PARIS -- Iliad reinforced its leading alternative position in the French broadband market during the 2nd quarter 2006by increasing its ADSL subscriber base from 1,783,000 as of March 31, 2006 to 1,905,000 as of June 30,2006. Free added 122,000 subscribers during the 2nd quarter 2006 vs. 102,000 during the 2nd quarter2005.

These statistics confirm the power of Free ADSL offering and in particular of the Freebox services. Inaddition, Free maintained its focus on unbundling of the local loop. On June 30, 2006, 72.3% of itssubscribers were unbundled (partially or fully unbundled). As of June 30, 2006, about 1,825,000 userswere equipped with a Freebox.

During the 1st half 2006, optional value-added services generated revenues of approximately € 73.5million, more than double the revenues generated in the 1st half 2005. Broadband ARPU was close to €33.5 per month (excl. VAT) during the 2nd quarter 2006.

The usage of optional triple-play services has continued to spread amongst Free’s subscribers during the1st half 2006 :

1H 2006 & 2Q 2006 Revenues

As of the June 30, 2006 accounts, Iliad is dividing its activities in two sectors : Broadband, which replacesthe Internet sector, and Traditional Telephony, which includes the Telephony sector and the Other sector.

Traditional Telephony (which does not include IP telephony) continued to suffer from the growing successof voice over broadband offers. The total number of Onetel subscribers declined over the period to 258,000 customers billed on June 30, 2006 from 298,000 as of December 31, 2005. Onetel ARPU stoodat around € 12.2 per month on average over the period. Kertel posted a decrease in its 1st half 2006cards sales at 2.7 million cards vs. close to 3.6 million during the 1st half 2005. The significant decrease incards sales since January 2006 results from tariff rebalancing at Kertel which improved profitability.

Outlook

Based on 1st half 2006 performance, Iliad is on its way to exceed 2 million ADSL subscribers by end 2006.The Group will maintain its focus on unbundling of the local loop in order to reach 75% unbundling ratio byend 2006.

During the 1st half 2006, Free’s average gross margin remained above € 20 per unbundled subscriber permonth.

Iliad (Euronext: ILD)