REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

5. INFORMATION ABOUT THE COMPANY AND THE GROUP
5.1 HISTORY AND DEVELOPMENT
Iliad sold all of its shares in Kedra in February 2007. Finally, Kedra offers high-quality call termination services.
Within the Traditional Telephony segment, other services include in particular the reverse look-up directory
ANNU, which is accessed mainly via Minitel and by telephone, as well as the services provided by Iliad’s
subsidiary, Assunet S.A., a web-based insurance broker.
The following table shows the changes in the Group’s consolidated revenues, EBITDA and profit from ordinary
activities over the last three fiscal years:
(in € millions) 2005 2006 2007
Revenues ...................................................................... 724.2 935.1 1,212.4
EBITDA ...................................................................... 224.6 328.5 443.6
Profit from ordinary activities ................................................. 107.7 180.5 213.8
Analysis of 2007 revenues and EBITDA by business segment
(in € millions) Broadband Traditional
Telephony Total
Consolidated revenues ........................................................ 1,178.4 34.0 1,212.4
EBITDA ...................................................................... 435.0 8.6 443.6
5.1.6.2 Local loop unbundling and the roll-out of the fiber-to-the home (FTTH) optical fiber
network: a key strategy for the profitable growth of the Group
5.1.6.2.1 Local loop unbundling
The unbundling of the local loop is a technical operation which allows operators to control the access to their
subscribers and thereby free themselves to a great extent from their dependence on France Télécom’s network.
Local loop unbundling (LLU) is vital for the Group’s ADSL services, as this enables it to take full advantage of
the density and quality of its network and to set up end-to-end management of the infrastructures connecting it to
its customers.
LLU allows the Group to offer its customers attractive prices (currently €29.99 per month for the ADSL
broadband Internet access package, with a download rate of 28 Mbit/s per second) and a competitive range of
services, providing higher transmission speeds combined with telephony and audiovisual services for customers
with a Freebox modem.
LLU is a key element for the profitability of the Group due to the high margins that can be generated. At present,
most of the recurrent charges paid to France Télécom relate to the rental of equipment used for connecting the
subscriber’s modem to the corresponding DSLAM belonging to the Group.
By placing LLU at the heart of its strategy and adopting an aggressive and profitable pricing policy, Free
succeeded in winning over one in five new ADSL broadband customers during 2007, in an extremely
competitive market. At December 31, 2007, the company had 2,904,000 ADSL customers, 2,366,000 of whom
are on unbundled lines 9 .
Iliad intends to continue the unbundling of new distribution frames to increase the number of unbundled lines. It
will enable Iliad to strengthen its competitive position in new unbundled areas and increase its profitability.
5.1.6.2.2 The roll-out of the fiber-to-the-home (FTTH) optical fiber network
Since 2006, the group has rolled out its optical fiber network in areas with a high density of Free subscribers. The
purpose of this roll out is to provide access to an optical fiber local loop, thereby improving the quality of the
services and delivering faster transmission speeds. These investments will be profitable to the extent that they are
first made in areas with a high density of Free subscribers. The roll out strategy will reduce unbundling costs and
strengthen the Group’s strategic position. The Group intends to reach 4 million homes by 2012 representing an
investment of about €1 billion.
9 Source: France Télécom
Iliad – Registration Document 2007 - 17