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FRANCE TELECOM GROUP & MICROSOFT HAVE ANNOUNCED A STRATEGIC DEAL TO CO-DEVELOP INNOVATIVE PRODUCT AND TECHNOLOGIES

Paris, July 6, 2005.

On June 29th, 2005, France Telecom Group and Microsoft announced a strategic deal to co-develop innovative products and technologies that enable customers to benefit from the new opportunities of the digital world through innovative convergent services.

As part of this partnership, Didier Lombard, Chairman and CEO France Telecom Group and Steve Ballmer, CEO Microsoft Corporation are presenting the first two initiatives in this strategic partnership.

First, France Telecom Group and Microsoft will cooperate on a next generation service platform to enable aggregation and delivery of a wide variety of services, including voice, video and data.

Digital convergence brings many new opportunities for users to utilize multiple devices across many different networks. There is a need for next-generation service platforms, for triple play and beyond, in order to evolve from side-by-side services, and provide users with a much richer experience, giving the liberty to combine TV, VoIP, IM, presence, content, and many other services simultaneously and with great flexibility.

This service platform, using the Microsoft Connected Services Framework, will provide a foundation for building and managing complex services using a service-oriented architecture (SOA) and Web service interfaces. France Telecom Group will aggregate, provision and manage a range of new converged services for consumers and business customers, to enrich and simplify their everyday life, regardless of network or device.

By bringing together services developed by France Telecom Group and Microsoft software, as well as a broad array of third-party offerings and content, France Telecom Group will be able to create new combinations targeting specific customer segments. France Telecom Group will be able to develop differentiated offerings that will attract new subscribers, build customer loyalty, and importantly, drive new revenue streams.

The second strategic initiative is a joint collaboration bringing many countries a series of feature-rich, easy-to-use voice-over-IP (VoIP) phones developed by France Telecom Group and based on Microsoft software:

 LivePhone - the first WiFi broadband Smartphone developed by France Telecom Group for its Home segment - will be connected to the France Telecom Group home gateway (LiveBox) and services.
 Homezone - developed by France Telecom Group - is a seamless service for communications on the move and at home, using a dual-radio GSM / WiFi mobile Voice Over IP device which will evolve to become a Smartphone based on the Windows Mobile platform.

As part of the partnership, France Telecom Group and Microsoft will develop new advanced features and applications, enabling mobile information workers and consumers to access a broad variety of applications and services on the go as well as at home. Both mobile voice-over-IP phones will be built using industry standard Session Initiation Protocol (SIP). Homezone will be compatible with Unlicensed Mobile Access (UMA), technology promoted by France Telecom Group.

Didier Lombard, Chairman and CEO France Telecom Group today says: "With the NExT program and the ambition it defines, France Telecom Group aims to build the future of telecom services and to become the preferred telecom services provider, by harnessing the potential of information technologies on integrated fixed, mobile and internet networks. The partnership between the world's leading software company and France Telecom Group promises customers a New Experience of Telecommunications, with services that enhance their everyday life. "

Steve Ballmer, CEO Microsoft Corporation, today says: "This partnership demonstrates the commitment of both our companies to innovating and delivering the best services to customers. This is about accelerating convergence to provide consumers and enterprises with much richer and simpler experiences. Innovating together, we will deliver new digital devices and better integrated, end-to-end services that combine Microsoft's expertise in software with France Telecom Group's expertise in broadband and mobile networks."


About Microsoft

Founded in 1975, Microsoft (NASDAQ: MSFT) is a worldwide leader in software for personal and business computing. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing at any time and from any place, using the digital tool of their choice connected up to the Internet.
Created in 1983, Microsoft France employs 900 people. Since January 31, 2005, the company has been chaired by Eric Boustouller.


About France Telecom Group
France Telecom Group is one of the world's leading telecommunications carriers, with 129,6 million customers on the five continents (220 countries and territories) at March 31, 2005 and consolidated revenues of 47.16 billion euros for 2004 under French GAAP (46.16 billion euros under IFRS GAAP). For the Q1 2005, consolidated revenues totaled 11.62 billioneuros under IFRS GAAP. France Telecom Group provides businesses, consumers and other carriers with a complete portfolio of solutions that spans local, long-distance and international telephony, wireless, Internet, multimedia, data, broadcast.
France Telecom Group is the second-largest wireless operator and Internet access provider in Europe, and a world leader in telecommunications solutions for multinational corporations. France Telecom Group (NYSE: FTE) is listed on the Paris and New York stock exchanges.


Microsoft press contacts:
Corinne Got-Camard: +33 6 64 40 45 37
cgot@microsoft.com
Julie Paillard - Euro RSCG: +33 6 62 11 38 43
Julie.paillard@eurorscg.fr


France Telecom Group press contacts:
+ 33 1 44 44 93 93
Nilou Du Castel: nilou.ducastel@francetelecom.com
Cathy Excoffier: cathy.excoffier@francetelecom.com
Alain Duquenne: alain.duquenne@francetelecom.com