PARIS -- During the 1st quarter of 2011, Iliad Group achieved an excellent business performance, recruiting127,000 additional subscribers net of terminations and thus reporting a 32% market share of netrecruitment during the period. At 31 March 2011, the Group had a customer base of 4,661,000broadband subscribers. The main changes of the period were as follows:

(i) The 1st quarter was marked by the commercial success of the Freebox Revolutionoffering, allowing the Group to record its best quarter since 2007 in terms ofrecruitment with 154,000 new Freebox Revolution subscribers (net of terminationsand excluding migration of Alice subscribers) and Freebox V5, which was a market shareof 38% of recruitments for the period. This outstanding market share reflects the greatinterest expressed by subscribers in the specific features of the Freebox Révolution. Inaddition to including calls to mobiles, which was quickly copied by our competitors, the250 GO NAS server, the Blu-ray player, HD video games, etc. were all differentiatingfactors that bolstered the Free brand’s drive for market share gains.

As part of its loyalty-building and retention programme directed at Alice subscribers, the Groupprovided Alice subscribers with the option of migrating to Free’s packages, in particular the FreeboxRévolution product offering. Nearly 22,000 Alice subscribers thus subscribed to a Free package in the1st quarter. Against the backdrop of strong demand for the Freebox Révolution, during the first quarterthe Group managed to deliver to new Free subscribers within an average of 4 working days. Leadtimes for existing subscribers who already have a Freebox V4 or V5 were longer than usual. Thissituation should improve in the coming weeks and should be handled by the beginning of summer.The Group maintained its effort to extend local loop unbundling during the period, by continuing toinvest in the opening of new cluster nodes. The continued implementation of this profitable growthpolicy allowed the Group to achieve a record unbundling rate, in excess of 90%.

With revenues of nearly € 510 million, the Group achieved growth of 1.1% in the 1st quarter 2011compared to the same period of 2010, despite:
(i) The negative impact of the change of VAT status for triple-play packages (applicablefrom 1 January 2011), whereas the first billing of subscribers according to the newpricing structure only applied from February 2011.
(ii) The regulatory decline in fixed line termination rates.

After taking these elements into account, the Group’s ARPU for the 1st quarter (at the end of theperiod) was € 35.8, a moderate decline compared to the previous year. In accordance with Groupforecasts, and due to excellent usage of value added services, the ARPU of Freebox Revolutionsubscribers is in excess of € 38.

Iliad (Euronext: ILD)