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25th November 2002

In the framework of the MobilCom rescue plan organised by the German Federal government since September 15, 2002, France Telecom has signed a conditional transaction with MobilCom for an amicable termination of their agreements regarding the development of UMTS in Germany.

This MobilCom rescue plan includes two separate parts:

* a rescue plan for MobilCom's traditional businesses (GSM service

provider, fixed-line telephony and internet) financed by a credit

facility of 162 million euros granted by four German financial

institutions and backed by an 80% warranty from the German Federal state

and the Land of Schleswig-Holstein;

* a freeze-down plan for the UMTS business with France Telecom's

participation.

A number of conditions need to be fulfilled to finalise this agreement, including:

* an agreement between France Telecom and the banking syndicate, as well

as Nokia and Ericsson, on the purchase of their loans (approximately

6 billion euros) in exchange for perpetual securities redeemable into

shares at a price of 47 euros per share, and would be accounted for in

France Telecom's balance sheet as quasi-equity. This agreement is to be

finalised on November 30, 2002 at the latest;

* approval by the MobilCom Shareholders Meeting of the rescue plan for

MobilCom's traditional businesses, the freeze-down plan for the UMTS

business and waiver of all recourse against the France Telecom Group.

The MobilCom shares held by G. Schmid and Millenium have been placed in

a Trust. The Trustee has undertaken to approve the entire rescue plan at

the Shareholders Meeting. This Shareholders Meeting is to take place on

January 30, 2003 at the latest;

* approval by the France Telecom Shareholders Meeting on the perpetual

securities to be issued in exchange for the loans re-purchased from the

banks and vendors. This Shareholders Meeting is to take place on

February 28, 2003 at the latest.

If all the conditions of the agreement were fulfilled, France Telecom would:

* purchase the loans from the banks and vendors (for approximately

6 billion euros) in exchange for the perpetual securities;

* waive the loans purchased from the banks and vendors (6 billion euros

quoted above), as well as the shareholder loans granted to MobilCom over

the last two years (1 billion euros), amounting to a total of

approximately 7 billion euros;

* contribute to expenses for MobilCom's UMTS freeze-down plan, up to a

maximum of 580 million euros, including compensation for the termination

of the National Roaming contract between E-Plus and MobilCom. This

amount will be paid progressively to reflect the actual costs incurred

by MobilCom. Approximately one quarter of this amount will be paid

before the end of this year to allow MobilCom to meet initial expenses

related to the UMTS freeze-down plan.

These charges are already fully provisioned in France Telecom's accounts.

In exchange, France Telecom benefits from :

* waiver by MobilCom of all recourse against the France Telecom Group

(including Orange) and vice versa;

* waiver by Gerhard Schmid of all recourse against the France Telecom

Group (including Orange) and vice versa;

* recovery provision to the value of MobilCom's UMTS assets (including the

license) allowing France Telecom to receive 90% of the proceeds on any

UMTS asset possibly sold by MobilCom.

This agreement is consistent with the decisions of France Telecom's Board of Directors on September 12, 2002 and allows the Group to limit its exposure to risks linked to its withdrawal from the UMTS business in Germany.

France Telecom expresses its gratitude to the German Federal government for its decisive contribution to the implementation of MobilCom's rescue plan. France Telecom also thanks Dr Dieter Vogel, the negotiator appointed by the government.

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