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IDATE DigiWorld Summit 2006Futur Trends For Mobile November 2006: 

IDATE DigiWorld Summit 2006 Futur Trends For Mobile November 2006 IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION. Frank Esser - Chairman and CEO - Member of Vivendi’s Management Board

What are the market trends?: 

What are the market trends? Telecom market evolution 2005 - 2010 51% 34% 15% 2005 Mobile Internet and data Fixed 57% 23% 20% 2010 Mobile Internet and data Fixed Source : Idate + 4.6 billion of euros + 4.7 billion of euros for mobile operations + 2.4 billion of euros for internet operations Market: €34.9 bn Market est.: €39.5 bn Mobility and internet are the two growth drivers for internet / Telecom sector Market estimates by segment:

What are the market trends?: 

What are the market trends? Source: Arcep 81% of mobile penetration as of today 100% in the short term 12 million potential customers Average: 100 % Italy United Kingdom Spain Sweden Germany Belgium French mobile market has still strong growth potential Mobile penetration in main European countries at the end of June 2006:

What are the market trends?: 

What are the market trends? … still far away from the most advanced countries (USA: ~1,000min / month) SFR customers: 12-month rolling AUPU grew by +14.7% to 319 min/month (end of June 2006) Source = Arcep, SFR estimates +10% >+10% In million of minutes Number of minutes from a mobile phone in France: Mobile voice usage: a double digit growth …

Slide7: 

What are the market trends? Fixed phone Mobile phone Internet(3) TV ~2h50 Radio(1) ~1h50 Music (non-radio) ~30 min. Video Games ~15 min. ~15 min. ~10 min. ~20 min. Reading(2) ~56 min. (1) Including when listening as background activity (2) Including newspapers, books, magazines (3) For personal use Source: panel data, INSEE, IFOP, Datamonitor, Estimates Of which <1min spent on mobile digital content Cinema ~15 min. Average time spent / day on media Average time spent / day on telecom Strong potential of growth for mobile content usage Mobile captures small share of consumers’ time

What are the market trends?: 

WAP Internet Localization Chat / IM Enterprise / Web What are the market trends? Voice Data and services Interpersonal messaging (SMS, MMS, Mail, Visio) Mobile content services CAGR +10% by 2010 SFR revenues Data and services revenues Mobile data content revenues CAGR +25% by 2010 Strong growth of mobile content services driven by internet, localization, chat/IM and enterprise

What are the market trends?: 

What are the market trends? 44% of French households have broadband internet access as of today expected to be 70% in 2010 potential of more than 8 million households Potential of 8 M households Broadband internet Source : Idate ADSL is the second driver for internet / telecom sector Penetration rate in French households estimates:

What are the market trends?: 

What are the market trends? Internet is naturally extended into mobile Broadband Access Broadband Access Access Increasingly proven business models Experimental / new business models Untapped revenue potential around audience for French mobile market 3G / HSDPA Continuity of usage Personalization Localisation (GPS) SMS / MMS Operator WAP portal

What are customers demands?: 

What are customers demands? Sources: Louis Harris study - May 2006 / TNS Sofrès / AFOM – October 2006 Mobile phone is the preferred handset (continuity of usage) 94% of SFR customers take their mobile phone everywhere 81% of SFR customers consider their mobile phone as their main handset More than 1/3rd of SFR customers use their mobile phone outside France, at least once a year. Mobile phone is more and more used at home (personalization) 56% of communications made by SFR customers from their home is from their mobile phone 59% of SFR customers record their contacts in their mobile phone directory. Mobile operators are winning the battle for the preferred communicating device Usage is key, mobile customers are technology agnostic Mobile phone is easy to use (simplicity) 77 % of mobile users think that mobile phone is simple to use

SFR ”mobile centric” strategy: 

Mobile customers are technology agnostic … technology should be transparent technology need to ease user experience, … usage is key: a communicating handset: the mobile phone mobile usage is growing strongly… … and is naturally transitioning to the internet. Mobility « by SFR » : Continuity of usage Personalization Take advantage of the growth of mobile phone usage Mobility ≠ Technology SFR ”mobile centric” strategy SFR vision

SFR “mobile centric” strategy: 

SFR Core Offerings Option SFR existing mobile offer Happy Zone GSM / 3G – 3G+ 2G / 3G-3G+ / WiFi / WiMAX ADSL Internet access Voice Internet SFR “mobile centric” strategy

Illustration of SFR’s strategy: 

Illustration of SFR’s strategy End of December 2006: 3G+ will be deployed on all of the SFR’s 3G network, i.e. 65% of the French population One of the largest EU HSDPA network to date An evolving debit rate of 1.8 Mbit/s at launch and test at 3.6 Mbit/s in 2007 Quantum leap in user experience SFR: first operator to launch 3G+ (HSDPA) in France

Illustration of SFR’s strategy: 

Illustration of SFR’s strategy Offerings with discounted tariffs for calls made from home Customers keep their favorite handset Coverage zone larger than the house Large success in other European countries Continuity of mobile usage at home and around (fixed – mobile substitution) Launch of “Happy Zone”

Illustration of SFR’s strategy: 

Illustration of SFR’s strategy SFR will launch ADSL offerings in April 2007: an option on top of mobile offerings continuity of mobile services on the internet Strong fixed assets Télé2 France acquisition: acceleration of SFR’s ADSL strategy immediate credible player in ADSL SFR and neuf cegetel, a long term partnership: SFR and Télé2 are “Fixed VNOs” on the neuf cegetel ADSL network Continuity of mobile services on the internet = value creation for mobile operators

Illustration of SFR’s strategy: 

Illustration of SFR’s strategy Music on mobile and PC: SFR Music: 1.5 M tracks downloaded in H1- 2006 Top 3 of legal downloading platforms in France Success of “SFR Jeunes Talents” SFR strategy for community websites and web created content Continuity of SFR services on the web Mobile environment accessible on the internet: Synchronization of the directory Self-care / shop on-line … SFR on the internet: “audience” model Success of first SFR’s “audience” model

Conclusion: 

Conclusion Entry point: the home The “box” is the core of service offering Technical convergence through a fixed point Entry point: the person Mobility is the core of SFR’s service offering Continuity of usage through a personal and free service Technical convergence “mobile centric” Two different visions

Conclusion: 

Conclusion Mobile and internet usage is growing Mobile handset is the preferred communicating device Internet will go mobile Emergency of new business models from the internet transitioning in mobile Focus on user experience and not on technology Mobile operators are well positioned for the years to come