Changing the rules in a fast-changing world

Etienne Fouques Mobile Communications Group

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Alcatel in Mobile 2004 highlights

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Alcatel in Mobile 2004 Figures

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Mobile communications
FY04 3.301 Bn*, a 13% increase vs FY03 Q3 04 Sales: +28.3% (YoY) Q4 04 Sales: +27.2% (YoY) 27% of Group sales All mobile segments profitable with a double-digit overall operating profit

*w/o handsets

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Alcatel in Mobile A Solid Position & Strong Momentum

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Fifth consecutive year of profitable market share capture in mobile Recognized innovation and cost leadership in mobile infrastructures Broadest portfolio of transport/aggregation solutions Fast developing in video & next-generation payment solutions Professional services recognized expertise in end-to-end quality of service Delivering innovation to drive the industry forward NGN/IMS, Convergence, AdvancedTCA, WiMAX

Serving 320+ mobile Serving 320+ mobile operators worldwide operators worldwide

+
Confirming leadership Confirming leadership in growing markets in growing markets Introducing user-centric broadband Introducing user-centric broadband

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Alcatel in Mobile - 2004 Highlights

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Leadership in Leadership in growing markets growing markets

Business Highlights

Saudi Arabia, Libya, Iran, Algeria, Nigeria China, Thailand, Bangladesh, Pakistan Brazil, Russia, India Austria, Netherlands, Portugal, Thailand, UK, UAE, Tunisia, Libya Successful launch of Orange Intense Services China: trials with CMCC, CT, CNC Mobile NGN: T-Mobile, Cingular Major Wireless Transmission deals with Orange, Vodafone, Telenor Convergent Payment, Packet Core, and Video solutions 20+ new customers : O2, Bell Mobility, KPN, TIM NGN iGGSN WiMAX, TD-SCDMA Managed Applications Content Distribution

Momentum in 3g Momentum in 3g

Significant wins with Significant wins with major operators major operators Increased footprints in Increased footprints in application solutions application solutions

Partnership Highlights

Established strong Established strong position in strategic position in strategic segments segments

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Globacom Nigeria The Success Story Continues

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Alcatel, a growth partner since day one (2003)

1 million subscribers in less than one year (> 2 millions today) 87 towns covered in first year of operation First to introduce multimedia messaging services

further pioneering and fueling the growth

685mio USD turnkey contract extension Mobile network extension to 8mio subs capacity Triple Play services on a new fixed network, with broadband multimedia services in 10 major cities 8,600 km 120Gbit/s submarine cable to the UK/USA Unique Triple Play experience in Africa

Alcatel confirmed as N1 partner for the development of telecommunication services in Africa & Middle-East

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Changing the rules in Wireless Access

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Alcatel - Multi-Access Broadband Solutions

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2004

2005
TD-SCDMA CDMA UMTS HSDPA

2006
C o n v e r g e n c e Service bundling

Mobile

HSDPA+

Nomadic
UMTS TDD

WiMAX Rev e

Wireless DSL
MC-CDMA

WiMAX Rev d

Core network convergence

Driving the convergence to provide truly multi-access broadband

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Alcatel and Intel - Make Mobile WiMAX a Reality

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Joint work on standards and spectrum Joint developments

Alcatel develops network solution Intel develops chipset Centrino

Joint End-to-End interoperability testing Joint marketing & business development Commercial network deployments starting mid-2006

802.16e

The strategic relationship between Alcatel and Intel lays the foundation for nomadic broadband wireless to succeed Signals Research Group

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Orange selecting Alcatel for a live HSDPA experimentation in France

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Building upon the successful launch of Orange Intense Orange is selecting Alcatel for its HSDPA experimentation Offering both Corporate and Consumers End-Users higher speed better quality of service (e-mail, video) All Alcatel NodeBs deployed for Orange are HSDPA-ready (simple software upgrade) With full performance (16QAM modulation-inside) from Day One enabling Broadband Mobile

Experimentation starting in Q2 2005 including interoperability with chipsets/devices

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Alcatel and ZTE

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A powerful combination to serve the CDMA market OEM agreement for Fixed and Mobile CDMA Broadband and Local Loop

Global reach Next-generation core network Payment, Video, Triple Play End-to-end integration expertise

Cost-effective CDMA radio solutions 1xRTT EV-DO / EV-DV 40+ references around the world

Adding ZTE's CDMA radio access portfolio into the mix makes Alcatel the only company ready to address all forms of broadband. Current Analysis

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Changing the rules in Core Network

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Mobile Markets Challenges

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Mobile Market trends towards NGN

2G network extension to face strong capacity growth forecasts Core Network renovation for matured/amortized network UMTS deployment starting directly with NGN R4 architecture

Mobile Market trends towards IMS

Increase ARPU with New Services : Multimedia, fixed-Mobile

Keep Value in the Mobile Networks

Optimize OPEX & CAPEX

Alcatels Contribution

ALCATEL Market Leader in NGN Core IMS ready NGN solution A strong partner in Service innovation A broad portfolio of revenue-generating services Common service delivery for fixed and mobile

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Alcatel The Leader in Next-Generation Mobile Core

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Commercially -available softswitch (NGN) Deployed with Tier1 operators Several million ports in 2005 Breakthrough vs. traditional solutions Software-based, Open IT technologies Higher capacity & density 10:1 advantage Reduced development cycles 4:1 advantage Field-proven OPEX savings Up to 40% Network expansion CAPEX savings Up to 25% Multi-standard : GSM/EDGE, 3G/UMTS, CDMA Support of converged services : UMA Future-proof for all-IP evolution Ready for migration (software) to IMS services

Delivering drastic savings TODAY, while preparing TOMORROW

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Mobile NGN- Breaking into major Tier 1 Operators

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The worlds first nationwide next-generation mobile network Complete GSM/EDGE core renovation 1mio+ ports already deployed Drastic OPEX & CAPEX savings Ready for 3G and UMA service introduction

Spatial Atrium solution for 3G launch and 2G network expansion 100% of initial 3G deployment More than 4 Million ports ordered

Major wins against incumbent legacy suppliers Strong traction and success in other regions

(TAO)

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Changing the rules in end-user services

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Alcatels leadership in Video Services

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Mobile TV Mobile TV

3G

Enhanced Enhanced Video Streaming Video Streaming

Video Video Conferencing Conferencing Video Mail Box Video Mail Box Video Calling Video Calling Video Surveillance Video Surveillance

2.5G 2G

Streaming Streaming Audio Audio Ring Back tones Ring Back tones

Video Streaming Video Streaming Video Download Video Download

Video Messaging Video Messaging

Maturity of Local Market

Over 50 references video/music references in the world

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Orange France Successful launch of Video services

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From video streaming over GPRS

Orange World Video, Dec 2003

2.5 G
5.1M Users (26% of subs base) Top Usage
News/Fashion TV Sports Music

3G
Successful 3G take-off
End Jan05: 30,000 + 3G users 11,000 video greetings on New Years Eve

500.000 video streaming Jan05

to a full 3G video offering

Orange Intense, Dec 2004
Alcatel delivering on the promise of 3G/UMTS

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32nd Americas Cup

Putting into practice User-Centric Broadband Services

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Americas Cup One of the biggest sport & media event in the world Alcatel has exclusivity on the new media rights
Content distribution for mobile and Internet

Alcatel now engaging in

Content aggregation and service delivery for MSPs and ISPs Alcatels MobileKiosk solution Hosted and operated mode Fixed & mobile broadband multimedia services Live news Video on demand 3D interactive race viewer Gaming Interactive community services Multimedia personalisation

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Conclusion

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Alcatel in Mobile - 2005 Outlook

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Sustain profitable growth

Extend leadership in growing markets Increase momentum in Broadband Wireless Access Confirm leadership in mobile NGN, on the road to IMS Further increase footprint in applications Grow in Services

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Page 22

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