u WORLD MARKET, BREAKDOWN BY SEGMENT

(billions of euros)

463 68
Wireless Services Other Fixed Telephony Data

553 79

Source: Idate.
ket in value (20 percent), followed by the U.K. (18 percent), France (14 percent) and Italy (13 percent).
In the data services market, Europe is expected to see growth of 10 percent per year in value between now and 2004.

Wireless Leads Growth

Wireless services continue to drive the accelerated transformation of the telecommunications market in the 15 countries of the European Union. In 2000, fixed telephony accounted for only 45 percent of the market. The wireless boom the 19992000 increase was 13 percent will gain fresh impetus in 2001-2002 from the progressive introduction of GPRS and UMTS technologies. Massive take-up of wireless phones one out of every two people in France had one at the end of 2000 makes them a fundamental source of value for voice services, with growing potential for access to Internet services such as information, e-commerce and business applications.

Internet Leverage

The Internet is another powerful lever for service development in Europe. The number of accesses should rise from 41 million in 2000 to 129 million in 2004, when the market will be worth an estimated 26 billion euros (source: IDC). France counted 9 million devices connected to the Internet at the end of 2000. According to forecasts, the total number of devices will triple by 2004, giving France about 27 million Internet users, more than half of them residential customers (source: IDC).
a growing proportion of their transactions on line. In the medium term, this volume could reach 3 to 10 percent of goods purchased, representing a potential of 10 to 45 billion euros in technical services, not including the value of the goods and services sold. The deployment of digital terrestrial TV will spark ongoing expansion in the broadcasting market. At the same time, the pay-TV market (cable and satellite) continues to experience strong growth in Europe (12 billion euros in 1999, up 18 percent over 1998) and in France (2.6 billion euros in 1999), for a projected annual growth rate for 1999-2005 of 12 percent (BIPE).

New Activities

The Internet has ushered in an era of electronic commerce. Consumers and businesses alike will carry out Source: Idate, unless otherwise specified.
REAPING THE BENEFITS OF A FOCUSED STRATEGY
France Telecom is reaping the benefits of a fast-expanding market thanks to a strategic focus on sharpening its leadership in France, leveraging its three key growth drivers wireless, Internet and international business and developing network services. As a European leader and a top-tier global player, France Telecom is pursuing its transition from a phone company to a leading Internet company.

u EBITDA **

u Operating income

33.7 24.6 27.2

8.7 8.9 9.6

10.8 4.5 4.0

3.5 2.3

Consolidated revenues rose by 23.7 percent from 1999 to 2000, compared with a 10.5-percent increase in the preceding year. Excluding changes in scope and exchange rates, annual growth was 8.1 percent.
Revenues from business outside of France were up 149.7 percent over the previous year. International business accounted for 25.8 percent of consolidated revenues, up from 12.8 percent in 1999.
EBITDA rose 12.4 percent from 1999 to 2000.
Operating income increased by 8.2 percent compared to the previous year.
u Income before goodwill and minority interests

u Net income

u Net earnings per share

(in euros)

4.7 2.8 2.7 2.2 2.3

3.7 2.7 2.3

Income before goodwill and minority interests grew by 73.7 percent from 1999 to 2000, reflecting exceptional gains made on the disposal of nonstrategic assets.
Consolidated net income increased by 32.2 percent over 1999. This increase was 20.3 percent between 1998 and 1999.
Net earnings per share increased 27.4 percent from 1999 to 2000.
* See pages 60 to 64 for financial statements. ** Earnings before interest, taxes, depreciation and amortization
u Breakdown of revenues by business segment

(in millions of euros)

2,550 4,5,310 8,653 1,054 19,153 18,657
Orange Wanadoo Fixed-line, Voice and Data Services in France Fixed-line, Voice and Data Services outside France
* Segments on pro forma basis

Operating Highlights

s Wireless Communications (thousands of customers) France Europe (outside France) Rest of the world s Fixed-line Telephony (thousands of customers) France Europe (outside France) Rest of the world s Internet Access (thousands of customers) France Europe (outside France) Rest of the world s Cable networks (thousands of customers) France Europe (outside France)

10,051 2,752 1,253

14,311 15,832 2,927

42% 475% 134%

34,056 1,168 2,457

34,114 1,937 3,167

66% 29%

80% 82% 128%

709 1,076

769 1,328

8% 23%

Employees

s Full-time equivalent Total Group of which France

174,262 152,346

1188,866 148,846

+ 8.4% 2.3%

2000 HIGHLIGHTS

JANUARY

s GLOBAL ONE France Telecom becomes the sole owner of Global One by acquiring the interests held by Sprint and Deutsche Telekom s JORDAN France Telecom acquires 40 percent of

LOCAL DEVELOPMENT

s A VALUED REGIONAL PARTNER
With a presence across France, the Group is actively involved in development projects, in conjunction with local government authorities. France Telecom has signed an agreement with the association of French Chambers of Commerce and Industry, for instance, to promote new technologies with the organizations partners. To support employment, France Telecom contributes to structures that facilitate new business creation. France Telecom has also set up an organization to encourage the launch of start-ups by intrapreneurs from the Group. At the end of December 2000, 150 employees had founded 115 enterprises, creating 1,700 jobs. France Telecom participates in efforts to promote social integration through work/training programs. The latest agreement with the French national employment office, ANPE, enables Group employees to play a fundamental role in these initiatives as mentors. The company is one of the most active backers of "Agir Contre lExclusion", a government-supported foundation to combat exclusion. As a leading force in the Internet, France Telecom promotes initiatives to make the Internet available to the broadest number of people. A partnership agreement with PIMMs an association of organizations that set up local information centers and offer mediation services enabling residents of less-favored neighborhoods to discover the Internet and information technologies. Other initiatives are being developed as well, including a network of 55 multimedia centers in French cities, "cyberbuses" and "cybervillages" in rural areas and "Internet ambassadors" to schools and municipal authorities.

THE ENVIRONMENT

s ENVIRONMENTAL MANAGEMENT
France Telecoms global environmental initiative spans reducing consumption, recycling, limiting noise, visual and atmospheric pollution and creating services that contribute to sustainable development. This initiative will lead to a full-fledged Environmental Management System. Printed phone directories are recycled, with revenues from the program going to the national forestry department to aid reforestation following the storms that swept across France in December 1999. France Telecom has also set up an operation to dismantle old phones in partnership with an enterprise that helps the long-term unemployed rejoin the workforce. Switches, telephone poles, batteries and cables are also recycled. Over 15 percent of France Telecoms "line installation" investment goes towards integrating network equipment in order to preserve historical sites, including Mont Saint Michel. All transmission network lines and two-thirds of subscriber lines are already installed underground. These same policy applies to wireless network facilities. France Telecom also develops services that minimize environmental impact, such as remote reading of environmental sensors, tools that reduce travel, telemeetings, or Web-based transactions.

s PARTNERING SUSTAINABLE DEVELOPMENT
France Telecom participates in partnerships that promote the concept of sustainable development, including ETNO, Global Compact, the Global Telecom Initiative and others. In addition, the company helps heighten environmental awareness among the public and contributes to European air quality projects (such as APNEE). Since 1998 the Group has been a partner of the Foundation for Environmental Education in Europe (FEEE), for which it has developed a collaborative work application.

CORPORATE PATRONAGE

s SUPPORT FOR TALENT
Corporate patronage expresses the ethical values of the enterprise: responsibility, sharing, relations between people and local support. Since its creation in 1987, the Fondation France Telecom has provided support for actions that forge ties through emotion, hope and solidarity. A major patron of the vocal arts, the Foundation aids young singers, voice ensembles and festivals. It also plays an active role in the creation of productions and recordings that reach new listeners. Thanks to the Foundation, young people in underprivileged neighborhoods have access to cultural enrichment through music and teaching programs. The Fondation France Telecom sponsors French gymnastics teams as well, providing scholarships to highlevel gymnasts to facilitate their training and transition to new jobs after their sports careers.

s SUPPORT FOR

EL SALVADOR
On January 13, 2001, a violent earthquake ravaged El Salvador, killing over 800 people. Employees from the entire France Telecom group, which has a subsidiary in El Salvador, mobilized to deliver aid to the country, funding food, medicine, blankets and shelters. France Telecom also contributed to reconstruction and repair

s CONSUMER

RELATIONS

s AUTISM: NURTURING HOPE

The Foundation has provided support for autistic persons and their families since 1991, focusing on improving the resources available to them by adapting and creating specific structures, such as medical and social institutes, integrated education, vacation facilities, etc. This support also spans special training of professionals and parents. The Foundation funds research as well by awarding numerous scholarships. It encourages solidarity throughout France, particularly within the Group: over 200 France Telecom employees are members of the Association of Volunteers to aid the Autistic (AVA).

France Telecoms customer service policy is centered on addressing the expectations of consumers. The company has signed a protocol with the consumer rights group AFUTT in France, which was renewed in 2000. Within the scope of this accord, regular meetings and work groups are organized to better identify and address consumer concerns regarding fixed and wireless telecommunications services.

SPONSORSHIP

s SPORTS PARTNERSHIPS
an innovative MPEG-4 coding system developed by France Telecom R&D. France Telecom also designed and produced the official website, www.therace.org, which had a tremendous audience during the event. France Telecom partnered the French national rugby team for its matches, in addition to 20 clubs in the national France Telecom is involved in several sports partnerships, with an emphasis on championship league. A number of rugby team and leisure sports such as rugby and websites have been launched as well thanks to support from France Telecom. sailing. For The Race round the world , France Telecom provides support for 20 yacht race, France Telecom equipped all soccer clubs, 12 of them in Frances first boats with video production and transdivision. These partnerships have created mission equipment, as well as voice and data communications resources, including communities of interest whose members benefit from special discount offers for France Telecom products. Finally, France Telecom was a sponsor of the Tour de France bicycle race. In the leisure arena, France Telecom has for the past two years provided support for running and roller-blading, both increasingly popular in urban areas.

communicate

deploy

listen

transform
WIRELESS Pg. 24 / 31 CONSUMER INTERNET Pg. 32 / 41 CONSUMER FIXED-LINE TELECOMMUNICATIONS Pg. 42 / 51 BUSINESS SERVICES Pg. 52 / 59

business segments

business segments U wireless
In 2000, France Telecom combined the majority of its wireless operations under the Orange brand. Orange is a tremendously vigorous brand with a unique, forward-looking vision. It enjoys a broad presence in Europe and the rest of the world, coupled with customercentric innovation. These strategic advantages position Orange as a pivotal force for communications in the third millennium and for third-generation wireless.

wireless

u FRANCE TELECOM WIRELESS OPERATIONS WORLDWIDE

14,311

2000 Rest of the world United Kingdom France
the end of December, this figure had increased to 30.5 million customers, representing 12-month growth of 68 percent (pro forma). The new subsidiary will capitalize on the strengths that have made Orange such a tremendous success in the U.K. and other countries: a powerful brand with a distinctive difference, a unique vision and strategy for wirefree communications, and a complete portfolio of services that will be continually enhanced in the years ahead. With Orange, France Telecom will offer customers throughout Europe the best wireless services in the
u UMTS LICENSES IN EUROPE
Licenses obtained Candidate for license
UMTS in order to continually enhance the speed and efficiency of its networks. In the future, in addition to voice, these networks will offer such multimedia services such as videophones, access to image libraries, wireless Internet and untethered e-commerce. With 11 UMTS licenses to date, Orange will be a major force in thirdgeneration wirefree services.
Subsidiaries and their markets
Triple Number One in France
Orange operates in France through its subsidiary France Telecom Mobiles, which markets the Itineris, Ola and Mobicarte services. In 2000, the company consolidated its leadership in a French market that continues to expand. At the end of 2000 it had 48 percent of the market and 14.3 million customers, adding 4.3 million customers in 12 months. France Telecom Mobiles is also the leader in coverage (reaching 98 percent of the population with its dual-band GSM network). This coverage is reflected in both customer satisfaction surveys and studies by the French telecom regulator ART. The Groups position in France is bolstered by a dense distribution network. The arrival in 2000 of a host of competitors offering prepaid services led France Telecom to add new distribution channels. Two hundred salespeople were recruited and trained for 40,000 sales outlets. Nearly seven million call credit vouchers and Mobicarte credit recharges were sold via this indirect network of local outlets in 2000. Following this success, other France Telecom products will soon be sold by these outlets, including Mobicarte pay-as-you-go kits and Wanadoo Internet kits. France Telecom Mobiles sharpens its leadership thanks to ongoing innovation. In particular, work by France Telecom R&D labs have made the Group a pioneer in

A Clear Regulatory Framework
France Telecom and other operators believe that a clear regulatory environment is fundamental to the success of future wireless services. Two significant multilateral conferences under the aegis of the International Telecommunications Union (ITU) addressed these issues in 2000. The decisions adopted are favorable to the Groups businesses, particularly as regards to third-generation wireless. Standards provide an international definition of the characteristics required to enable different systems to interface with one another. Frequency allocation is also an important issue, and the identification of new frequency bands addressed the explosive growth of the market and the advent of broadband wireless services. The unified standards defined will enable customers to use their wireless phones around the world. France Telecom can thus invest in these services with the knowledge that a clear regulatory framework will guarantee that its frequency needs are met until 2008.
wireless/Internet convergence. France Telecom Mobiles was the first operator in France to introduce secure payment solutions for wireless e-commerce: customers simply insert a credit card into a slot on specially designed wireless handsets to make purchases from anywhere. The first wireless portal in France, Itineris-Services, was launched in June, offering WAP services and access to the WAP versions of the Voila portal, Alapage, the Yellow pages, Mappy and Yahoo. A business THE ADVENT OF wireless portal dubbed WIRELESS INTERNET "Portail Mobile EntreThe introduction of WAP technology marks a significant step prises" was introduced towards wireless Internet, enabling at the same time. In people to access the Net from June, France Telecom anywhere. But the real breakthrough in became the first operauntethered Internet will come tor in the world to with the upcoming introduction enable customers to of GPRS, followed by the 3G UMTS system. The higher bandadd call credit to paywidths available will transform as-you-go service using handsets into true mobile multicredit cards. Trials of media devices. GPRS services began in
April and were deployed on a larger scale in the fall in the run-up to planned market launch in mid-2001. The Internet creates opportunities to foster closer customer relationships too, and France Telecom opened the markets first e-care center. Offers designed to secure loyalty proved successful, and France Telecom now has one of the lowest churn rates in the country, despite tight control over service cancellations by prepaid customers. Already the wireless leader in the French West Indies with its Ameris network, the Group launched its Itineris network in Runion, the islands second GSM service.
Growth Champion in The U.K.
Despite arriving in the market several years later than the three other wireless operators in the U.K., Orange U.K. had nearly reached second place at the end of 2000, with 9.8 million customers. Orange U.K. posted the highest growth rate in the market in 2000, increasing its customer base by over 80 percent. This tremendous expansion is the fruit of highly innovative marketing and an extremely strong brand.

The merger of Wind and Infostrada, a fixed and Internet operator acquired by Enel, will make the resulting company a top-tier player in the Italian market. Upon completion of the operation,Orange will own 26.6 percent of the equity of the new company, which is expected to be listed on the Italian stock market. Plans call for a restructuring of the companys capital 24 to 30 months after the merger, which would enable France Telecom to increase its share to approximately 32.5 percent. Enel will then have 42.5 percent and the public float will represent 25 percent. This will give Orange solid foundations in Italy, with even more attractive potential thanks to a UMTS license. In Germany, Orange is a shareholder in MobilCom, the second-largest wireless reseller in the country, with four million customers. MobilCom is also the countrys second leading Internet service provider through its Freenet subsidiary and the number two fixed-line operator, giving it a total of 6.5 million customers. The company is building one of the most modern voice and data networks in Europe, which will link Germanys major cities to the rest of the world at the end of 2001. MobilCom will market third-generation wireless services starting in 2002 thanks to a UMTS license that it obtained in August 2000. In Belgium, Mobistar is the number two wireless operator, with 1.8 million customers and a 32 percent market
share. It introduced WAP services in April 2000 and was awarded a UMTS license in 2001. In the Netherlands, Dutchtone, which entered the market as the number four player in January 1999, had over one million customers at the end of 2000. Dutchtone has acquired a UMTS license. In Denmark, Orange has a 53.6-percent interest in Mobilix, which has signed up 517,000 customers since it began operating in March 1998. This ranks it third among the four operators in the country. Mobilix is considered the most innovative operator in Denmark thanks to its SMS (short message service), WAP and e-commerce offers (the latter uses a chip card included with the handset for wireless transactions). In Sweden, Orange obtained a third-generation wireless license in December 2000. It owns 51 percent of Orange Sverige, a company created for the license acquisition. In Switzerland, Orange Communications is now 85-percent held by Orange. Since the launch of commercial service in June 1999, Orange has moved to second place out of three operators in the country, with 786,000 customers. Orange is promoting its distinctive innovation in this promising market with WAP and high-speed data services, while leveraging the power of the brand. This strategy includes the recent acquisition of a UMTS license. In Portugal, the group owns 20 percent of Optimus, the countrys number three wireless operator. Optimus has

MOBILIX

MOBISTAR
quickly established itself thanks to innovative marketing especially its popular prepaid cards and had 1.35 million customers at the end of last year. This company has also acquired a UMTS license. In Austria, Orange has a 17.5-percent stake in the Connect Austria consortium, which obtained the countrys third GSM wireless license. Marketed under the One brand, the service had 1.15 million customers at the end of 2000, ranking it third. The company holds a UMTS license. In Eastern Europe, Orange is the leader in Romania with MobilRom (1.2 million customers, giving it 51.3 percent of the market), as well as in Slovakia with Globtel (617,000 customers, 56.4 percent of the market) and Moldova with Voxtel (55,000 customers).
Orange has a presence in numerous African markets. In the Ivory Coast it owns 85 percent of Ivoiris, which has offered GSM service since 1996 and counted 212,000 customers at yearend 2000. In Cameroon, Socit Camerounaise de Mobiles, in which France Telecom has a 100-percent stake, launched a network in January 2000 and had recruited 81,000 customers by the end of the year. In Botswana Orange owns 51 percent of Vista Cellular, which has since 1998 operated a network that now has 53,000 customers. In Madagascar, Orange holds a majority interest in SMM via Telsea. This service had 47,000 customers at year-end. In the Dominican Republic, France Telecom Dominicana began operating a wireless service in November 2000, winning 20,000 customers in two months. Orange has also accorded brand licenses to network operators around the world, enabling them to take advantage of its reputation and impact, including Hutchison Telecom (Australia and Hong Kong), Hutchison Telecom Max (India) and Partner Communications (Israel). In order to maximize synergies, a program to integrate all wireless entities within the new Orange company was initiated in September 2000. This will enable deployment in all markets worldwide of the vision that has energized the success of Orange in the United Kingdom, taking advantage of the existing strengths and expertise acquired by the wireless operators that are now part of Orange. s

Global Ambitions

France Telecoms new wireless business segment enjoys tremendous advantages that will enable it to become a global leader in multimedia wirefree services. The subsidiary expects to have operations in some 50 countries towards 2005 and is already a shareholder in wireless ventures around the world. In India, Orange owns 26 percent of BPL Mobile, which has 262,000 customers in the Bombay region. It also has a 34-percent stake in the Thai company Bitco, whose Wireless Communications Services subsidiary has acquired a GSM 1800 license.

New Phones in 2000

The new 2000 range of phones makes it easier to access services (both current and upcoming), with enhanced ergonomics (more comfortable receivers, bigger screens and more memory for diaries and directories) and simplified service activation (direct access to a directory of services and guide, with onscreen menus and contextual prompts). The stylish phones have been specially designed for France Telecom, with models available for every type of use. The first phone in the new range was unveiled in May. The design and spirit of the 2000 range is found in two new fax machines as well. The Galo 2200 is an entrylevel thermal paper fax and the Galo 4830 is a plain paper fax with a DECT compatible phone, enabling email and printout of web pages. For businesses, the Diatonis range has been enhanced with a new wireless terminal, the 4074 GT, and by a "wiring-free" option for simple, low-cost connection of phones

NEW IN 2000

The array of services that make the phone more and more convenient continues to grow.

Call Blocking

This service lets customers block calls that do not show a caller ID, or those that have been identified (by their number) as malicious calls. Many customers want this service as an alternative to changing numbers or requesting an unlisted number.

Transfer to New Number

This is one of several services for customers who move and want calls to their old number forwarded (with or without a message). In 2001 the service will be available without any geographic restrictions and will be billed on a per-use basis.
For entrepreneurs launching a new business, a "Telecom Consulting Kit" includes a booklet of coupons good for special offers from partners (Ciel accounting software, Ikea Entreprise, Chronopost, Office Depot, Viking Direct). Booklets with coupons from local partners and training/consulting services are also created by local France Telecom sales offices.

Lower, Simplified Rates

France Telecom lowered its international long-distance rates in two phases in 2000, with an 18-percent reduction for residential customers and a 24-percent cut for small businesses. The Primaliste Pays rate option, providing country discounts for calls to a given country, is now free,

Thierry, Net pioneer

"Since Im a researcher, Ive had an email account since 1985, and my first IP address dates back to 1990. Now, though, with ADSL at home Im really discovering everything the Internet can do. I can stay connected all the time and still use my phone. And the connection is every bit as efficient as at my office, where we have a fiberoptic link! I use it to work at home, and I just love the multimedia entertainment, like being able to watch a TV show from a country where I was on an assignment a few weeks earlier!"
u GLOBAL TRANSMISSION NETWORK
TAT NABN TPC 5 China-US Maya I Americas II Panam ECFS

EBN TPC5 China-US APCN2

Sea Me We 3
Austr Japan Sat-3-Safe-Wasc Atlantis Americas Southern Cross

AFRICA

LATIN AMERICA. GROWTH OPPORTUNITIES FOR FRANCE TELECOM.
launched its service in January 2000. The ultra-modern network built by Intelig already covers 37 cities across the country. In addition to long-distance service, Intelig will shortly begin marketing direct network connections, data services and Internet access. In El Salvador, France Telecom is the leader in the Estel consortium, which acquired a majority stake in the national operator CTE. In addition to the countrys fixed-line network (570,000 lines) which is 85 percent digital CTE has a 20-year license for a wireless network that had 164,000 customers at the end of 2000. The current penetration rate for fixed telephony (six lines per 100 inhabitants) leaves substantial growth potential in the country. In the Dominican Republic, France Telecom operates through Orange. In Asia, France Telecom acquired an additional five percent of Pramindo Ikat, giving it a 40-percent equity stake in the Indonesian fixed-line operator. Pramindo has a license to build 306,000 lines in three years plus exclusive rights to operate the existing network of 868,000 lines in conjunction with the new lines. In Vietnam, the government awarded France Telecom a contract to build 540,000 lines in five years in the Ho Chi Minh City region, of which 252,000 have already been installed. France Telecoms FCR subsidiary has also signed a cooperation agreement with the national operator VNPT. In Jordan, France Telecom acquired a 40percent interest in the incumbent operator Jordan Telecommunications Company (JTC) in 2001 in partnership with Arab Bank. JTC has 614,000 customers. The Group is responsible for the management and operation of JTC and its wireless subsidiary PetraCell, whose MobilCom service was launched in September 2000. France Telecom is also present in India, Thailand and Lebanon.

Louise and Franck Its always sunny somewhere!
The unexpected adds spice to life. You wake up, look at it raining outside, then hear on the news that its going to be sunny in the west of the country. So goodbye gray Paris for the weekend. "When Franck said we werent going to the movies but to the coast, I thought it was a joke." "She didnt argue much! I just called the 3220 toll-free number, said "Europcar" and all we had to do was choose the type of convertible we wanted." "And remember to pack our toothbrushes"
"Egora" portal for healthcare professionals. With "Olane Sant Extranet", clinics and hospitals can work with offsite healthcare professionals over secure networks. Call centers are another area where businesses are increasingly seeking to outsource services. France Telecom has set up five Call Center facilities in the Paris region, Tours, Nantes and the Belgian city of Ghent. In 2000, the number of agent workstations at these centers rose from 400 to 2,000. The European call center market experienced vigorous 24-percent growth during the year. France Telecom contributed to this expansion by integrating technologies that transform facilities into full-fledged multimedia customer contact centers. For companies that want to outsource all their telecommunications resources, France Telecom provides end-toend support, covering audits, network supervision, network engineering, construction and operation, plus staffing. In addition to benchmarking studies, France Telecom can take over ownership of legacy assets, manage technology migrations and devise tailored financing solutions. Thomson Multimedia, for example, awarded France Telecom a contract to manage all its telecommunications resources in 28 countries around the world.
billing, product support, etc.). Customers enter a single password to log into the "Web Entreprises" site and can then navigate seamlessly to all other France Telecom websites. Online ordering of products and services via the site was introduced in October.

Competitive rates

Telephone Rate Structures Tailored to Usage Profiles
Business telephone rates evolved to better match the needs and usage profiles of enterprises. Two rate cuts in 2000 resulted in an average decrease of nearly 6 percent

OPERATOR CUSTOMERS

At the end of 2000 a total of 128 licenses had been accorded to telecommunications operators in France. These competitors are also France Telecoms customers in a "carriers carrier" market valued at three billion euros, above and beyond interconnection charges. A second carrier service center was inaugurated in Limoges for operator order fulfillment and support. On January 17, 2000 France Telecom introduced carrier preselection for international and national long-distance calls, followed by calls from fixed-line phones to wireless phones. A one-stop shop for carriers offering preselection was opened in the French city of Besanon. Twenty-six operators proposed preselection services or were ready to launch offers at the end of 2000.

4,615 24,228 2,748 3,(2,153) 33,157 129,585
4,098 6,629 5,255 2,18,903 54,055
3,905 6,629 4,172 2,300 (15) 16,991 46,158
Consolidated statements of cash flow
(Amounts in millions of euros) OPERATING ACTIVITIES Net income Adjustments to reconcile net income to funds generated from operations Depreciation and amortization of property, plant and equipment and intangible assets Gain on disposal of assets Changes in valuation allowances and other provisions Undistributed earnings of affiliates Deferred income taxes Minority interest Other items Funds generated from operations Decrease (increase) in inventories Decrease (increase) in trade accounts receivable Decrease (increase) in other receivables Increase (decrease) in trade accounts payable Increase (decrease) in accrued expenses and other payables Change in other operating assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES Purchase of property, plant, and equipment and intangible assets Cash paid for Orange plc Cash paid for investments securities and acquired businesses, net of cash acquired Investments in affiliates Proceeds from sale of investment securities and businesses, net of cash sold Proceeds from sale of assets Decrease (increase) in marketable securities and other long-term assets Net cash used in investing activities (14,313) (21,693) (10,899) (7,969) 7,(218) (46,888) (5,001) (2,502) (302) 288 (6,647) (4,660) (1,906) (151) 1,480 (5,019) 6,818 (7,700) 4,(277) (52) 25 6,863 (329) (978) (1,372) 936 1,493 (250) 6,613 5,021 (596) 297 (198) 29 7,482 (176) (780) (668) 1,084 1,8,109 4,666 (657) 544 (182) 177 (133) (3) 6,712 (20) (217) 614 (7) 7,132 3,660 2,768 2,Year ended December 31, 1999 1998
(Amounts in millions of euros) FINANCING ACTIVITIES Issuance of long-term debt Repayment of long-term debt Increase (decrease) in bank overdrafts and short-term borrowings Increase in capital share Minority interest shareholder contributions Dividends paid to minority shareholders Appropriation of net income Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Effect of changes in exchange rates on cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period SUPPLEMENTARY DISCLOSURES Cash paid during the period for: Interest Income taxes