REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

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6. OVERVIEW OF THE GROUP’S BUSINESS 6.1 PRINCIPAL ACTIVITIES The Group has decided to reinforce its peering capabilities in Europe by being present on several new exchange points. In particular, the Group has entered into IRU agreements for optic fibers to connect Paris to London, Amsterdam, Brussels and Frankfurt. Iliad has also reinforced its peering capabilities on the East Coast of the United States, and now boasts two transatlantic 10-Gigabit connections. International transit At December, 31, 2007 for international transit, Free used the services of two transit service providers offering bandwidth capacity of 40 Gigabits per second: Level3 and Teleglobe. Server platform All Free’s servers run on a Linux operating system, which is well-established and used by many Internet-based companies. Free’s Linux-based infrastructure consists mainly of Dell 1U PC servers installed at its various PoPs. Free uses Network Appliance file servers for data storage. 6.1.4 Description of the Group’s principal activities 6.1.4.1 The Broadband segment 6.1.4.1.1 Free Free is the third largest broadband Internet access provider in France and one of the few such providers to have become profitable through the provision of ISP services. Free first posted a profit in April 2001, only 24 months after the start-up of its business. Today, Free has four different Internet access offerings, characterized by their simplicity, attractive pricing and recognized technical quality. They also provide tools allowing subscribers to take full advantage of the Internet’s many features, including portals, search engines, email, personal website construction tools and account management systems. These four offerings consist of the “Pay-as-you-go” service, the “50-hour plan” and Free’s broadband and high speed broadband offerings. Free initially based its growth strategy on the provision of non-subscription access to the Internet (“Pay-as-you-go” access) offering a limited range of content. Its marketing strategy was based on minimizing advertising expenditure and emphasized the simplicity and low cost of the offering. This strategy was successful, with Free now claiming over four million user-created email addresses. After completing the roll-out of its telecommunications network and interconnecting with the France Télécom network in April 2001, Free was in a position to control the cost structure of an offering based on Internet connection time. It therefore launched an attractive and profitable dial-up package, charging a fixed rate of €14.94 for 50 hours of Internet usage per month. Free has capitalized on the different nuances of its brand name, transforming it from a name implying that the offering is free of charge into a name associated with high-quality paid services and the freedom offered to users of these services. This new brand image was enhanced with the launch in October 2002 of Free’s ADSL broadband offering for €29.99 per month. Through the use of its network and by building on its experience in dial-up offerings, Free has developed a high-quality broadband access offering which is attractively priced and, where possible, makes the most of the opportunities afforded by the unbundling of the local loop. Free’s offerings are pertinent to all Internet user segments and have different maturity profiles, with some subscribers migrating from one offering to another (such as from the “Pay-as-you-go” service to the “50-hour plan” and from the “50-hour plan” to the Free broadband offering). The downturns in the “50-hour plan” offering and the “Pay-as-you-go” offering are more than offset by strong growth in the broadband offering. 30 - Iliad – Registration Document 2007
The following tables give details of all the Internet access services marketed by Free. 14 Subject to conditions and line eligibility 6. OVERVIEW OF THE GROUP’S BUSINESS 6.1 PRINCIPAL ACTIVITIES Details of Internet access services provided by Free at December 31, 2007 “Pay-as-you-go” • No subscription/no commitment access via PTSN or Numéris (cost of telephone call billed by France Télécom) • An unlimited number of email addresses • 10 Gb of space for hosting the customer’s personal website • Specific tools enabling customers to manage and customize their websites Table 1 Table 2 “50-hour plan” €14.94 per month, including VAT • 50 hours Internet usage per month with no minimum contract period • An unlimited number of email addresses • The least expensive charge per additional minute on the market (local Internet call rate) • 10 Gb of space for hosting the customer’s personal website • Specific tools enabling customers to manage and customize their websites Free’s Broadband Service Offering €29.99 per month, including VAT Option 1 (Unbundled line) 14 Option 5 14 • Unlimited usage for a fixed price – up to 28 Mbit/s (ATM) download and 1 Mbit/s upload • HD Freebox provided to subscribers free of charge • Unlimited usage for a fixed price – up to 10 Mbit/s download and 1 Mbit/s upload (ATM) • Freebox V4 provided to subscribers free of charge • No minimum contract period • No minimum contract period • Termination charge: €96 maximum including VAT (reduced by €3 for each month of duration of the subscription) • Termination charge: €96 maximum including VAT (reduced by €3 for each month of duration of the subscription) • Unlimited use of bandwidth • Unlimited use of bandwidth • An unlimited number of email addresses • An unlimited number of email addresses • 10 Gb of space for hosting the customer’s • 10 Gb of space for hosting the customer’s personal website personal website • Specific tools enabling customers to manage • Specific tools enabling customers to and customize their websites manage and customize their websites • No line rental payable to France Télécom in • No line rental payable to France Télécom – the case of full unbundling (same Freebox Only (same subscription price) subscription price) • Access to telephony services for customers • In the case of migration from partial with a Freebox modem unbundling to full unbundling: migration charge of €90 including VAT (reduced by €3 for each month of duration of the subscription to Free’s broadband service) • Access to a selection of television channels from Free’s portal. • Access to telephony services and audiovisual content offerings for customers with a Freebox modem Iliad – Registration Document 2007 - 31
Page 1 and 2: Société anonyme. Share capital:
Page 3 and 4: TABLE OF CONTENTS GENERAL COMMENTS
Page 5 and 6: 16.2 SERVICE CONTRACTS ENTERED INTO
Page 7 and 8: 1. PERSONS RESPONSIBLE 1.1 PERSON R
Page 9 and 10: 3. SELECTED FINANCIAL INFORMATION 3
Page 11 and 12: 4. RISK FACTORS 4.1 RISKS RELATING
Page 13 and 14: 4. RISK FACTORS 4.3 FINANCIAL RISKS
Page 15 and 16: 4.4 LEGAL RISKS 4.4.1 Risks relatin
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Page 21 and 22: 2007 • Sale of Kertel (February 2
Page 27 and 28: Considering acquisition opportuniti
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14. ADMINISTRATIVE, MANAGEMENT AND
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15. COMPENSATION AND BENEFITS 15.2
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16. FUNCTIONING OF THE COMPANY’S
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17.1 HUMAN RESOURCES 17. EMPLOYEES
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18.1 IDENTIFICATION OF SHAREHOLDERS
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19. RELATED PARTY TRANSACTIONS 19.
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20. FINANCIAL INFORMATION CONCERNIN
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2.3.4 List of subsidiaries and affi
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21.1 SHARE CAPITAL 21.1.1 Amount of
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21. ADDITIONAL INFORMATION 21.1 SHA
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21.1.8 Authorized unissued share ca
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21.4.2 Changes in the Iliad share p
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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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