TELECOMS & MEDIA INDUSTRY

IN FRANCE

DIDIER QUILLOT CEO COYOTE SYSTEM

Former CEO ORANGE

Former CEO LAGARDERE ACTIVE

DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

1. How to destroy €6 billion of

value in the French telecoms

market?

2 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

MAIN

PLAYERS

Activity MOBILE

ISP

MOBILE

ISP

MOBILE

ISP

ISP

Promise

Proximity to its

clients,

innovation and

excellence.

Excellence and

« bespoke »

service.

Best value for

money with

innovative offers!

Simplicity,

generosity,

technological

innovation for its

community

2011 Results

In France (*)

Sales in France in

2011 => 22,5bn€

EBITDA margin in

France in 2011 =>

38%

Sales in France in

2011 => 12,1bn€

EBITDA margin in

France in 2011 =>

19%

Sales in France in

2011 => 5,2bn€

EBITDA margin in

France in 2011 =>

21%

Sales in France in

2011 => 2,1bn€

EBITDA margin in

France in 2011 =>

39%

Before January 2012 :

A robust market with strong margins !

(*) Sources: 2011 accounts (Orange, Bouygues, SFR & Illiad)

3 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

January 2012 : Free launches Free Mobile starts a revolution in

the French market !

Aggressive offers => unlimited calls and no minimum contract period.

Aggressive prices => 2€ and less than 20€.

Effective positioning => simplicity and defence of the consumer

4 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

Number of new clients in

2012 (just 1 year) !

Free blows apart the existing French telecoms model !

Price : 2 offers at ultra-low price with

no minimum contract period! « Fulll unlimited » for 19,99 € (15,99 if Free is ISP)

« Starting offer » for 2€/ month for 1h of calls + 60 texts (free if Free is IAP)

Simple and easy to understand, no MCP

Product : the handset is sold

separatly!

Complete transparence in price structure

Redefiniition of the subsidy model

Place : distribution « without stores »!

Internet : main source of new clients

Very few stores, still in development.

Promotion : let the « hype » do the

talking for you!

Launched without an official media campaign

Media and social « hype » organised and controlled by Management

Organisation of TTM

The « 4Ps » of mobile telephony!

(*) Sources:

Iliad accounts 2012.

5

5.2 Million

Around € 6 bn of value will be lost in the French Telecoms market !

With Free Mobile at €20 + €2 offer

With Free Mobile at €30

Without Free

Sales estimates in France for mobile and fixed-line telephony for retail market [€bn]*

Initial estimates

Does not include Pro and B2B market impact

* Source :Roland Berger Strategy Consultants, estimates with 30% EBITDA.

SALES = -18,1bn€ & EBITDA = -5,5bn€

6 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

The competitors fight back and reorganise the market !

1- OFFERS : Launch of low cost offers and careful attention to product mix to retain value!

2- WARGAME 4G: Use Data to maximise value!

3- HANDSETS: Control mix of Android Vs iPhone to limit the handset subsidy.

4- RETAIL AND CALL CENTERS: Sell stores to multi-brand and move call centers offshore.

5- HR: Lobbying to underline negative social and employment consequences.

7 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

1- Network sharing will become a necessity (optical fiber & 4G).

2- Using 4G to rebuild the offer’s value by the data.

3- Category management between low cost and top-of-range offer.

4- Organisations simplification and social costs reduction.

DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013 8

Main consequences for the French market in the future :

2. Characteristics of telecoms vs.

media markets in France.

9 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

Characteristics of the French TELECOMS & MEDIA market :

Highly consolidated (few players)

Highly capital intensive (large CAPEX to deploy

networks)

Highly profitable

Large marketing budgets ++

Importance of TTM

Importance of retail

Importance of quality of service => network

Importance of client relationship (CALL CENTER

& CRM)

HR : culture of the engineers

10 DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013

Highly fragmented market

Low CAPEX requirement

Low margins

Digital economy

Importance of brands

Importance of content and talent management

TTM naturally very slow but accelerating

through effects of internet and social networks

Importance of Click and mortar and print and

mortar

HR: highly undisciplined

Vs

DIDIER QUILLOT CEO COYOTE SYSTEM

Former CEO ORANGE France

Former CEO LAGARDERE ACTIVE

THANK YOU!

DIDIER QUILLOT - TELECOM & MEDIA INDUSTRY IN FRANCE - 04/24/2013