REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

5. INFORMATION ABOUT THE COMPANY AND THE GROUP
5.1 HISTORY AND DEVELOPMENT
Growth in Free’s broadband customer base between 2005 and 2007 10
12/31/2005 12/31/2006 12/31/2007
Total ADSL subscribers .......................................... 1,595,000 2,278,000 2,904,000
Number using unbundled lines .................................... 1,120,000 1,730,000 2,366,000
Percentage using unbundled lines ................................. 70.2% 75.9% 81.5%
Share of French residential ADSL market ......................... 18.0% 19.0% 19.7%
5.2 INVESTMENTS
5.2.1 Principal investments over the last three fiscal years
The Group’s property, plant and equipment mainly consists of the transmission equipment necessary for
operating its network, the modems and DSLAMs used for Free’s broadband Internet access service offering, the
rights to use optical fiber held by the Group under the terms of IRU agreements, and the cabling costs payable to
France Télécom. The cash flow statements for the years concerned provide a detailed breakdown of the Group’s
capital expenditures and the methods used to finance them.
Over the last three fiscal years, the Group acquired the following non-current assets, including through finance
leases:
(In € thousands) 2005 2006 2007
Intangible assets ................................................... 1,075 1,617 1,857
Property, plant and equipment ...................................... 209,197 323,285 374,678
TOTAL ...................................................... 210,272 324,902 376,535
The investments over the last three fiscal years were as follows:
• In 2005: Acquisition of IFW for €57.9 million;
• In 2006: Acquisition of PN (recently renamed Free Infrastructure) for €40,000 and acquisition of Citéfibre
for €2.9 million.
5.2.2 Principal investments in progress
Since the beginning of 2008, the Group’s principal investments represented (i) growth-related expenditure which
directly depends on the number of new customers won – such as Freeboxes, Freebox DSLAMs and service
access fees or wiring connection costs invoiced by France Télécom; (ii) network-related expenditure – including
expenditure incurred to increase network density invested jointly with private operators or local authorities, or
under IRU agreements; and (iii) expenditure relating to the launch of FTTH programs.
Financing
These investments are financed by cash flows from operating activities.
5.2.3 Principal future investments
In September 2006, the Group announced that it intended to roll out an optical fiber network providing a direct
connection to the homes of its subscribers (using fiber-to-the-home, or FTTH technology). The total related
capital expenditure, which will be incurred between 2006 and 2012, will amount to some €1 billion. The overall
investment program will be financed mainly from cash flows generated by the Group’s operations and by the
proceeds of the June 2006 OCEANE bond issue. The main aspects of the program remained the same in 2007.
10 Sources: Iliad/Arcep/France Télécom
18 - Iliad – Registration Document 2007