Iliad IPO Execution Overview

Who is Iliad ?

A story of Growth and Profitability

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Leading independent ISP/Telecom group in France

3 complementary sectors, 1 network

Focus on residential customers

Internet Other activities

100% 100%100%

Telephony

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Strengthening of Free’s Leadership Position

Free: 2nd largest broadband ISP Best value for money offer 908,000 ADSL subs as of Sep. 30, 2004

• + 140,000 new subscribers in 3Q 2004

20% of ADSL net adds in 2004

# 1 operator in local loop unbundling Continuous increase of unbundled users

ratio

355,000 unbundled users as of June 30, 2004

17%

35%48%

Wanadoo

FREE

Other

ADSL Market Shares in France

Source : France Télécom 30/09/2004

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At the forefront of technological innovation

“Triple-play” Freebox DSLAM and modem developed in-house

Higher download higher bandwidth (up to 15 Mbs download)

Voice over DSL (August 2003)• #1 VoDSL operator on national scale

TV over ADSL (December 2003)• Content Agreements

• Over 200,000 regular viewers

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A demonstrated recordof profitable growth

Revenues CAGR 90% from 2001-2003

Net income positive since 2001

Operating costs and capex under constant review

No debt

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Why an IPO in 2004?

Iliad was a privately owned company since 1991

Raise capital for ADSL and network extension at minimum dilution

Institutionalize Iliad in the French telecommunications landscape

Provide exit to Goldman Sachs and value to managers

IPO rationale has to be simple / easy to explain

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Key Steps of the IPO Process

DecemberSeptemberJulyAprilMarch January

2003 2004

Investment banks beauty contest

Presentations of Iliad to investment banks

First half 2003 results audit

Kick off meeting

AMF VisaDecember 15, 2003

First day of trading January 30, 2004

Pricing January 29, 2004

RoadshowJanuary 21, 2004

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Investment Banking Presentations (March 2003)

Introduce Iliad to investment banking community (8 banks) to

Provide bankers with extensive documentation : Non disclosure agreement 2001 and 2002 consolidated accounts Powerpoint presentation of the Company Press review NO business plan at this stage

Allow for further meetings / Q&A sessions

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The Pitch (April 2003)

Key topics to be discussed for Iliad pitch:

Bank team Equity story / investor concerns Valuation methodology Timing Syndicate structure Fees Analyst coverage Roadshow Lock-up period

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Focus on Equity Story and Valuation Methods

Fees ranging from 3.75% to 5.00%

Investment Bank Equity Story Valuation

Société Générale 1. Integrated Telco2. Strong Fundamentals3. Network Ownership4. Growth sector5. Management

Multiples € 530 mil. to € 850 mil.

Cazenove 1. Profitable growth2. Only one investing in

Unbundling3. Organic growth4. Cash cow from dial up5. Management

Sum of Parts€ 450 mil. to € 550 mil.

Credit Agricole 1. Iliad is a challenger2. Network ownership3. Innovation4. Marketing powerhouse

DCF € 450 mil.

Second beauty contest amongst 3 out of 8 banks :

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The Winning Pitch

Société Générale designed that simple chart that perfectly summarized our transioning business model :

This page gave SG the lead position in the beauty contest

MARGE ACTUELLE+27.5%

Phase 1 : stratégie de gainde pdm = chute des marges

Phase 2 : Poursuite de lastratégie de gain de pdm + début du dégroupage =ralentissement de la chute des marges

Phase 3 : Maintien de pdm + mise en oeuvre du dégroupage =hausse des marges

Phase 4 : Maintien de pdm + accélération du dégroupage= hausse des marges

IPO

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Other Parties’ Selection (June 2003)

Issuer’s counsel

Has to sign off on document (Prospectus)

Has to render opinion

Has to enjoy working all night

Has to be cheap : can cost up to € 1.0 million

Communications agency

Know-how

Roadshow organisation

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Kick-off Meeting (September 2003)

IPO scheduled for April 2004

4 main processes have to run quasi-simultaneously : Management due diligence Financials / business plan IPO Structure Equity Story

Leading to the drafting of the prospectus

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Timing is Everything : Grasping the Opportunity…

Accelerate timetable to be the first IPO in France for 2 years and first Telco / ISP IPO in Europe for 3 years

SG lukewarm about acceleration :

Tight documentation schedule

IPO based on half year 2003 and 3Q2003 accounts rather than full year 2003

Analyst research over the christmas season

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Grasping the Opportunity…6

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rech. Warm-up RL

Vacances

Publication de lanote d'opération

Publication desnotes d'analystes

Travaux de préparation en amont 4 semaines d'examen par la COB

Offre de marché

4 s : rédactionrecherche

Disponibilité deT3 2003

Dépôt à la COBdu doc. de base

Publication du document de base

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The Prospectus

A long and iterative process :

Always drive the process to make sure the messages are clear and that it is in « plain english »

Pay attention to risk factors. Investors actually read it !!

1. Management due diligence (questions see appendix)

2. First draft by the issuer’s counsel

3. Subsequent drafts with investment bankers, issuer’s counsel and underwriter’s counsel

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Dealing with the Market Authorities (AMF)

Autorité des Marchés Financiers (AMF) equivalent to US SEC

Listing is conditional to AMF approval (Visa)

Draft prospectus submitted on Friday Nov 14

Additional documents submitted concomittantly

100 questions from AMF to be answered promptly in order to highlight company’s transparency and good understanding of accounting and business issues

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Valuing Iliad : Company’s Perspective

Have an opinion on how you value your own company ?

Understanding management’s benchmark and comparables environment

French mid-cap companies Focus on Freenet and eBiscom

Understanding management / owner’s attitude towards dilution

Define the use of proceeds !

Valuation was key as Iliad was reopening the French and European Technology market

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Valuing Iliad : Market Perspective

Revenues EBITDA

Restatements

Given the differences in accounting methodsregarding subscriber acquisition costs, we have restated Iliad’s EBITDA by substracting from Iliad’s EBITDA the costs related to ADSL initial access (« FAS »)

We have not restated DSLAMs and modemsaccounting methods as these assets remain in Iliad’s possession

EBITDA restatement

Internet revenues (€mn) Telephony revenues (€mn)

Other revenues (€mn) ADSL subs ('000)

22,0%

20,6%

16,9%

3055

85

17

20

24

2003 2004 2005

199280 320

76

82 90

2003 2004 2005

1000

751

447

2004e 2005e

Iliad EBITDA 78 110Iliad ISP EBITDA 55 85

Capex linked to FAS 26 20

Iliad EBITDA restated 52 90Iliad ISP EBITDA restated 29 65

295

378422

50

78

110

EBITDA from Internet (€mn) EBITDA from Telephony (€mn)

Others (€mn) Iliad EBITDA margin

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Valuing Iliad : Market Perspective

Two approaches

Comparablecompanies

Relevant multiples

Global valuation and SOTP valuation

Global valuation• European ISPs focused on residential customers (excl . Portals and US

ISPs)• First Tier with European leaders T-Online and Wanadoo ISP (20-30%

discount for leadership premium) • Second Tier with e.Biscom Freenet, TIM, Tiscali and United Internet• Wanadoo ISP multiples obtained by substracting Directory EV• SOTP• Same ISPs• Fixed-Line operators: Jazztel, Kingston and Tele2

Even if EV/EBITA could be a better proxy, we retained EV/Sales and EV/EBITDA since these are:

• The multiples brokers focus on• More adapted to high-growth business• Consistent with what is used for Telecom stocks at

large

Relevant period • 2003 to 2005 with a stronger focus on 2004 and 2005

IPO discount All valuation data exclude any IPO discount, which will be based on market conditions at the time of offering

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Valuing Iliad : Market Perspective

Market Cap M€

Ent. Value

M€

EV/Sales - EV/EBITDA

03E 04E 05E 03E 04E 05E Tier 1T-Online 13,291 9,324 4.75x 4.09x 3.56x 27.6x 20.9x 15.4xWanadoo ISP (1)

6,577 4,713 2.74x 2.24x 1.91x Ns 33.5x 19.4xWanadoo (2)

9,674 7,810 2.94x 2.53x 2.25x 27.3x 16.9x 12.6x

Average (with a 20% discount) 3.00x 2.53x 2.19x 22.1x 21.8x 13.9x

Average (with a 30% discount) 2.62x 2.22x 1.91x 19.3x 19.0x 12.2x Tier 2

Telecom Italia Media 1,191 1,168 1.93x 1.67x 1.51x Ns 20.1x 12.8x Tiscali 2,151 2,327 2.58x 2.16x 1.93x 33.4x 16.8x 12.2x e.Biscom 2,201 2,559 4.99x 3.91x 3.09x 27.3x 13.5x 8.3x Freenet 926 835 2.13x 1.41x 1.24x 11.8x 8.4x 6.2x

United Internet 1,130 1,113 2.72x 2.34x 2.04x 13.8x 11.4x 9.9x

Average (extrema excluded) 2.48x 2.06x 1.83x 20.6x 13.9x 10.1x

Retained average 2.64x 2.21x 1.94x 20.6x 17.2x 11.6x

Market capitalisation 1 month average, as of 27-Nov-03Source : SG, Brokers' consensus, Bloomberg, Datastream, Fininfo

(1) based on an Enterprise value of the Directory business of 3,098 M€, see appendices for detailed calculation(2) For information purpose only

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Valuing Iliad : Market Perspective

Source: SG Cowen, Brokers

840 1,040

600 700 800 900 1,000 1,100 1,200 1,300 1,400

Range

EV/EBITDA 05

EV/EBITDA 05

EV/EBITDA 04 restated

EV/EBITDA 04

EV/EBITDA 03

Linear regression

EV/Sales 05

EV/Sales 04

EV/Sales 03

(1)

840

820

840

890

Retained averages

1,040

1,340

1,030

1,270

780

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Managing the Press

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Pre-Marketing Period

A concept created by Goldman Sachs for large privatisations

Designed to get management a clear understanding of investors’ issues and to give the underwriter a clear idea on price

Pros

Free’s market share

Sound strategy with unbundling

No debt

Network ownership

Cost structure

Management

Cons :

Why an IPO

Size of deal

Very competitive environment

Accounting treatment

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IPO Terms

Offering Structure : 6.000.000 shares

Price Range : € 14.00 to 16.30

Greenshoe :

Lock up :

Exchange :

Global Coordinator :

Joint Lead Manager :

Syndicate :

5.000.000 capital increase 1.000.000 from Goldman Sachs

€ 667 mil. To € 776 mil. Pre-money

828.000 new shares

6 months

Euronext Premier Marché

Société Générale

Cazenove

Oddo

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A Full Roadshow Schedule

One on oneABN Amro AM

UK - Scotland

One on onesHenderson InvestorsHermes

T. Rowe Price InternationalJP Morgan FlemingGLG Partners

Capital InternationalSchroders IMGartmore IMMarshall WaceThreadneedleFidelityLazard AMScottish Widows

Group meetingsADELPHI CAPITAL LIMITED LEGG MASON

ANCHORAGE CAPITAL LONDON & MERCANTILE

BARINGS LONGVIEW PARTNERS

BLENHAM INVESTMENT MARBLE BAR AM

BRADSHAW AM MERRILL LYNCH

BUTTONWOOD MFCCAXTON MICOUD

CAZENOVE FUND MANAGEMENTMOORE CAPITAL

CFA MORGAN STANLEYCLAYVARD MORLEY

DALTON STRATEGIC PARTNERSMPC

DB ADVISORS OCH-ZIFF CAPITAL

ECCLESIASTICAL INSURANCE ODEYEGERTON CAPITAL OMAM

F&C PARK PLACE

FEROX POLAR CAPITAL

FIRST STATE RATHBONE UNIT TRUST MANAGEMENT

GAM (UK) LIMITED REARBOURNE TECHNOLOGY

GIBBS CAPITAL SAVOY INVEST

GOLDMAN SACHS AM SGAM

HBK SPS

HIGHBRIDGE CM THEODORE GILISSEN

HSBC TURA CAPITAL

IW WEST MORELAND

J O HAMBRO CM JUPITER

JM FINN KIO

One on onesNatexis AMSGAMAXA IMCDC FPAAGF AM

BNP Paribas AMCIC AM

SogeposteCrédit Agricole AM - CLAM

CDC Ixis AM

Group meetingsGENERALI FINANCES FEDERIS GESTION D'ACTIFS

BFT FIDELITY INVESTMENTS

BGPI FINANCES SA

LCF ROTHSCHILD AM FINANCIERE ARBEVEL

LAZARD FRERES GESTION FORTIS BANK

FORTIS INVESTMENTS GEFIP

GROUPAMA AM HR GESTION

MMA FINANCE HSBC AM

CPR AM HSBC PRIVATE BANK

ACBERTROS ICGESTION

ACM-SOCAPI ING PRIVATE BANKING

AVIVA GESTION D'ACTIFS LAZARD FRERES BANQUEAXA MUTUALITE FRANCAISE

BANQUE D'ORSAY NEXTRADIO

BANQUE PRIVEE SAINT DOMINIQUE NSMDBNP PARIBAS OBC GESTIONBOISSY GESTION OFIVALMO

BOUSSARD & GAVAUDAN GESTIONSANPAOLO AMCAZENOVE SANPAOLO AMCCR ACTIONS SGAM

CDC IXIS AM SMA GESTION

CIE FINANCIERE ED. DE ROTHSCHILDTRUSTEAM FINANCE

COGEFI CLAMCOPERNIC SA - IONIS EQUIGEST

CPR AM ETOILE GESTION

One on onesADAMUnion InvestDEAMDEKACominvestMetzler

Group meeting

ACA EQUITY PARTNERS

FRANKFURT TRUSTAMG GENERALIINTERNATIONAL CAPITAL MARKETSBADEN WURTTENBERGISCHEMERCURIUS CMCAZENOVEMETZLER INVEST

DEUTSCHE POSTBANK VALUE MANAGEMENT

DRESDNER BANK AG WEISSENHORN UND PARTNER

One on onesJulius Baer AMCredit Suisse AM

Group meetings

Paris UK - Scotland

Frankfurt

Amsterdam

Zurich

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Key Success Factors

Lots of upside still ahead for new shareholders Doubling of ADSL subscribers over next 24 months TV and telephone offer

The IPO timing was perfectly in synch with industrial developement Over 500.000 ADSL subs Clear success of Freebox Margin Rebound

EB

ITD

A m

arg

in

TimeT4

2002T1

2003T2

2003T3

2003T4

2003

Q4 2002 / Q1 2003

Signing up userson Option 5

8,770

45,850

87,230

163,000

Q3 2003Faster

development of unbundling

Q2 2003Signing up users

on Option 5+

Start of unbundling

Q4 2003 / 2004Acceleration in

unbundling+

Signing up users on Option 1 (directly)

Number of unbundled users

IPO

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Life After the IPO…

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29-janv-04

29-févr-0

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29-mars-04

29-avr-04

29-mai-0

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29-juin-04

29-juil-0

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29-août-04

29-sept-04

29-oct-04

Base 100 au 29-01-04

ILIAD FRANCE TELECOM E.BISCOM FREENET SBF 120