REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

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6. OVERVIEW OF THE GROUP’S BUSINESS 6.1 PRINCIPAL ACTIVITIES 6.1 PRINCIPAL ACTIVITIES 6.1.1 Strategy 6. OVERVIEW OF THE GROUP’S BUSINESS Leveraging the competitive strengths described in Section 6.1.2 of this registration document, the Group’s strategy is based on the principles described below. Continuing to provide the most competitive Internet access offerings in France In order to continue the growth of its market share, the Group plans to pursue its policy of winning new ADSL broadband customers by combining a competitive pricing policy with a focus on the quality of its services (such as by offering ever-increasing bandwidth and innovative services such as ADSL-based or voice over IP telephony as well as audiovisual content), and on its technical and customer support services. The Group’s aim is to implement this customer recruitment policy and further enhance the Group’s profitability in a fast-growing market. Increasing the number of subscribers on unbundled lines (Option 1) The Group intends to increase the number of customers on unbundled lines in two complementary ways. First, it plans to increase its market share in areas which have already been unbundled by continuing to offer its Freebox services directly to new subscribers under Option 1. Second, it plans to encourage the migration of the maximum possible number of Option 5 subscribers (on non-unbundled lines) to Option 1 (unbundled lines) by expanding the density of its network. This network expansion will take into account any applicable technical restrictions and will prioritize the areas to be unbundled, focusing on those that already have a large number of subscribers, to ensure a rapid return on investment. Given the significant difference in profitability between unbundled subscriber lines and other lines, the expansion of local loop unbundling (to migrate existing subscribers or win new customers) is designed to substantially increase the Group’s profit margins. Promoting the use of optional value-added services provided through the Freebox Since the launch of its ADSL-based telephony service in August 2003, the Group has consistently added new free and pay-per-use services for customers with Freebox modems in unbundled areas. In 2005, the Freeplayer media center service was added, along with a multi-device offering and Video on Demand provided in partnership with Canalplay. The new HD Freebox was launched in 2006, enabling subscribers with access to this technology to have digital video facilities and watch programs in high definition. Also in 2006, Free’s Video on Demand offering was strengthened with the addition of new content for adults, children (Canalplay Kids) and music-lovers (i Concerts). In 2007, a fax service was added to the Freebox offering, along with a new “TV Perso” service enabling subscribers equipped with the HD Freebox to create their own personal television channel. On-demand contents were also boosted with the launch of a subscription-based, unlimited-use Video on Demand service (S-VoD) offering known as Free Home Video. The Group considers that these services strengthen the appeal of its ADSL broadband offering and help foster customer loyalty. The Group’s strategy is therefore focused on increasing the number of these services and making sure that they are easy to use, notably by simplifying interfaces and invoicing procedures. Rolling out an FTTH network in areas with high subscriber density In September 2006, the Group was the first operator to announce the roll-out of an optical fiber network in order to provide a direct connection to the homes of its subscribers using fiber-to-the-home (FTTH) technology. This technology offers significantly faster data transmission rates than ADSL and will give subscribers access to new services. At the same time, it will enable the Group to operate totally independently from France Télécom’s local loop. Iliad intends to optimize its capital expenditures by focusing on areas with high subscriber density. In mid-September 2007, Free announced the features of its FTTH high speed broadband offering (see Section 6.1.4.1.1), which it will continue to roll out in a bid to expand the number of eligible households. 20 - Iliad – Registration Document 2007
Considering acquisition opportunities which could contribute to Group growth 6. OVERVIEW OF THE GROUP’S BUSINESS 6.1 PRINCIPAL ACTIVITIES Although it continues to focus on internal growth as the core of its strategy, the Group will pursue a policy of external expansion if targeted opportunities arise in areas that strongly complement its existing business or would result in improved use of the Group’s network. 6.1.2 Competitive advantages The Group benefits from a number of competitive advantages which should enable it to sustain its profitable growth and maintain its position as a leading provider of broadband Internet access in France. The Group believes it is well-placed to take full advantage of the growth potential in the Internet and telecommunications sectors thanks to the strengths described below. Free – a long-established Internet service provider with a well-known brand in France As a result of the success of its consumer market services, Free has positioned itself as a major player in the Internet access market in France since its creation in 1999. Free’s successive launch of its dial-up “Pay-as-you-go” and “50-hour plan” offerings and its €29.99 per month broadband service have firmly established the credibility and recognition of the brand. It is clearly associated with the concepts of freedom, cutting-edge technology and value-for-money. Technically sophisticated and attractively priced service offerings The Group’s network enables it to design sustainable service offerings that are at once easy to understand, technically sophisticated and attractively priced. The broadband and high speed broadband Internet access offerings at €29.99 a month are among the most competitively priced on the market in their respective segments while providing a high quality of service. This positioning is a central factor in the Group’s strategy and aims to create the right environment for lasting and profitable growth of its business. A high-performance national network supporting both Internet service provider and fixed telephony operations for the consumer market In order to be able to offer high-performance and innovative services to its customers and to guarantee the profitability of its business operations, in 1999 the Group decided to establish its own telecommunications network, which would allow it to control the technical aspects and pricing of its services for the routing of both data (Internet) and voice (over IP or circuit-switched). Since early in the second half of 2001, the Group has been rolling out and operating its own optical fiber network. The skills and experience acquired by the Group’s network teams now mean that it is able to use its own resources to operate and maintain a nationwide network and guarantee its Internet customers a level of quality and connection speeds which are each recognized as among the best on the market. The specific technical features of the network and its high density are key factors for the success and profitability of the Group’s service offerings in both Internet access and telephony. The size, design and scalable architecture of the Group’s network make it capable of serving all potential customers simultaneously using the Group’s telephony, broadband and audiovisual services in areas where unbundling of the local loop has taken place. A leading player in local loop unbundling The Group considers that the unbundling of the local loop is at the heart of its ability to offer original, sustainable and profitable broadband Internet access services. Currently the Group has 2,366,000 unbundled lines thanks to the installation of approximately 3,418 Freebox DSLAMs in 1,504 facilities located in or alongside France Télécom exchanges. The Group intends to capitalize on its experience in unbundling the local loop to expand the areas in which it can offer differentiated services to its customers. Targeted research and development focusing on the consumer market The Group’s investment in research and development of hardware and software products has enabled it to position itself as a frontrunner in the implementation of innovative technological solutions on the consumer market. The success of this policy is based largely on management’s commitment to providing high-quality technical equipment and retaining flexibility in its choice of hardware. This in turn has resulted in the design of Iliad – Registration Document 2007 - 21
Page 1 and 2: Société anonyme. Share capital:
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9.1.2 ADDITIONAL INFORMATION 9.1.2.
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21.1 SHARE CAPITAL 21.1.1 Amount of
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Not applicable. 23. THIRD PARTY INF
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25. INFORMATION ON SHAREHOLDINGS 25
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GLOSSARY Broadband ARPU (Average Re
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GLOSSARY IP (Internet Protocol): te
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GLOSSARY Spamming: the bulk mailing
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RR Donnelley : 01 53 45 19 00
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REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

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