no. 16 / april 2010

Dear shareholder, we’re delighted to present this

fi rst issue of your newsletter in an all-new format. Inside

are a message from the Chairman, Didier Lombard, and

an interview with CEO Stéphane Richard, followed by

an analysis of 2009 fi nancial results and a presentation

of the Group’s new governance. Also, upcoming share-

holder events, share data and investor relations news.

Plus of course your Club rendezvous.

plusa special colour supplement featuring Group news and innovations from around the world.

2

message from the Chairman

2009 was marked by a seriously deteriorated economic climate, an increase in regulatory weight and the malaise felt within our company in France, a situation that we have begun to address with tangible measures. The Group was able to meet the challenges of this diffi cult environment and I want to thank all our employees for continuing to apply their full energies. Their efforts enabled our company to sustain its dynamic business performance as we expanded our customer franchise by 5.7% and achieved satisfactory fi nancial results.In particular we contained the erosion of our revenues and EBIDTA. By generating organic cash fl ow in line with our commitments we are in a position to both continue to reduce our debt and propose a dividend of 1.40 euros per share, following payment of a comparable dividend last year. Although the performance of our share in 2009 might appear disappointing, the aggregate yield of the France Telecom share over the past three years was better than the CAC 40 and equivalent to that of the Stoxx Telecom index.France Telecom’s transformation during the past fi ve years has given us the assets we need to move confi dently forward, as shown by our commercial successes and our fi nancial results. A new chapter is now beginning for the Group under a new leadership team headed by Stéphane Richard. I have no doubt that this team will meet the human and business challenges ahead and take Orange further along the path to success as a robust multinational enterprise capable of delivering long-term performance.

Didier Lombard,Chairman

interview Stéphane RichardChief Executive Offi cer

What are your initial impressions of the Group that you joined in September 2009?I arrived amidst a particularly diffi cult climate that enabled me to not only gauge the depth of the malaise within the com-pany, but at the same the resilience that gives France Telecom such strength. I was of course struck by the doubts expressed by many of our employees in France, but equally by their strong attachment to their company and, more broadly, by the exceptional talents and expertise of the Group’s teams. This widespread mobilisation—which is all the more remarkable given the context of the economic crisis and the increased regulatory pressures we faced in 2009—also explains why we delivered such good performance last year in terms of business volumes and fi nancial results.I found it absolutely essential to get out and talk to employees to better understand the seeming disconnect between what people felt and the performance of the company. I wanted in particular to understand how we can focus priority on balanc-ing these two pillars that underpin the continued success of France Telecom. A company that moves forward on both legs is a company whose growth and sustainable performance refl ect a feeling of fulfi lment among its employees, who are the primary source of its value.

How can the expectations of the company’s employees and business performance be reconciled in France?Regaining confi dence and restoring a certain calm will take time. Listening is the fi rst and most essential priority and this is what we have done, in particular through a profound diagnos-tic based on a survey of all employees. At the same time some 2,500 meetings have been organised to give people throughout the company a chance to be heard. Beginning last autumn we launched various initiatives with the heads of operations focused on our management model and ways to improve our information systems, which need to be simplifi ed to better meet the needs of our customers. We’re working with employee representatives to rebuild our “social contract”. This process has already led to concrete measures, including a strengthening of human resources, improved working con-ditions and new recruitment to anticipate the significant number of people who will be retiring in the next several years. We signed a fi rst agreement on part-time work for seniors, as well as agreements on mobility and work-life balance.

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This new “social contract”, which is still being developed, will in particular give local teams greater room for manoeuvre and enhance employee-management dialogue at every level of the company. People need to feel good about their jobs and their work at the company, otherwise there’s little point in defi n-ing performance plans! The way to get people to give their best effort is not by dictating constraints, but by nurturing a real desire to work together and by providing the resources they need to better satisfy the expectations of our customers. This forward-facing management approach must enable us to regain our status as a preferred employer in order to retain and attract the talents that are indispensable to the Group’s performance in the years ahead. I personally view this as a real investment much more than an expense.

Concretely, what are some of the measures you plan to introduce in the coming months?Let me first reiterate the strengths that contributed to the Group’s good results. We have a large customer franchise that we have been able to expand year after year in mobile and in broadband Internet. We have a capacity for innovation that keeps us on the cusp of the network technologies that constitute the core of our business and drives a steady stream of new products and services. Another important strength is our expanding international footprint, which now spans 32 countries in the home communication market. Last but not least, we continue to deliver solid fi nancial performance. We have steadily reduced our debt for the past fi ve years and we have generated cash flow to ensure funding of the invest-ments needed to prepare for the future and enabling us to pay attractive dividends to our shareholders. Thanks to these assets, which Didier Lombard was instrumental in building up, we have been able to initiate the current process of defi ning a new Group project that spans the entire Group and includes

employee fulfi lment. This project, shaped in collaboration with our operational teams, will defi ne the Group’s medium term objectives. Each entity will then be able to adopt this plan and cascade it across its specific business area. This initiative addresses the fundamental challenges the Group faces, including our development in very-high-speed networks, expanding our positions in emerging markets, renewing our offers and enhancing their quality in order to better meet the expectations of our customers.

What is the outlook for 2010?We obviously have a very full agenda and 2010 will be an intensely busy year. We continue to face uncertainties from external factors such as regulatory decisions and the strength of the economic recovery, which means we must be extremely attentive and poised to respond swiftly. We will be closely tracking developments in our industry, especially the explosive growth of mobile Internet use and the development of services linked to the deployment of fi bre-optic networks. On the fi nan-cial side, we are confi rming our organic cash fl ow objectives for 2010 in order to maintain our room for manoeuvre, to con-tinue to reduce our debt and to propose attractive remunera-tion for our shareholders. As I said, 2010 will be a pivotal year for the Group as we deploy a forward-facing project that combines operational performance and social performance. The new management team will work with me to bring this initiative to fruition by this summer and then oversee its effi cient deployment. Together we are totally committed to writing this new chapter and driv-ing our future growth.

www.orange.com/fi nance▼

4

2009 results

fi nancial indicators

revenues (1)

EBITDA (1) (2)

– as % of revenues

Capital Expenditures (CAPEX) (1)

– as % of revenues

Organic cash fl ow(historical)

in millions of euros (comparable basis)

2008

46,800

16,83236.0%

6,28313.4 %

8,016

change

– 1.8%

– 3.0%–

– 15.6%–

+ 4.2%

45,944

16,32735.5%

5,30411.5%

8,350

2009

analysis

Revenues showed solid resil-

ience despite the impact of several

factors. The impact of new regulatory

measures, the economic crisis and

unfavourable exchange rates all held

back organic growth. Excluding the

impact of regulatory measures, reve-

nues were stable, edging up 0.1%.

Growth came mainly from emerging

markets, notably Africa and the Middle

East. In Europe, France showed resil-

ience throughout the year, due in par-

ticular to the performance of the

mobile business. Other countries in

Western Europe generally performed

well despite a diffi cult context in the

United Kingdom and Spain. The situ-

ation was much more difficult in

Eastern Europe, however, especially

Romania. Orange Business Services

maintained its market share despite

the negative effects of the economic

crisis, as customers exercised tight

control over their spending.

The decline in EBITDA (1) (2) was

limited to 0.5 points thanks to effi -

cient management of operating

expenses. This helped offset the triple

impact of regulatory measures, higher

spending for new activities such as

content, and the increase in intercon-

nection costs. In this business envi-

ronment capital expenditures

were concentrated mainly on 3G cov-

erage, building out networks for our

new subsidiaries, the network core,

submarine cables and quality of serv-

ice. CAPEX decreased signifi cantly for

2G coverage and for fi bre deployment

in France in 2009. The objective of

8.35 billion euros in organic

cash flow in 2009 was achieved.

The Group consolidated its solid

fi nancial foundations and established

margins of manoeuvre to continue to

reduce its debt while maintaining a

dynamic shareholder remuneration

policy. Cash fl ow generated in 2009

also enabled the acquisition of minor-

ity interests in our Spanish subsidiary.

The net debt/EBITDA ratio now

stands at 1.9, one of the lowest ratios

among European telecommunications

operators.

(1) Excluding activities in the United Kingdom where a merger plan has been announced.

(2) EBITDA, which corresponds to operating margin before amortisation, is adjusted to exclude non-recurring items.

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governance

The functions of chairman and chief

executive offi cer have been separated

since 1 March 2010. In his capacity

as Chairman, Didier Lombard ensures

that corporate bodies respect best

governance practices, contributes to

the definition of technology strategy

and may represent the Group in dis-

cussions with governments, partners

and customers.

As Chief Executive Offi cer, Stéphane

Richard is now in charge of general

management and chairs the execu-

tive committee. He acts on behalf of

the company.

The new executive committee named

in April 2010 functions under the

authority of the CEO.

The new organisation of the executive

committee is focused on three

objectives:

– Implement the new business plan

currently being developed and cas-

cade key priorities at different levels of

the organisation, including strength-

ening of the Human Resources func-

t ion and c rea t ion o f a Qua l i t y

function.

– Simplify the organisation and in par-

ticular facilitate interaction between

the Group’s operations in different

countries and corporate functions

through the creation of an International

funct ion and integrat ion of the

Marketing and Innovation functions.

– Trigger fresh impetus by promoting

internal talent and by bringing in out-

side talent recognised for their skill

and experience, including Christine

Albanel, Pierre Louette and Bruno

Mettling.

Complete details on the new Executive Committee are available on www.orange.com

worldTwo major moves

in Europe

In a mature European market where penetration rates already largely exceed 100%, mergers create an attractive growth channel. The Group aims to become No. 1 or No. 2 player in the countries where it operates and initiated two game-changing transactions in 2009 to strengthen its positions.

In the United Kingdom, where Orange was the No. 3 player, an alliance was concluded with the No. 4 player T-Mobile, in order to create a 50/50 joint venture that will become the leading operator in Europe’s largest market. The transaction, which has been approved by European competition authorities, is expected to take effect during the fi rst half of 2010. Local teams will enjoy broad management autonomy. The two shareholders have made a long-term commitment to the venture of at least three years.

In Switzerland, the Group initiated the merger of its subsidiary Orange Switzerland, which is No. 2 in the market, with Sunrise, the No. 3 player, creating the second-largest operator in the market behind the incumbent.

2010 Financial AgendaTuesday 20 april meeting with shareholders in ParisTuesday 4 may meeting with shareholders in BordeauxWednesday 9 june annual General Meeting of ShareholdersThursday 29 july fi rst-half 2010 resultsTuesday 5 october meeting with shareholders in AnnecyThursday 28 october 3rd Quarter resultsThursday 4 november meeting with shareholders in PauThursday 2 december meeting with shareholders in Rennes

6

2009 annual results

the share in 2009share information

Markets: Eurolist A – Euronext; New York Stock Exchange.

ISIN code: FR0000133308.

Stock code: FTE.

Par value: 4 euros.

Included in the following indices: CAC 40, Euronext 100, FTSEurofi rst 100, FTSEurofi rst 80, IT. CAC,

S&P 100, FTSE4GOOD, ASPI Eurozone and Ethibel.

Eligible for deferred settlement service and investment savings accounts.

Number of shares in circulation at 31 December 2009: 2,648,709,774.

dividends (euros per share)

1.40*

2009

1.40

2008

1.30

2007

1.201

20062005

* Proposed to the Annual General Meeting on 9 June 2010.

shareholding structure at 31 December 2009

Public 68.93%Treasury shares 0.08%Employees 4.02%

Government + Erap + FSI 26.97%

stock market performancesince 31 December 2007

Stoxx Telecom

CAC 40

10

15

20

25

30

France Telecom

31 December2009

31 December 2008

31 December 2007

7

shareholder relations

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1.1 million shareholders

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1010 shareholder hotline

• 4,000 calls monthly

• Advisors available to answer questions

on news from the Group and the Club

• Available 9 am to 7 pm

French time, Monday

through Friday.

• Live share price

information

•

•

•

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France Telecom Club

• 200,000 Club members

• Open to all Group customers

who hold at least 5 bearer shares

or one direct registered share.

• Special offers for products

and accessories.

• Access to events and tours.

direct registered

shareholders• 160,000 direct registered France

Telecom shareholders

• Benefi ts: no custody fees, reduced

transaction costs, systematic

notifi cation of shareholder meetings

• direct contact number

(in France): 1010

annual general meeting

1,000 shareholders attended in 2009

live webcast on www.orange.com

next AGM on 9 June 2010

meetings with shareholders• 8 meetings in 2009

across France

• meetings hosted

by senior executives

• complete information

on the Group

CABAIindividual shareholder

committee

13 members, 4 meetings in 2009

review and benchmarking

of best practices

specialist analysis of

investor relations

www.orange.comwebsite

800,000 pages viewed in 2009

in Finance section

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contact us

by mail: BP1010 – 75721 Paris Cedex 15 France by phone: 10 10 or 0 800 05 10 10 toll-free from a France Telecom landline or +33 1 60 95 87 24 from outside France. fax: 0 800 06 10 10 email: conseiller.actionnaire@orange-ftgroup.com

The Shareholder’s letter is published by France Telecom • Société Anonyme with a share capital of 10,594,839,096 euros • RCS Paris 380 129 866 • 6, place d’Alleray – 75505 Paris Cedex 15 — France • Director: Cédric Testut • Editor-in-chief: Marie Albert-Lebrun • Design and production: • Photos and illustrations: France Telecom Photo Library (Médiathèque – Orange Brand Site – Orange Librairie) – Franck Fife/AFP. All rights reserved. Document printed on PEFC certifi ed paper.

rendezvous special offers for Club members

toursnew ! CableshipsIn June 2010 the Club is organizing a tour of its cable-ship facilities at the ports of La Seyne-sur-Mer (in the Var region in Southern France) and Brest (Finistère, Brittany). Visitors will learn all about a lesser-known activity where France Telecom is a world leader: submarine cable systems.

There are specifi c requirements to take part in this tour. Please call 1010 for more information and to register for the draw (1).

new ! Fibre demonstration showroomTo better understand how fi bre changes everything, the Club invites you to discover the wonderful world of very-high-speed access. Technical presentations and practi-cal demonstrations take place at the showroom in the Paris suburb of Levallois-Perret. Several dates are avail-able year-long. Register for the draw from 27 April to 11 May, drawing of ticket winners on Wednesday, 12 May 2010 (1)

.

sportTour de FranceAs a longstanding partner of the world’s most famous bicy-cle race, Orange is giving away invitations to different stages between Rotterdam (Netherlands) and the Champs-Elysées (3-25 July 2010). Register for the draw from 1-9 June, drawing of ticket winners on 10 June 1010 (1).

cultureOpera: Pelléas et Mélisande in ParisExperience Debussy’s famous opera in Paris at the Opéra-Comique. Registration from 25 May to 2 June, drawing of ticket winners on 3 June (1).

Aix-en-Provence Festival, 1-21 JulyMusic lovers come to Aix for exceptional operas and concerts during soft summer evenings. Orange has reserved tickets for Club members. Call 1010 for the complete programme and information. Register from 15-23 June, drawing of ticket winners on 24 June 2010 (1).

Deauville American Film FestivalAmerican stars and hit movies will be featured from 3-12 September 2010. Special passes are available for Club members who sign up for the drawing (1). Call 1010 for the complete programme and information.

new ! Château de VersaillesThis summer, visit the Château de Versailles, the Grand Trianon, Marie-Antoinette’s private domain and the “Grandes Eaux Musicales”, musical and water extravaganza. Sign up to win tickets in the draw. Call 1010 for the complete programme and information.

Reminder: Club members receive a 25% discount for tickets to all Concerts Parisiens (2).

leisureTake the entire family for a magical day at Disneyland Resort® Paris: Club members can win free tickets to both parks in a special draw. Registration until 28 April, 2009, draw (1) on 29 April 2010.

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Telecom, plus upcoming Club events

you don’t want to miss.

It’s fast and easy to sign up at

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jointhe Club!

call 10 10 or 0 800 05 10 10toll-free from a France Telecom landline (9am to 7pm Monday to Friday, French time). Operators are standing by to answer questions about events and sign you up as a Club member.

1) Limited number of tickets available. Winners are selected by random draw. No purchase necessary to participate. Complete rules for these free drawings can be obtained without charge by calling 10 10 from France or +33 1 60 95 87 24 from outside France. A copy of the rules has been registered with the law offi ces of SCP Guérin et Bourgeac, Paris 75015, France.(2) For reservations call +33 1 48 24 16 97 (please have your Club member number ready). Only a limited number of tickets is available. For a complete list of concerts sponsored by the Orange Foundation please call 10 10 (in France).