REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

9. OPERATING AND FINANCIAL REVIEW
9.1 KEY CONSOLIDATED FINANCIAL DATA
Broadband revenues for 2007 (excluding inter-segment sales) climbed €313.3 million to €1,178.4 million, up
36.2% compared with a year earlier, boosted by the development of Free’s ADSL broadband offer.
ISP revenues
2005 2006 2007
Total ADSL subscribers ................................................. 1,595,000 2,278,000 2,904,000
Unbundled subscribers .................................................. 1,120,000 1,730,000 2,366,000
Percentage of unbundled subscribers .................................... 70.2% 75.9% 81.5%
Share of French residential ADSL market18 .............................. 18.0% 19.0% 19.7%
ISP revenues (Free, Free Télécom and Free Haut Débit), through both the switched telephone network and
ADSL, totaled €1,149.9 million for 2007, an increase of 40.4% over 2006. The main growth factors were as
follows:
• The continuing success of the Broadband offer. The number of ADSL subscribers rose to 2,904,000
at December 31, 2007 from 2,278,000 one year earlier. Subscriber acquisition remained strong in 2007,
with Free signing up 22.3% of total new ADSL subscribers in France, representing 626,000 net adds for
the year. At December 31, 2007 Free’s share of the French ADSL market was over 19.7%, versus 19.0%
at end-2006.
• Free’s continuing drive to increase the proportion of unbundled subscribers. At
December 31, 2007 the unbundled subscriber rate was 81.57% versus 75.9% at end-2006.
• The growing use of optional value-added services provided through the Freebox. In 2007, revenues
generated from these services totaled €263.4 million versus €163.4 million in 2006. At
December 31, 2007 optional value-added services represented approximately 22.4% of total Group
revenues compared with 3.4% at December 31, 2004.
(in € millions) 2004 2005 2006 2007
Revenues from optional value-added services ............................ 13.5 75.0 163.4 263.4
Broadband revenues ..................................................... 394.1 638.9 865.1 1,178.4
% of Broadband revenues ................................................ 3.4% 11.7% 18.9% 22.4%
Take-up of the “Pay-as-you-go” and “50-hour plan” dial-up offers continued to decline in favor of Broadband
offerings during 2007, with the related revenues representing €13 million against €23 million in 2006.
Hosting and advertising revenues
The marketing of domain names in France, value-added hosting services and the sale of advertising space on
Free’s portal generated hosting and advertising revenues of almost €19.3 million in 2007, up from €14.3 million
in 2006.
Inter-segment sales and other revenues
Inter-segment sales and other revenues correspond to airtime on Free’s directly-operated network billed to the
Traditional Telephony segment, and to sales of WiFi cards and related items. These revenues were lower than in
2006 due to the contraction in Traditional Telephony business volumes.
Purchases used in production and external charges
Purchases used in production and external charges rose 31.7% in 2007 to €671.5 million. Broadband gross profit
(defined as revenues less purchases used in production and external charges) came to €517.5 million,
representing 43.9% of revenues, excluding inter-segment sales, compared with 43.0% in 2006.
18 Source : Iliad and France Télécom for 2005, 2006 and 2007.
Iliad – Registration Document 2007 - 71