Slide 1: France Telecom 1H08 results
France Telecom 1HO08 results July 315 2008 Reliance telecom
Slide 2: Cautionary statement
cautionary statement » this presentation contains forward-looking statements about France Telecom’s business, in particular for 2008. Although France Telecom believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertaintie
Slide 3: 1H08 highlights
1H08 highlights Keirance telecom
Slide 4: 1H08 key financial achievements
1H08 key financial achievements another strong semester in revenue and GOM performance 1HO7— tHos SSE in millions of euros cB actual basis key points stronger growth in 2Q08 (+4.1%) after 1Q08 (+ 3.7%) due to mature revenues 25,310 | 26,304 +3.9% countries performance emerging countries maintained a
Slide 5: 1H08 key KPIs
1H08 key KPIs continued customer base growth, particularly in mobile and fixed broadband Group custom: Group mobile custo: in millions re in millions 449 163 174 89 103 114 86 2 com, 3 11 ee 21 1 HOG 1HO7 1HO8 4HO6"* 4HO7 4HO8 I Orange branded cust. © non branded broadband mobile customers ADSL Grou
Slide 6: 2Q08: strong quarter, above expected market growth
2Q08: strong quarter, above expected market growth 2Q revenue growth at 4.1% revenue gr per quarter on a comp. 4.1% 2006 2007 2008 2006 2007 2008 1Q 2Q insight » 1HO8 Group growth is above expected market trend which was estimated for 08-10 between 2% and 3% » 4th consecutive strong quarter = growth
Slide 7: 2Q08 stronger growth in all segments
2Q08 stronger growth in all segments in millions of euros 1Q08 Group revenues 13,027 total personal 7,064 personal France 2,468 personal UK 1,443 personal Spain 827 personal Poland 586 personal ROW 1,775 total home 5,649 home France 4,478 home Poland 740 home Spain 167 home UK 88 home other ROW 248
Slide 8: France and other mature countries performance
France and other mature countries performance contributed to growth rate improvement in 1H08 3.9% +11.2% 1.5% 1.9% emerging ‘ 1.8% countries +15.4% matures Enterprise 1H08* contribution to organic Group growth growth 1HO7* contribution to Group growth organic growth *yoy variation on comparable basi
Slide 9: GOM increased by 4.7% especially driven by mobile and enterprise
GOM increased by 4.7% especially driven by mobile and enterprise activities in % of in % of Ain% in millions of euros 1HO7* revenues 1HO8 ~—s revenues A% pts Group GOM 9,237 36.5% | 9,675 36.8% | 4.7% +0.3pt total personal 4,794 35.7% 5,054 35.1% 5.4% -0.6 pt personal France 1,941 40.2% 1,997 39.5%
Slide 10: Ongoing improvement of cost structure
ongoing improvement of cost structure cost rebalancing to enhance market positions in % of revenues labour 17.4% interconnection other IT&N general, properties and others 12.1% GOM pre-commercial 50.7% commercial expenses 14.2% GOM 36.5% 1HO7 CB 16.7% 11.7% 51.5% 14.7% 36.8% 1HO8 -70bp on labour ope
Slide 11: Headcount evolution
headcount evolution on track to achieve Group 06-08 forecast 189,736* . International 185,102 -868* net reduction mainly in TP Group > Franc -3,766* net reduction = ACT plan operates = recruitments: +419** mainly on critical joblines June 07 CB June 08 » Group headcount down by 4,634 people, ie -2.4
Slide 12: Operating income stable yoy
operating income stable yoy in millions of euros gross operating margin (GOM) employee profit sharing share-based payment depreciation & amortization impairment of goodwill disposal of assets restructuring costs associates operating income 5,463 o—_——. less accelerated depreciation in 08 07 disposal
Slide 13: Net income Group share on comparable terms
+4.4% of net income Group share on comparable terms in millions of euros 1HO7 1HO8 operating income 5,463 5,471 financial results -1,296 -1,209 o tax 543 -1,266 @ minorities interest -316 -321 net income Group share 3,308 2,675 EE a activities -409 -10 exceptional on deferred tax -611 -170 ie | ar n
Slide 14: Organic cash flow increasing by 11.8% yoy
organic cash flow increasing by 11.8% yoy, on track with FY guidance in millions of euros 1HO7 1H08 gross operating margin (GOM) 9,416 9,675 +2.8% net interest expense cash out -1,459 -1,360 employee profit sharing cash out -346 -359 income taxes cash out -467 -445 early retirement plan cash out -48
Slide 15: 1H08 capex on track with FY guidance
1H08 capex on track with FY guidance in millions of euros and % of revenue 3,134 2,980 11.9% 11.8% personal home enterprise 1HO7 CB 1HO8 personal capex slowdown: main 3G roll out completed in mature countries first benefits from network sharing agreements continuous investments and network deploymen
Slide 16: 1H08 net debt decrease yoy
1H08 net debt decrease yoy: net debt/GOM ratio drop from 2.25 to 1.97 net debt changes in millions of euros 42,113 74 64 37,980 3,386 533 38,204 net debt [| | | “188 / GOM* -3,645 2.25 net debt Mobistar 1 GOM* ‘lw citivox net debt 1.99 on ate ree acquisition 30Mé GOM* ‘ohwMobistar 81ME 1.97 in ohwJo
Slide 17: Financial structure optimization pursued in 1H08
financial structure optimization pursued in 1H08 France Telecom keeps attractive financing conditions in a general context of interest rate increase June 08 net debt €38.2Bn June 08 gross debt* €43.1Bn % of debt with a fixed rate** 86% % of debt in €** 78% average maturity 7.2 years in billions of e
Slide 18: 1H08 business performance
1HO8 business performance Keirance telecom
Slide 19: 1H08 personal France
1H08 personal France strong revenue performance in 2Q and 1H08 revenues: +4.8 in millions of euros +186 4830 gm mye 234 -156 4HO7 CB customer regulatory voice non voice equipment base impact others 4121 +46 5,061 1HO8 = customer base increase (+3.9% yoy) with 66.5% of contract customers positive voi
Slide 20: 1H08 personal France
1H08 personal France stable market share with continuous development of contract base olution* lomer - in thousands market share incl MVNO —*~market share excl MVNO ll contract G.9% 1 prepaid 46.5% 46.7% 46.8% 6.4% 46.4% 46.4% 23,403 24,316 44.5% 44.5% 44.3% ° 43.8% 43.6% 43.5% 49% ean, 1Q07 2007 3Q
Slide 21: 1H08 home France
1H08 home France retail revenue stable with successful migration from FT PSTN to Orange multiplay revenues: +1.2% yoy in millions of euros 8,863 1 -322 +318 +108 * incl, ~30% of international 1HO7CB = =PSTN internet carrier & others * | carriers 8,967 1HO8 « internet revenue growth: +26% « PSTN decr
Slide 22: 1H08 home France
1H08 home France number of fixed lines continues to increase: +2% yoy wholesale lines (FT retail lines Wholesales lines detail +1.633K +1.294K +963k - 1H07 108 te 27.8 28.2 28.4 in thousands netadds net adds. full ULL 744 650 WLR 435136 naked ADSL 454 178 Dec-06 insight ADSL market share* (%) = +2%
Slide 23: 1H08 France focus
1H08 France focus content everywhere strategy deployment y6 y) LIGUE1 ae 7 Feb > > 27 May > 9Apr Gaumont HBO > Autumn Pb > 12June PB 3 July 9 Aug pre-launch of Orange foot: on TV & mobile acquisition of first Ligue football rights: = Saturday night matches = mobile rights = VoD mag interactive servi
Slide 24: France: priorities and action plan for 2H08
France: priorities and action plan for 2HO8 country level = ongoing cost control to cope with a possible market growth slowdown « improve Orange QoS to reduce churn and maintain premium « develop convergent offers & services » development of the content everywhere strategy personal home = maintain m
Slide 25: 1H08 personal UK
1H08 personal UK consistent strong revenue growth revenues: +9.7% in millions of euros 103 70 26 2,881 2625 94 _ ~~ -36 1HO7CB customer regulatory woice-—non-voice equipment& HOB. base impact others * excluding regulatory impacts revenue growth of 11% » revenue growth coming from: — strong contract
Slide 26: 1H08 personal UK
1H08 personal UK consistent performance delivering value and growth customer base mix net adds evolution by in thousands in thousands contract Mi contract 3.9%) |) prepaid prepaid 2 1007 2Q07 3Q07 4Q07 1Q08 2008 1HO7 insight « subscriber mix improves quarter on quarter with contract customers now re
Slide 27: 1H08 home UK
1HO8 home UK quality and service improvement revenues: -7.7% yoy Broadband ULL population coverage in millions of euros in% 180 56% 6 166 54% “9 = “11 35% 39% 1HO7CB broadband narrowband others (incl 108. 1Q07 2007 1Q08 2Q08 fxed voice) = focus on network improvement and quality of service: — ULL cu
Slide 28: UK: priorities and action plan for 2H08
UK: priorities and action plan for 2HO8 country level new management in 1H, focus on: = customer experience reorganisation to be more customer focused (to complete in Q3) customer service: processes improvement and geographic optimization extend retail distribution to 400 shops under own property an
Slide 29: 1H08 personal Spain
1H08 personal Spain 2.3% growth in a rapidly slowing market » +3,5% revenue growth excl. Euskaltel 1,641 136 —— 4 41,679 in 1H08 and strong mobile service . Ll 73443 46 revenue growth (+3.8% in 1HO8) = increased contract customer base thanks to quarterly rolling churn reduction (17.9% in 2Q08 vs 19.
Slide 30: 1H08 personal Spain
1H08 personal Spain consolidating market share and value of the customer base in thousands prepaid 1) contract -22 -50 1Q07 2Q07* 3Q07 4Q07 1Q08 2Q08 * excl. inactive prepaid base clean up (500k) insight on-going improvement of customer base with better mix: 56% of contract vs 53% in 2Q07 « nearly s
Slide 31: 1H08 home Spain
1HO8 home Spain strong DSL growth compensating for other activities decline for the first time since 2006 revenues: +2.2% yoy in millions of euros 1HOT.CB ADSL voice & enterprise wholesale equipment 1H08 narrow: eaters and insight = strong continuous double digit growth of DSL revenues (+22%) = “All
Slide 32: Spain: priorities and action plan for 2H08
Spain: priorities and action plan for 2HO8 country level « ina slowing market, the objective remains to consolidate value market share and to optimize cost structure: - distribution channel restructuring — Orange will open 300 stores in Spain over the next two to three years (30 to 40 stores by year
Slide 33: 1H08 personal Poland
1H08 personal Poland revenues supported by growth in customer base and usage revenues: +11.1% y in millions of euros - double digit revenue growth 1,092 ae . Ae . 22 1,213 supported by: -38 -8 — customer base increase of +6.5% yoy to 13,9 million - higher voice usage 1HO7 customer regulatory voice n
Slide 34: 1H08 personal Poland
1H08 personal Poland leadership position maintained in both value & volume in thousands —® Volume —* Value 34.5% 33.9% 34.2% sy q% 34.1% 6a 33.7% 33.6% 33.6% 33.3% 2Q07 3Q07 4Q07 1Q08 2Q08* insight 5% growth in voice usage (average usage per user**) continuous growth in mobile broadband customer bas
Slide 35: 1H08 home Poland
1H08 home Poland lower PSTN erosion vs 1H07 thanks to broadband & other activities ramp-up in millions of euros 1,566 =— ! -146 20 20 29 — 20 1,509 1HO7 CB PSTN internet carrier business others 1H08 = revenue transformation continues with lower PSTN erosion partially offset by other fixed activities
Slide 36: 1H08 home Poland
1HO8 home Poland broadband value market share leadership at 50% in H1 evolution of TP fixed lines in millions Wholesale MTP retail lines 2Q07 3Q07 4Q07 1Q08 2Q08 insight fixed line evolution is mainly driven by fixed to mobile substitution impacted in Q2 by new provisioning system stabilisation peri
Slide 37: Poland: priorities and action plan for 2H08
Poland: priorities and action plan for 2HO8 level = revenue guidance revised from -1% to flat = continue with cost reduction plans and asset optimisation programs « extend the usage of the Orange brand » launch new content services personal home » push sales in data services (including laptops & iPh
Slide 38: 1H08 personal ROW
1H08 personal ROW sustained growth in more penetrated markets revenues: +8.3' in millions of euros = strong H1 performance = growth driven mainly by Egypt, 3,338 3,617 Dominican Republic, Senegal, Ivory Coast and Romania * progressive maturing of other 4HO7 CB 1HOs European countries * excluding reg
Slide 39: 1H08 personal ROW
1H08 personal ROW overall customer base up to 49 million, 43% of group base in millions Moldova Switzerland Dominicana Slovakia Belgium+Lux Romania Africa Middle East 13.2 14.0 insight Africa: significant continued growth mainly coming from Madagascar, Mali & the Ivory Coast, despite difficult globa
Slide 40: 1H08 home ROW
1HO08 home ROW revenues: +2.2% yoy broadband customer base in thousands (+65%) in millions of euros Mauritius |- 6 Wory Coast ~ 28 Senegal Jordan 156 total 1HO7 UK Spain Senegal Ivory Others 1HO8 cB Coast = +5.8% yoy revenue growth in Middle East & Africa on a comparable basis = growth in broadband
Slide 41: Focus on new operations
focus on new operations = 398 k customers at the end of H1 and 23% market share after only 8 months » successful launch of GSM network ‘on the 30" of June recent sign-up of customer number 100,000 recent launch of 5! operator + financial integration in consolidated group accounts expected = need to
Slide 42: RoW: priorities and action plan for 2H08
RoW: priorities and action plan for 2HO8 regional level develop home activities with specific organisation and more integrated distribution channels work on customer satisfaction in order to reduce churn (especially in mature markets) and gain new clients (especially in emerging markets) develop gro
Slide 43: 1H08 enterprise
1H08 enterprise Q1 growth trend confirmed in Q2 over all our portfolio in millions of euros +45 3,840 3,731 +73 | in 1HO7 1H07 CB " Business ' Advanced ' Extended ' others " 1H08 Network Business Business Legacy Network Services trong resilience of Business Network Legacy in France helped by additio
Slide 44: 1H08 enterprise: priorities and action plan for 2H08
1H08 enterprise: priorities and action plan for 2HO8 overall « increase our business while preserving our level of profitability, through a strong management of operations: develop network related services and continue to improve margin of services (real-time business) further streamline costs base
Slide 45: Outlook
outlook Keirance telecom
Slide 46: 2008 outlook
2008 outlook Group FY08 revenue trend should remain above average market growth in spite of expected market growth slowdown in some countries 2007 2010e source: France Telecom Investor Day. Dec. 07 main 2" half business trends France: resilience of activities in a lower growth context UK: performanc
Slide 47: 2008 outlook: GOM stabilization
2008 outlook guidance on GOM stabilization is unchanged evolution of GOM rate GOM rate stability for FY 2008 vs 2007 CB* «= free hotline regulation impact (Chatel law**) for both retail and enterprise activities in France 37.3% keep room of manoeuver in commercial costs to face increasing competitio
Slide 48: Full year 2008 guidance is confirmed
full year 2008 guidance is confirmed GOM rate = stability CAPEX to sales = around 13% organic cash flow = higher than € 7.8 bn
Slide 49: Dividend policy unchanged
dividend policy unchanged the Board has decided to distribute an ordinary interim dividend of €0.6 per share while keeping in the medium term a net debt to GOM ratio below 2 under current market conditions «possibility for the Board to distribute above 45% of organic cash flow vs. 40-45% before > ch
Slide 50: Appendices
appendices Keirance telecom
Slide 51: Glossary (1)
glossary “) Per User) AUPU (Average Usage Per User) CAPEX (CAPital EXpernditu C.B mparable ) Churn Rate GOM Gross Operating Margin + sum of France Telecom ADSL access on the retail market (excluding monoplay usage without high-speed Intemet access), the unbundling and ADSL wholesale offers sold to t
Slide 52: Glossary (2)
glossary @) Net Financial debt Number Mature markets Growing markets SACs Subscriber Acquisition Costs SRC Subscriber, Retention Costs Commercial costs IT&N costs + gross financial debt (converted at the year end closing rate), less ()) derivative instruments Gartied in assets for trading, cash flow
Slide 53: 1H07 from historical to comparable basis results
appendix 1 1H07 from historical to comparable basis results in millions of euros revenues EUR GBP PLN other GOM % of rev capex % of rev historical in local ‘currency 18,050 2,152 8,881 data weight. avg rate H107 1,00000 1, 48232 0,26021 in MEUR 25,913 18,050 3,190 2,311 2,362 9,416 36.3% 2,967 11,4%
Slide 54: 3Q07 historical basis results
appendix 2 3Q07 historical basis results — indication of perimeter impact in millions of euros revenues EUR GBP PLN other GOM % of rev capex % of rev historical in local ‘currency 9,347 1,125 4,603 data weight. avg rate Q307 1,00000 1,49667 0,26372 in MEUR 13,508 9,347 1,684 1,214 1,262 5,094 37.7%
Slide 55: 4Q07 historical basis results
55 appendix 3 4Q07 historical basis results — indication of perimeter impact in millions of euros revenues EUR GBP PLN other GOM % of rev capex % of rev historical in local ‘currency 9,293 1,213 4,606 data weight. avg rate Q407 1,00000 1,39218 0,27358 * Kenya acquisition not taken into account in ME
Slide 56: 2007 historical basis results
56 appendix 4 2007 historical basis results — indication of perimeter impact in millions of euros revenues EUR GBP PLN other GOM % of rev capex % of rev historical in local ‘currency 36,690 4,490 18,091 data weight. avg rate Q407 1,00000 1,46160 0,26450 in MEUR 52,959 36,690 6,563 4,785 4,921 19,116
Slide 57: Enterprise positioning on emerging markets
appendix 5 enterprise positioning on emerging markets: a key asset to build growth « the best footprint for enterprise with the extension of Ethernet Links international coverage: 21 countries on 4 continents (incl. India and Morocco) presence in sizeable growth potential areas with high end value s
Slide 58: Balance sheet (1)
appendix 6 - balance sheet (1) (in millions of euros) Note ASSETS goodwill, net other Intangible assets, net property, plant and equipment, net interests in associates assets available for sale non-current loans and receivables 5 non-current financial assets at fair value through profit or loss. 5 n
Slide 59: Balance sheet (2)
appendix 7 - balance sheet (2) (in millions of euros) EQUITY AND LIABILITIES share capital additional paid-in capital retained earnings translation adjustment equity attributable to equity holders of France Telecom SA minority interests total equity non-current trade payables non-current financial l
Slide 60: Cash-flow account (1)
appendix 8 - cash-flow account (1) (in millions of euros) OPERATING ACTIVITIES consolidated net income after tax adjustments to reconcile net income/(loss) to funds generated from operations depreciation and amortization impairment of non-current assets gain on disposals of assets change in other pr
Slide 61: Cash-flow account (2)
appendix 9 - cash-flow account (2) (in millions of euros) INVESTING ACTIVITIES purchases/sales of property, plant and equipment and intangible assets purchases of property, plant and equipment and intangible assets increase/(decrease) in amounts due to fixed asset suppliers proceeds from sales of pr
Slide 62: Cash-flow account (3)
appendix 10 - cash-flow account (3) (in millions of euros) FINANCING ACTIVITIES issuances bonds convertible, exchangeable or redeemable into shares long-term debt redemptions and repayments bonds convertible, exchangeable or redeemable into shares long-term debt equity portion of hybrid debt increas
Slide 63: Profit & loss account
appendix 11- profit & loss account (in millions of euros) Half year Half year ended ended Note June 30 June 30, 2008 2007 revenues 2 26,304 25,913 external purchases 2 (11,263) (11,030) other operating income 2 202 236 other operating expense 2 (1,167) (1,276) labour expenses: - wages and employee b
Slide 64: 1H08 personal ROW
appendix 12 1HO08 personal ROW WO revenues var “THO subscribers county (Me _—_yoy cb 005) BelgiumsLue 77 24% 34 7.0% Swntzeland 53-03% 187 60% Roman 8 86% too 177% Slovakia 38 35% 2807 54% Moldova 58 452% jae 273% Dominicana 208 222% 228 28.9% Jordan Botswana 3 4% om 318% Cameroon 14 apm 187 122% Ce
Slide 65: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANCE TELECOM Date: July 31, 2008 By: /S/ Stéphane Pallez Name: Stéphane Pallez Title: Group Deputy Chi