REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

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6. Overview of the group’s Business ...................................................................... 20 6.1 PRINCIPAL ACTIVITIES ............................................................................ 20 6.1.1 Strategy ............................................................................................. 20 6.1.2 Competitive advantages ............................................................................. 21 6.1.3 A network servicing the Group’s Internet and telephony operations .................................. 22 6.1.4 Description of the Group’s principal activities ...................................................... 30 6.2 PRINCIPAL MARKETS ............................................................................. 39 6.2.1 Internet access ...................................................................................... 39 6.2.2 Telephony operators ................................................................................ 41 6.3 EXCEPTIONAL FACTORS WHICH HAVE INFLUENCED THE GROUP’S PRINCIPAL ACTIVITIES OR PRINCIPAL MARKETS .............................................................................. 42 6.4 EXTENT TO WHICH THE GROUP IS DEPENDENT ON PATENTS OR LICENSES, INDUSTRIAL, COMMERCIAL OR FINANCIAL CONTRACTS OR NEW MANUFACTURING PROCESSES .................. 42 6.4.1 Dependence on patents and software licenses ....................................................... 42 6.4.2 Dependence on supply, industrial, commercial or financial agreements .............................. 42 6.4.3 Dependence on new operating processes ............................................................ 43 6.4.4 Dependence on the Group’s main customers and suppliers .......................................... 43 6.5 BASIS FOR STATEMENTS MADE BY THE GROUP REGARDING ITS COMPETITIVE POSITION ............ 44 6.6 REGULATORY SITUATION ......................................................................... 44 6.6.1 Regulation of electronic communications networks and services ..................................... 44 6.6.2 Regulation of the content of electronic communications .............................................. 55 7. Organizational structure ............................................................................... 60 7.1 BRIEF DESCRIPTION OF THE GROUP ............................................................... 60 7.2 ORGANIZATION CHART ........................................................................... 61 8. Property, plant and equipment ......................................................................... 62 8.1 EXISTING OR PLANNED MATERIAL TANGIBLE FIXED ASSETS ....................................... 62 8.2 ENVIRONMENTAL ISSUES THAT MAY AFFECT THE COMPANY’S UTILIZATION OF THE TANGIBLE FIXED ASSETS ..................................................................................... 62 9. Operating and financial review ......................................................................... 63 9.1 KEY CONSOLIDATED FINANCIAL DATA ............................................................ 63 10. Capital resources ...................................................................................... 76 11. Research and development, patents and licenses ...................................................... 77 11.1 RESEARCH AND DEVELOPMENT ................................................................... 77 11.2 INTELLECTUAL PROPERTY ........................................................................ 77 11.2.1 Patents ............................................................................................. 77 11.2.2 Trademarks ......................................................................................... 77 12. Trend information ..................................................................................... 78 13. Profit forecasts or estimates ........................................................................... 79 14. Administrative, management and supervisory bodies and senior management ...................... 80 14.1 MEMBERS OF THE ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES ................... 80 14.1.1 Composition of the Board of Directors .............................................................. 80 14.1.2 Composition of the senior management team ........................................................ 83 14.2 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT CONFLICTS OF INTEREST .......................................................................... 84 14.3 DIRECTORS’ AND SENIOR MANAGERS’ INTERESTS IN THE COMPANY AND THE GROUP ............. 84 15. Compensation and benefits ............................................................................ 86 15.1 TOTAL AMOUNT OF COMPENSATION PAID AND BENEFITS IN KIND GRANTED TO DIRECTORS AND SENIOR MANAGERS ............................................................................... 86 15.1.1 Directors’ fees ...................................................................................... 86 15.1.2 Compensation paid and benefits in kind granted to senior managers during fiscal 2007 .............. 86 15.1.3 Change in total compensation paid to members of the senior management team in the past three fiscal years .......................................................................................... 86 15.2 STOCK OPTIONS GRANTED TO OR EXERCISED BY CORPORATE OFFICERS IN 2007 ................... 87 15.3 AGREEMENTS ENTERED INTO BY THE COMPANY OR MEMBERS OF THE GROUP WITH THE COMPANY’S SENIOR MANAGERS OR PRINCIPAL SHAREHOLDERS ................................... 87 15.4 LOANS AND GUARANTEES GRANTED TO SENIOR MANAGERS ....................................... 87 16. Functioning of the company’s administrative and management bodies .............................. 88 16.1 ORGANIZATION OF THE COMPANY’S ADMINISTRATIVE AND MANAGEMENT BODIES ................ 88 16.1.1 Organization of the Board of Directors .............................................................. 88 16.1.2 Senior Management (Article 19 of the bylaws) ....................................................... 90 16.1.3 Meetings of the Board of Directors .................................................................. 91
16.2 SERVICE CONTRACTS ENTERED INTO BETWEEN THE COMPANY AND MEMBERS OF THE COMPANY’S ADMINISTRATIVE AND MANAGEMENT BODIES ....................................... 91 16.3 INTERNAL RULES OF THE BOARD OF DIRECTORS AND DIRECTORS’ CODE OF CONDUCT ............ 91 16.3.1 Members of the Board of Directors ................................................................. 91 16.3.2 Independent directors .............................................................................. 91 16.3.3 Meetings of the Board of Directors ................................................................. 92 16.3.4 Evaluation of the Board of Directors ............................................................... 92 16.3.5 Committees of the Board of Directors .............................................................. 92 16.3.6 Code of conduct applicable to trading in the Company’s securities ................................. 93 16.4 INTERNAL CONTROL ............................................................................. 94 16.4.1 Report on the conditions governing the preparation and organization of the work of the Board of Directors and internal control procedures ......................................................... 94 16.4.2 Statutory Auditors’ report on the Chairman’s report on internal control procedures ................ 99 17. Employees ............................................................................................ 101 17.1 HUMAN RESOURCES ............................................................................. 101 17.1.1 Changes in the Group’s workforce during the past three years ..................................... 101 17.1.2 Analysis of the Group’s workforce during the past three years ...................................... 101 17.2 STOCK OPTIONS AND FOUNDERS’ WARRANTS GRANTED BY THE COMPANY, EXERCISED OR HELD DURING THE FISCAL YEAR ENDED DECEMBER 31, 2007 .......................................... 101 17.2.1 Stock options and founders’ warrants granted during the year ...................................... 101 17.2.2 Stock options and founders’ warrants exercised during the year .................................... 101 17.2.3 Stock options held ................................................................................. 102 17.3 FOUNDERS’ WARRANTS ISSUED BY FREE ........................................................ 102 17.4 EMPLOYEE PROFIT-SHARING ..................................................................... 102 18. Major shareholders .................................................................................. 103 18.1 IDENTIFICATION OF SHAREHOLDERS ............................................................. 103 18.1.1 Ownership structure and voting rights ............................................................. 103 18.1.2 Changes in voting rights during the past three years ............................................... 103 18.2 VOTING RIGHTS OF SHAREHOLDERS ............................................................. 104 18.3 SHAREHOLDERS’ AGREEMENTS, LOCK-UP UNDERTAKINGS AND PARTIES ACTING IN CONCERT .... 104 18.3.1 Shareholders’ agreements ......................................................................... 104 18.3.2 Lock-up undertakings .............................................................................. 104 18.3.3 Parties acting in concert ........................................................................... 104 18.4 ARRANGEMENTS WHICH MAY RESULT IN A CHANGE IN CONTROL OF THE COMPANY .............. 104 19. Related party transactions ........................................................................... 105 20. Financial information concerning the company’s assets and liabilities, financial position and profits and losses ..................................................................................... 106 20.1 CONSOLIDATED FINANCIAL STATEMENTS FOR 2007, 2006 AND 2005 ............................. 106 20.2 PARENT COMPANY FINANCIAL STATEMENTS FOR 2007 ........................................... 158 21. Additional information ............................................................................... 189 21.1 SHARE CAPITAL ................................................................................. 189 21.1.1 Amount of share capital ............................................................................ 189 21.1.2 Shares not representing capital .................................................................... 189 21.1.3 Share buyback programs ........................................................................... 189 21.1.4 Potential share capital ............................................................................. 190 21.1.5 Information about the terms of any acquisition rights or any obligations over authorized but unissued capital or an undertaking to increase the share capital .................................... 193 21.1.6 Information about the share capital of any member of the Group which is under option or agreed conditionally or unconditionally to be put under option and details of such options (including those persons to whom such options relate) .............................................................. 193 21.1.7 Changes in the Company’s share capital over the past five years ................................... 194 21.1.8 Authorized unissued share capital .................................................................. 195 21.2 BYLAWS ........................................................................................ 195 21.2.1 Corporate purpose (Article 2 of the bylaws) ........................................................ 195 21.2.2 Management of the Company ...................................................................... 196 21.2.3 Rights and obligations attached to shares .......................................................... 196 21.2.4 Changes in the rights of shareholders .............................................................. 197 21.2.5 Shareholders’ Meetings ............................................................................ 197 21.2.6 Articles of the bylaws likely to have an impact on a change in control .............................. 199 21.2.7 Disclosure thresholds (Article 12 of the bylaws) .................................................... 199 21.2.8 Specific provisions governing changes in the Company’s share capital ............................. 199 21.2.9 Form of shares and identification of shareholders (Article 9 of the bylaws) ......................... 199
Page 1 and 2: Société anonyme. Share capital:
Page 3: TABLE OF CONTENTS GENERAL COMMENTS
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
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Page 19 and 20: 5. INFORMATION ABOUT THE COMPANY AN
Page 21 and 22: 2007 • Sale of Kertel (February 2
Page 27 and 28: Considering acquisition opportuniti
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Page 31 and 32: Réseau International CTI (Centre d
Page 33 and 34: 6. OVERVIEW OF THE GROUP’S BUSINE
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6. OVERVIEW OF THE GROUP’S BUSINE
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Local loop unbundling 6. OVERVIEW O
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6.6.2 Regulation of the content of
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7.2 ORGANIZATION CHART At March 31,
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9.1 KEY CONSOLIDATED FINANCIAL DATA
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9. OPERATING AND FINANCIAL REVIEW 9
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9.1.2 ADDITIONAL INFORMATION 9.1.2.
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11. RESEARCH AND DEVELOPMENT, PATEN
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13. PROFIT FORECASTS OR ESTIMATES T
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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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