The new France Telecom launches the new Orange May 31th, 2006

The new France Telecom

simplicity proximity

audacity

confidence

Our offers

A loyalty Program

All included

Unlimited content
A single point of contact
A single Phone High Definition

All Included offers

All included offers in France
Les Optimales France Telecom Les Optimales Orange PSTN offers From limited to unlimited landline calls Fixed to Mobile calls and SMS Subscription fee included A PSTN line + A Broadband access + Digital TV A single contact and a single bill for PSTN & Multimedia Subscription fee included and services included

ADSL line included

A triple-play offer, ADSL line included (Naked ADSL offer) Internet + Unlimited VoIP for landline calls + Digital TV
All included offers in the UK
Free Broadband for Orange Mobile Customers Free broadband up to 8Meg for new and existing* Orange customers with an Orange Pay Monthly Plan 30+ Free Livebox Available nationwide
Free Calls to Orange Mobiles for Orange Broadband Customers
*: for 9 month + with Orange
Free calls to Orange mobiles for Orange Broadband customers with a Livebox for 6/m Unlimited calls to any UK landline Unlimited calls to and between Orange Broadband customers
Unlimited TV & sport 24/7 at home and on mobiles
Free Digital TV on ADSL at home A new range of ADSL multimedia offer up to 18Meg TV included VoIP, Security and other options available
Unlimited TV & Sport on Mobiles
Option TV + Surf: 20 channels for 6 per month Option Total TV: 50 channels + Videos for 10 per month Option Sport: unlimited access to sport for 9 per month

A single Phone

High Definition
High Definition for Voice and Image
High Definition VoIP High Definition for TV

Orange HD

ADSL access

HD-Voice

Unlimited VoIP with High Definition standard

HD decoder

Digital HD Option
Free for all Livebox + VoIP customers
Compatible devices available from 69

TPS HD option

SAGEM D45W Thomson V1590 15

Unlimited mobile at home

Unik: unlimited mobile at home
All you need is Unlimited mobile calls at home thanks to a connection to the Livebox
A broadband Internet Access with a Livebox

An Orange

broadband contract
One out of a range of mobile device compatible with the Livebox
What is new Unlimited calls towards fixed and Orange mobile phones from home 7 days a week, 24 hours a day Unik connects automatically to the Livebox The Livebox allows for numerous Unik connections and 3 simultaneous calls + TV and ADSL connections What is different A single number (GSM/WiFi), the mobile number A unique voice mail A unique contact book A simple mid-range device with no specific application Handover for call started at home (the call automatically switches to the Orange mobile network
One shop network One Customer Care One portal
One Brand: Orange Business Services One contract One contact
More simple offers for Enterprise
One loyalty program on Fixed, Mobile and Internet

Appendix

More on Rebranding

Framework

Residential
Countries where the group has an incumbent position

Distribution fixed

Internet, TV, Multiplay, mobile

Enterprise

Incumbent brand

Distribution

Other countries

Roadmap

France UK Netherlands Spain Jordan Senegal Poland

H1 2006

H2 2006

Main impacts

Upfront cost: slightly below EUR200m in 2006 (including CAPEX) Cumulated impact: neutral at the end of 2007 Savings for 2008 and onwards: circa EUR 200m on a full year basis

More on offers

Ready for a new phase
Number of Livebox Group (000) & % of ADSL customer base
Number of mobile broadband Customers - Group (000)

1547 24

3Q05 4Q05 1Q06
Les Optimales France Tlcom PSTN offers
France Telecom subscription fee + services (voice mail, detailed bill, ) Various options such as caller name presentation Atout illimit +120

Main objective

Reduce churn

Soon available

Atout +240 Atout+120
Les optimales Orange PSTN, Broadband Internet and TV
Soon available Main objective
France Telecom subscription fee + services (voice mail, detailed bill, ) Various options such as caller name presentation Atout +MegaMax Internet broadband Digital TV with 30 channels bouquet
New Orange triple-play offers Free digital TV included
ADSL 1M Max ADSL 8M Max ADSL 18M Max
Maintain retail ADSL market share

TV included

24.9 29.9 39.9
+ VoIP, Video telephony, security, installation,
New Orange triple-play offers Internet + TV + Unlimited Telephony
(ADSL line included No subscription fee)
ADSL 1 M max ADSL 8 M max
Sustain retail ADSL market share in dense areas
Unlimited voice (VoIP) for landline calls
Try Broadband, with no commitment
try broadband without getting tied into a contract try out services we love
speeds of up to 1meg for just 14.99 free USB modem no connection charge available nationwide available to all new customers and all existing dial-up customers

Free Broadband

free broadband with an Orange Pay Monthly plan - 30+ on Racoon, Canary and Panther on 18 month contract transparent no catches
speeds of up to 8meg free Livebox free evening and weekend UK landline calls new and existing customers
talk freely when youre part of the Orange family
get broadband customers talking for 6 a month:
Unlimited calls to any UK landline Unlimited calls between Orange Broadband customers Unlimited calls to Orange mobile customers

Cautionary Statement

This presentation contains forward-looking statements and information on France Telecom's objectives, notably for 2006. Although France Telecom believes that these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties and there is no certainty that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could result in material differences between the objectives presented and the actual achievements include, among other things, changes in the telecom markets regulatory environment, competitive environment and technological trends, the success of the NExT program and other strategic initiatives (based on the integrated operator model) as well as France Telecoms financial and operating initiatives, and risks and uncertainties attendant upon business activity, exchange rate fluctuations and international operations. All the financial information in this presentation is based on international financial reporting standards (IFRS) and present additional specific uncertainty factors given the risk of changes in IFRS standards. More detailed information on the potential risks that could affect France Telecom's financial results can be found in the Document de Rfrence filed with the Autorit des Marchs Financiers and in the Form 20-F filed with the U.S. Securities and Exchange Commission. 41

France Telecom Canada June 2006

Agenda

Strengths of France Telecom NExT strategic plan FY05 and Qresults
A player solidly positioned in its businesses

&I

Presence in 220 countries & territories 147 million customers worldwide (1) 2005 Revenues: 49 billion (2) 203,008 employees (2)

s& ti rke Ma

Ne two rk

Customer

Product Factory R&D
A world leader in telecommunications R&D
A leader on its key markets

(1) At

03/31/06

(2 At 12/31/05

Following the Acquisition of Amena, Europes leading integrated operator
Belgium Mobile: 2.96 million Fixed-line: 0.55 million United Kingdom Mobile: 14.96 million Internet: 2.02 million Netherlands Mobile: 1.9 million Internet: 0.61 million Poland Mobile: 10.42 million Fixed-line: 10.48 million Internet: 1.78 million
France Mobile: 22.45 million Fixed-line: 33.78 million Internet: 6.21 million
Spain Mobile: 10.53 million Fixed-line: 2.85 million Internet: 1.24 million
Mobile Fixed-line Internet Number of customers at March 31, 2006.
to answer the industry changes and new entrants plans
to anticipate new usage patterns
A solid strategic framework
Growing role of content and entertainment

is about new usages

France Telecom answers
Aggregate & distribute all major digital contents / Develop TV, music & games on all platforms.

New customer needs

More multiplay and all you can eat offers
Converged offers & Livebox at the heart of our Broadband strategy / Over 7m multiplay customers in 08 / over 12m mobile broadband customers by the end of 08
Customisation & services
Build an integrated customer experience / Best in class for customer care / A full range of services for every day's life
Communication suite versus plain voice
Major initiative for multi-access portal & Communication Suite (Orange Link), bringing together mobile broadband and Internet
The best way to anticipate industrys transformation

The NExT business model

Flat fee for access to NExT services Flat fees for the plain telecom suite and basic content offering
Towards a new business model for revenue streams
Specific features, customized options Premium content access Support or on site services Life services
Pay per use, flat fee or shared revenues, license fees and advertising
A progressive change from current business model

Orange HD

ADSL access

HD-Voice

Unlimited VoIP with High Definition standard

HD decoder

Digital HD Option

TPS HD option

Free for all Livebox + VoIP customers
Compatible devices available from 69

Thomson V1590

SAGEM D45W

unlimited mobile at home

All you need is Unlimited mobile calls at home thanks to a connection to the Livebox
A broadband Internet Access with a Livebox

An Orange

broadband contract

One out of a range

of mobile device compatible with the

Livebox

What is new Unlimited calls towards fixed and Orange mobile phones from home 7 days a week, 24 hours a day Unik connects automatically to the Livebox The Livebox allows for numerous Unik connections and 3 simultaneous calls + TV and ADSL connections What is different A single number (GSM/WiFi), the mobile number A unique voice mail A unique contact book A simple mid-range device with no specific application Handover for call started at home (the call automatically switches to the Orange mobile network
FY 05 results: From Revenues to Gross operating margin
Euro millions FY04 actual FY04 Pro-forma FY05

Revenues

Non labour costs

as a % of revenues

46,158 19,385

47,841 20,669

49,038 21,860
Of which external purchases

17,870

19,169

20,149

Labour costs

Gross Operating Margin

17,923 38.8%

18,264 38.2%

18,416 37.6%
From Gross Operating Margin to Operating Income
Euro millions FY04 FY05 Chge in EURm
Employee Profit Sharing Share-based payment Amortization Impairment of goodwill Impairment of assets Disposal of assets Restructuring costs Associates

17,923

- 280 - 399 - 7,990 -534

-- 181 30

18,416

- 382 - 178 - 7,034 -11

-568 1,475 -454 20

- 102 + 221 + 956 + 523

- 389 + 553 - 273 20

Operating Income

Total Financial Charges, net Income taxes

9,312 -3,625

-2,477

11,284

-3,356 -1,568

+ 1,972

Net result

Minority Interests

Net Result Group Share
FY05 financing: From GOM to Net cash provided by operating activities

Euro millions

Interest Expense, net* (cash) Cancellation of Forex impact included in GOM Income Taxes (cash) Early Retirement Plan (cash) Employee Profit Sharing (P&L) Others (ow restructuring costs) Change in Working Capital requirement
(inventories + receivables - payables)
-3,078 -20 - 762 -791 - 280 - -227
-3,074 -15 -811 -918 - 382 - 214
Change in Working Capital requirement (others)
Net Cash provided by operating activities

12,697

13,374
*Net Financial charges excluding discounting, disposal/provision on financial assets and foreign exchange (gain/loss)

Financing in FY05

FY04 12,697 - 5,208

-5,134

FY05 13,374 - 6,108

-6,045

Net Cash provided by operating activities Purchase of tangible and intangible assets, net of change in fixed asset vendors

ow Capex

Proceeds from sale of tangible and intangible assets

Organic Cash Flow *

* Net cash provided by operating activities, less net cash used in investing activities, less asset disposals and less disposals of financial assets. It also corresponds to Net Cash Provided by Activities, less purchase of Tangible and Intangible Assets, and less Proceeds of Sales of Tangible and Intangible Assets

1Q06: key figures

Actual 1Q05 Comparable Basis - 1Q05

12,813 4,671 36.5%

6, 499 50.7%
Actual % Comparable change Basis - % chg
Gross Operating Margin As a % of revenues
G.O.M. before commercial expenses As a % of revenues

11,621 4,376 37.7%

5,766 49.6%

12,542 4,668 37.2%

6,343 50.6%

10.3% 6.7%

2.2% 0.1%
CAPEX As a % of revenues GOM - CAPEX

1,157 10.0% 3,220

1,242 9.9% 3,426

1,390 10.8% 3,281

Conclusion
A tough but anticipated environment
Mobile maturing markets spurring competitive pressure Home broadband market consolidation not achieved No favorable change in regulatory context and pending uncertainties

1Q 2006 in line with full year guidance
Leadership confirmed on new fast growing Telecom markets
Since December 2005 + 737k fixed broadband subscribers + 697K mobile broadband subscribers
On track to deliver NExT thanks to :
Rebranding and New offers
- Rebranding starting in France, UK and Netherlands in 1H06
- First new convergent offers and all included & unlimited offers
Managing Organic Cash Flow generation
Tightened cost management Reinforced control of CAPEX

Appendices

December 5 2002, Ambition FT 2005 presentation
" 15 + 15 + 15 "
Refinancing Plan: 23 December 2002: 2.9bn 28 January 2003: 6.4bn 23 January 2004: 2.5bn Thanks to Plan Top which allows to increase Free Cash Flow from the end of 2002 until mid 2004 of around 15bn Share Capital increase of April 2004
Net Debt Evolution (IFRS on and after 2004)
bn 6.8 63.44.14.31-Dec-99 Net debt 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 31-Dec-05 4.49.8 49.8 6.4 Years 5.2 0
Average Maturity of net debt
2004 figures include 4,2bn Euro of perpetual debt (TDIRA) which previously accounted as equity (excepted for the average maturity of net debt)
m 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,7.05% 5.74% 2,31-Dec-99 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 31-Dec-05 5.82% 3,847 5.90% 3,045 4,041 3,688 3,621 6.79% 6.46% 5.43% 8% 8% 7% 7% 6% 6% 5% 5% 4%

Interest Expenses

Average cost of net debt
Net Debt Allocation: Fixed - Floating - by Currency (after swaps)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 9.0% 39.0% 37.0% 54.0% 35.0% 25.0% 40.0% 62.0% 91.0% 61.0% 63.0% 46.0% 65.0% 75.0% 60.0% 38.0% 59.0% 73.0% 70.0% 41.0% 27.0% 30.0%
A share capital increase of over 14.8bn explains the increase of fixed debt in 2003

1995 Fixed debt

Floating debt
Majority of Outstanding Debt is Euro Denominated

As of 31-Dec-2004

PLN Others GBP 4.2% 2.1% 5.3%

As of 31-Dec-2005

PLN Others 6.0% 0.1%

GBP 12.0%

EUR 88.4%

EUR 81.9%

France Telecom SA Debt Distribution
4,887 4,531 3,974 3,659 3,500
2,000 1,260 1,000 1,376 1,662

1,952 1,500

735 515

2033 2034

France Telecom Historical Spreads
Asset Swap Spread (bps) 160

20 06/02/2003

9/15/2003

12/29/2003

04/12/2004

7/26/2004

11/08/2004

2/21/2005

06/06/2005

9/19/2005

1/16/2006

05/01/2006

France Telecom 7.25 1/28/2013
France Telecom 3.625 10/14/2015
France Telecom 8 12/20/2017
S&P, Moodys and Fitch Ratings
Fitch / S&P A Moodys A2

Mar-02

Aug-02

Jan-03

Jun-03

Nov-03

Apr-04

Sep-04

Feb-05 S&P

Jul-05 Fitch

Dec-05

May-06

Moodys
The notches improvement of rating agencies allowed France Telecom to come back in 2006 : - On the USCP market : about 1 billion US$ - about C$ 1,125 billions - On the swiss franc market : CHF 400 millions C$ 370 millions - On the Yen market : Yen 22 Billions yen C$ 225 millions 26
Managing strong local businesses and taking advantage of global business lines
France UK Spain Poland ROE ROW

Personal

Reinforce country integration on each business

Enterprise

One manager for each geography
Group Management Committee will exercise its direct responsibility for of all group businesses on a geographical basis
Tightened management organization
Objective N1 Ensure a clear management accountability with a focus on country integration
Louis-Pierre Wenes Sanjiv Ahuja CEO Orange Olivier Barberot Grp Human Resources

Barbara Dalibard

Objective N2
Make convergence happen as fast as possible
Grp Transformation & French operations Jean-Philippe Vanot

Didier Lombard

Chairman & CEO
Enterprise Communication Services

Objective N3

Grow through a more effective market facing organization
Jean-Yves Larrouturou Grp General Secretary
Grp Networks & Information Systems

Objective N4

Adjust cost structure
Gervais Pellissier Grp Finance
Georges Penalver Grp Strategic Marketing & Product Factory
Annexe 1 : France Telecom and its Canadian and US Competitors

(1) (2) (2)

Ratings (Moody's/S&P)

A3/AStable/Positive

Baa1/AStable/Negative $21,448 $17,055 $1,751
Baa2/BBB+ Positive/Stable $13,957 $7,269 $625
A2/A Negative/Negative $59,003 $20,547 $3,294
A3/A Stable/Negative $89,821 $75,112 $7,397
Market Cap Total Revenue for Full Year 2005 Net Income

$55,794 $62,901 $8,158

Wireless Subscribers (Millions)
All figures in US$ millions. Source Bloomberg (1) FX Rate: USD per EUR 1.28270 (2) FX Rate: USD per CAD 0.89791 Source: Bloomberg, Company website