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|UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION
|--------------------------------------------------------

Washington,
  D.C. 20549


Form
  20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) 
  OF THE SECURITIES EXCHANGE ACT OF 1934 ANNUAL REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934

For
  the fiscal year ended December 31, 2007

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION
  FILE NUMBER: 000-30078

WAVECOM
  S.A.(Exact name of Registrant as specified in its charter)

|Not
        applicable                                                                                                                                                                                                                                                             | Republic
        of France                              | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | 
|(Translation
        of Registrants name into English)                                                                                                                                                                                                                            | (Jurisdiction
        of incorporation or organization) | 
|3,
        esplanade du Foncet
        92442 Issy-les-Moulineaux Cedex  France
        (Address of principal executive offices)
        Tel. 011 33 1 46 29 08 00 Ronald D. Black CEO ron.black@wavecom.com
        (Name, telephone number and e-mail of Company contact person) |                                                        

Securities
  registered or to be registered pursuant to Section 12(b) of the Act: See below

|Title
        of each class:                                                                                                                                 | Name
        of each exchange on which registered:                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------
|Shares,
        nominal value 1.00 each*
        American Depositary Shares, evidenced by
        American Depositary Receipts, each representing one Share | Nasdaq
        Global Market
        (for listing purposes only Nasdaq Global Market)

Securities
  registered or to be registered pursuant to Section 12(g) of the Act: NoneSecurities
  for which there is a reporting obligation pursuant to Section 15(d) of the Act:
  NoneIndicate
  the number of outstanding shares of each of the issuers classes of capital
  or common stock as of the close of the period covered by the annual report:

Ordinary
  Shares, nominal value 1.00 per share: 15,796,591

Indicate
  by check mark if the registrant is a well-known seasoned issuer, as defined
  in Rule 405 of the Securities Act.Yes  No

If
  this report is an annual or transition report, indicate by check mark if the
  registrant is not required to file reports pursuant
  to Section 13 or 15(d) of the Securities Exchange Act of 1934.Yes 
  No

Indicate
  by check mark whether the registrant: (1) has filed all reports required to
  be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
  during the preceding 12 months (or for such shorter period that the registrant
  was required to file such reports), 
  and (2) has been subject to such filing requirements for the past 90 days.Yes
   No

Indicate
  by check mark whether the registrant is a large accelerated filer, an accelerated
  filer, or a non-accelerated filer.See
  definition of accelerated filer and large accelerated filer in Rule
  12b-2 of the Exchange Act. (Check one):Large
  accelerated filer  Accelerated
  filer:  Non-accelerated
  filer:

Indicate
  by check mark which basis of accounting the registrant has used to prepare the
  financial statements included in this filing:

U.S.
  GAAP  International Financial
  Reporting Standards as issued by the international Accounting Standards Board
   Other

If
  Other has been checked in response to the previous question, indicate
  by check mark which financial statement item the registrant has elected to follow:Item
  17  Item 18

If
  this is an annual report, indicate by check mark whether the registrant is a
  shell company (as defined in Rule 12b-2 ofthe
  Exchange Act). 
  YesNo

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|By
      bringing wireless connectivity, our solutions help:
|------------------------------------------------------------
|                                                            
|                                                           
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            

Automotive
    applications:For the automotive market, wireless communication is particularly useful
    for features such as: stolen vehicle tracking, navigation systems, monitoring
    driving patters, concierge services as well as remote vehicle diagnostics
    and maintenance. Automatic
    metering:With
    growing regulatory requirements to vary tariffs based on consumption, automatic
    meter management is evolving. Meter manufactures and utility companies alike
    are looking at many new ways to use wireless functionality to optimize consumption. Alarm
    and security systems:Alarm
    systems connected to wireless networks are replacing traditional wire-line
    technologies and using high bandwidth capabilities for remote video surveillance. Fixed
    wireless applications:Desktop
    phones and mobile public telephones using wireless networks are bringing connectivity
    to countries or regions where there is limited or no existing wire-line infrastructure. Sales
    and payment terminals:Point
    of sale terminals now use wireless networks to confi rm and authorize payments
    from retailers with debit and credit cards, oftentimes replacing the traditional
    wire-line methods. Control
    and monitoring:Machines
    that are wireless-enabled have many industrial and commercial uses from vending
    machines to photocopiers that can be monitored remotely for inventory levels
    or the proper functioning of the equipment.


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Wavecom
    is a leading provider of smart-device communications technology for innovative
    M2M (Machine to Machine) business solutions. Built on unparalleled wireless
    expertise, Wavecom solutions include a range of Wireless CPU®s
    (microcontrollers with built-in wireless communication capability), backed
    by the industry-leading OpenAT®Software Suite with its
    own real-time operating system, an integrated development environment and
    a wide range of middleware Plug-Ins for greater customization. These complete
    embedded solutions, that use chipsets tailored to M2M markets, enable makers
    of all types of machines to develop a new breed of intelligent wireless applications
    without the need of external processors. Wavecom also provides an industry-leading
    portfolio of operated services which enable the remote monitoring and upgrade
    of devices in the field.




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Table
  of Contents

|                           | Page                                                                                             
|-------------------------- | -------------------------------------------------------------------------------------------------
|PART
      I               | 8                                                                                                
|                           | Item
      1: Identity of Directors, Senior Management and Advisers                              
|                           | Item
      2: Offer Statistics and Expected Timetable                                            
|                           | Item
      3: Key Information                                                                    
|                           | Item
      4: Information on the Company                                                         
|                           | Item
      4A: Unresolved Staff Comments                                                         
|                           | Item
      5: Operating and Financial Review and Prospects                                       
|                           | Item
      6: Directors, Senior Management and Employees                                         
|                           | Item
      7: Major shareholders and Related Party Transactions                                  
|                           | Item
      8: Financial Information                                                              
|                           | Item
      9: The Offer and Listing                                                              
|                           | Item
      10: Additional Information                                                            
|                           | Item
      11: Quantitative and Qualitative Disclosures about Market Risk                        
|                           | Item
      12: Description of Securities other than Equity Securities                            
|                           |                                                                                                  
|PART
      II              | 85                                                                                               
|                           | Item
      13: Defaults, Dividend Arrearages and Delinquencies                                   
|                           | Item
      14: Material Modifications to the Rights of Security Holders and Use of
      Proceeds
|                           | Item
      15: Controls and Procedures                                                           
|                           | Item
      16A: Audit Committee Financial Expert                                                 
|                           | Item
      16B: Code of Ethics for Financial Officers                                            
|                           | Item
      16C: Principal Accountant Fees and Services                                           
|                           | Item
      16D: Exemption from the Listing Standards for Audit Committees                        
|                           | Item
      16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers           
|                           |                                                                                                  
|GLOSSARY                   | G-1                                                                                              
|                           |                                                                                                  
|PART
      III             | 90                                                                                               
|                           | Item
      17: Financial Statements                                                              
|                           | Item
      18: Financial Statements                                                              
|                           | Item
      19: Exhibits                                                                          
|                           |                                                                                                  
|Financial
      Statements | F-1                                                                                              

6WAVECOM
  - Annual Report Form 20-F 2007

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PRESENTATION
  OF INFORMATION

Unless
  the context otherwise indicates, references to Wavecom we,
  us or the Company include Wavecom S.A. and its subsidiaries.
  References to U.S. dollars or $ contained herein are
  to the lawful currency of the United States, and references to euro
  or  are to the currency of the European Monetary Union.

|FORWARD-LOOKING
      STATEMENTS
|--------------------------------

This
  annual report contains forward-looking statements within the meaning of the
  United States Private Securities Litigation Reform Act of 1995, in particular
  Item 4 Information on the Company  Trends. These forward-looking
  statements are usually identified by words such as believe, anticipate,
  plan, goal, target and similar expressions.
  These forward-looking statements are not guarantees of Wavecoms future
  operational or financial performance and are subject to risks and uncertainties.
  Actual operational and financial results may differ materially from Wavecoms
  expectations contained in the forward-looking statements as a result of various
  factors. Factors that may cause such differences include, but are not limited
  to, the factors discussed in Item 3 Key Information-Risk Factors
  and Item 5 Operating and Financial Review and Prospects.

WAVECOM
  - Annual Report Form 20-F 2007      7

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PART
  I

|                                                                                  | Page | 
|--------------------------------------------------------------------------------- | ---- | 
|Item
      1: Identity of Directors, Senior Management and Advisers               | 10   | 
|Item
      2: Offer Statistics and Expected Timetable                             | 10   | 
|Item
      3: Key Information                                                     | 10   | 
|Selected
      Financial Data                                                     | 10   | 
|Exchange
      Rate Data                                                          | 12   | 
|Risk
      Factors                                                                | 12   | 
|Item
      4: Information on the Company                                          | 22   | 
|Company
      background                                                          | 22   | 
|Business
      overview and recent evolution                                      | 22   | 
|The
      market for wireless communication between machines                      | 24   | 
|Vision
      & Mission                                                            | 24   | 
|Currently
      targeted product applications                                     | 25   | 
|Our
      products and services                                                   | 25   | 
|Marketing
      and Sales                                                         | 30   | 
|Customer
      base                                                               | 31   | 
|Research
      and development                                                    | 31   | 
|Our
      contract manufacturing partner and relationship                         | 32   | 
|Quality
      assurance, ISO certification and our continuous improvement process | 33   | 
|Backlog                                                                           | 33   | 
|Competition                                                                       | 33   | 
|Intellectual
      property                                                       | 34   | 
|Capital
      Expenditures                                                        | 35   | 
|Corporate
      Information, organizational structure                             | 35   | 
|Property,
      Plant and Equipment                                               | 36   | 
|Environmental
      Issues                                                        | 36   | 
|Risk
      Management and Insurance Coverage                                      | 36   | 
|Item
      4A: Unresolved Staff Comments                                          | 37   | 
|Item
      5: Operating and Financial Review and Prospects                        | 38   | 
|Constant
      currency rates                                                     | 38   | 
|Critical
      Accounting Judgments and Estimates                                 | 38   | 
|Background                                                                        | 39   | 
|Reporting
      by Geographic Business Segment                                    | 41   | 
|Results
      of Operations                                                       | 42   | 
|Selected
      quarterly operating results                                        | 50   | 
|Liquidity
      and capital resources                                             | 51   | 
|Research
      and development                                                    | 51   | 
|Off-balance
      sheet arrangements                                              | 51   | 
|Tabular
      disclosure of contractual obligations                               | 52   | 
|Interest
      rate risk                                                          | 52   | 
|Subsequent
      events                                                           | 53   | 
|Item
      6: Directors, Senior Management and Employees                          | 54   | 
|Board
      of Directors and Executive Officers                                   | 54   | 
|Directors                                                                         | 55   | 
|Executive
      officers                                                          | 57   | 
|Committees
      of the Board of Directors                                        | 59   | 
|Corporate
      Governance Activities                                             | 61   | 

8WAVECOM
  - Annual Report Form 20-F 2007

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|                                                                          |    | 
|------------------------------------------------------------------------- | -- | 
|Code
      of Ethics and Business Conduct                                 | 61 | 
|Code
      of Ethics for Senior Financial Management                      | 61 | 
|Internal
      controls                                                   | 61 | 
|Compensation
      of Directors and Officers                              | 65 | 
|Share
      Ownership and Option and Warrant Information                  | 67 | 
|Employees
      and independent contractors                               | 70 | 
|Item
      7: Major shareholders and Related Party Transactions           | 72 | 
|Major
      shareholders                                                  | 72 | 
|Major
      changes in ownership                                          | 74 | 
|Geographic
      Distribution of shareholders                             | 74 | 
|Related
      Party Transactions                                          | 74 | 
|Item
      8: Financial Information                                       | 75 | 
|Financial
      Statements                                                | 75 | 
|Legal
      Proceedings                                                   | 75 | 
|Significant
      Changes                                                 | 75 | 
|Dividends                                                                 | 75 | 
|Item
      9: The Offer and Listing                                       | 76 | 
|Price
      Range of Shares and ADSs                                      | 76 | 
|Item
      10: Additional Information                                     | 77 | 
|Memorandum
      and articles of association                              | 77 | 
|Objects
      and purposes                                                | 77 | 
|Composition
      of share capital                                        | 77 | 
|Dividend
      and liquidation rights                                     | 77 | 
|Attendance
      and voting at shareholders meetings                     | 77 | 
|Repurchase
      and redemption of shares                                 | 78 | 
|Requirement
      for holdings exceeding certain percentages              | 79 | 
|Material
      Contracts                                                  | 79 | 
|Exchange
      Controls                                                   | 79 | 
|Taxation                                                                  | 80 | 
|Documents
      on Display                                                | 83 | 
|Item
      11: Quantitative and Qualitative Disclosures about Market Risk | 84 | 
|Item
      12: Description of Securities other than Equity Securities     | 84 | 

WAVECOM
  - Annual Report Form 20-F 2007      9

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Item
  1:  Identity of Directors, Senior Management and Advisers

Not applicable.

Item
  2:  Offer Statistics and Expected Timetable

Not applicable.

Item
  3:  Key Information

|Selected
      Financial Data
|-----------------------------

The following
  selected financial data for the five years ended December 31, 2007 are derived
  from the consolidated financial statements of Wavecom, which have been prepared
  in accordance with U.S. GAAP and have been audited by Ernst & Young Audit,
  independent auditors. The data should be read in conjunction with Item
  5. Operating and Financial Review and Prospects, the consolidated financial
  statements, related notes and other financial information included in this annual
  report.

10WAVECOM
  - Annual Report Form 20-F 2007

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|                                                                             | Years
      ended December 31, |  
|---------------------------------------------------------------------------- | ------------------------------ | -
|                                                                             | 2003                           |  
|                                                                             |                               
|Consolidated
      statements of operations data:                            |                                |  
|Revenues:                                                                    |                                |  
|Product
      sales                                                          | 
      271,773                |  
|Service
      revenue                                                        | 3.855                          |  
|Licensing
      revenue                                                      |                               |  
|                                                                             |                               
|Total
      revenues                                                         | 275.628                        |  
|Cost
      of revenues:                                                      |                                |  
|Cost
      of goods sold                                                     | 168.465                        |  
|Cost
      of services                                                       | 4.704                          |  
|                                                                             |                               
|Total
      cost of revenues                                                 | 173.169                        |  
|                                                                             |                               
|Gross
      profit                                                           | 102.459                        |  
|Operating
      expenses:                                                    |                                |  
|Research
      and development                                               | 62.123                         |  
|Sales
      and marketing                                                    | 27.766                         |  
|General
      and administrative                                             | 39.141                         |  
|Acquired
      in process technology                                         |                               |  
|Amortization
      and impairment of intangible assets                       | 4.244                          |  
|Restructuring
      costs                                                    |                               |  
|Deferred
      compensation amortization                                     | 205                            |  
|                                                                             |                               
|Total
      operating expenses                                               | 133.479                        |  
|                                                                             |                               
|Operating
      income (loss)                                                | (31.020                        | )
|Gain
      on sales of long-term investments                                 |                               |  
|Interest
      and other financial income (expense), net                     | 702                            |  
|                                                                             |                               
|Income
      (loss) before minority interests and income taxes               | (30.318                        | )
|                                                                             |                               
|Minority
      interest                                                      | (38                            | )
|                                                                             |                               
|Income
      (loss) before income taxes                                      | (30.280                        | )
|Income
      tax expense (benefit)                                           | 861                            |  
|                                                                             |                               
|Net
      income (loss)                                                      | (31.141                       | )
|                                                                             |                               
|Basic
      net income (loss) per share(1)                                   | (2.06                         | )
|Diluted
      net income (loss) per share                                    | (2.06                         | )
|Cash
      dividends declared per share(2)                                   |                               |  
|Number
      of shares used in computing basic net income (loss) per share   | 15,098,795                     |  
|Number
      of shares used in computing diluted net income (loss) per share | 15,098,795                     |  
|                                                                             |                               

|(1) | Net income (loss) per share amounts are computed using the weighted average number of shares outstanding, which excludes options and warrants, and reflects only the actual ordinary shares outstanding.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We do not expect to pay any cash dividends on our shares in the foreseeable future.
|--- | -----------------------------------------------------------------------------------

WAVECOM
  - Annual Report Form 20-F 2007      11

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|                                       | 2003            |  | 2004           |  | 2005           |  | 2006           |  | 2007            | 
|-------------------------------------- | --------------- |  | -------------- |  | -------------- |  | -------------- |  | --------------- | 
|                                       |                
|Consolidated
      balance sheet data: |                 | 
|Total
      current assets             | 
      211,542 |  | 
      99,174 |  | 
      94.965 |  | 
      93.097 |  | 
      183.467 | 
|Total
      assets                     | 275.229         |  | 137.206        |  | 120.078        |  | 139.177        |  | 231.398         | 
|Total
      current liabilities        | 131.204         |  | 78.716         |  | 37.969         |  | 50.318         |  | 44.598          | 
|Total
      long-term liabilities      | 6.692           |  | 2.034          |  | 17.969         |  | 17.200         |  | 98.092          | 
|Total
      shareholders equity       | 137.333         |  | 56.456         |  | 64.140         |  | 71.659         |  | 88.708          | 
|                                       |                

|Exchange
      Rate Data
|------------------------

The exchange
  rate for converting U.S. dollars into euros (using the noon buying rate in New
  York City for cable transfers in foreign currencies as certified for customs
  purposes by the Federal Reserve Bank of New York) on March 31, 2008 was $1.58=1.
  Fluctuations in the exchange rate between the euro and the dollar will affect
  the dollar amounts received by owners of ADSs on conversion of dividends, if
  any, paid in euro on the shares and may affect the dollar price of the ADSs
  on the Nasdaq Global Market.

|         |        
|-------- | -------
|Month    | High   
|         |        
|2008     |        
|March    | $1.5904
|February | 1.5230 
|January  | 1.4922 
|2007     |        
|December | 1.4784 
|November | 1.4968 
|October  | 1.4441 
|         |        

|(source:
      www.oanda.com)
|-----------------------------

The table
  below shows the average rates of exchange for one U.S. dollar per euro for the
  years ended December 31, 2003 to December 31, 2007. Averages are based on daily
  noon buying rates for cable transfers in New York City certified for customs
  purposes by the Federal Reserve Bank of New York. (source: www.federalreserve.gov)

|                              |        
|----------------------------- | -------
|Year
      ended December 31, | Average
|                              |        
|2007                          | $1.3711
|2006                          | 1.2563 
|2005                          | 1.2449 
|2004                          | 1.2011 
|2003                          | 1.1315 
|                              |        

|Risk
      Factors
|------------------

In addition
  to the other information contained in this annual report, the following risk
  factors should be carefully considered in evaluating us and our business. These
  statements are intended to highlight the material risk factors that may affect
  our business results, however these risks are not the only ones we face, and
  additional risks not presently known to us or that we currently deem immaterial
  may impair our business operations in the future.

|Risks
      related to our Business
|-----------------------------------

|Our
      primary source of revenue is the vertical markets, or embedded industrial
      applications, for wireless communication between machines, which are nascent
      markets. If these markets do not develop at the rate we anticipate, or if
      we are unable to successfully penetrate these markets, our financial results
      will be adversely impacted.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In September
  2004, we announced that we would focus exclusively on the vertical markets,
  or embedded industrial applications, for wireless communication between machines,
  targeting wireless applications in three areas: Automotive, industrial Machine-to-Machine
  (M2M) and mobile professional applications. The applications for which we sell
  our products are extremely fragmented and no single sub-application shows signs
  that it will expand more quickly than the others.

12WAVECOM
  - Annual Report Form 20-F 2007

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Therefore,
  the timing of the development of these markets, which will be critical for our
  success in the future, is not, at this time, well defined.

We face
  various competitors in vertical markets both at the local and the global level.
  It has been our experience that our competitors exert price pressure to increase
  their market share. This pressure can be aggravated by the impact of a weak
  US dollar on prices. If we are unable to maintain or expand our share of the
  vertical markets in both volume and value our revenues may not grow at the rate
  we anticipate, or they may decline.

In addition,
  it is possible that we could eventually face a situation in the vertical markets
  similar to that which we faced in the mobile handset market when prices for
  competing solutions decreased significantly and we were unable to continue to
  offer our products at competitive prices. If this risk, or the other risks described
  above, were to materialize, both our revenues and earnings could stagnate or
  suffer declines. As a result, we may not generate sufficient revenues to cover
  our operating expense base, and we may therefore operate at a loss.

|Our
      long sales cycle may result in substantial fluctuations in revenue from
      quarter to quarter which makes corporate planning difficult.
|----------------------------------------------------------------------------------------------------------------------------------------------------

The time
  between the first contacts with a customer, a design win, and the first sale
  may be long, in particular in the automotive area, since design times and safety
  certifications for new models take several years. Our typical sales cycle is
  generally from six to 18 months and can be as much as two to three years for
  some customers. In addition, the timing of our sales is often linked with the
  timing of the launch of our customers new products. Any slippage in the
  launch of a customers product, or cancellation of pending orders could
  delay the timing of our related product sales. Consequently, we face difficulties
  in predicting the quarter in which expected sales to customers will occur, if
  at all, and we may incur substantial expenses in relation to expected product
  sales far in advance of the actual sales and receipt of revenue. In addition,
  our customers ability under certain circumstances to reschedule or cancel
  orders without significant penalty could adversely affect our liquidity, as
  we may be unable to adjust our purchasers of components from third-parties to
  match customer changes in delivery dates or cancellations.

|We
      may be unable to sustain or increase our profitability and once again suffer
      operating losses which could lead to a decline in our stock price.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------

After
  two years of posting operating losses in 2003 and 2004, the following years
  2005, 2006 and 2007 were profitable. In the current economic context, if we
  are unable to sustain business growth and maintain the gross margin at the present
  level or if our operating expenses exceed current levels, we may once again
  suffer operating losses for one or more quarters.

|We
      may experience integration difficulties or encounter unknown liabilities
      with respect to our recent acquisition of Anyware Technologies.
|-------------------------------------------------------------------------------------------------------------------------------------------------------

On February
  1, 2008, we announced the acquisition of Anyware Technologies. We cannot predict
  the success of the acquired company once under our control, and we may not achieve
  the expected rate of return from the acquisition, or may fail to successfully
  integrate the business or employees into our working environment. An acquisition
  can also result in unanticipated legal risks, legal costs and liabilities. Our
  failure to successfully integrate the acquired company into our group may adversely
  affect our financial condition and results of operations, and may hinder our
  ability to execute on our business strategy.

|If
      the ecosystem for wireless-enabled machines does not develop we may not
      find adequate markets for our products and thus not achieve our growth targets.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The ecosystem
  for wireless-enabled, communicating machines consists of four main types of
  players. First are the technology providers, like us, who provide the core wireless
  technology using all major wireless standards. A category of value-added distributors
  and design houses play a role in conceptualizing, creating and designing end-products.
  Manufacturers also conceive, create, design and produce a broad range of wireless-enabled
  devices. Finally, there are the wireless network operators and virtual wireless
  operators which provide the air time to transmit data to end users.
  If any one of these players does not develop at the same pace as the others,
  the markets as a whole will have difficulty developing, which may in turn keep
  us from reaching our growth targets.

|The
      wireless communication market in which we operate is characterized by rapidly
      changing and increasingly complex technologies and we must constantly balance
      the need to keep pace with new trends with our interest in not overspending
      on uncertain and unproven technologies.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The markets
  in which we sell our wireless solutions are regularly developing new types of
  products and new versions of existing products. To be competitive, manufacturers
  who purchase our solutions for use in their end-products must satisfy market
  demand at market prices. To meet our customers needs, we must continuously
  update and enhance our products,

WAVECOM
  - Annual Report Form 20-F 200713

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shortening
  their life cycles so that they meet the latest standards and include up-to-date
  features for a wide variety of applications.

To develop
  these enhancements, new designs and technologies, we must spend time and significant
  amounts of money on research and development. These investments are generally
  made before commercial viability for the resulting products can be sufficiently
  proven. In addition, some of our technology is forward-looking and offers functionalities
  which are significantly advanced compared to current market standards and which
  may not have ready market applications or the ability to achieve market acceptance.
  There are no assurances that we will achieve net positive earnings from our
  new products or that they will be commercially successful, particularly if we
  misjudge a markets readiness for our products or miss a product life-cycle
  window. We may lose market share if our competitors are more successful or faster
  than we are in updating and improving products and technology and timing product
  releases with market demand.

From
  a technology standpoint, we face competition from both alternative wireless,
  and non-wireless technologies. Wireless technologies can be roughly characterized
  as WAN (Wide Area Network) which includes GSM, CDMA, OFDM, UWB, WiMAX followed
  by WLAN (Wireless Local Area Network) i.e. WiFi and finally PAN (Personal Area
  Networks) such as Bluetooth or Zigbee. Non-wireless technologies are those which
  are used to provide mirroring functionality but via a fixed (wired) network
  such as the fixed line telephone network (PSTN), LAN Ethernet or a more specific
  M2M example such as PLC (Power Line Control) which is used in the Automatic
  Meter Management market. If any of these competing technologies becomes the
  technology of choice in one or more of our target market segments while we have
  decided not to adopt those technologies, we could lose significant market share
  in the applicable segment(s).

|We
      began to perform more services work on a contingent fixed-price basis, which
      has associated risk that the work-product may not be accepted when finally
      delivered and therefore we may not be paid for our time, or the cost of
      our labor may be more than we receive in revenues.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Customer
  demand for fixed-price and/or turnkey service engagements is increasing and
  we are accepting more service work on a fixed-price basis. Typically, we perform
  the work for fixed-price services at our expense, and receiving payment for
  the work performed is contingent on the customers acceptance of the work-product
  that we deliver at certain intervals, called milestones, or at the end of the
  engagement. If the customer does not accept all or part of the work-product
  that we deliver, we may not receive some or all of the anticipated revenues
  to offset the costs incurred in performing the engagement, which could have
  an adverse impact on our revenues, net profit and financial condition. In addition,
  the risks associated with these engagements include the possibility that we
  could poorly manage the engagement and not conduct the work in the most cost
  effective manner. Further, because the fee that is charged for these engagements
  is determined at the outset, we could underestimate the amount of work that
  will be required and the engagement could actually result in a loss. Moreover,
  we could lose other more profitable opportunities because we are required to
  commit significant resources to fixed-price service engagements which may turn
  out to be unprofitable.

|We
      have launched new offers of services. The sales generated by these services
      could grow at a slower level than expected and therefore not generate the
      profits expected.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2007,
  we launched several new service offers such as IDS (Intelligent Device Services).
  These are innovative services and we cannot be sure that customers will quickly
  adopt them or that we will achieve net positive earnings on these services.

|As
      the vertical markets for wireless communication between machines evolve,
      current or future market participants, including our customers and ourselves,
      may seek to consolidate their resources, which could create significant
      financial and/or competitive stresses for us.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As the
  vertical markets for wireless communications between machines evolve, current
  or future market participants may seek to consolidate their resources to create
  more competitive or commercially effective units. Such industry consolidation
  may lead to a bid for the acquisition of our business by another group, in which
  case our shareholders may not be able to benefit from our future long-term development.

It is
  also possible that we will be excluded from an industry consolidation, in which
  case our competitors may grow stronger and gain increased market share. In addition,
  some of our key customers could be acquired by a company using a different technology
  than ours, resulting in the loss of sales for future projects with this customer.
  In light of the nascent nature of the vertical markets, we may be subject to
  financial and/or competitive stresses resulting from industry consolidation,
  and we cannot be certain as to our future position in the industry.

|Past
      or future acquisitions could disrupt our business and harm our financial
      condition.
|----------------------------------------------------------------------------------------------------

As part
  of our strategy to increase our revenue and expand our product base, we continue
  to evaluate opportunities to acquire other businesses, assets or technologies
  that would complement our current business, expand the breadth of our markets
  or enhance our strategic capabilities. Future acquisitions that we may make
  or joint ventures that we may enter into with other companies could require
  us to incur debt or contingent liabilities or require us to issue equity securities
  that

14WAVECOM
  - Annual Report Form 20-F 2007

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could
  cause the trading price of our stock to decline. Other potential acquisitions
  that we may make, or joint ventures that we may enter into, entail a number
  of risks that could materially and adversely affect our business and operating
  results, including:

| | problems
      integrating the acquired operations, technologies or products with our existing
      business and products;
|- | ---------------------------------------------------------------------------------------------------------------------------

| | diversion
      of managements time and attention from our core business;
|- | --------------------------------------------------------------------------

| | need
      for financial resources above our planned investment levels;
|- | -----------------------------------------------------------------------

| | difficulties
      in retaining business relationships with suppliers and customers of the
      acquired company;
|- | ------------------------------------------------------------------------------------------------------------------

| | risks
      associated with entering markets in which we lack prior experience;
|- | -------------------------------------------------------------------------------

| | risks
      associated with the transfer of rights and licenses of intellectual property;
|- | -----------------------------------------------------------------------------------------

| | potential
      loss of key employees of the acquired company; and
|- | ------------------------------------------------------------------

| | potential
      impairment of related goodwill and intangible assets.
|- | ---------------------------------------------------------------------

|If
      we fail to vigorously protect our intellectual property, our competitive
      position may suffer.
|------------------------------------------------------------------------------------------------------------

Our future
  success and competitive position depend in part upon our ability to develop
  and protect proprietary technology used in our products. We protect our intellectual
  property rights through a combination of patent, trademark, copyright and trade
  secret laws, as well as licensing agreements, employee and third party non-disclosure
  agreements and assignment agreements. Policing the unauthorized use of our intellectual
  property is difficult and costly, and we cannot be certain that the steps we
  have taken will prevent the misappropriation or unauthorized use of our technologies,
  particularly in countries where the laws may not protect our proprietary rights
  as fully as in the United States or Europe.

We may
  be subject to intellectual property infringement claims that result in costly
  litigation and could harm our business and ability to compete. Our industry
  is characterized by the existence of a large number of patents, as well as frequent
  claims and related litigation regarding these patents and other intellectual
  property rights. We may be involved in litigation to enforce our patents or
  other intellectual property rights, to protect our trade secrets and know-how,
  to determine the validity of property rights of others, or to defend against
  claims of invalidity. This type of litigation can be expensive, regardless of
  whether we win or lose. In the event of claims of infringement against our customers
  with respect to technology used in our products, we may be required to indemnify
  our customers, which could be very costly. Any claims, even those without merit,
  could be time consuming to defend, result in costly litigation and diversion
  of technical and management personnel, or require us to enter into royalty or
  licensing agreements. A successful claim of infringement against us with respect
  to our products could harm our business and result in significant cash expense
  to us to cover litigation costs.

|Our
      products are manufactured by Solectron Corporation, acquired by Flextronics
      in 2007, and if Flextronics is unable to meet our requirements for any reason,
      or if our agreement with Flextronics should be terminated, we could experience
      significant difficulty arranging for a suitable replacement at reasonable
      cost.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Following
  the acquisition of the Sony-Ericsson M2M Communications business in the second
  quarter of 2006, we were working with three new manufacturing partners in Mexico
  and Taiwan. We have progressively transferred the production of our products
  to the Flextronics plant in China and as of the end of 2007 our entire production
  is done at that factory.

Our reliance
  on a single manufacturer increases the risks that we could encounter delays
  related to manufacturing or supply problems at some point in the future. Using
  one contract manufacturer, we are necessarily dependent on this single primary
  supplier who assembles and tests our components and our products. Our manufacturer
  has other customers and may not have sufficient capacity to meet all of our
  supply, manufacturing, assembly and testing needs during periods of peak demand.
  They may fail to meet our specified requirements, notably our quality standards.
  They can experience financial difficulties, or delays or disruption to production
  or may be unable to produce any product if the plant is destroyed or damaged.
  In addition, a financial or political crisis in China, or a change in the political
  climate making China less receptive to foreign businesses, could also disrupt
  our supply of manufactured products or increase costs.

Our manufacturing
  agreement with Flextronics provides for termination in a strictly limited and
  precisely defined number of cases. In case of termination, a six-month exit
  management plan would be implemented to transition production back to us or
  to another contract manufacturer. However, the transition to another manufacturing
  sub-contractor would be complex and would require substantial investment of
  management, as well as possibly financial, resources.

In the
  event any of the risks described above materialize and prevent us from delivering
  our products to our customers on a timely basis, we could lose a portion of
  our business temporarily or on a long-term basis, be subject to customer contract
  penalties and incur substantial costs to establish a new contract manufacturing
  relationship.

WAVECOM
  - Annual Report Form 20-F 200715

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|Quality
      issues, such as errors in the software used in our products, could result
      in significant losses to us or our customers, thus damaging our reputation,
      or increase the potential for product liability claims against us.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We may
  face quality issues affecting either the hardware or the software in our products.
  Software frequently contains undetected errors or failures, especially when
  first introduced or when new versions are released. Several of our products
  utilize unproven or evolving technologies that may contain defects or other
  quality or performance problems. Some of these defects may be latent, or only
  triggered by very specific events, and undiscoverable through advance testing
  and may only surface following widespread use by customers. Accordingly, errors
  might still be found in our products and product upgrades for some time following
  release. Should problems occur in the operation or performance of our products,
  we may experience delays in meeting key launch dates or delivery dates to our
  customers. Defects may also cause us to incur significant re-engineering costs,
  and divert the time and attention of our engineering personnel from our new
  product development efforts. The discovery of these performance problems or
  defects could result in significant losses to our customers, who may subject
  us to indemnity or product liability claims in addition to causing customer
  relationship issues, and reduced market acceptance of our products. Significant
  defects could require product replacement or recalls or we could be obligated
  to accept product returns. These developments could have a material adverse
  effect on our reputation, business, operating results and financial condition.

Our sales
  agreements with our customers frequently contain provisions designed to limit
  our exposure to potential product liability and other claims due to unforeseen
  errors in software. It is possible, however, that the limitation of liability
  provisions contained in our sales agreements may not be effective under the
  laws of certain jurisdictions. For example, liability for claims for personal
  injury (e.g. in the consumer automotive context) cannot be contractually disclaimed
  or limited in the United States. We currently have limited insurance against
  product liability risks or errors and omissions coverage, and there can be no
  assurance that the current levels of insurance coverage are adequate or that
  additional insurance will be available to us on commercially reasonable terms
  or at all. A product liability claim or claim for economic loss brought against
  us could have a material adverse effect upon our business, operating results
  and financial condition.

|A
      significant portion of our cash is invested in marketable securities. In
      the event of a market downturn, we may suffer losses on our investments.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------

Wavecom
  has policies that limit cash investments to short-term, low-risk instruments.
  Cash is mainly held in securities that are invested in short-term money market
  accounts (in France: Fonds Commun de Placement or FCP and
  Société dInvestissement à Capital Variable or SICAV).
  However, we cannot guarantee that these investments are completely risk-free
  and we may suffer losses on our investments.

|Our
      sales and operating results could be adversely affected if the third parties
      on whom we rely for the supply of our components are unable to meet our
      supply or quality requirements.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe
  that a number of our suppliers are sole sources for key components. These key
  components are complex and difficult to manufacture and require long lead times.
  We work with our suppliers on a twelve-month rolling forecast basis, however
  these forecasts are subject to change for many reasons frequently outside of
  our control. In the event of a reduction or interruption of supply, or decline
  in quality, it could take several months before we could begin receiving adequate
  supplies from alternative sources. Supply interruptions could delay product
  shipments, causing our revenues to decline and operating results to suffer.

|Our
      profitability could be negatively impacted if the prices of our key components
      increase or if they are no longer available.
|-------------------------------------------------------------------------------------------------------------------------------------------

Over
  the past five years, we experienced declining or stable prices for most of the
  key components we use in our products. It is possible that these trends could
  reverse and that we could see component prices increase. The hardware platforms
  that we sell are made up of components that are made by manufacturers other
  than us. If our suppliers decide to discontinue manufacturing specific components,
  we may have to redesign our products, thus adding unplanned development costs.
  If either of these situations occurs, our cost structure could change, thus
  limiting our ability to maintain competitive pricing and making it more difficult
  to continue to be profitable.

|Fluctuations
      in the rate of exchange between our reporting currency, the euro, and the
      U.S. dollar can affect our net sales and costs.
|--------------------------------------------------------------------------------------------------------------------------------------------------

Although
  our functional currency is the euro, a significant portion of our revenues and
  assets are recorded in U.S. dollars. At the same time, most of our components
  are purchased in U.S. dollars, and a portion of our operating expenses is in
  U.S. dollars. During 2007, the value of the euro increased against the U.S.
  dollar, reducing our reported revenues and negatively affecting our reported
  operating and net results. This situation could continue in the future.

We incurred
  a net foreign exchange loss for 2007 of 1.4 million compared to a net
  foreign exchange loss in 2006 (1.9 million) and a net foreign exchange
  gain in 2005 (4.1 million). We may incur foreign exchange losses again
  in the future.

16WAVECOM
  - Annual Report Form 20-F 2007

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Beginning
  in January 2003, we put in place a program to hedge our currency risk through
  the use of forward contracts and put and call options covering expected net
  cash flows in U.S. dollars. This program is not able to cover a sudden change
  in the currency rate or a significant change in our business. The objective
  of this program is to minimize our risk, but we will never be able to eliminate
  the risk.

|Our
      costs may increase or we may have to redesign our products if they infringe
      on other companies intellectual property rights.
|---------------------------------------------------------------------------------------------------------------------------------------------

Other
  companies have patents, copyrights, trade secrets and other intellectual property
  rights covering technology used in the wireless communications industry. Although
  we have entered into appropriate intellectual property licenses permitting us
  to use the intellectual property rights of third parties, if any of our products,
  including products we may acquire, were found to infringe protected technology,
  we could be required to redesign them, to obtain further intellectual property
  licenses or to pay royalties or damages to the owner of the technology. The
  resulting costs would harm our business. If we were unable to obtain these licenses
  or to redesign our products to make them non-infringing, we could be prohibited
  from marketing the relevant products.

|We
      need to attract, retain and develop key personnel who are skilled in our
      business and technology to remain competitive.
|--------------------------------------------------------------------------------------------------------------------------------------

It is
  important to our success that we retain our highly skilled product development,
  sales, marketing and other key employees, including senior management, and continue
  to attract and motivate additional skilled employees. We rely to some extent
  on independent contractors who work for consulting firms.

If we
  fail to attract, hire or retain appropriately qualified personnel, we could
  experience delays in our research and development projects or our product roll-outs,
  which could affect our ability to bring new products to market successfully
  or on a timely basis.

|Concentrated
      ownership of shares by two of our founding shareholders could significantly
      influence shareholder votes or affect the price of our common stock.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At March
  31, 2008, our two founding shareholders, who are also members of our board of
  directors, own interests of approximately 10% and 11% each, of our outstanding
  shares as of such date. The influence over shareholder votes of significant
  shareholders may have the effect of delaying, deferring or preventing a change
  in control of us, and such shareholders may otherwise have the ability to control
  shareholder decisions. In addition, any plans by these shareholders to dispose
  of a substantial amount of their shares in the open market could have an adverse
  impact on the market for our common shares.

|As
      a result of our global operations, we are exposed to numerous risks, including
      logistical difficulties, cultural differences, product localization costs,
      import and tariff restrictions and adverse foreign tax consequences.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have
  principal operational locations in France, the United States and Hong Kong.
  We do business globally using an extensive distributor network. Directly or
  indirectly, we are selling in more than a hundred countries on all continents,
  and our manufacturing is subcontracted in China.

Worldwide
  operations are subject to a number of risks, including:

| | the
      need to track and monitor tariffs, duties, export controls and other trade
      barriers;
|- | ----------------------------------------------------------------------------------------------------

| | the
      impact of unexpected changes in regulatory requirement and applicable laws;
|- | -------------------------------------------------------------------------------------

| | the
      burden of monitoring and complying with a wide variety of foreign laws and
      regulations;
|- | -------------------------------------------------------------------------------------------------------

| | political
      and economical instability, which tends to be a more significant risk in
      the countries where we currently outsource manufacturing;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | potential
      adverse tax consequences;
|- | -----------------------------------------

| | longer
      payment cycles for sales in certain foreign countries;
|- | -------------------------------------------------------------------

| | difficulties
      and costs of staffing and managing international operations;
|- | -------------------------------------------------------------------------------

| | disease
      and related quarantines;
|- | --------------------------------------

| | cultural
      differences; and
|- | -------------------------------

| | aggressive
      competition from companies based in countries which do not protect intellectual
      property rights to as great an extent as those of the United States and
      France
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

WAVECOM
  - Annual Report Form 20-F 200717

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|Business
      disruptions could seriously harm our operations and financial condition
      and increase our costs and expenses.
|---------------------------------------------------------------------------------------------------------------------------------

A number
  of factors, including natural disasters, computer viruses or failure to successfully
  upgrade and improve operational systems to meet evolving business conditions,
  could disrupt our business, which could seriously harm our revenues or financial
  conditions and increase our costs and expenses. For example, our headquarters
  in Paris is located in potential flood zones that could subject these facilities
  and associated computer systems to disruption.

|The
      requirement to expense stock options in our income statements has had a
      significant adverse effect on our reported results and we expect this negative
      impact to continue in the near future.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On December
  16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement
  No 123 (revised 2004), Share-Based Payment (SFAS 123R).
  SFAS 123R requires all share-based payments to employees, including grants of
  employee stock options, to be recognized in the income statement based on their
  fair values. Pro forma disclosure is no longer an alternative. We adopted this
  new standard on January 1, 2006, using the modified prospective method.

The adoption
  as of January 1, 2006, on a prospective basis, of SFAS 123R fair value method
  had an impact of approximately 2.1 million on our operating result reported
  for fiscal year 2006 due to the compensation charges and of 4.8 million
  for fiscal year 2007. We expect the effect of SFAS 123R to continue to have
  a negative impact on our reported operating results for the near future.

|Our
      quarterly revenues fluctuate significantly, which makes forecasting difficult
      and can significantly impact our planning process.
|------------------------------------------------------------------------------------------------------------------------------------------------

Our revenues
  and operating results fluctuate significantly from quarter to quarter. Factors
  that could cause our quarterly results to fluctuate include:

| | any
      delay in our introduction of new products or product enhancements;
|- | ----------------------------------------------------------------------------

| | size
      and timing of customer orders and our product shipments;
|- | -------------------------------------------------------------------

| | any
      delay in shipments caused by component shortages or other manufacturing
      problems;
|- | -------------------------------------------------------------------------------------------------

| | loss
      of a major customer or a reduction in purchases by a major customer;
|- | -------------------------------------------------------------------------------

| | reduction
      in the selling price of our products;
|- | -----------------------------------------------------

| | size,
      timing and structure of significant license sales;
|- | --------------------------------------------------------------

| | customer
      responses to announcements of new products and product enhancements by our
      competitors;
|- | ------------------------------------------------------------------------------------------------------------

| | foreign
      exchange rate fluctuations, primarily between the euro and the U.S. dollar;
      and
|- | ---------------------------------------------------------------------------------------------------

| | booking
      of one-time, non-recurring expenses such as restructuring or acquisition
      costs.
|- | ---------------------------------------------------------------------------------------------------

Due to
  these and other factors, our results of operations have in the past and could
  fluctuate substantially in the future and quarterly comparisons may not be reliable
  indicators of future performance. Because many of our expenses for personnel,
  facilities and equipment are relatively fixed in nature, we may not be able
  to reduce expenses quickly to balance an extended decline in our revenues and
  could experience net losses during these periods. In addition, quarterly fluctuations
  may have a negative effect on the price of our shares and ADSs, and a corresponding
  negative impact on public perception and customer and investor confidence.

|The
      regulatory environments in which we operate have become increasingly complex,
      including with respect to accounting standards and internal rules and changes
      in accounting principles may affect our reported earnings and operating
      income
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due to
  the global reach of our operations and our listings on the French and U.S. stock
  exchanges, we are subject to complex, overlapping and rapidly evolving laws,
  regulations and requirements, including with respect to our financial statements,
  which are prepared according to both International Financial Reporting Standards
  (IFRS) and U.S. GAAP. The reporting requirements may be contradictory and subject
  to inconsistent interpretation. We review our compliance with all new and existing
  accounting rules and pronouncements on an ongoing basis. Depending on the outcome
  of these ongoing reviews, the evolution of our business model and the potential
  issuance of further accounting pronouncements, implementation guidelines and
  interpretations, particularly with respect to revenue recognition or stock-based
  compensation, we may be required to modify our accounting policies and business
  practices which could have a material adverse effect on our results of operations
  or financial reporting. Our current accounting policies are described in Item
  18 and note 1 to our consolidated financial statements.

The laws
  and regulations to which we are subject apply to a wide variety of areas, including
  corporate governance and internal controls. The implementation of these requirements
  may require greater investment in and use of resources than have already been
  anticipated. This could ultimately place significant strains on our organization,
  increase our cost base and dilute our internal resources currently devoted to
  general financial and reporting activities.

18WAVECOM
  - Annual Report Form 20-F 2007

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If, despite
  our efforts, we are unable to comply with these new laws and standards in the
  mandated timeframes, or if we encounter deficiencies, or if our chief executive
  officer, chief financial officer or independent registered public accounting
  firm determine that our internal control over financial reporting is not effective
  as defined under section 404, we may experience a loss of confidence by the
  market, or a declining stock price, either of which could harm our reputation
  and results of operations.

There
  can be no assurance that additional regulation in any of the jurisdictions in
  which we now, or in the future may, operate would not significantly increase
  the cost of regulatory compliance.

|If
      we are considered to be a passive foreign investment company for the United
      States federal income purposes, U.S. holders of our equity securities could
      suffer negative consequences.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based
  on the composition of our income and assets, and the valuation of our assets,
  during 2007, we do not believe that we were a passive foreign investment company
  (PFIC) for United States federal income tax purposes for the taxable
  year ending December 31, 2007. However, the determination of whether we are
  a PFIC is made annually. Accordingly, it is possible that we may be a PFIC in
  the current year or future years due to changes in the composition of our income
  or assets or the valuation of our assets. The composition of our income and
  assets will be affected by how we invest the proceeds from our 2007 convertible
  debt offering. These proceeds could cause us to be a PFIC if they are not timely
  invested in assets that do not produce passive income for purposes of the PFIC
  rules. If we become a PFIC, U.S. holders of our equity securities could be subject
  to adverse U.S. tax consequences, including additional U.S. federal income tax
  and an interest charge upon certain distributions by us or upon sale or other
  disposition of our equity securities at a gain, as well as additional reporting
  requirements. Please see Taxation  U.S. Taxation of U.S. Holders
   Passive Foreign Investment Company for a more detailed discussion
  of the consequences if we are a PFIC. You should consult your own tax advisors
  regarding the application of the PFIC rules to your particular circumstances.

|Holders
      of our shares have limited rights to call shareholders meetings or
      submit shareholder proposals which could adversely affect their ability
      to participate in the governance of our Company.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In general,
  our Board of Directors may call a meeting of our shareholders. A shareholders
  meeting may also be called by a liquidator or a court appointed agent, in limited
  circumstances, such as at the request of the holders of 5% or more of our outstanding
  shares held in the form of ordinary shares. In addition, shareholders or groups
  of shareholders holding a defined number of shares (currently 1.76% i.e 277,732
  shares) held in the form of ordinary shares may submit proposed resolutions
  for meetings of shareholders. As a result, the ability of our shareholders to
  participate in and influence the governance of our Company will be limited.

|Provisions
      of our articles of association and French law could have anti-takeover effects
      and could deprive shareholders who do not comply with such provisions of
      some or all of their voting rights.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Provisions
  of our articles of association and French law may impede the accumulation of
  our shares by third parties seeking to gain a measure of control over our Company.
  For example, French law provides that any individual or entity (person),
  acting alone or in concert with others, that becomes the owner or ceases to
  be the owner of more than 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3, 90%, 95% of
  the share capital or voting rights of our Company is required to notify (i)
  our Company and (ii) the AMF by registered letter (with return receipt) within
  five trading days of exceeding or falling below such thresholds.
  The AMF makes the notice public. Failure to comply with the above stated stipulations
  will result in the suspension of the voting rights attached to the shares exceeding
  the thresholds crossed and not declared at the shareholders meetings which could
  be held up until the expiration of a time limit of two years, inclusive, from
  the date that a corrective declaration is made. Also a shareholder who does
  not comply with these notification requirements may have all or part of its
  voting rights suspended for up to five years by the commercial court at the
  request of our Chairman, any of our shareholders or the AMF, or may be subject
  to criminal penalties and fines. Additionally, any person acquiring more than
  10% or 20% of the share capital or voting rights of our Company must notify
  us and the AMF within 10 trading days of crossing any of these thresholds and
  file a statement of their intentions as to the objective they are pursuing.To permit holders to give the required notice, we are required to publish
  in the BALO (the official journal for legal notifications in France) no later
  than 15 calendar days after the annual ordinary general meeting of shareholders
  information with respect to the total number of voting rights outstanding as
  of the date of such meeting. In addition, if the number of outstanding voting
  rights changes by 5% or more between two annual ordinary general meetings, we
  are required to publish in the BALO, within 15 calendar days of such change,
  the number of voting rights outstanding and provide the AMF with written notice
  of such information. The AMF publishes the total number of voting rights so
  notified by all listed companies in a weekly notice (avis), indicating
  the date that each such number was last updated. Furthermore, every month we
  must notify the AMF of, and publish, the total number of voting rights and shares
  of our share capital if the number of available voting rights and shares so
  notified has changed compared with the last published information. Under the
  regulations of the AMF and subject to its limited exemptions, any person or
  persons acting in concert who comes to own more than 33 1/3% of our share capital
  or voting rights must initiate a public tender offer for the balance of our
  share capital and the balance of

WAVECOM
  - Annual Report Form 20-F 200719

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the securities
  giving access to our share capital (including, for these purposes, all securities
  convertible into or exchangeable for equity securities).

Under
  the terms of the deposit agreement relating to our ADSs (American Depository
  Shares), if a holder of ADSs fails to instruct the depositary in a timely and
  valid manner how to vote such holders ADSs with respect to a particular
  matter, the depositary will deem that such holder has given a proxy to the chairman
  of the meeting to vote in favor of each proposal recommended by our board of
  directors and against each proposal opposed by our board of directors and will
  vote the ordinary shares underlying the ADSs accordingly. This provision of
  the depositary agreement could deter or delay hostile takeovers, proxy contests
  and changes in control or management of our Company

|Interests
      of our shareholders will be diluted if they are not able to exercise preferential
      subscription rights for our shares.
|-------------------------------------------------------------------------------------------------------------------------------------------

Under
  French law, shareholders have preferential subscription rights (droits préférentiels
  de souscription) to subscribe for issuances of new shares or other securities
  with preferential subscription rights, on a pro rata basis, such purchases
  to be paid in cash. Shareholders may waive their right specifically in respect
  of any offering, either individually or collectively, at an extraordinary general
  meeting. Preferential subscription rights, if not previously waived, are transferable
  during the subscription period relating to a particular offering of shares and
  may be quoted on the exchange for such securities on NYSE Euronext Paris. Holders
  of our ADSs may not be able to exercise preferential subscription rights for
  these shares unless a registration statement under the U.S. Securities Act of
  1933 is effective with respect to such rights or an exemption from the registration
  requirements is available. If these preferential subscription rights cannot
  be exercised by holders of ADSs, to the extent possible we will endeavor to
  make arrangements to have the preferential subscription rights sold and the
  net proceeds of the sale paid to such holders. If such rights cannot be sold
  for any reason, we may allow such rights to lapse. In either case, the interest
  of holders of ADSs in our Company will be diluted, and, if the rights lapse,
  such holders will not realize any value from the granting of preferential subscription
  rights.

|It
      may be difficult for holders of our ADSs to exercise some of their rights
      as shareholders.
|---------------------------------------------------------------------------------------------------------

It may
  be more difficult for holders of our ADSs to exercise their rights as shareholders
  than it would be if they directly held our ordinary shares. For example, if
  we offer new ordinary shares, and a holder of our ADSs has the right to subscribe
  for a portion of them, the Bank of New York, as the depositary, is allowed to
  sell for such ADS holders benefit that right to subscribe for new ordinary
  shares of our Company instead of making it available to such holder in its own
  discretion. Also, to exercise their voting rights, holders of our ADSs must
  instruct the depositary how to vote their shares. Because of this extra procedural
  step involving the depositary, the process for exercising voting rights will
  take longer for a holder of our ADSs than it would for holders of our ordinary
  shares.

|Fluctuation
      in the value of the U.S. dollar relative to the euro may cause the price
      of our ordinary shares to deviate from the price of our ADSs.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------

Our ADSs
  trade in U.S. dollars and our ordinary shares trade in euros. Fluctuations in
  the exchange rates between the U.S. dollar and the euro may result in temporary
  differences between the value of our ADSs and the value of our ordinary shares,
  which may result in trading by investors seeking to exploit such differences,
  which could adversely impact the trading opportunities for other shareholders.

|We
      have not distributed dividends to our shareholders in the past nor do we
      intend to in the near future.
|---------------------------------------------------------------------------------------------------------------------

We currently
  intend to use all of our operating cash flow to finance the development of our
  business for the foreseeable future. We have never distributed cash dividends
  to our shareholders, and we currently have no plan to distribute cash dividends.
  If we distribute a portion of our earnings as dividends to shareholders in the
  future, the determination of whether to declare dividends and, if so, the amount
  of such dividends will be based on facts and circumstances existing at the time
  of determination.

|Our
      share price is and may continue to be volatile.
|---------------------------------------------------------

Our share
  price is volatile due, in part, to generally volatile securities markets, and
  the volatility in the telecommunications and technology companies securities
  markets in particular. Factors other than our financial results that may affect
  our share price include, but are not limited to, market expectations of our
  performance, capital spending plans of our customers, the level perceived growth
  of the industries in which we participate and any perceived need for us to raise
  additional capital through the sale of securities. Any future sale of equity
  or convertible securities we may consider could depress our stock price.

|We
      may have difficulty in accessing capital to grow the business if we are
      unable to obtain short-term bank loans in the future.
|--------------------------------------------------------------------------------------------------------------------------------------------

At some
  point in the future, we may have need for short-term financing in order to continue
  to grow our business. If we are unable to obtain a traditional bank loan, due
  to a decline in our credit rating or due to the unwillingness of a bank to

20WAVECOM
  - Annual Report Form 20-F 2007

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make
  a business loan, we may have to seek alternative financing that could be both
  difficult and expensive. The banking practices in France are different from
  traditional banking practices in other countries, like the United States for
  example, and obtaining a traditional bank loan is often difficult and may carry
  a very high interest rate.

|The
      Company may not be able to repay all of its Bonds
|-----------------------------------------------------------

In July
  2007, the Company completed the offering of bonds convertible into and/or exchangeable
  for new or existing shares (OCEANE) due January 1, 2014 (launched on July 5,
  2007) for a total of 80.5 million.

We may
  be required to repay all of the OCEANE in the event of default. If bondholders
  were to require the Company to repay the OCEANE following an event of default,
  we cannot be certain that we will be able to pay the amount required in full.
  Our ability to repay the OCEANE is subject to its liquidity position at the
  time of repayment, and may be limited by law, and by indebtedness and agreements
  that we may have entered into on such date, which may replace, supplement or
  amend our existing or future debt. Our failure to repay the OCEANE could result
  in a cross default under other indebtedness.

WAVECOM
  - Annual Report Form 20-F 200721

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Item
  4:   Information on the Company



Company
  background


---



We were
  incorporated as a French société anonyme on June 28, 1993,
  for a period of 99 years under the name of Wavecom, S.A. We are registered in
  Nanterre, France, registration number 391 838 042. Our headquarters offices
  are located at: 3 Esplanade du Foncet, in Issy-les-Moulineaux, France, where
  our phone number is +33 (1) 46 29 08 00.

Business
overview and recent evolution



Overview

We are
  a global technology company that develops, markets, and sells wireless platforms
  that can be embedded into virtually any machine or device, thus enabling it
  to transmit and receive both data and voice communications via wireless cellular
  network operators. Our highly sophisticated wireless platforms, are sold as
  wireless central processing units (Wireless CPU®s  including both
  smart modems and modules) and integrate all of the necessary software and hardware
  on miniature circuit board platforms that can be used for a wide variety of
  applications. We also provide our customers with development tools and engineering
  support services to facilitate the design and operation of innovative wireless
  products. Our tag line  Smart wireless  Smart business
   succinctly describes how our customers benefit from using our products
  and services. During 2007, we offered, for the first time, a service platform
  that allows for the monitoring and maintenance of devices equipped with our
  Wireless CPU®s via a back-end server for the purposes of upgrading our software,
  the application software or wireless network software. This new service model
  opens the door to future contracts that we believe will eventually create subscription
  business providing a recurring income stream.

With
  over fourteen years in cellular telecommunications experience, we have attracted
  and developed a talented team of managers and employees who are focused on creating
  and selling wireless solutions to the enterprise market that includes hardware,
  software and services. Our engineering teams represent more than half of our
  employees, who have highly specialized expertise and know-how in the design
  and integration of radio-frequency-architected circuitry, communications software
  and base band ASICS (Application Specific Integrated Circuits), specifically
  designed for machine-to-machine processing and communication. Our products and
  services get to market by using a combination of our own direct sales force
  which is augmented by an extensive world-wide network of value-added distributors
  and manufacturers representatives that reach a large number of diverse
  customers and prospects from around the world. Although we do not operate our
  own production facilities, our operations teams have acquired substantial skills
  over the years in producing and manufacturing our Wireless CPU®s by working
  closely with our contract manufacturing partner located in China.

Our organizational
  structure is designed to reflect our strategic orientation. This structure includes
  management by geographic segment: EMEA (Europe Middle-East and Africa), APAC
  (Asia-Pacific) and the Americas (North and South America). Each of these regions
  is headed by a Group Vice President who has responsibility for developing customer
  relations and managing the profitability of the region. The regions are supported
  from a product standpoint by marketing and technology, research and development,
  and operations (manufacturing). During 2007 we added a matrix management structure
  for the automotive business which is headed by a Group Vice President who coordinated
  our global development efforts in automotive. Given the benefit of this worldwide
  coordination we saw in 2007, moving forward in 2008 each of the regional Vice
  Presidents now has, on top of his geographical responsibility, a matrix role
  of coordination for each of our most promising markets: including: automotive,
  wireless local loop and broader M2M areas. From an administrative standpoint
  the overall Company is supported by teams from finance, human resources and
  quality that are located in the regions and managed from our headquarters in
  France.

2007
   Operational overview

The year
  2007 was one of mixed results. Revenues increased by 7% versus the previous
  year, growing from 188.8 million to 202.3 million but sales varied greatly from
  region to region. However, in 2007 net income more than triple to reach 17.4
  million compared to 4.7million in 2006.

|Operational
      highlights:
|-----------------------------

During
  2007 we experienced improved operational performance led by progress in two
  main areas:

| | Successful
      completion of the integration of the business we acquired in 2006; and,
|- | ----------------------------------------------------------------------------------------

| | Improvement
      on most key target metrics for operations.
|- | ------------------------------------------------------------

22WAVECOM
  - Annual Report Form 20-F 2007

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In 2007
  we successfully completed consolidation of our production into one outsource
  manufacturer located in China for all of our products, including those from
  the business we acquired in 2006. This manufacturing consolidation played a
  key role in the on-going enhanced manufacturing efficiency, with measurable
  improvement in the supply chain management, including the area of component
  procurement. This consolidation contributed to reduced cost of goods, resulting
  in an improved product gross margin 5.9 percentage points better on average
  than the previous years performance.

Additionally,
  we maintained operational excellence and improved on key target metrics including:

| | Lower
      defect and return rates;
|- | ------------------------------------

| | Higher
      yields for lower costs;
|- | ------------------------------------

| | Improved
      on-time deliveries  on-time deliveries have reached 98% and average
      order time to delivery are standing at four weeks.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

We also
  made progress in areas that we believe will accelerate the uptake of our technology
  including:

| | Complete
      re-architecture of our firmware;
|- | -----------------------------------------------

| | Deployment
      of IDS (Intelligent Device Services) service offer;
|- | --------------------------------------------------------------------

| | Introduction
      of inSIM® (embedded SIM)  which has been recognized by a leading
      European automobile manufacturer as an innovative concept; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | Introduction
      and sampling of our low cost HSDPA solution.
|- | ---------------------------------------------------------------

As mentioned
  earlier, this operational improvement was counterbalanced by mixed revenue performance
  from our three regions.

Our Americas
  region reported a 56% year-over-year increase in revenues (at constant foreign
  exchange rates). The Asia-Pacific region had a slight incremental growth in
  revenues (also at constant currencies) while the EMEA (Europe, Middle East and
  Africa) region suffered a slowdown in sales in several markets and experienced
  a lower contribution from its distributors network. The weak US dollar
  compared to the euro negatively impacted our overall revenues by aproximately
  9 million, mostly in the second half of 2007. See Item 5 for more details.

|Strategic
      highlights:
|---------------------------

We made
  progress in advancing our strategic plans in 2007, underscored by several initiatives.

Service
  Offer launch:
  Our services offer became a reality with the launch of StarService, a new offer
  that eliminates up-front costs by combining a Wireless Microprocessor®)
  with a subscription to Wavecoms secure IDS (Intelligent Device Services).

StarService
  is the first offer in Wavecoms IDS platform, with more to be launched
  in 2008.

New
  module partner: We entered into a partnership with Sunlink Holding
  in Hong Kong who is producing hardware platforms based on Wavecom technology
  and designs. Sunlinks initial products are based on Wavecoms Q24
  family of Wireless CPUs®, and Wireless Microprocessor® technology. They
  have full OpenAT® capabilities,and Wavecom will supply the baseband component.

Sunlink
  is now making products based on Wavecom technology that should be suited to
  certain APAC-region markets. These products are not in direct competition with
  Wavecom since they have a field of use restriction. This strategic alliance
  is expected to accelerate wireless M2M development in Asia Pacific region in
  the future

Strategic
  acquisition:As of February 1, 2008, we completed a strategic acquisition
  of Anyware Technologies who are experts in client-server applications. This
  company is recognized for its open source technology expertise for creating
  advanced software solutions that optimize enterprise processes. Its M2M-specific
  solutions perfectly complement Wavecoms secure and scalable Intelligent
  Device Services (IDS) platform, with the combination creating the most advanced,
  and easy to deploy, end-to-end software solution in the industry.

Trends

As described
  above, 2007 was a year in which we put many building blocks in place that will
  help us to move the business forward. We once again achieved our main objective
  in 2007 which was to continue to operate profitably in each quarter, despite
  mixed sales performances. We continue to work at growing revenues by adding
  more features and functionality in our products and services. In particular,
  we intend to continue to improve the functionality of each element of our own
  Open AT® Software Suite, while adding more features. We also expect to facilitate
  the addition of the most-requested companion wireless technologies such as Bluetooth,
  GPS, WiFi and Zigbee. In the coming year we expect to announce the first customers
  for our complete offer for IDS. Through our internally-developed DOTA (Download-Over-the-Air)
  capabilities, we can offer customers the ability to remotely upgrade and enhance
  the operating system, the application layers and the

WAVECOM
  - Annual Report Form 20-F 200723

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network
  software in any customer application. The addition of client, server-based technologies,
  through our acquisition of Anyware Technologies in 2008 should significantly
  advance the development of complete solutions that link networks of machines
  to corporate IT systems, thus enhancing enterprise efficiency.

Technology
  ownership has allowed us to continuously differentiate our products, simultaneously
  bringing customers the lowest total cost of ownership and investment protection.
  We believe we are well-positioned to further expand our customer base and launch
  even more complete solutions. We intend to continue to seek out strategic acquisitions
  that will enhance our overall business offer.

The
Market for wireless communication between machines



The market
  for machines with wireless communication capabilities, which we call the vertical
  markets, is a developing business area. Based on our own internal data,
  we estimated the global size of the vertical markets to be approximately 20
  million units (wireless enabling devices) delivered in 2007. This figure represents
  the total number of units using wireless cellular technology sold in 2007. This
  does not include wireless PC cards. The market is very fragmented with many
  sub-segments each having relatively low wireless attach rates. We believe that
  the global size of these vertical markets should continue to expand in the coming
  years as the usefulness of wireless-enabled machines is recognized for increasingly
  diverse applications.

|Factors
      favorable to the growth of the vertical markets
|-------------------------------------------------------------

Wireless
  operators have started looking beyond consumer voice applications to develop
  the market for wireless-enabled machine communications. Major wireless network
  operators in Europe, the Americas and Asia offer specific fee schedules and,
  in some cases, have set up dedicated entities to serve the vertical markets.
  In some countries, virtual mobile operators, MVNOs are appearing
  who purchase and re-sell, with added-value, air time from the cellular network
  operators mainly for data communication.

Other
  trends we see emerging that could help the expansion of the vertical markets
  include:

| | The
      European Union eCall (Emergency Call) initiative and the US-based
      services of OnStar are driving the demand for cellular wireless
      devices to be installed in the cars. eCall will open up a market for embedded
      communication devices for each new car model to be sold in Europe by 2009-2010
      As of March 31, 2008, 16 European countries have signed the MOU for eCall
      (source: ERTICO);
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
      Europe some insurance companies have implemented Pay-As-You-Drive
      programs using wireless connectivity to monitor driving patterns and performance
      in order to customize premiums to consumers;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Some
      governments are launching road-charging programs (eToll: electronic Toll
      collect programs) which should push the adoption of wireless devices in
      all trucks and commercial vehicles;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      utility industry is becoming more and more de-regulated and as a consequence
      we are seeing a growing interest in projects associated with Automatic Meter
      Management systems using wireless technology for remote and real-time access
      to the meters, enabling energy savings, accurate billing and fraud deterrence;
      and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Sales
      and payment applications are growing in emerging countries where wireless
      is replacing fixed-line infrastructure, some governments are also imposing
      cash register monitoring systems in order to monitor taxes paid on all cash
      transactions.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Vision
and Mission



Our vision
  is one of a fully-connected wireless world and in that world, our mission is
  to accelerate the uptake of smart device connectivity by delivering outstanding
  expertise and technology that inspires creativity and sparks innovation.

We believe
  that in order to accomplish this mission we must listen to our customers and
  provide them with products and services that make their wireless connectivity
  easy, efficient, reliable and long-lasting.

The market
  today for industrial and automotive wireless solutions remains relatively small
  compared to consumer wireless applications such as mobile phones and personal
  computers. Nevertheless, we believe that the market will experience growth over
  the next several years, and that we at Wavecom, with our 14 years experience
  in the area of wireless machine-to-machine communication, are well positioned
  to be the leader in the space. As a pioneer in creating the technology building
  blocks that make wireless machine-to-machine communication useful, we will continue
  to forge a path to market growth.

Our strategic
  approach, which focuses on delivering a value proposition, is one that was conceived
  to stimulate growth in wireless communication for industrial applications. This
  value proposition can be summed up in these four key points:

24WAVECOM
  - Annual Report Form 20-F 2007

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| | Lowest
      cost of ownership
|- | ------------------------------

| | Ease
      of use
|- | -----------------

| | Investment
      protection
|- | ---------------------------

| | End-to-end
      connectivity
|- | -----------------------------

On the
  surface our strategy of offering our customers innovative technology and superior
  service with overall value is not only straight-forward, but easy for our customers
  to leverage and use to differentiate their own products.

Currently
targeted product applications



We focus
  on six principal types of product applications in the vertical markets. Each
  of the vertical markets has numerous sub-applications due to the diversity of
  potential uses.

| | Automotive
      applications.We address both the market for factory installed
      wireless capability and after market for applications that are
      installed after automobile production. For the automotive market, wireless
      communication is particularly useful for a wide variety of features such
      as: stolen vehicle tracking, navigation systems, monitoring driving patters,
      concierge services as well as remote vehicle diagnostics and maintenance.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Automatic
      metering.This market consists of all types of meters  electric,
      gas and water. There is growing pressure, predominantly regulatory, on utility
      companies to vary tariffs based on consumption patterns, automatic meter
      management is a growing market. As a consequence the metering industry is
      investigating new ways to collect accurate, real-time consumption information.
      So, meter manufactures are looking at many new ways to use wireless functionality
      to meet their needs.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Alarm
      and security systems.Traditionally, alarm systems used wire line connectivity
      with wireless as a backup. We are now seeing a move to wireless as the primary
      technology for connectivity. With the emergence of high bandwidth technology,
      more and more security systems can be equipped with video surveillance using
      wireless technology.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fixed
      wireless applications.These are telephones that are stationery (desktop)
      phones that use wireless networks instead of wire line connectivity in countries
      or regions where there is no existing wire line infrastructure.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Sales
      and payment terminals.These point of sale terminals now
      use wireless networks to confirm and authorize payments from retailers using
      debit and credit cards oftentimes replacing the traditional wire line methods.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Control
      and monitoring.This broad category covers the deployment of wireless-enabled
      devices for managing a variety of industrial and commercial products, from
      vending machines to photocopiers or industrial equipment for the purposes
      of verifying inventory levels or monitoring the proper functioning of the
      equipment.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our
products and services



Our commercial
  product offering consists of three central elements:

| | Open
      AT® Software Suite
|- | -----------------------------

| | Hardware
      families including: Wireless Microprocessor®, Quik and Plug & Play,
|- | ----------------------------------------------------------------------------------

| | Services
      (Professional and Operated),
|- | -------------------------------------------

Everything
  we do is designed to help our customers reduce their Total Cost of Ownership
  (TCO) by embedding and running their software applications directly on our Wireless
  CPU® devices. By doing this they are able to reduce overall material costs,
  accelerate revenue generation by shortening time-to-market and ensure post-sale
  field maintenance through the use of Download Over-The-Air (DOTA) and MOTA (Monitoring/Maintenance-Over-The-Air)solution
  upgrade capabilities. Download over-the-air allows our customers to update software
  which is embedded in their wireless products via remote radio transmission,
  transmission from many tens, hundreds or thousands of kilometers away, without
  the need to physically visit their individual applications in the field, which
  are quite often dispersed over a broad geographical area. MOTA, as the second
  key element of our Intelligent Device Services (IDS) offer, provides customers
  with the ability to monitor their network of products and make pre-emptive maintenance,
  for example, detecting machines that are no longer operating at 100% and dispatching
  a technician to fix the problem. Our commercial product offerings are designed
  to be flexible in a way that the mix of these three elements can be adapted
  to the unique needs of our customers whether they be start-ups, multinational
  conglomerates or anywhere in between.

With
  respect to software portability, Open AT® software may be ported from one
  Wireless CPU® to another as a result of the new Open AT® Software Suite
  2.0 release, substantially reducing porting costs for our customers. This is
  made possible as a direct result of one of our pivotal strategic strengths,
  namely software creation, ownership and licensing. The software suite allows
  customers to embed and port their own software into our Wireless CPU®, thus
  eliminating the need

WAVECOM
  - Annual Report Form 20-F 200725

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for external
  microprocessors and other analogue and digital semiconductor components. This
  benefit alone saves a significant amount on the material costs for our customers
  and the TCO can be further reduced by many other offers such as our Design Services,
  Professional Education via our Wavecom University, and IDS.

Open
  AT® Software Suite

The Open
  AT® Software Suite consists of five elements; Open AT® IDE (Integrated
  Development Environment), Open AT® Applications, Open AT® Plug-Ins,
  Open AT® OS and Open AT® Firmware. With this suite of software comes
  the possibility to unlock and harness the true power of our Wireless CPU®
  portfolio from real-time, multi-tasking, application design to over-the-air
  software upgrades, monitoring and maintenance.

| | IDE:
      Open AT® built on Eclipse
|- | -------------------------------------

| | In
      parallel with the introduction of Open AT® OS V4.10, Wavecom also launched
      version 1.0 of its Integrated Development Environment (IDE) called Open
      AT® IDE v 1.0. This development environment is built on the industry
      standard Eclipse framework and allows developers to reduce development
      and program test times.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
      IDE is the powerful suite of developer tools that bring the entire commercial
      offer to life. Without comprehensive tools, the developer is prohibited
      from making the most of the Wireless CPU® in terms of design efficiency.
      Eclipse provides a unified approach to code creation, compilation,
      Wireless CPU® download, remote monitoring and debugging in a feature-rich
      easy-to-use graphical user environment. In 2006, we transitioned our IDE
      to one built on Eclipse which is a tried and tested open-source, community-developed
      framework that is limited only by the developers own creativity and
      imagination. Eclipse also allows our customers to develop new, or
      re-use their own application-specific development tools in the same framework,
      further enhancing the ease of use and hence speed of creation of applications.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Open
      AT® Applications
|- | ---------------------------

| | Believing
      that getting customers started quickly is beneficial for all participants
      to the value chain, Wavecom embraces the concept of creating building blocks
      to avoiding encroaching on our customers business. Such building blocks
      come in the form of sample applications on the Software Development Kit
      (SDK), free source code in Application Notes that can be downloaded
      from our website, or fully customizable reference designs. In addition,
      an increasing number of applications are being created within the Wavecom
      Developer Forum by the growing community of creative thinkers who have embraced
      Open AT® and the Wireless CPU® families. Of course, our customers
      are the ultimate creators of products and they benefit from the unique capability
      provided by the Open AT® Software Suite in that it is the only industrial-grade
      cellular development environment that facilitates applications to be written
      in standard C language, pre-compiled and natively executed, on a Wireless
      CPU®.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Open
      AT® Plug-Ins
|- | -----------------------

| | Plug-Ins
      contain the middleware that represent the freedom to develop value-added
      generic or application-specific functionality within the Open AT® Software
      Suite. We provide TCP/IP and Internet Plug-Ins today, making machine-to-machine
      (M2M) connectivity to the Internet easy. And, provide access to Bluetooth
      and other companion wireless technologies for short-range wireless device
      interconnection. In 2007 we launched the Lua Plug-In as a free and open
      source offering for developers with rapid application prototyping needs.
      Our partnership with Airbiquity also resulted in us developing support for
      the aqLink® Plug-In, developed by Airbiquity within our Open AT®
      environment, which is a technology used for example by the automotive industry
      to send location data over a voice connection to reduce the time to contact
      emergency services following an accident. Many other customers have developed
      their own Plug-Ins such as memory card readers, M2M-specific data protocols,
      software wrappers and peripheral device drivers. The flexibility of Open
      AT® is so extensive that it even allows customers to emulate behaviour
      of other legacy systems such as fixed-line interfaces where seamless transition
      can be achieved from a non-wireless installed base to a wireless one.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Open
      AT® OS
|- | -----------------

| | The
      Operating System element is responsible for managing the entire embedded
      software environment on the Wireless CPU®. It manages key functionalities
      that are unique to us such as the Real-Time operation, VariSpeed, VariPower
      as well as DOTA. Our OS also executes the embedded customer applications.
      It provides access to more than 500 programming APIs (Application Programming
      Interfaces) for both internal and external modes of operation. Our latest
      version in use by customers since the end of 2007 adds multi-tasking, unique
      audio features and countless other enhancements to the existing low-latency,
      multi-level, interruptible RTOS (Real Time Operating
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26WAVECOM
  - Annual Report Form 20-F 2007

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| | System).
      This new pre-emptive, multi-tasking OS is a major step towards capturing
      yet more embedded application opportunities and enthusiastic developers.
      We will continue to add significant enhancements in 2008, further increasing
      our lead in relation to competition, a fact made possible through our unique
      ownership of Open AT® Software Suite.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Open
      AT® Firmware
|- | -----------------------

| | Firmware
      is the underlying lower layers of the embedded software. The direct link
      to physical interfaces of both wired and wireless applications is managed
      by the firmware. These interfaces include wired devices such as displays,
      general purpose inputs/output, ports such as USB (Universal Serial Bus),
      keypads and numerous others. In addition to these inherent interfaces are
      the complementary wireless interfaces that do not use controllers such as
      Bluetooth and GPS. These allow our customers to design architecturally-efficient
      products, reducing their overall costs. Wavecom owns its own cellular stacks
      for GSM, GPRS, EDGE and WCDMA which allows Wavecom customers to benefit
      from increased bandwidth for data transfer via global cellular networks
      while giving them security that we can continue to supply as we do not rely
      on 3 party stack vendors NexGen Software SAS.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NexGen
|------

During
  2006 we made a strategic acquisition of the software company NexGen Software
  SAS. The company was a privately-held, France-based software company specializing
  in Internet protocol and client software. This acquisition brought us an internally-developed
  Open AT® Internet Plug-In which comprises a suite of protocol stacks and
  internet-client software expertise along with a worldwide customer base of over
  one hundred. With this acquisition, we eliminate our reliance on external, third-party,
  Internet software vendors and further strengthen our already extensive software
  expertise while adding IP (Intellectual Property) developed exclusively by NexGen
  Software SAS specifically for machine-to-machine communication. This expertise
  will allow a more aggressive roadmap of software dedicated to Internet and back-end
  IT (Information Technology) connectivity to be brought to our evolving customer
  base.

NexGen
  Software SAS operates as a wholly-owned Wavecom entity and develops and markets
  its current portfolio of software products. With an installed base of over 50
  million devices, NexGen Software SAS serves customers primarily in the European
  and Asian regions, and from an application standpoint addresses many of our
  target applications.

|Wavecom
      Developer Forum
|-----------------------------

In October
  2005, we launched the Wavecom Developers Forum on the Wavecom corporate website
  (www.wavecom.com/forum) which has seen membership grow exponentially. As of
  March 31, 2008 it had over of 5,600 developer members, an increase of almost
  300% compared to the previous year and is providing an online virtual meeting
  place for developers to exchange ideas and source code in addition to providing
  us with an invaluable opportunity to further enhance the channels by which we
  listen to the needs of our customers. This is truly enabling the developer community
  to speed up development using our Open AT® Software Suite.

Because
  the embedded element of our software offer is included in the delivery of our
  Wireless CPU® portfolio as part of our pre-packaged solutions approach,
  it does not represent an independent source of revenue.

Wireless
  CPU®s

In 2005,
  we began the Wireless CPU® programmable device classification. This change
  in nomenclature was initiated specifically to denote the stark contrast between
  our Wireless CPU® range and simple modems. The modem, standing for MOdulator
   DEModulator, is a device which receives data in one format and transforms
  it into another, without adding any value or intelligence to the data. Our products
  have come a long way since this rudimentary beginning and can now perform all
  basic modem functions as well as listen to and act on that data, store it in
  embedded silicon memory, create and send emails based on it, show it on readable
  displays, use it to trigger external actions such as alarms or monitors and
  even host complex user interfaces. The Wireless CPU® has become the central
  brain of many of our customers applications due to this increased capability.
  We believe that we are currently the only market provider that offers Wireless
  CPU®s with an interchangeable form factor for both GSM and CDMA standards.
  This interchangeability gives our customers extended flexibility by eliminating
  the need to significantly redesign the same product for different cellular standards.

|Wireless
      Microprocessor® Family
|-------------------------------------

We introduced
  a new Wireless CPU® in April 2006  the Wireless Microprocessor®
  family which led to the creation of the first model, the WMP100. The family
  has the smallest form factor of any of our Wireless CPU®s and is designed
  to allow our customers to use our combined hardware and software platform for
  running all of their applications software  not just the wireless portion.
  This concept is revolutionary because it allows our customers to significantly
  reduce their overall costs

WAVECOM
  - Annual Report Form 20-F 200727

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by eliminating
  excess supporting components such as microcontrollers, ASICs (Application Specific
  Integrated Circuit), connectors and associated cabling while also being the
  first device that can be implemented in a fully-automated production environment,
  further reducing costs incurred from manual assembly and testing techniques.
  Finally, by analyzing the needs of our customers, the new architecture brings
  flexibility of choice for the memory components as required by our customers.
  They now have unrivalled access to memory density, environmental specification
  and package choice according to the specific needs of the product they are developing.
  For example, an automotive customer may require our product be qualified for
  extremely low temperatures, while a customer developing an alarm system at the
  equator is unlikely need or want to pay for this specification. In 2007, we
  counted more than 100 customers actively designing or in production with WMP100
  and commenced the WMP150 version which meets automotive grade requirements.
  October 2007 saw the launch of an entry level Wireless Microprocessor® known
  as WMP50. This device was launched in conjunction with a new and unique business
  model called StarService which allows customers to access the device with no
  up-front costs, establishing an unprecedented environment to expand the wireless
  industrial M2M market.

|Embedded
      Wireless CPU®: Quik Family
|-----------------------------------------

A series
  specially conceived for rapid mounting, hence the name, on printed circuit boards
  during the production assembly process. In 2005, we broke new ground by introducing
  an ARM9-based Wireless CPU® which raised the wireless computing capability
  to a new level and extended the peripheral connectivity. Our line of Quik Wireless
  CPU®s currently includes:

| | Q2686,
      the first in the ARM9 based family, it offers a host of new peripheral connectivity
      possibilities such as cameras for security and digital audio for pre-stored
      digital voice playback, C-GPS compatibility and works on GSM networks anywhere
      in the world;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Q2687,
      with a new parallel bus expansion port used for connecting external memory
      devices, displays and parallel interface controller peripherals and high
      speed data capable (EDGE), and soon to be available in an automotive-qualified
      version;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Q24
      series, this best-selling series includes five dual-band GSM versions and
      a CDMA interchangeable version and is used in every type of application
      and in every segment we target, from automotive to industrial M2M to mobile
      professional. In 2006, we announced the extension of the best-selling Quik
      Q24, long-life Wireless CPU®s to be the first Company to provide security
      to our customers offering a ten-year product life. This new series includes
      four versions: Q24 Classic, Q24 Plus, Q24 Extended and Q24 Auto thus allowing
      it to address a variety of wireless devices. By being hardware and software
      compatible with the existing Q24 family, this new series allows for the
      seamless upgrade of customer products and devices thus saving on new design
      or re-design costs;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | GR64
      is a continuation of the GM/GR  47/48 products from the former Sony
      Ericsson portfolio. It is industrial grade, in particular offering high
      performance in an extended temperature range -30oC to +75oC and
      supports embedded scripting application execution;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | GS64
      is the professional and consumer-grade addition from the former Sony Ericsson
      portfolio; and
|- | -------------------------------------------------------------------------------------------------------------

| | CM52
      is the automobile-grade CDMA product from the former Sony Ericsson portfolio.
      It operates within an extended temperature range and has a rugged build
      for extreme vibrations.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2007
  we initiated the new Q64 which is an Open AT capable version of the original
  GR64 bringing all the benefits of the Open AT® Software Suite to existing
  customers who previously didnt have access to those benefits. Also added
  to the Quik family in 2007 was our first 3G device in this family, Q26 Ultra,
  which is form-factor compatible with previous Q26 devices to reduce customer
  integration costs and uniquely meets the tough requirements of the automotive
  industry. Finally, also in 2007, a new automotive-grade product was added to
  the portfolio called CM52. Serving the Americas market, this device secured
  our existing customer base that was previously using the CM42.

|External
      Wireless CPU®: Plug & Play Family  Fastrack and Integra
|-----------------------------------------------------------------------

As key
  enablers for rapid deployment, Fastrack and Integra represent the fastest route
  to learning all about the three elements of our commercial offer. They allow
  entry-level Open AT®-driven applications to be built and represent a stepping
  stone to the embedded versions of our Wireless CPU®s:

| | Fastrack
      is designed both for external retrofits to existing non-wireless enabled
      applications and for creating new wireless applications without circuit-board
      development skills. This ready-to-use solution can host the entire customer
      application when using Open AT® Software which can even monitor and
      control external sensors and switches, such as a temperature sensor or motion
      detector via the use of external general-purpose input/outputs. It can also
      be plugged directly into a personal computer, straight out-of-the-box, for
      super-fast development initialization. The SIM card (GSM wireless network
      identification) and power supply regulation are built in.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28WAVECOM
  - Annual Report Form 20-F 2007

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| | In
      February 2007, we introduced the new Fastrack Supreme Wireless CPU®.
      This Plug & Play family product evolution keeps the same versatile form
      factor as the previous Fastrack but offers new and unique hardware expansible
      capabilities via Wavecoms new open IES (Internal Expansion Socket)
      interface. The specification of this interface is provided freely in order
      for customers to design their own expansion cards which can be fully inserted
      inside the Fastrack Supreme, creating an eco-system of 3 party developers
      and partners This unique concept allows the marriage of cellular plus a
      host of other wireless and wired network interfaces such as GPS, Ethernet,
      Bluetooth, WiFi, WiMAX and many others. We will supply a range of expansion
      cards ourselves, commencing with IO input/output expanders and a C-GPS card
      and during 2007 the first expansion cards were designed by third parties.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
      October 2007, we announced our first 3.5G HSDPA/HSUPA (High Speed Downlink/Uplink
      Packet Access) device in the form of the Fastrack Extreme. In addition to
      providing access to high data speeds, this product series will also utilise
      the expansion card concept made available first with the Fastrack Supreme
      and provide embedded application capabilities via the Open AT® Software
      Suite.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Integra
      is a ruggedized design for plugging directly onto a circuit board and comes
      complete with a larger range of interfaces compared to Fastrack, for control
      and monitoring of larger-complexity applications. It is highly compact,
      ready-to-use and designed to be easily incorporated on the circuit board,
      making it ideal for harsh environment applications where small size is critical.
      The SIM card and power supply are built in.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Specialized
      wireless technology
|-------------------------------------

We announced
  on March 5, 2007 the demonstration of our prototype embedded SIM, inSIM®
  (integrated industrial SIM). By integrating the SIM at the chip level, both
  customers and operators benefit from a simplified and faster cellular subscription.
  The robust, industrial design ensures proper functioning in harsh climatic conditions
  such as extremes of temperature, vibration and humidity which reduces the risk
  of disconnected devices that are often linked to high-value, time-sensitive
  transactional data. In addition, with the SIM silicon component fully embedded
  into the Wavecom Wireless CPU®, logistics and management issues associated
  with the SIM card inventory becomes easier, more cost effective and more secure,
  thus reducing the risk of potential SIM card theft, especially once it is installed.
  During 2007, pilots commenced prior to the rollout of the inSIM® technology
  across all three lines of the Wireless CPU® portfolio in 2008.

|Entirely
      RoHS-compliant product line
|------------------------------------------

The EU
  directive, known as RoHS (Restriction of Hazardous Substances), which bans the
  use of identified hazardous substances in all electronics products came into
  effect on July 1, 2006. We were the first and only supplier of cellular wireless
  solutions to upgrade our entire range of Wireless CPU®s to be compliant
  with this new RoHS directive. This transition ensured that our existing customers
  did not have to redesign their products for a new form factor.

Professional
  Services

We believe
  that the complete, personalized service that we provide to our customers is
  a critical factor in our customers choosing us as a supplier, and one of our
  principal competitive advantages. Our assistance and technical support services
  are intended to allow our customers to complete their product development and
  manufacturing phases swiftly and to move quickly to volume production. We provide
  our customers with an evaluation kit with which enables them to carry out technical
  feasibility studies for their future products.

The direct
  customer contact that comes from providing these services also helps us to anticipate
  our customers plans for future product development and enables us to better
  understand the evolution of our product applications.

Our professional
  services include:

| | Wavecom
      University, providing professional-grade, externally-hosted training and
      developer certification;
|- | ---------------------------------------------------------------------------------------------------------------------

| | Extended
      warranty (up to five years)
|- | ------------------------------------------

| | Express
      and Fast delivery of products;
|- | ------------------------------------------------

| | Design
      assistance and support;
|- | ------------------------------------

| | Development
      of application-specific software;
|- | ---------------------------------------------------

| | Code
      review for customers Open AT® applications;
|- | -------------------------------------------------------

| | Field
      testing and validation, including assistance for obtaining a products
      complete certification in those countries where certification is required;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Supply
      of test software and tools for monitoring production;
|- | ------------------------------------------------------------------

| | Assistance
      with the production process; and
|- | -------------------------------------------------

WAVECOM
  - Annual Report Form 20-F 200729

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| | Customer
      training in the optimal use of our solutions, accompanied by instruction
      manuals.
|- | ------------------------------------------------------------------------------------------------------

Intelligent
  Device Services

Another
  key building block was added to our service portfolio in January 2007 when we
  announced the launch of our complete end-to-end service offer  IDS (Intelligent
  Device Services). As more and more machines become equipped with wireless transmission
  capability, it becomes critical for networks of machines to be monitored and
  maintained remotely via server-based systems. Our IDS allow users to remotely
  manage their wireless devices securely, over-the-air, via protected user-friendly
  screens. It can be used to upgrade firmware and application software, configure
  devices, perform remote diagnostics, and intervene with corrective action if
  necessary. The IDS service offer is based on a Wavecom-hosted backend server
  that can easily be integrated into a customers existing IT (Information
  Technology) infrastructure. Having this type of servicing capability is essential
  for any network of connected devices.

We launched
  our first packaged service offer  StarService in October of
  2007. The offer combines a Wireless Microprocessor® and a subscription to
  Wavecoms secure Intelligent Device Service (IDS). Since capital investment
  is sometimes a barrier to integrating wireless capability, this offer eliminates
  that obstacle by including the Wireless Microprocessor WMP50 as part of the
  offer.

|Anyware
      Technologies  a strategic acquisition to complement IDS
|----------------------------------------------------------------------

On February
  1, 2008, we announced the acquisition of Anyware Technologies. Created in 2000
  and based in Labège, a high-tech business corridor near Toulouse, France,
  Anyware Technologies is recognized for its open source technology expertise
  for creating advanced software solutions that optimize enterprise processes.

Anyware
  Technologies M2M-specific solutions perfectly complement Wavecoms
  secure and scalable IDS (Intelligent Device Services) platform, with the combination
  creating the most advanced end-to-end software solution in the industry. Anyware
  has been a Wavecom technology partner for several years.

Together,
  the two businesses have broadened the deployment of combined turn-key solutions
  which allow customers to develop wireless products that connect any equipment
  seamlessly to their IT infrastructure. Anyware Technologies has brought to Wavecom
  a world class-leading Integrated Development Environment (IDE), built on Eclipse,
  whose ease-of-use should accelerate broad adoption of wireless M2M applications.
  Anywares Java-based software can be used with all brands of wireless
  modules and the Company will continue to supply to the entire wireless M2M space.

Initial
  response to our IDS platform has been positive and we expect this to be a growing
  part of our business in the future.

Licensing

We licensed
  our technology once in 2005 and once in 2006.

Going
  forward we see software and technology licensing as an important part of our
  business. As such, we have a team working to develop additional technology licensing
  opportunities. Given the nature of our licensing business, however, it is not
  expected to be a consistent contributor to our sales until a critical mass of
  business develops.

Marketing
and Sales



We use
  both direct and indirect sales channels, as well as strategic commercial partnerships,
  to sell our various wireless technology solutions.

Over
  the last several years, we reinforced our direct sales teams to address the
  largest customers in targeted application segments such as: automotive, home
  & commercial security, automatic meter management, sales & payment and
  control and monitoring and finally, mobile professional, primarily fixed-voice
  (wireless local loop) applications, In 2007, our direct sales and marketing
  teams, which regroup sales people, field application engineers and marketing
  staff made up 27% of our total workforce. These teams are based in our three
  primary geographic regions: EMEA (Europe Middle-East and Africa), APAC (Asia-Pacific),
  the Americas (North America and South America) and in our corporate offices.
  In 2007, direct sales represented 51% of the global Wavecom annual revenue compared
  to 45% in 2006.

Our indirect
  sales channel of distributors, built over the past nine years, as well as an
  extensive network of Sales Representatives in North America are
  active in promoting our products and services worldwide. This distributor network
  has a presence in more than one hundred countries and is made up of specialists
  in electronic components and system

30WAVECOM
  - Annual Report Form 20-F 2007

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design
  that we train and develop to specifically address our target segments. They
  allow us to reach a large number of very diverse small and medium sized customers
  and prospects throughout the world.

In 2007
  we established a designation of Center of Excellence. The new partnership
  program emphasizes bridging the technology gaps that many new wireless machine-to-machine
  projects encounter. By working with qualified and competent Wavecom Centers
  of Excellence  adopters of connected systems can remain focused on their
  core businesses and leave the wireless part of equation to experts. Wavecom
  and its network of partners offer a complete set of services from design to
  integration to manufacturing.

Customer
base



Our current
  customer base, with whom we have both direct and indirect relationships, is
  numerous and highly diverse. This diversity contributes stability to our revenue
  stream.

The table
  below shows our top 10 customers for 2007.

|                                        
|----------------------------------------
|Rank                                    
|                                        
|1                                       
|2                                       
|3                                       
|4                                       
|5                                       
|6                                       
|7                                       
|8                                       
|9                                       
|10                                      
|                                        
|Total
      of top ten customers in 2007
|                                        

Our distributor
  customers purchase our products and re-sell them to their own customers who
  use them in a diverse range of applications, which we believe are mostly vertical
  applications.

Notwithstanding
  the fact that our current customer base is fairly balanced and diverse, we have
  in the past experienced some customer concentrations. If a particular customer
  develops a product that meets with substantial success, it is possible that
  sales to a single customer could rapidly begin to represent a particularly significant
  portion of our revenues.

Research
and development



In order
  to remain at the forefront of fast-paced technological developments and increasing
  customer requirements in each of our markets, we make sizeable investments in
  research and development. The intellectual property developed by our research
  and development teams is integrated into our proprietary solutions.

|                             |       |  |       |  |       | 
|---------------------------- | ----- |  | ----- |  | ----- | 
|(in
      million of euros)  | 2005  |  | 2006  |  | 2007  | 
|                             |       |  |       |  |       | 
|Expenditures
      (1)       | 24.1 |  | 30.0 |  | 31.8 | 
|As
      % of total revenues | 19%   |  | 16%   |  | 16%   | 
|                             |       |  |       |  |       | 

|(1) | Excluding
      costs related to stock-based compensation and amortization of acquired technology.
|--- | --------------------------------------------------------------------------------------------------

As of
  December 31, 2007 our research and development team included more than 250 staff
  (salaried employees and independent contractors), representing over half of
  our worldwide workforce. We have research and development teams based in our
  three regions: at our Company headquarters in Issy-les-Moulineaux near Paris
  (France), in Research Triangle Park, Raleigh, NC (USA) and in Hong-Kong (China).
  By having local teams, we can react to our customers specific development
  needs quickly and efficiently and drive regional customization when and where
  appropriate.

Our research
  and development department is organized along four line teams, (hardware, software,
  performance & validation and customer engineering). R&D teams dedicated
  to new product development are driven by a program

WAVECOM
  - Annual Report Form 20-F 200731

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management
  team, through a classical matrix management for lines and projects. Program
  management is a cross-functional organization in charge of managing the whole
  product life cycle process which reports directly to the Group CTO (Chief Technical
  Officer).

This
  matrix structure allows us to keep core resources permanently allocated to critical
  hardware and software development specifically addressing issues in all three
  of our target applications. We believe that this structure is optimal since
  it 1) ensures consistency of technical solutions, 2) maximizes reuse of research
  and development for new products and applications, and 3) ensures uniformity
  of tools and methods. Research and development teams work on developing new
  products for each target market; expanding the existing product ranges; and
  integrating all of the latest telecommunications standards required by our customers,
  including GSM, GPRS, CDMA, EDGE, W-CDMA and HSPA.

Our R&D
  teams play a critical role in conceptualizing and developing products and solutions
  in response to customer needs identified by our strategic and product marketing
  teams. As the Company strategy shifts to greater emphasis on software functionalities,
  it is the R&D software teams that will lead this initiative. The latest
  versions of our Open AT® operating systems, the OS 6.63 and Open AT®
  Software Suite 1.0 were completely developed in-house, by Wavecom engineers
  who managed all specifications, architecture, development and integration phases.
  By controlling the software, we can offer an optimal system solution 
  in terms of system resource consumption and performance  providing the
  customer with complete flexibility to evolve products and ensuring quick response
  time, since we do not depend on third party technology providers. This in-house
  capability makes us different from our competitors who typically outsource development
  of significant critical software, like the protocol stack for instance.

During
  2007 we completed three major projects:

| | Wireless
      Microprocessor WMP100 based on an ARM9 processor platform with quad-band
      capabilities in a BGA 576 25x25x3 mm form factor,
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | Introduction
      of our new software architecture based on BSP (Board Software Package) that
      will be ported on Wireless CPU® Q24, Q26 series and WMP100,
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Alignment
      all the three sites in term of tools and development processes & achieve
      the CMMI level2 Certification (Capability Maturity Model Integration).
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

We also
  began two new major projects in 2007:

| | Wireless
      CPU® Q26 Extreme, a new 3.5G platform based on the ICERA Livanto®
      Soft Modem solution; Quad band Edge and 3 bands HSPA capable in a Q26 form
      factor, that should be commercially available in Q4 2008,
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Wireless
      CPU® Q26 Elite, based on the new QUALCOMM QSC 6055 chipset CDMA 1XRTT
      in a Q26 form factor, that should be commercially available in Q2 2009.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

Looking
  forward to 2008 we plan to work on several efficiency and quality-related activities
  including:

| | Extending
      the CMMI (Capability Maturity Model Integration) methodology worldwide
|- | --------------------------------------------------------------------------------------

| | Implementing
      an Agile SW development methodology to allow faster software
      Suite delivery to the market with a target of drop every 4 months.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------






Our
  contract manufacturing partners and relationships


---



We currently
  use one contract manufacturer, Flextronics in China, for producing our Wireless
  CPU® products. The establishment of a broad commercial relationship with
  Flextronics, has enabled us to work closely with them in the development of
  key industrial processes and in the provision of new customer services, such
  as logistics, maintenance, technical support, design services and the launch
  of new products. In early 2007 we completed full consolidation (three out-sourced
  factories into one) of a competitive business we had acquired in 2006.

Although
  Flextronics is the main manufacturer of our wireless CPU® products, we believe
  that we have the ability to add additional suppliers on relatively short notice
  should they be unable to meet our product or capacity requirements. For a discussion
  of the risks related to the use of a single contract manufacturer, see Item
  3 Key Information  Risk Factors.

|Component
      supply
|----------------------

Under
  the commercial agreement with Flextronics, the responsibility for component
  supply lies with the contract manufacturer, although most major component prices
  are negotiated directly with suppliers by our purchasing department. Should
  we reduce or discontinue the manufacture of our products or modify their design
  in terms of components, the contract manufacturer can invoice us for the cost
  of the components which are no longer of use. Procurement of components by our
  contract manufacturer is driven by our forecast for finished products. Usually
  the components are ordered two to four months before they enter into the production
  process. Through our contract manufacturer we order components for our products
  from microchip producers, including NXP Semiconductors, Infineon, Numonyx,

32WAVECOM
  - Annual Report Form 20-F 2007

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STMicroelectronics,
  Silicon Labs, Skyworks, Renesas, Triquint, Spansion and Qualcomm. Non-standard
  semiconductors based on our designs are produced by Atmel and Ricoh.

Quality
assurance, ISO certification and our continuous improvement process



In October,
  2007, we successfully completed a follow up audit for our ISO9001: 2000 certification
  that we first received in November 2005. Our certification is a multi-site certificate
  (reference: FR05/1246QU) covering our four main locations in Europe (France
  and United Kingdom), the United States (Raleigh) and Asia-Pacific (Hong Kong
  and Beijing). The certification covers the following scope: development, sales
  and delivery of pre-packaged wireless solutions for automotive, industrial and
  mobile professional applications. In 2007, we included our two newest sites:
  Research Triangle Park, Raleigh, NC (USA) and Camberley (UK) in the ISO audit
  process and are now part of our ISO certificate.

Our contract
  manufacturer, Solectron purchased by Flextronics in 2007, located in Suzhou,
  China is ISO-certified according to the standards ISO/TS16949 and ISO14000.
  In addition to the fact that our contract manufacturer is certified, we also
  require, in our technical specifications, that all of our component suppliers
  be ISO-certified. Using ISO-certified suppliers helps us to ensure the quality
  of the products we sell. Before our products are shipped they are tested at
  the contract manufacturers site. We own and manage all of the test devices
  and equipment in order to ensure that our products satisfy our own, pre-established,
  quality standards.

The ISO9001
  certification pushes us toward continued improvement and helps us to focus on
  one of our major activities: software development using a CMMI (Capability Maturity
  Model Integration) estimate.

During
  the second quarter 2007 we reached CMMI level 2 which confirmed the process
  of internal controls in our software development. In 2008, we expect to continue
  pursuing CMMI for our main software development, in all entities, using the
  AGILE principles to ensure continuous improvement and efficiency. At the same
  time, we will work toward CMMI level 3 status expected to be reached in the
  2009/2010 timeframe. This should ensure that procedures are in place to allow
  for continuous improvement.

This
  estimate, which studies the processes for creating software, was initiated at
  the end of 2004. We achieved CMMI level 2 on the second half of 2007 which states
  our ability to control on our software development. During the year 2008, we
  will deploy within our different development units the best practises, used
  in the CMMI project in combining them with the implementation of AGILE Principles,
  in order to go on with the deployment of our efficiency improvement and achieve
  CMMI level 3 in 2009/2010. Thus we will have processes that ensure tailoring
  of our organization and improvement process.

Backlog



At December
  31, 2007, our product backlog amounted to approximately 41.7 million.
  All orders received in a currency other than the euro are valued on the basis
  of the currency exchange rate euro/dollar at the close of the period. We include
  in our backlog all accepted product purchase orders for which delivery has been
  specified within one year. Our backlog may vary significantly from time to time
  depending upon the effect of seasonality on our customers business and
  their levels of inventory, the availability of necessary components, and the
  capacity of our suppliers, contract manufacturers and subcontractors to satisfy
  our orders. Accordingly, although useful for scheduling production, backlog
  as of any particular date may not be a reliable indicator of sales for any future
  period. During the past several years, our operations teams have successfully
  reduced our manufacturing cycle time and therefore we are able to deliver product
  much more quickly than in the past and to honor orders with short lead times,
  which can result in a lower backlog at a given date.

Competition



We compete
  primarily with wireless module and modem makers, the primary one being Siemens.
  We also compete with local producers in the Chinese market, mainly Simcom, in
  the U.S. market with Enfora and Sierra Wireless, and in Europe and the U.S.
  with Telit.

We are
  exclusively focused on supplying wireless-enabling solutions to the vertical
  markets. We are unique among most of our competitors since we develop our own
  software whereas our competitors typically outsource software development. With
  more than 33 million Wavecom wireless CPU®s already sold, our products are
  field-proven wireless technology solutions for vertical markets. In addition,
  our products include full essential intellectual property rights protection,
  an important element that not all our competitors offer.

Our ability
  to remain competitive in the long term depends significantly on the price, quality,
  availability and performance of our own products and services. In addition,
  we must continue to bring new products to market that respond to our customers
  needs for new hardware platforms, software applications, customer services and
  technical support.



WAVECOM
  - Annual Report Form 20-F 200733

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Intellectual
property



Our intellectual
  property strategy involves two critical dimensions: establishing, defending
  and exploiting proprietary intellectual property developed by our own engineering
  and research and development teams, and obtaining licenses to third-party intellectual
  property essential to the development, sale and operation of our wireless communications
  devices. We have also established policies to promote the development and pursuit
  of new patents within Wavecom.

|Protection
      of our proprietary intellectual property
|---------------------------------------------------------

As of
  December 31, 2007, we currently hold one hundred and two (102) French patents
  expiring on various dates, the first of which is in 2015. We have filed three
  (3) patent requests in the United States, and we have initiated eight (8) PCT
  (Patent Cooperation Treaty) extension of one of our patents in specific jurisdictions.

We apply
  very strict rules in terms of confidentiality and know how protection. We have
  a written policy relating to confidentiality and, in addition to the training
  given to new employees, regular reminders of these policies are issued. Our
  employment agreements contain provisions intended to protect our trade secrets
  by forbidding the unauthorized disclosure of confidential information. Our independent
  contractors are required to enter into confidentiality agreements that also
  assign us rights to inventions they make during the course of their work while
  engaged by us. We have also entered into non-disclosure agreements to protect
  our confidential information delivered to third parties in conjunction with
  possible collaborations and for other purposes.

|Promoting
      patent development within Wavecom
|-------------------------------------------------

In October
  1999, we established an employee patent incentive program designed to recognize
  employee-inventors and to encourage employee-inventors to sponsor patent applications.
  The patent incentive program provides employees who have developed an invention
  in the course of their employment with a bonus if and when we file a patent
  application. A second bonus is paid based on the effective commercial exploitation
  of the patent within five years after the filing of the patent.

To further
  promote a patent spirit and to encourage and organize the development
  of patents within the Company we created a patent committee in 2003. This committee
  is led by our Chief Technology Officer. Its activities include the evaluation
  of invention proposals, to make recommendations on such issues as technical
  merit, patentability and commercial potential of an invention, providing support
  in ensuring an adequate protection of a Wavecom patent or other intellectual
  property rights, and making the final decision to file a patent.

|Mandatory
      licensing policy of the European Telecommunications Standards Institute
|---------------------------------------------------------------------------------------

The European
  Telecommunications Standards Institute (ETSI) has established a
  policy that requires owners of intellectual property rights to declare to the
  ETSI those intellectual property rights which they believe are essential to
  the use or operation of GSM/GPRS/EDGE-based equipment (Clause 4.1 of ETSIs
  IPR Policy). This policy has been extended to WCDMA and HSDPA (more commonly
  referred to as 3G or 3G+). At the time of their declaration, the owners take
  the commitment to grant irrevocable licenses to third party developers, manufacturers
  or distributors on terms and conditions that are fair, reasonable and non-discriminatory
  (Clause 6.1 of ETSIs IPR Policy).

We believe
  that most of the patents which are important to us have been declared by their
  owners to the ETSI and are therefore covered by ETSIs mandatory licensing
  policy. These include major historical players who have declared to the ETSI
  their patents in this field such as Motorola, Philips, Siemens, Alcatel, NEC
  and also groups such as Ericsson and Nokia. However, it remains possible that
  some owners of GSM/GPRS/EDGE (or WCDMA or HSDPA)-related patents, including
  patents which may be required for the development, production, sale or use of
  our products, may not have declared them to ETSI.

|CDMA
|----

The GSM
  standard is not the only standard in effect and some geographical markets are
  covered by a different standard that is CDMA. Qualcomm holds, directly or indirectly,
  a large part of the rights for this technology.

|Our
      agreements for cross-licensing, patent non-assertion and licensing
|----------------------------------------------------------------------------

In order
  to produce and market our GSM/GPRS/EDGE-based Wireless CPU®, we have had
  to assess whether licenses from third-party patent owners were and are required.
  Because of the rapid technological evolution and intense competition in our
  industry, there is a substantial number of patents to consider. Since an exhaustive
  research to determine all of the relevant patents or to check the validity or
  essential character of each patent would be cost-prohibitive, we
  chose from the very beginning to rely on the declarations made to the ETSI (currently
  more than 4,000 patents declared in 2 G i.e. GSM/GPRS/EDGE).

34WAVECOM
  - Annual Report Form 20-F 2007

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We currently
  have either unilateral or cross-licenses (or non assertion agreements providing
  a similar coverage) to use the GSM/GPRS/EDGE-essential patents with Motorola,
  Siemens, Philips, NEC, Alcatel, Nokia, Ericsson and Mitsubishi.

We review
  regularly the number of patents and patent families declared as essential at
  the ETSI, as well as each individual patent holders share of the overall
  ETSI portfolio of declared patents, to evaluate continuously the necessity to
  enter into additional license agreements. In doing so, we have observed that
  some patents covered by the GSM standard were registered almost 20 years ago
  and are reaching the limit of the period of protection of the patents which
  is 20 years in Europe.

In addition,
  as new digital transmission standards develop and as our products follow these
  new evolutions of the standards, we have initiated confidential negotiations
  to acquire additional licenses for new essential patents. This is actually the
  case for the new GSM standard evolution called 3G or 3G+
  -WCDMA or HSDPA) which are the third generation of the GSM standard.

In order
  to produce and market CDMA-based wireless CPU®s, we entered into a cross-license
  agreement with Qualcomm in May 2002. Under this agreement, Qualcomm has granted
  us a license to use CDMA essential or necessary patents that Qualcomm
  owns or is entitled to license for the CDMA standard in consideration for our
  payment to Qualcomm of an up-front fee and a royalty percentage based on each
  CDMA product we sell. We negotiated and concluded early in 2007 an amendment
  to this license that improves some of its terms. In addition, under this agreement,
  we have granted Qualcomm a royalty-free license to use CDMA essential patents
  that we own or develop for the CDMA standard.

Capital
Expenditures



In 2007
  and in previous years, we purchased laboratory, testing and computer equipment,
  principally at our headquarters in France, at our Raleigh Triangle Park office
  and at our contract manufacturers production facility. Total expenditures
  on property and equipment were 5.0 million in 2007, 5.5 million
  in 2006 and 1.7 million in 2005. In 2006, our capital expenditures also
  included the acquisition of certain assets of the Sony Ericsson M2M business
  unit and the acquisition of NexGen Software SAS Company for a total amount of
  29.8 million (purchase price plus acquisition costs minus cash acquired).
  All capital expenditures were internally financed from reserves.

Corporate
Information, organizational structure



Wavecom
  S.A. is the parent company and 100% owner of the following subsidiaries:

| | Wavecom
      Inc., RTP, NC  USA
|- | ---------------------------------

| | Wavecom
      Asia Pacific, Limited, Hong Kong  China (99.99 %)
|- | ----------------------------------------------------------------

| | Wavecom
      Northern Europe, Ltd, Camberley  United Kingdom
|- | --------------------------------------------------------------

| | NexGen
      Software SAS  France
|- | ----------------------------------

| | Wavecom
      Deutschland GmbH, Darmstadt  Germany
|- | ---------------------------------------------------

Wavecom
  S.A. is the headquarters and decision-making center and manages the subsidiaries
  listed above. It also performs an operational role for the distribution of Wavecom
  products in Europe, Middle-East and Africa. The two main subsidiaries, Wavecom
  Inc. and Wavecom Asia-Pacific, Ltd. are responsible for sale of products supplied
  by Wavecom S.A in their respective regions. Wavecom Northern Europe, Ltd. mainly
  acts primarily as an agent and a service provider, Wavecom Deutschland GmbH
  was dormant from mid 2006 until end of December 2007 and since the hiring of
  an employee in December 2007 this subsidiary is acting again as an agent for
  Germany. NexGen Software SAS is a seller of softwares.

Wavecom
  S.A. owns 100 % of Wavecom Korea Co, Ltd, Seoul, South Korea which is a dormant
  Company as of 31 December 2007.

Since
  February 1 2008, Wavecom owns 100% of Anyware Technologies S.A. located in France.
  This company provides a value-added products and services offer in various complementary
  business areas: web applications, Eclipse technology, Web Content Management
  (CMS and open source collaborative tools), Machine-to-Machine applications (allowing
  connection, control and management of remote machines through a Web interface)
  or scalable systems.

|Wavecom
      active subsidiaries:
|----------------------------------

| | Wavecom
      Inc.
|- | ------------------

As of
  December 31, 2007 this entity produced revenues of global 70.8 million
  versus 49.6 million in 2006. This company is responsible for the sale
  of our products in the North and South American markets. It has continued to
  see strong growth after a long period of development primarily linked to the
  long sales cycles in this region as well as the need to obtain operator certification
  in order for our customers products to work on the wireless networks.
  Wavecom, Inc.

WAVECOM
  - Annual Report Form 20-F 200735

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benefited
  significantly from the acquisition in 2006 of the former Sony Ericsson M2M business.
  This subsidiary produced a net profit of 775,000 in 2007 compared to 173,000
  in 2006.

| | Wavecom
      Asia Pacific, Limited
|- | -----------------------------------

This
  entity is responsible for the sale of our products and services in the Asia-Pacific
  geography

As of
  December 31, 2007 this entity generated revenues of 35.2 million, similar
  to 2006 level, led by a positive sell-through of point of sale and automatic
  metering, although the wireless local loop sector decreased by approximate 5
  million year-on-year as the market contracted.

This
  subsidiary posted a net profit of 931,000 versus 651,000 in 2006.

| | Wavecom
      Northern Europe, Limited
|- | --------------------------------------

This
  subsidiary was dormant from mid-2004 until April 2006, when we acquired the
  M2M business that was based in England and transferred certain acquired assets
  into this subsidiary. Wavecom Northern Europe provides certain services to Wavecom
  S.A. and acts as its agent in some regions. It produced a net profit of 69,000
  in 2006 and a loss of 21,000 in 2007.

| | Wavecom
      Deutschland GmbH
|- | ------------------------------

2007
  sales amounted to 16,000 with a profit of 8,000

| | NexGen
      Software SAS
|- | -------------------------

This
  company develops and markets software suites for TCP/IP communication. It generated
  sales of 390,000 in 2007 (439,000 in 2006) and the net result was
  10,000 (18,000 in 2006).

Property,
Plant and Equipment



Our headquarters
  are located in Issy-les-Moulineaux, a suburb of Paris, France, where we occupied
  approximately 7,000 square meters of leased office facilities as of December
  31, 2007. We also currently lease office space in Research Triangle Park (North
  Carolina, USA), Camberley (UK), Hong Kong (China), and Beijing (China).

Environmental
Issues



Since
  we do not operate any factories or production facilities, the environmental
  impact directly related to our activity is essentially limited to consumption
  of resources and disposal of waste at our administrative and commercial offices,
  where we are in compliance with local laws and regulations relative to environmental
  protection. We therefore do not believe that, at this time, we have any significant
  environmental risk related to activities directly managed by us.

As of
  July 1, 2006, we migrated all of Wavecoms legacy products to have lead-free
  certification according to the European RoHS (Restriction of Hazardous Substances)
  lead-free content standards. All new products launched as of July 1, 2006 meet
  the European RoHS standards.

Risk
Management and Insurance Coverage



|Risk
      Management
|---------------------

The Risk
  Management function is allocated to the Risk Committee. The Risk Committee provides
  assistance to the CEO, the Audit Committee, and the Board in fulfilling their
  overall responsibility to monitor the risks the Company may face.

|Sub-contracting
      related risks
|-----------------------------------

Although
  we outsource our production, we encourage our contract manufacturer to put in
  place practices that safeguard the manufacturing processes. These practices
  include measures designed both to prevent the occurrence of loss and to minimize
  the losses should an adverse event occur. Our objective is to transfer to our
  contract manufacturer, to the greatest extent possible, all exposure to loss
  in connection with the manufacturing activity they perform for us. The level
  of risk transferred to our contract manufacturer is based upon a number of factors,
  including the following:

| | the
      general business practices of our industrial field; and
|- | -----------------------------------------------------------------

| | a
      financial balance between our contract manufacturer and us in the assumption
      of the risks.
|- | --------------------------------------------------------------------------------------------------------

| | When
      we made our decision to work with one contract manufacturer in China, for
      example, we worked with the manufacturer to prepare a joint Business Continuity
      Plan (or Disaster Recovery Plan) that allocated certain risk
      management obligations and risks to our Company and others to the contract
      manufacturer.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36WAVECOM
  - Annual Report Form 20-F 2007

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|Contractual
      Risks
|-----------------------

When
  major contracts are being negotiated, our Group Legal Director is involved with
  the operational team in order to evaluate and limit the contractual risks to
  our Company and to confirm that the appropriate type and amount of insurance
  is in place.

|Insurance
      coverage program
|--------------------------------

In collaboration
  with one of the main French insurance brokers, we have maintained an insurance
  program substantially identical in scope from 2006 to 2007. The level of insurance
  coverage and deductibles has remained identical to the previous program, with
  some enhancements as was already the case in 2006 due to both a favorable insurance
  market as well as our improved overall situation. We pay particular attention
  to the reputation and rating of our insurers and we only rely on insurers having
  a rating between A and AAA. Our annual insurance budget is around 1 million.

We determine
  the level of insurance coverage required by evaluating the major risks, coverage
  availability and cost. Our insurance policies include the following coverage
  levels, subject to specified limitations such as deductibles that vary from
  case to case from 10,000 to 150,000 (up to 200,000 in particular
  cases):

| | property
      damage and related loss of income;
|- | -------------------------------------------------

| | general
      commercial and product liability; and
|- | ---------------------------------------------------

| | directors
      and officers liability.
|- | -----------------------------------------

Because
  of our size, we have not established nor do we consider it necessary to establish
  an internal insurance entity to act as a re-issuer (a captive).

Item
  4A:  Unresolved Staff Comments

None.

WAVECOM
  - Annual Report Form 20-F 200737

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Item
  5:  Operating and Financial Review and Prospects

The following
  discussion of our financial condition and results of operations should be read
  in conjunction with our consolidated financial statements and the related notes,
  and the other financial information included elsewhere in this annual report.
  Our consolidated financial statements and our quarterly financial results included
  in this discussion have been prepared in accordance with U.S. GAAP. In compliance
  with applicable European regulations, we also publish our consolidated financial
  statements under IFRS (International Financial Reporting Standards).This discussion
  includes forward-looking statements based on assumptions about our future business.
  Our actual results could differ materially from those contained in the forward-looking
  statements.



Constant Currency Rates


---



In certain
  instances we compare revenues and expenses from one period to another period
  in this Annual Report on Form 20-F using constant currency rates. To present
  that information, current period results for entities reporting in currencies
  other than euros are converted into euros at the prior years exchange
  rates, rather than the exchange rates for fiscal year 2007. For example, if
  a U.S. entity reporting in U.S. dollars sold $1 million dollar of products in
  each of fiscal year 2007 and fiscal year 2006, our financial statements would
  report 730,000 of revenues in fiscal year 2007 (based on an exchange rate
  of 1 = $1.37 which was the average exchange rate in fiscal year 2007)
  and 787,000 in revenues in fiscal year 2006 (based on an exchange rate
  of 1 = $1.27 which was the average exchange rate in fiscal year 2006).
  The constant currency presentation would translate the fiscal year 2007 results
  using the fiscal year 2006 exchange rates and indicate that underlying revenues
  were flat rather than decreasing by 57,000 as would be reported in the
  financial statements under U.S. GAAP. We present this constant currency information
  for fiscal year 2007 in order to assess how our underlying business performed
  before taking into account currency exchange fluctuations. We use figures prepared
  on a constant currency basis both for our internal analysis and for our external
  communications, as we believe they provide suitable means by which to analyze
  and explain variations from one period to another. However, these figures provided
  on a constant currency basis are unaudited and are not measurements of performance
  under U.S. GAAP.



Critical Accounting Judgments and Estimates


---



We have
  identified the most critical accounting principles upon which our financial
  situation depends and that involve the most complex or subjective judgments
  and estimates. Our judgment used to determine the appropriate assumptions and
  to make estimates is based on our historical experience, terms of existing contracts,
  and our observation of trends in the industry, information provided by our customers
  and information available from other outside sources. We believe that our most
  critical accounting estimates are:

| | Provision
      for royalty payment for intellectual property rights: Our products are designed
      to conform to wireless industry standards which are based on certain patented
      technologies that we use. We have concluded license agreements with a number
      of GSM/GPRS patent holders, under which we pay royalties. We record a provision
      for royalty payments that we estimate will be due to these patent holders
      once we conclude license agreements with them. The provision is based on
      a percentage of consolidated product revenues and is recorded at the time
      revenue is recognized. Should the actual royalties to be paid under license
      agreements differ from our estimates, the royalty provision would have to
      be revised.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Provision
      for obsolete inventories: We provide for the estimated loss of value of
      obsolete inventories at the time that such inventories are identified as
      being at risk of obsolescence. Changes in this provision have an impact
      on the determination of cost of goods sold. In determining the risk of obsolescence
      for components, we review the estimated need for the components based on
      current sales and production forecasts and take into consideration any planned
      changes in the architecture of our products which would cause components
      on hand to become obsolete. The risk of obsolescence of finished goods is
      analyzed based on current sales forecasts, as well as announced end-of-life
      decisions, which could accelerate the obsolescence of such products. Should
      actual sales or production patterns differ from our forecasts, revisions
      to the provision for obsolete inventories would be required.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Provision
      for warranty services: We provide for the estimated cost of product warranty
      service at the time the revenue is recognized. While we have put in place
      extensive product quality programs and processes, our warranty obligation
      is affected by product failure rates, our ability to repair defective products
      and service delivery costs incurred in correcting a product failure. Should
      actual product failure rates, repair rates or service delivery costs differ
      from our estimates, revisions to the estimated warranty accrual would be
      required.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38WAVECOM
  - Annual Report Form 20-F 2007

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The three
  provisions described above have an impact on the determination of cost of goods
  sold. They are recorded in other accrued expenses on the balance
  sheet and are described more fully in the footnotes to our annual consolidated
  financial statements.

| | Other
      accruals: Under U.S. GAAP, loss contingencies are recognized in accordance
      with SFAS 5, Accounting for Contingencies. Liabilities are accrued when
      a loss contingency is considered to exist and when a loss is considered
      probable and can be reasonably estimated. Management makes these estimates
      primarily with the analyses of internal specialists, if available, or with
      the support of outside specialists, such as actuaries or legal counsel.
      Revision of managements estimates of these loss contingencies may
      significantly affect future operating results.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Allowance
      for deferred tax assets: We estimate our actual current tax exposure, together
      with our temporary differences resulting from differing treatment of items,
      for tax and accounting purposes. These temporary differences result in deferred
      tax assets and liabilities. We must then assess the likelihood that our
      deferred tax assets will be recovered from future taxable income and to
      the extent we believe that recovery is not likely, we must establish a valuation
      allowance. To the extent we establish a valuation allowance, increase or
      decrease, this allowance during an accounting period, we must include and
      expense or reverse the allowance within the tax provision in the statement
      of operations. Significant management judgment is required in determining
      our provision for income taxes, our deferred tax assets and liabilities
      and any valuation allowance recorded against our net deferred tax assets.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Product
      revenue recognition: Revenue from product sales is recognized when (i) persuasive
      evidence of an arrangement exists, (ii) the product is delivered (at the
      time the products are shipped and risk of loss has been passed to the buyer),
      (iii) the price is fixed or determinable and (iv) collection of the price
      is reasonably assured. If any of these criteria are not met, recognition
      of revenues is deferred until such time as all of the criteria are met.
      The Companys product sales are not sold with a right of return unless
      our product is defective and covered by warranty. The Companys sales
      typically do not include multiple product and/or service elements. Although
      the products sold have embedded software, Wavecom believes that software
      is incidental to the products they provide. In addition, the Company does
      not provide post-contract customer support or maintenance for the software
      (either free of charge or for a fee) embedded in the products. The contracts
      do not provide for upgrading or updating any Wavecom embedded software.
      For instance, the functionality DOTA (Download-Over-the-Air), included in
      the products provides the customers the capability to remotely upgrade and
      enhance their own operating systems, application layers and network software.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Software
      revenue recognition: The Company recognizes revenue from licensing fees
      when the delivery has occurred, the fee is fixed or determinable, evidence
      of an arrangement has been received, all significant contractual obligations
      have been satisfied and the resulting receivable is deemed collectible by
      management, in accordance with Statement of Position 97-2, Software
      Revenue Recognition (SOP 97-2,) as amended by Statement
      of Position 98-4, Deferral of the Effective Date of a Provision of
      SOP 97-2 and Statement of Position 98-9, Modification of SOP
      97-2, Software Revenue Recognition, with Respect to Certain Transactions.
      If any of these criteria are not met, recognition of revenues is deferred
      until such time as all of the criteria are met. If the contract for a licensing
      agreement includes a clause allowing for free updates if and when available
      and if vendor specific objective evidence of fair value for this post-contract
      customer support can not be determined at the time the contract is signed,
      the revenue must be spread over life of the contract. Revenue recognition
      is complex and certain judgments and estimates affect the application of
      this policy.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Share
      based payment: Wavecom has various types of share based compensation plans
      for employees. The fair value of stock options, employee share issues and
      share grants without consideration is determined at the grant date. The
      fair value of stock options is estimated by using the binomial model on
      the date of grant based on certain assumptions. Those assumptions include,
      among others expected volatility, the expected option term and the expected
      dividend payout rate. The assumption of volatility has been set by reference
      to the implied volatility of options available on Wavecom shares in the
      open market and in light of historical patterns of volatility, whereas the
      expected option term is estimated by observing general option holder behavior
      and actual historical terms of Wavecom option programs. Changes in valuation
      assumptions may significantly affect the expense recorded in the income
      statement.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






Background


---



We are
  a global technology company that develops, markets, and sells wireless platforms
  that can be embedded into virtually any machine or device, thus enabling it
  to transmit and receive both data and voice communications via wireless cellular
  network operators. Our highly sophisticated wireless platforms, are sold as
  wireless central processing units (Wireless CPU®s  including both
  smart modems and modules) and integrate all of the necessary software and hardware
  on miniature circuit board platforms that can be used for a wide variety of
  applications. We also provide our customers with development tools and engineering
  support services to facilitate the design and operation of innovative wireless

WAVECOM
  - Annual Report Form 20-F 2007      39

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products.
  Our tag line  Smart wireless. Smart business  succinctly
  describes how our customers benefit from using our products and services. During
  2007 we offered for the first time, a service platform that allows for the monitoring
  and maintenance of devices equipped with our Wireless CPU®s via a back-end
  server for the purposes of upgrading our software, the application software
  or wireless network software. This new service model opens the door to future
  contracts that we believe will eventually create subscription business providing
  a recurring income stream.

With
  over fourteen years in cellular telecommunications experience, we have attracted
  and developed a talented team of managers and employees who are focused on creating
  and selling wireless solutions to the enterprise market that includes hardware,
  software and services. Our engineering teams represent more than half of our
  employees who have highly specialized expertise and know-how in the design and
  integration of radio-frequency-architected circuitry, communications software
  and base band ASICS (Application Specific Integrated Circuits), specifically
  designed for machine-to-machine processing and communication. Our products and
  services get to market by using a combination of our own direct sales force
  which is augmented by an extensive world-wide network of value-added distributors
  and manufacturers representatives that reach a large number of diverse
  customers and prospects from around the world. Although we do not operate our
  own production facilities, our operations teams have acquired substantial skills
  over the years in producing and manufacturing our Wireless CPU®s by working
  closely with our contract manufacturing partner located in China.

Our organizational
  structure is designed to reflect our strategic orientation. This structure includes
  management by geographic segment: EMEA (Europe Middle-East and Africa), APAC
  (Asia-Pacific) and the Americas (North and South America). Each of these regions
  is headed by a Group Vice President who has responsibility for developing customer
  relations and managing the profitability of the region. The regions are supported
  from a product standpoint by marketing and technology, research and development,
  and operations (manufacturing). During 2007, we added a matrix management structure
  for the automotive business which is headed by a Group Vice President who coordinated
  our global development efforts in automotive. Given the benefit of this worldwide
  coordination we saw in 2007, moving forward in 2008 each of the regional Vice
  Presidents now has, on top of his geographical responsibility, a matrix role
  of coordination for each of our most promising markets: including: automotive,
  wireless local loop and broader M2M areas. The regions are supported by teams
  from finance, human resources and quality that are located in the regions and
  managed from our headquarters in France.

2007
   Operational overview

The year
  2007 was one of mixed results. Revenues increased by 7% versus the previous
  year, growing from 188.8 million to 202.3 million but sales varied greatly from
  region to region. However, in 2007 net income more than triple to reach 17.4
  million compared to 4.7million in 2006.

|Operational
      highlights:
|-----------------------------

During
  2007 we experienced improved operational performance led by progress in two
  main areas:

| | Successful
      completion of the integration of the business we acquired in 2006; and,
|- | ----------------------------------------------------------------------------------------

| | Improvement
      on most key target metrics for operations.
|- | ------------------------------------------------------------

In 2007
  we successfully completed consolidation of our production into one outsource
  manufacturer located in China for all of our products, including those from
  the business we acquired in 2006. This manufacturing consolidation played a
  key role in the on-going enhanced manufacturing efficiency, with measurable
  improvement in the supply chain management, including the area of component
  procurement. This consolidation contributed to reduced cost of goods, resulting
  in an improved product gross margin compared to the previous year.

Additionally,
  we maintained operational excellence and improved on key target metrics including:

| | Lower
      defect and return rates;
|- | ------------------------------------

| | Higher
      yields for lower costs;
|- | ------------------------------------

| | Improved
      on-time deliveries  on-time deliveries have reached 98% and average
      order time to delivery are standing at four weeks.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

We also
  made progress in areas that we believe will accelerate the uptake of our technology
  including:

| | Complete
      re-architecture of our firmware;
|- | -----------------------------------------------

| | Deployment
      of IDS (Intelligent Device Services) service offer;
|- | --------------------------------------------------------------------

| | Introduction
      of inSIM® (embedded SIM)  which has been recognized by a leading
      European automobile manufacturer as an innovative concept; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | Introduction
      and sampling of our low cost HSDPA solution
|- | --------------------------------------------------------------



40WAVECOM
  - Annual Report Form 20-F 2007

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As mentioned
  earlier, this operational improvement was counterbalanced by mixed revenue performance
  from our three regions.

Our Americas
  region reported a 56% year-over-year increase in revenues (at constant foreign
  exchange rates). The Asia-Pacific region had a slight incremental growth in
  revenues (also at constant currencies) while the EMEA (Europe, Middle East and
  Africa) region suffered a slowdown in sales in several markets and experienced
  a lower contribution from its distributors network. The weak US dollar
  compared to the euro negatively impacted our overall revenues by about 9
  million, mostly in the second half of 2007.

|Strategic
      highlights:
|---------------------------

We made
  progress in advancing along our strategic plan in 2007, underscored by several
  initiatives.

Service
  Offer launch: Our services offer became a reality with the launch of StarService,
  a new offer that eliminates up-front costs by combining a Wireless Microprocessor®
  (free of charge) with a paid subscription to Wavecoms secure IDS (Intelligent
  Device Services).

StarService
  is the first offer in Wavecoms IDS platform, with more to be launched
  in 2008.

New
  module partner: We entered into a partnership with Sunlink Holding
  in Hong Kong who is producing hardware platforms based on Wavecom technology
  and designs. Sunlinks initial products are based on Wavecoms Q24
  family of Wireless CPUs®, and Wireless Microprocessor® technology. They
  have full OpenAT® capabilities, and Wavecom will supply the baseband component.

Sunlink
  is now making products based on Wavecom technology that should be suited to
  certain APAC-region markets. These products are not in direct competition with
  Wavecom since they have a field of use restriction. This strategic alliance
  is expected to accelerate wireless M2M development in Asia Pacific region in
  the future

Strategic
  acquisition:As of February 1, 2008, we completed a strategic acquisition
  of Anyware Technologies who are experts in client-server applications. This
  Company is recognized for its open source technology expertise for creating
  advanced software solutions that optimize enterprise processes. Its M2M-specific
  solutions perfectly complement Wavecoms secure and scalable IDS (Intelligent
  Device Services) platform, with the combination creating the most advanced,
  and easy to deploy, end-to-end software solution in the industry.

Reporting
  by Geographic Business Segment



The Company
  has determined that the risks and the profitability are predominantly driven
  by the geographic areas. In addition, the Companys Chief Executive Officer
  uses now such segment reporting to allocate resources.

Management
  is aligned by geographic segment: EMEA (Europe Middle-East and Africa), APAC
  (Asia-Pacific) and the Americas (North and South America).

The table
  below sets forth revenues and operating losses for each of our segments for
  the year ended December 31, 2005, December 31, 2006 and December 31, 2007.

|                                                |       
|----------------------------------------------- | ------
|Fiscal
      year 2005 (amounts in  thousands) | EMEA  
|                                                |       
|Revenues                                        | 74,840
|Operating
      (loss)/income                   | 7,588 
|                                                |       

|                                                |       
|----------------------------------------------- | ------
|Fiscal
      year 2006 (amounts in  thousands) | EMEA  
|                                                |       
|Revenues                                        | 99,389
|Operating
      (loss)/income                   | 9,730 
|                                                |       

|                                                |       
|----------------------------------------------- | ------
|Fiscal
      year 2007 (amounts in  thousands) | EMEA  
|                                                |       
|Revenues                                        | 96,576
|Operating
      (loss)/income                   | 21,666
|                                                |       

WAVECOM
  - Annual Report Form 20-F 2007      41

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|EMEA
      (Europe, Middle-East and Africa)
|-------------------------------------------

The EMEA
  region, whose sales decreased by 3% year on year suffered from lower sales mainly
  in automotive and fixed cellular or wireless local loop applications, and also
  in indirect sales through distribution. For the automotive segment, sales decreased
  year-on-year as fewer cellular products were shipped by our key automotive customers.
  This sluggish product sell-through was also the case for fixed cellular which
  we believe experienced a decrease globally. Some of the other direct customer
  sectors, such as metering and alarms did grow, but their growth was not enough
  to make up for the other declines.

EMEA
  represents 48% of total revenues.

Operating
  income increased significantly between 2006 and 2007 as this region benefits
  from improved gross margin in percentage of sales and from a decrease in allocated
  expenses compared to the prior year due to a lower gross profit contribution
  relative to the total Company.

|APAC
      (Asia-Pacific)
|-------------------------

The sales
  of APAC region were stable between 2006 and 2007 but grew by 9% at constant
  currencies led by a positive sell-through of point of sale and automatic metering
  and increased service revenues, although the wireless local loop sector decreased
  by approximate 5 million year-on-year as the market contracted.

APAC
  presently represents 17% of total revenues.

Operating
  income for the region increased from 2006 to 2007 primarily due to higher gross
  margins

|Americas
|--------

The sales
  of Americas region grew by 46% and by 56% at constant currencies. This growth
  was fueled by the home and security market as well as vehicle remote management.
  In addition, revenue was positively impacted in 2007 by one particular customer
  which completed delivery of a large program.

The Americas
  presently represents 35% of total revenues.

Operating
  income for the region increased from 2006 to 2007 due in part to higher sales
  and improvement in gross margin partly compensated by an increase in allocated
  expenses compared to the prior year due to a higher gross profit contribution
  of Americas relative to the total Company.

|Corporate
      Headquarters
|----------------------------

Licenses
  revenues are allocated to corporate headquarters. The increase in operating
  loss is mainly due to the absence of license revenues in 2007 and to an increase
  of expenses recorded at corporate, in particular long term research and development
  projects.

Results
  of Operations



|Fiscal
      Year 2007 compared to Fiscal Year 2006
|---------------------------------------------------

|Revenues
|--------

|                                                      |        
|----------------------------------------------------- | -------
|Year
      ended December 31,(amounts in  thousands) | 2005   
|                                                      |        
|Product
      sales                                   | 180,393
|Percentage
      of total revenues                    | 97.6%  
|Services
      revenue                                | 2,542  
|Percentage
      of total revenues                    | 1.3%   
|Licensing
      revenue                               | 5,823  
|Percentage
      of total revenues                    | 3.1%   
|                                                      |        
|Total
      revenues                                  | 188,758
|                                                      |        

42WAVECOM
  - Annual Report Form 20-F 2007

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|Sales
      by geographic region
|--------------------------------

|                                        |     
|--------------------------------------- | ----
|As
      % of total revenues:           | 2006
|                                        |     
|European,
      Middle East and Africa: | 53  
|Asia-Pacific:                           | 22  
|Americas:                               | 26  
|                                        |     
|                                        | 100 
|                                        |     

|Sales
      by application and distribution channel
|---------------------------------------------------

|                                      |        
|------------------------------------- | -------
|(amounts
      in  000s)             | 2006   
|                                      |        
|Direct
      customers:               |        
|Automotive                            | 35,180 
|Industrial
      (Machine-to-Machine) | 37,677 
|Mobile
      Professional             | 4,347  
|Personal
      Communication Devices  | 0,023  
|Indirect
      customers:             |        
|Distributors(1)                       | 103,165
|                                      |        
|Total
      Products                  | 180,392
|Total
      Services & licencing      | 8,366  
|                                      |        
|Total                                 | 188,758
|                                      |        

|(1) | Our
      distributor customers purchase our products and re-sell them
      to their own customers who use them in a diverse range of applications,
      which we believe are mostly industrial and mobile professional applications.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenues
  for the full year 2007 increased 7% year-on-year reaching 202.3 million,
  or 12% at constant currencies, as the weak U.S. dollar had a negative impact
  of approximately 9 million on 2007 sales as compared with 2006 exchange
  rates.

|Products:
|---------

|In
      2007, product sales increased by 10% at actual exchange rates (15% at constant
      currency exchange rates) year-on-year.
|------------------------------------------------------------------------------------------------------------------------------------

The positive
  year-over-year revenue trend was driven by the significant progress in the Americas
  region which grew by 46% at actual exchange rates or 56% at constant currency
  exchange rates. This growth was fueled by the home and security market as well
  as vehicle remote management. In addition, one particular customer completed
  delivery of a large program in 2007.

The APAC
  region decreased by 3% (at actual exchange rates) but grew by 5% (at constant
  currency exchange rates) led by a positive sell-through of point-of-sale and
  automatic metering, although the wireless local loop sector decreased by approximate
  5 million year-on-year as the market contracted.

The EMEA
  region, which decreased by 3% year on year suffered from lower sales mainly
  in automotive and fixed cellular or wireless local loop applications, which
  saw greater competition than in the previous year, and also in indirect sales
  through distribution. For the automotive segment sales decreased year-on-year,
  as fewer cellular products were shipped by our key automotive customers. This
  sluggish product sell-through was also the case for fixed cellular which we
  believe globally decreased. Some of the other direct customer sectors, such
  as metering and alarms did grow, but their growth was not enough to make up
  for the other declines.

|Services:
|---------

Technology
  development and other service revenues were generated from the sale of technical
  support to customers in order to assist them in the integration of our products
  into their end-products but also from service offerings that Wavecom develops.
  In 2006 and 2007, service revenues mainly resulted from a specific long-term
  project to develop a customized product in the automotive industry.

WAVECOM
  - Annual Report Form 20-F 2007      43

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|Licensing:
|----------

We had
  no licensing revenue in 2007.

In 2006,
  total revenues from licensing amounted to 5.8 million with the following
  breakdown:

| | 1.9
      million generated by a licensing contract signed in 2005 which revenue was
      spread over the last three quarters of 2005 and the four quarters of 2006,
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.9
      million generated by a licensing contract signed in 2006 which revenue was
      all recognized in 2006.
|- | -------------------------------------------------------------------------------------------------------------------

|Customer
      Concentration:
|-----------------------------

Revenues
  from the top ten customers represented 50% of the total and no customer represented
  more than 9% of sales where six were direct customers and four were value-added
  distributors.

Backlog:
  We include in our backlog all accepted product purchase orders for which delivery
  has been specified within one year. The 12-month backlog on December 31, 2007
  was 41.7 million compared to 51.5 million at December 31, 2006.

|Cost
      of revenues
|----------------------

|                                     |                             
|------------------------------------ | ----------------------------
|                                     | Year
      ended December 31
|(amounts
      in  thousands)       | 2006                        
|                                     |                             
|Cost
      of revenues               |                             
|Cost
      of good sold              | 105,775                     
|Cost
      of services and licensing | 2,723                       
|                                     |                             
|Total
      cost of revenues         | 108,498                     
|                                     |                             
|Gross
      Profit                   |                             
|On
      good sold                   | 74,618                      
|On
      services and licensing      | 5,642                       
|                                     |                             
|Total
      gross profit             | 80,260                      
|                                     |                             

Cost
  of goods sold: Total cost of goods sold consists primarily of the cost of
  components, our contract manufacturers charges, essential intellectual
  property royalties, warranty expenses, and depreciation.

The total
  cost of goods sold decreased by 1.1% from 105.8 million for 2006 to 104.7
  million for 2007, despite an increase of 10% of the product sales mainly driven
  by the continuation of the reduction of the costs on the business acquired in
  2006.

Cost
  of services and licensing:Total costs of services and licensing increased
  from 2006 to 2007 mostly due to significant costs recorded by the Company to
  support one of its development agreements.

Gross
  profit: Gross profit increased by 14.4% from 80.3 million for 2006
  to 91.9 million for 2007. As a percentage of sales, 2007 gross profit
  amounted to 45.4% versus 42.5% in 2006. This year-on-year increase is explained
  by a better product margin, in particular for the activity acquired in 2006
  partly offset by no license revenues, which is a business with higher margins,
  and by higher development costs for services revenues.

44WAVECOM
  - Annual Report Form 20-F 2007

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|Operating
      expenses
|------------------------

|                                                 |                             
|------------------------------------------------ | ----------------------------
|                                                 | Year
      ended December 31
|(amounts
      in  thousands)                   | 2006                        
|                                                 |                             
|Research
      and development                   | 29,982                      
|Sales
      and Marketing                        | 14,196                      
|General
      and Administrative                 | 23,875                      
|Acquired
      in process technology             | 1,450                       
|Amortization
      of acquired intangible assets | 3,020                       
|Stock
      based related expenses               | 2,090                       
|                                                 |                             
|Total                                            | 74,613                      
|                                                 |                             

In the
  table above, amounts for amortization of acquired intangible assets and stock-based
  related expenses have been excluded from Research and Development, Sales and
  Marketing, and General and Administrative and presented in separate lines for
  purposes of comparability.

Total
  operating expenses were 79.2 million in 2007, compared to 74.6 million
  in 2006, increasing by 6%.

Operating
  expenses for Research and Development, and Sales and Marketing, have increased
  as compared to 2006 by 6% and 28% respectively. Both lines increased due to
  two main factors:

| | four
      additional months of costs related to the acquired activity in 2006 (90
      people largely in R&D and sales and marketing joined Wavecom in May
      2006), and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | increases
      in headcount during 2007.
|- | -----------------------------------------

In addition,
  some engineers time allocated to Research and Development in 2006 were
  allocated to Sales and Marketing in 2007 based on the nature of their work performed
  in 2007. Finally, a larger amount of engineers time has been allocated to Cost
  of Service in 2007 as opposed to Research and Development line to support the
  service contracts. General and Administrative decreased by 13% mainly due to
  bad debt expenses primarily in Asia and in Europe and expenses associated with
  the M2M business acquisition completed in 2006.

Total
  headcount including subcontractors was 483 at the end of 2007 versus 440 at
  the end of 2006.

Operating
  expenses also included a non-cash expense of 2.1 million in 2006 and 4.8
  million in 2007, related to stock-based compensation as required by implementation
  of SFAS 123R. The increase is explained by the granting in June 2007 of 155,650
  free shares, 40,000 BSA (warrants) and of 372,650 stock options.

In addition,
  in 2006 and 2007, there were a number of accounting charges related to the 2006
  acquisition that adversely impacted our operating result. In accordance with
  SFAS 141, certain intangible assets and in-process technology were identified
  within the former M2M business. As of December 31, 2006, in-process technology
  was valued at 1.5 million which was expensed in the second quarter 2006,
  the projects included in the in-process technology were completed in 2006 and
  2007 and the related products are now on the market. The acquired intangible
  assets were valued at 13.3 million, and are depreciated over a period
  of one to four years, resulting in a depreciation charge of 3.0 million
  in 2006 and 3.5 million in 2007.

|Other
      income (expense)
|----------------------------

Interest
  and other financial income, net:On July 13, 2007, Wavecom issued 80,5
  million principal amount of bonds convertible into and/or exchangeable for new
  or existing shares (OCEANE) at a rate of 1.75% and mature on January 1, 2014.
  The OCEANE bear interest at a rate of 1.75% per annum. On a full year basis,
  interest expenses amount to 1.4 million and we recorded 664,000
  for the year ended December 31, 2007.

We recorded
  net interest and other financial income of 1.8 million in 2007, compared
  to 1.1 million in 2006. Net interest and other financial income represent
  the net of 3.4 million of interest income (1.3 million in 2006)
  and 1.5 million of interest expenses (0.2 million in 2006). This
  increase is due to a higher cash level mainly driven by the OCEANE generating
  more financial income offset by interest expense mainly on the OCEANE.

Wavecom
  has policies that limit cash investments to short-term, low-risk instruments.
  Cash is mainly held in securities that are invested in short-term money market
  accounts ( Fonds Communs de Placement or FCP and Société
  dInvestissement à Capital Variable or SICAV).



WAVECOM
  - Annual Report Form 20-F 2007      45

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Foreign
  exchange gain (loss): We had a net foreign exchange loss of 1.4 million
  in 2007 compared with a net loss of 1.9 million in 2006, reflecting mainly
  the foreign exchange loss on US dollar-denominated transactions and balance
  sheet items only partly compensated by the impact of our hedging program. The
  purpose of this hedging program is to limit our exposure to foreign currencies
  and not for speculative purposes.

In 2007,
  we recorded 56% of our total revenues in U.S. dollars, with virtually all the
  rest in euros. We purchase many of our components for U.S. dollars and the operating
  expenses of our U.S. subsidiaries are in U.S. dollars. The operating expenses
  of our Hong Kong subsidiary are primarily in Hong Kong dollars. Most of our
  other operating expenses are in euros. Dollar purchases and expenses represented
  approximately 62% of our cost of revenues and operating expenses in 2007.

Income
  tax expense (benefit): Our 4.3 million net tax benefit in 2007 (125,000
  net tax expense in 2006) was the result of the recognition of a deferred tax
  asset amounting to 4.5 million and to income tax expense of the Wavecom
  subsidiaries (214,000) and other taxes resulting in a net credit of 9,500.

Until
  December 31, 2006, due to its history of tax losses in foreign tax jurisdictions
  which account for Wavecoms deferred tax assets, the Company does not believe
  that sufficient objective, positive evidence exists to conclude that recoverability
  of its deferred tax assets is more likely than not. Consequently, the Company
  has provided valuation allowances covering 100% of its net deferred tax assets
  in these respective tax jurisdictions.

At December
  31, 2007, based on the good performance the years before, in particular in 2007,
  and the perspective for the near future, Management has decided to reverse a
  part of the valuation allowance. The minimum amount of future taxable income
  that would have to be generated to realized the deferred tax asset is 13.5
  million.

As of
  December 31, 2007, expiration dates of net operating loss carry forwards were
  as follows:

|                                              |                      
|--------------------------------------------- | ---------------------
|Expiration
      date:                        | (in
       thousands
|                                              |                      
|2008                                          |                     
|2009                                          |                     
|2010                                          |                     
|2011                                          |                     
|Between
      2013 and 2022                   | 1,650                
|No
      expiration date                      | 44,433               
|                                              |                      
|Total
      net operating loss carry forwards | 46,083               
|                                              |                      

Wavecom
  S.A. (France) had total loss carry forwards of 36,140,000 at December
  31, 2007 (60,249,000 in 2006) with no expiration date.

Net operating
  loss carry forwards in the United States totaled approximately 1,650,000
  at December 31, 2007 (2,320,000 in 2006) and will expire from 2013 to
  2022 if not utilized.

Net operating
  loss carry forwards in the APAC region totaled approximately 8,293,000
  at December 31, 2007 (9,938,000 in 2006) with no expiry date.

For more
  information, refer to Note 15 of the notes to the consolidated financial statements.

46WAVECOM
  - Annual Report Form 20-F 2007

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|Fiscal
      Year 2006 compared to Fiscal Year 2005
|---------------------------------------------------

|Revenues
|--------

|                                                      |        
|----------------------------------------------------- | -------
|Year
      ended December 31,(amounts in  thousands) | 2005   
|                                                      |        
|Product
      sales                                   | 125,952
|Percentage
      of total revenues                    | 97.5   
|Services
      revenue                                | 1,827  
|Percentage
      of total revenues                    | 1.4    
|Licensing
      revenue                               | 1,453  
|Percentage
      of total revenues                    | 1.1    
|                                                      |        
|Total
      revenues                                  | 129,232
|                                                      |        

|Sales
      by market
|---------------------

|                              |     
|----------------------------- | ----
|As
      % of total revenues: | 2005
|                              |     
|Vertical
      applications:  | 91  
|PCD
      (handset) business: | 9   
|                              | 100 
|                              |     

|Sales
      by geographic region
|--------------------------------

|                                      |     
|------------------------------------- | ----
|As
      % of total revenues:         | 2005
|                                      |     
|Europe,
      Middle East and Africa: | 58  
|Asia-Pacific:                         | 32  
|Americas:                             | 10  
|                                      |     
|                                      | 100 
|                                      |     

|Sales
      by product
|----------------------

|                                |        
|------------------------------- | -------
|(amounts
      in 000s)        | 2005   
|                                |        
|
      Embedded wireless CPU   | 103,327
|
      External wireless CPU   | 18,051 
|
      Flex (chipset solution) | 4,574  
|
      Services                | 1,827  
|
      License                 | 1,453  
|                                |        
|Total                           | 129,232
|                                |        

WAVECOM
  - Annual Report Form 20-F 2007      47

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|Sales
      by application and distribution channel
|---------------------------------------------------

|                                      |        
|------------------------------------- | -------
|(amounts
      in 000s)              | 2005   
|                                      |        
|Direct
      Customers:               |        
|Automotive                            | 16,378 
|Industrial
      (Machine-to-Machine) | 22,698 
|Mobile
      Professional             | 7,586  
|Personal
      Communication Devices  | 10,535 
|Indirect
      Customers:             |        
|Distributors(1)                       | 68,755 
|                                      |        
|Total
      Products                  | 125,952
|                                      |        
|Total
      Services & licensing      | 3,280  
|                                      |        
|Total                                 | 129,232
|                                      |        

|(1) | Our
      distributor customers purchase our products and re-sell them
      to their own customers who use them in a diverse range of applications,
      which we believe are mostly industrial and mobile professional applications.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total
  revenues increased 46% year-on-year from 129.2 million in 2005 to 188.7
  million in 2006.

|Products:
|---------

Products
  sales increase due mainly to the increase in product revenues from 126.0
  million to 180.4 million. We had no sales in the PCD (Personal Communication
  Device or handset business) in 2006, while it represented 9% of total sales
  in 2005. Sales in the Vertical Applications increased by 56% from 115.4
  million in 2005 to 180.4 million in 2006. This is explained largely by
  the eight months of revenues contributed by the acquired M2M business but also
  by an increase of around 13% for sales of historical Wavecom products.

From
  a geographic standpoint, product sales in the Americas region increased the
  most, representing 26% of total sales in 2006 versus 10% in 2005. This can be
  explained not only by the additional business generated by the acquired M2M
  business which was particularly strong in the Americas region but also by a
  strong increase from the historical activity.

By application,
  the greatest increase was in the automotive area, mainly due to the contribution
  of the acquired business. On the other hand, sales to Mobile Professional applications
  (PDA  Personal Digital Assistant  and WLL  Wireless Local
  Loop) decreased from 2005 to 2006 due to the fact that one customer that represented
  a significant portion of revenues in the first quarter of 2005 encountered technical
  difficulties that were unrelated to Wavecom and no longer contributed to sales
  in the last three quarters of 2005 nor for any of 2006. This decline was partly
  compensated by sales in 2006 for Wireless Local loop applications. Sales in
  Machine-to-Machine applications and to distributors were strong marking an increase
  from 2005 to 2006 of 66% and 50%, respectively.

|Services:
|---------

Technology
  development and other service revenues are generated from the sale of technical
  support to customers in order to assist them in the integration of our products
  into their end-products but also from service offerings that Wavecom develops.

|Licensing:
|----------

In 2005,
  Wavecom signed a licensing contract for its software and silicon technology.
  Out of the 3.4 million revenue from this contract, 1.5 million was
  recognized over the last three quarters of 2005 and 1.9 million was recognized
  in 2006.

In 2006,
  Wavecom signed and completed another licensing contract for its software and
  silicon technology for a license fee of 3.9 million. All the revenues
  associated with this license were recognized in 2006.

|Customer
      Concentration:
|-----------------------------

No single
  customer represented more than 9% of total revenues on an annual basis in 2006.
  The top ten customers combined represented 46% of 2006 total revenues.

Backlog:
  12 months backlog as of December 31, 2006 stood at 51.5 million.

48WAVECOM
  - Annual Report Form 20-F 2007

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|Cost
      of revenues
|----------------------

|                                     |                             
|------------------------------------ | ----------------------------
|                                     | Year
      ended December 31
|(amounts
      in  thousands)       | 2005                        
|                                     |                             
|Cost
      of revenues               |                             
|Cost
      of goods sold             | 69,094                      
|Cost
      of services and licensing | 842                         
|                                     |                             
|Total
      cost of revenues         | 69,936                      
|                                     |                             
|Gross
      Profit                   |                             
|On
      goods sold                  | 56,858                      
|On
      services and licensing      | 2,438                       
|                                     |                             
|Total
      Gross profit             | 59,296                      
|                                     |                             

Cost
  of goods sold: Total cost of goods sold consists primarily of the cost of
  components, our contract manufacturers charges, essential intellectual
  property royalties, warranty expenses, and depreciation.

The total
  cost of goods sold increased by 53.1% from 69.1 million for 2005 to 105.8
  million for 2006, principally due to higher levels of product sales.

|Cost
      of services and licensing:
|-------------------------------------

Total
  costs of services and licensing increased from 2005 to 2006 as a result of the
  development of these activities as well as to significant costs recorded by
  the Company to support one of its development agreements.

Gross
  profit: Gross profit increased by 35.4% from 59.3 million for 2005
  to 80.3 million for 2006. As a percentage of sales, 2006 gross profit
  amounted to 42.5% versus 45.9% in 2005. This year-on-year decline was largely
  related to the low-margin products from the acquired M2M business, partly offset
  by an increase in licenses revenues with higher margins.

|Operating
      expenses
|------------------------

|                                                 |                             
|------------------------------------------------ | ----------------------------
|                                                 | Year
      ended December 31
|(amounts
      in  thousands)                   | 2005                        
|                                                 |                             
|Research
      and development                   | 24,066                      
|Sales
      and Marketing                        | 11,725                      
|General
      and Administrative                 | 17,861                      
|Acquired
      in process technology             |                            
|Amortization
      of acquired intangible assets |                            
|Restructuring
      costs                        | 1,684                       
|                                                 |                             
|Total                                            | 55,336                      
|                                                 |                             

Total
  operating expenses were 74.6 million in 2006, compared to 55.3 million
  in 2005, increasing by 35%. The main explanation of this increase is linked
  to the eight months of additional expenses for the acquired M2M business. Following
  this acquisition, around 90 people joined the group, representing an increase
  of 27% of the headcount versus end of 2005.

2006
  expenses also include a non-cash expense of 2.1 million, related to stock-based
  compensation as required by implementation of SFAS 123R. Stock-based compensation
  was not required to be expensed under US GAAP for the year 2005. These expenses
  were recorded in the lines Research and Development, Sales and Marketing, and
  General and Administrative.

Operating
  expenses for Research and Development, Sales and Marketing, and General and
  Administrative all increased as compared to 2005 by 26%, 25% and 41% respectively.
  Excluding the stock-based compensation, the increase would have

WAVECOM- Annual Report Form 20-F 2007      49

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been
  25%, 21% and 34%, respectively. The higher increase in General and Administrative
  is due to higher bad debt expenses mainly in Asia and expenses associated with
  the M2M business acquisition. The increase in Research and Development and Sales
  and Marketing is mainly related to the acquired activity.

In addition,
  in 2006 there were a number of accounting charges related to our recent acquisition
  that adversely impacted our operating result. In accordance with SFAS 141, certain
  intangible assets and in-process technology were identified within the former
  M2M business. As of December 31, 2006, in-process technology has been valuated
  at 1.5 million which was expensed in the second quarter 2006, and the
  acquired intangible assets have been valuated at 13.3 million, and will
  be depreciated over a period of 1 to 4 years, resulting in a depreciation charge
  of  3.0 million in 2006.

No significant
  restructuring costs were recorded in 2006. The restructuring costs recorded
  in 2005 were the remaining costs related to the 2004 restructuring plan as a
  result of the Company decision to exit the handset market.

|Other
      income (expense)
|----------------------------

Interest
  and other financial income, net: We recorded net interest and other financial
  income of 1.1 million in 2006, compared to 1.0 million in 2005,
  reflecting principally higher interest rates.

Foreign
  exchange gain (loss): We had a net foreign exchange loss of 1.9 million
  in 2006 compared with a net gain of 4.1 million in 2005, reflecting the
  foreign exchange loss on US dollar-denominated transactions and balance sheet
  items only partly compensated by the impact of our hedging program.

Income
  tax expense (benefit): Our 125,000 net tax expense in 2006 (395,000
  net tax expense in 2005) was the result of the income tax expense of the parent
  Company (32,000) and of its subsidiaries (98,000) and other taxes
  resulting in a net credit of 5,000.

Selected
  quarterly operating results



The following
  table sets forth selected unaudited quarterly operating results for each of
  the eight fiscal quarters in the two-year period ended December 31, 2007. We
  have derived this information from our unaudited interim consolidated financial
  statements which have been prepared on a basis consistent with our audited consolidated
  financial statements. The results of operations for any quarter are not necessarily
  indicative of the results that might be expected for any future period.

50WAVECOM
  - Annual Report Form 20-F 2007

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|Selected
      quarterly operating results
|------------------------------------------

|                                                                   | March
      31,                                                      |   | June
      30, |   | Sept.
      30 |  | Dec.
      31, |   | March
      31, |  | June
      30, |  | Sept.
      30 |   | Dec.
      31, |  
|------------------------------------------------------------------ | -------------------------------------------------------------------- | - | -------------- | - | -------------- |  | -------------- | - | --------------- |  | -------------- |  | -------------- | - | -------------- | -
|                                                                   | 2006                                                                 |   | 2006           |   | 2006           |  | 2006           |   | 2007            |  | 2007           |  | 2007           |   | 2007           |  
|                                                                   |                                                                     
|                                                                   | (unaudited)
      (in thousands, except share and per share amounts) |  
|Revenues:                                                          |                                                                      |  
|Product
      sales                                                | 27.462                                                              |   | 49.187        |   | 54.992        |  | 48.753        |   | 47.785         |  | 55.776        |  | 50.405        |   | 44.543        |  
|Technology
      development and
        other services            | 270                                                                  |   | 216            |   | 408            |  | 1.647          |   | 332             |  | 334            |  | 1.958          |   | 1.205          |  
|Licensing
      revenue                                            | 484                                                                  |   | 484            |   | 485            |  | 4.369          |   |                |  |               |  |               |   |               |  
|                                                                   |                                                                     
|Total
      revenues                                               | 28.216                                                               |   | 49.887         |   | 55.885         |  | 54.769         |   | 48.117          |  | 56.110         |  | 52.363         |   | 45.748         |  
|Cost
      of revenues:                                            |                                                                      |  
|                                                                   |                                                                     
|Cost
      of goods sold                                           | 13.066                                                               |   | 28.762         |   | 35.206         |  | 28.741         |   | 26.012          |  | 30.139         |  | 26.956         |   | 21.543         |  
|Cost
      of services                                             | 176                                                                  |   | 697            |   | 802            |  | 1.048          |   | 1.559           |  | 1.600          |  | 1.666          |   | 1.009          |  
|                                                                   |                                                                     
|Total
      cost of revenues                                       | 13.242                                                               |   | 29.459         |   | 36.008         |  | 29.789         |   | 27.571          |  | 31.739         |  | 28.622         |   | 22.552         |  
|                                                                   |                                                                     
|Gross
      profit                                                 | 14.974                                                               |   | 20.428         |   | 19.877         |  | 24.980         |   | 20.546          |  | 24.371         |  | 23.741         |   | 23.196         |  
|Operating
      expenses:                                          |                                                                      |  
|Research
      and development                                     | 5.901                                                                |   | 8.119          |   | 8.467          |  | 8.634          |   | 7.758           |  | 8.179          |  | 8.493          |   | 9.132          |  
|Sales
      and marketing                                          | 2.886                                                                |   | 4.405          |   | 4.464          |  | 5.098          |   | 5.413           |  | 5.740          |  | 5.689          |   | 5.896          |  
|General
      and administrative                                   | 5.568                                                                |   | 5.847          |   | 6.325          |  | 7.448          |   | 5.784           |  | 5.700          |  | 5.461          |   | 5.911          |  
|Acquired
      in process technology                               |                                                                     |   | 1.400          |   |               |  | 50             |   |                |  |               |  |               |   |               |  
|Restructuring
      costs                                          |                                                                     |   |               |   |               |  |               |   |                |  |               |  |               |   |               |  
|                                                                   |                                                                     
|Total
      operating expenses                                     | 14.355                                                               |   | 19.771         |   | 19.256         |  | 21.230         |   | 18.955          |  | 19.619         |  | 19.643         |   | 20.939         |  
|Operating
      income (loss)                                      | 619                                                                  |   | 657            |   | 621            |  | 3.750          |   | 1.591           |  | 4.752          |  | 4.098          |   | 2.257          |  
|Interest
      and other financial income (expense), net           | (361                                                                 | ) | (471           | ) | 618            |  | (604           | ) | 369             |  | 369            |  | (705           | ) | 359            |  
|                                                                   |                                                                     
|Income
      (loss) before minority interests and income taxes     | 258                                                                  |   | 186            |   | 1.239          |  | 3.146          |   | 1.960           |  | 5.121          |  | 3.393          |   | 2.616          |  
|Minority
      interests                                           |                                                                     |   |               |   |               |  |               |   |                |  |               |  |               |   |               |  
|                                                                   |                                                                     
|Income
      (loss) before income taxes                            | 258                                                                  |   | 186            |   | 1.239          |  | 3.146          |   | 1.960           |  | 5.121          |  | 3.393          |   | 2.616          |  
|Income
      tax expense (benefit)                                 | 54                                                                   |   | 19             |   | 20             |  | 34             |   | 12              |  | 91             |  | 49             |   | (4.461         | )
|                                                                   |                                                                     
|Net
      income (loss)                                            | 204                                                                 |   | 167           |   | 1.219         |  | 3.112         |   | 1.948          |  | 5.030         |  | 3.344         |   | 7.077         |  
|                                                                   |                                                                     
|Basic
      net income (loss) per share                            | 0.01                                                                |   | 0.01          |   | 0.08          |  | 0.20          |   | 0.13           |  | 0.33          |  | 0.22          |   | 0.46          |  
|Diluted
      net income (loss) per share1                         | 0.01                                                                |   | 0.01          |   | 0.08          |  | 0.19          |   | 0.12           |  | 0.30          |  | 0.19          |   | 0.39          |  
|Shares
      used in computing basic net income (loss) per share   | 15,375,468                                                           |   | 15,384,077     |   | 15,385,077     |  | 15,390,765     |   | 15,401,390      |  | 15,447,796     |  | 15,199,624     |   | 15,221,619     |  
|Shares
      used in computing diluted net income (loss) per share | 15,782,195                                                           |   | 15,946,575     |   | 15,905,833     |  | 16,008,840     |   | 16,230,460      |  | 16,645,446     |  | 18,785,143     |   | 18,916,763     |  

|(1) | For
      quarters ended September 30, 2007 and December 31, 2007, diluted earnings
      per share also includes the effect, net of income tax, of the dilutive bonds
      (OCEANE issued on July 13, 2007) if they had been converted using the if-converted
      method.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe
  that period-to-period comparisons of our operating results are not necessarily
  meaningful. Our quarterly and annual operating results have fluctuated in the
  past and are likely to fluctuate significantly in the future. You should not
  rely on them to predict future performance. Our revenue may fluctuate due to
  the amount of new customer orders and the timing of production and delivery
  of these new orders. The amount and timing of our operating expenses may fluctuate
  significantly in the future as a result of the timing of these orders and our
  development of new products and technologies. For a discussion of factors which
  may affect our quarterly and annual operating results, see Item 3. Key Information
   Risk Factors. Our quarterly revenues fluctuate significantly and may
  affect the price of our ordinary shares and ADSs.

Liquidity
  and capital resources



We had
  negative cash flow from operations of 116.5 million in 2007 compared to
  positive cash flow of 30.0 million in 2006. This negative cash flow is
  due to the acquisition of marketable securities at the end of 2007, all cash
  being in cash or cash equivalents at the end of 2006. Excluding these purchases,
  the cash flow from operations is positive at 18.1 million.

The negative
  cash flow from investing activities of 5.1 million in 2007 is related
  to the purchase of tangible assets. The amount in 2006 was significantly higher
  at 35.1 million mainly due to the acquisition of the M2M division of Sony
  Ericsson.

We had
  working capital (defined as current assets less current liabilities) of 138.9
  million at December 31, 2007, an increase from 42.8 million at December
  31, 2006.

At December
  31, 2007, our capital lease obligations (including the current portion), amounted
  to 547,000, compared to debt and capital lease obligations of 618,000
  at the end of 2006.

At December
  31, 2007, following the issuance of the OCEANE, our debt (including the current
  portion) amounted to 81.2 million. We had no debt at the end of 2006.



WAVECOM
  - Annual Report Form 20-F 2007      51

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We had
  4.7 million in cash and cash equivalents at December 31, 2007 compared
  to 54.8 million at December 31, 2006, as we had, at year end, marketable
  securities for a total of 134.6 million.

Therefore,
  the net cash was equal to 58.1 million at December 31, 2007 compared to
  54.8 million at December 31, 2006 and was detailed as follows:

|                                             |                        
|-------------------------------------------- | -----------------------
|(amounts
      in  thousands)               | December
      31, 2006
|                                             |                        
|Cash
      or cash equivalents               | 54,776                
|Marketable
      securities                  |                       
|Current
      portion of convertible bonds   |                       
|Long
      term portion of convertible bonds |                       
|                                             |                        
|Net
      cash                               | 54,776                
|                                             |                        

Based
  on our current plans, and including pending and/or recent transactions, we believe
  that our available capital resources will be adequate to satisfy our cash requirements
  at least for 12 months from the date of this report. If our plans change, or
  if we do not achieve profits or if our profitability is significantly lower
  than anticipated, we may need additional financing.

Research
  and development



For information
  regarding our research and development programs and expenses, see Item 4. Company
  Information  Business Overview.

Off-balance
  sheet arrangements



At December
  31, 2007, we had no off-balance-sheet arrangements (as defined in Item 5E of
  Form 20-F) that had or are reasonably likely to have a current or future effect
  that would be material to investors.

Tabular
  disclosure of contractual obligations



Our contractual
  obligations as of December 31, 2007 consist principally of obligations under
  capital leases, operating leases, and other short-term obligations (commitments
  with third-party manufacturers and bank guarantees).

|                                                  |       
|------------------------------------------------- | ------
|Payments
      due by period (amounts in million) |       
|Contractual
      obligations                     | Total 
|                                                  |       
|Convertible
      bonds                           | 80.5  
|Capital
      lease obligations                   | 0.5  
|Operating
      leases                            | 18.0  
|Other
      long term liabilities                 | 22.3  
|                                                  |       
|Total
      contractual cash obligations          | 121.3
|                                                  |       

At December
  31, 2007, we had purchase commitments with our third-party manufacturers for
  future deliveries of products, principally during the first half of 2008. These
  purchase commitments totalled approximately 18.6 million.

In October
  2005, Wavecom signed a commitment with some of its executive committee members
  for the payment of a retention bonus, on condition they were still employed
  as of March 31, 2007 the amount was been paid in April 2007. The total amount
  of these bonuses was 2,421,000 (including benefits) and was being recognized
  ratably as an expense from October 1, 2005 to March 31, 2007 (over the 18 months
  service period). Accordingly, Wavecom recorded a compensation expense for this
  retention bonus in the years ended December 31, 2005, 2006 and 2007 in a respective
  amount of 428,000, 1,835,000 and 158,000.

On July
  13, 2007, Wavecom issued on 80,499,969 principal amount of bonds convertible
  into and/or exchangeable for new or existing shares (OCEANE) due January 1,
  2014.



52WAVECOM
  - Annual Report Form 20-F 2007

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At issuance
  each bond had a nominal value of 31.30. The bonds bear interest at a rate
  of 1.75% per annum. Interest will be payable annually in arrears on January
  1 of each year beginning January 1, 2008.

Holders
  may exercise their right to convert or exchange their bonds at their option
  at any time from July 13, 2007, the issue date of the bonds, until the seventh
  business day preceding their redemption date. The initial conversion/exchange
  ratio will be one share of the Company for one bond.

At maturity,
  the Company will redeem the bonds then outstanding at their nominal value (i.e.
  31.30 per bond). The Company may redeem the bonds at its sole option at
  any time from January 1, 2012, subject to 30 calendar days notice, so
  long as the product of (i) the applicable conversion/exchange ratio in effect
  on such date and (ii) the arithmetic average opening price of the Companys
  shares on Eurolist by Euronext Paris calculated over a period of 20 consecutive
  trading days during which the shares are traded, as selected by the Company
  from among the 45 consecutive trading days immediately preceding the date of
  publication of the notice relating to such early redemption, determined in the
  manner described herein, exceeds 130% of the nominal value of the bonds.

Interest
  rate risk



At December
  31, 2007, Wavecom had 134,610,000 invested in money market accounts, including
  SICAV and FCPs, with no fixed maturity, earning interest at short-term variable
  rates. Such accounts did not meet the criteria for cash equivalents criteria
  and were therefore recorded as Marketable Securities.

At December
  31, 2006 and 2005, we did not have amounts invested in short-term money-market
  accounts. At December 31, 2007, we had 3.7 million of pledged securities
  invested in short-term money market accounts. We had no variable rate debt at
  December 31, 2007.

|Currency
      rate risk
|------------------------

We publish
  our consolidated financial statements in euro and the functional currency of
  Wavecom S.A. is the euro. In 2007, we recorded 56% of our total revenues in
  U.S. dollars, with virtually all the rest in euro. We purchase many of our components
  in U.S. dollars and the operating expenses of our U.S. subsidiaries are in U.S.
  dollars. The operating expenses of our Hong Kong subsidiary are primarily in
  Hong Kong dollars. Most of our other operating expenses are in euros. Dollar
  purchases and expenses represented approximately 62% of our cost of revenues
  and operating expenses in 2007. A strengthening of the euro against the U.S.
  dollar and other currencies in which we receive revenues could reduce our reported
  revenues and our reported operating and net results. With regard to our assets
  denominated in non-euro currencies, we incurred a net foreign exchange loss
  of 1.4 million in 2007, a net foreign exchange loss of 1.9 million
  in 2006 and a net foreign exchange gain of 4.1 million in 2005.

If the
  euro had appreciated by 10% compared to the U.S. dollar during the year ended
  December 31, 2007, our revenues would have been 10.3 million lower and
  our expenses would have been 10.5 million lower, resulting in an operating
  gain of 200,000 greater than the published result. Our net foreign exchange
  position is described in Note 4 to our consolidated financial statements.

We use
  a combination of options and forward exchange contracts in order to minimize
  the risk to our estimated net dollar cash flows. Because these financial instruments
  do not always hedge specific transactions, they may be accounted for as speculative
  transactions; with the fair market value of the instruments being recorded on
  our balance sheet and their change in market value recognized in our profit
  and loss accounts at the end of each accounting period. See Note 4 to our consolidated
  financial statements.

Subsequent
  events



Wavecom
  announced on February 1, 2008 that it signed a definitive agreement to acquire
  100% of Anyware Technologies. The transaction was finalized for a cash payment
  to Anyware Technologies shareholders of 9.1 million plus 1.5 million
  placed in an escrow account for customary warranty provisions. An additional
  payment for earn-out of up to 2 million upon reaching certain milestones
  is to be made in 2009.

At its
  March 18, 2008 meeting, the Board of Directors decided to propose to the beneficiaries
  of the June 7, 2007 stock option plan to cancel the grant. This stock option
  plan included 38 beneficiaries including the CEO who were together granted a
  total of 372,650 stock options at an exercise price of 24.21. The cancellation
  was agreed to by a large majority of the grantees, representing 96% of the total
  number of outstanding stock options. Consequently, under SFAS123R, this cancellation
  will result in an expense of 3.8 million in the first quarter of 2008.

WAVECOM
  - Annual Report Form 20-F 2007      53

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Item
  6:  Directors, Senior Management and Employees

Board of
  Directors and Executive Officers



Our business is managed
  by our Board of Directors (Conseil dAdministration) and by our
  Chief Executive Officer (Directeur Général). French law governing
  a société anonymeand our By-Laws provide that the general
  management of the Company is performed either by the chairman of the Board of
  Directors or by another individual, elected by the Board of Directors and bearing
  the title of Chief Executive Officer. At its meeting held on October 21, 2002,
  the Board of Directors opted for a dual management structure and appointed Mr.
  Michel Alard as Chairman of the Board of Directors and Mr. Aram Hékimian,
  as Chief Executive Officer. At its meeting held on July 22, 2004, the Board
  of Directors appointed Ronald D. Black as our new Chief Executive Officer, in
  replacement of Mr. Aram Hékimian, who was appointed during the same meeting
  as Deputy Chief Executive Officer. Mr. Aram Hékimian resigned as Deputy
  Chief Executive Officer at the Board meeting held October 22, 2007, but he remains
  a director sitting on the Board of Directors.

The Chairman of the Board
  of Directors organizes and manages the activities of the Board of Directors.
  In addition, the chairman is responsible for the proper functioning of the Companys
  management bodies and, in particular, must verify the ability of the board members
  to perform their mission.

Under our By-Laws, each
  director is elected by the shareholders at an ordinary general meeting for a
  maximum three-year term. Each director must own at least one Wavecom share.
  Under French law, a director may be an individual or a corporation. Throughout
  most of 2005 our Board consisted of ten directors, one director resigned in
  September 2005, a second director resigned in February 2006 and, at his request,
  a third director was not renewed in his directorship at the May 17 2006 shareholder
  meeting. As of March 31, 2008 our Board consists of 7 directors. Directors may
  resign at any time and their functions as members of the Board of Directors
  may be terminated at any time by the shareholders at a general meeting. Directors
  must resign at the age of 65. A director does not need to be a French national
  and there is no limitation on the number of terms that a director may serve.
  In case of removal without cause, members of the Board of Directors are not
  entitled to damages, except in certain very specific circumstances.

Under French law, our Board
  of Directors sets the guidelines of the Companys activity and supervises
  their implementation. Within the limits set out by the corporate By-Laws, and
  the powers expressly granted by law to the general shareholders meetings, the
  Board of Directors may make any decision with respect to the business of the
  Company. In addition, the Board of Directors is responsible, among other things,
  for presenting financial statements to our shareholders and convening shareholders
  meetings.

Directors are required to
  comply with applicable law and with our By-Laws. Our directors may be jointly
  and severally responsible for actions that they take contrary to Wavecoms
  interests.

Under French commercial
  law and our By-Laws, any transaction we enter into (either directly or indirectly
  or through an intermediary) in which a member of our Board of Directors, or
  our Chief Executive Officer, or one of our shareholders holding more than 10%
  of the voting rights (or, if it is a company, the company controlling it) has
  a direct or indirect interest and that is not in the ordinary course of business
  and/or is not at arms length is subject to the prior consent of our Board
  of Directors. The same applies for transactions between the Company and another
  company, whenever one of our directors or our Chief Executive Officer is the
  owner, a partner, a manager, director, Chief Executive Officer, member of the
  directorate (directoire) or supervisory board (conseil de surveillance)
  of such company. Such transactions have to be reported to the chairman by the
  concerned person when, due to their subject matter or their financial impact,
  they are significant for neither party. Furthermore, the types and the purposes
  of these transactions must be communicated by the chairman to the Board of Directors
  and to the statutory auditors. The interested director is not taken into account
  for the quorum calculation and his or her vote is not taken into consideration
  for the calculation of whether the transaction has been approved by the Board
  of Directors. Any such transaction concluded without the prior consent of our
  Board of Directors can be nullified if it causes prejudice to us. The interested
  director, or Chief Executive Officer, can be held liable on this basis. Our
  statutory auditor must be informed of the transaction within one month following
  its conclusion and must prepare a special report to be submitted to our shareholders
  for approval at their next meeting. In the event that the transaction is not
  ratified by our shareholders at a shareholders meeting, it will remain
  enforceable by third parties against us, but we may in turn hold the interested
  director or Chief Executive Officer, as the case may be, and, in some circumstances,
  the other members of the Board of Directors, liable for any damages we may suffer
  as a result. In addition, the transaction may be cancelled if it is fraudulent.
  Moreover, certain transactions between a corporation and a member of its Board
  of Directors who is a natural person and/or its managing directors, Chief Executive
  Officer or Deputy

54WAVECOM
  - Annual Report Form 20-F 2007

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Chief Executive Officer,
  if any, are prohibited under French commercial law. Such prohibition also applies
  to natural persons representing a company acting as a board member.

The following table sets
  forth the names of the directors of Wavecom who served on the Board in 2007,
  their current positions with Wavecom, the dates of their initial appointment
  as directors and the expiration dates of their current term. Each directors
  term expires on the date of the annual general meeting of shareholders as indicated
  in the table below that approves our accounts for the previous year. Cumulative
  voting is not permitted.

|                           |    
|-------------------------- | ---
|Name                       | Age
|                           |    
|Michel
      Alard         | 53 
|Ronald
      D. Black      | 44 
|Aram Hékimian              | 52 
|Jean-François
      Heitz* | 58 
|Bernard
      Gilly*       | 51 
|Stephen
      Imbler*      | 56 
|Anthony
      Maher*       | 62 
|                           |    

|* | Indicates Directors
      who are considered independent under applicable rules and regulations
|- | -------------------------------------------------------------------------------------------------

Nine board meetings were
  held in 2007 (compared to seven board meetings in 2006) with an average attendance
  rate of 87% (which is stable compared to the 89% of 2006).

The day-to-day operations
  of Wavecom are managed by our team of executive officers, managed by our Chief
  Executive Officer. The following table sets forth the name and current position
  of each of our executive officers as of the date of this report:

|                           |    
|-------------------------- | ---
|Name                       | Age
|                           |    
|Ronald
      D. Black      | 44 
|Olivier
      Beaujard     | 39 
|Chantal
      Bourgeat     | 43 
|Didier
      Dutronc       | 48 
|Philippe
      Guillemette | 42 
|Etienne
      Menut        | 58 
|Claire
      Oliver        | 46 
|Pierre
      Piver         | 48 
|Pierre
      Teyssier      | 43 
|Hugues
      Waldburger    | 44 
|Anders
      Franzén       | 47 
|Stefan
      Lindvall      | 44 
|Dominique
      Cyne       | 50 
|                           |    

|There
      are no family relationships between any of the directors or executive officers
      of Wavecom.
|------------------------------------------------------------------------------------------------------------

Directors



Michel Alard, 53,
  has served as Chairman of the Board since he co-founded Wavecom in 1993. From
  1988 to 1993, Mr. Alard was GSM project manager for Matra Communications, a
  telecommunications equipment Company. Before joining Matra, Mr. Alard was joint
  head of research and development for CCETT, a joint telecommunication research
  center of France Telecom and TéléDiffusion de France (TDF).
  From 1979 to 1982, Mr. Alard was a research engineer at SFP (Société
  Française de Production) and TDF, and was involved in television broadcasting.
  Mr. Alard has engineering degrees from the École polytechnique and the
  École nationale supérieure des télécommunications.
  Mr. Alard also serves on the Board of Directors of ILOG, S.A., a French software
  Company listed on Nasdaq and the Euronext (Eurolist), Paris. Other

WAVECOM
  - Annual Report Form 20-F 2007      55

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Wavecom Group directorships:
  Wavecom Inc. (U.S.); Wavecom Asia Pacific Ltd. (Hong Kong); and Wavecom Korea
  Co. Ltd. (South Korea).

Ronald D. Black,
  44, Chief Executive Officer, joined Wavecom on August 16, 2004. He is also Director
  of Wavecom, Inc. Before Wavecom, Dr. Black served as Executive Vice President,
  Client Systems Group at Agere Systems, a leading provider of advanced integrated
  circuit solutions for consumer applications, including wireless. Previously,
  Dr. Black was Vice President at Gemplus, based near Marseilles, France, serving
  as General Manager of the Next-Generation networks Business unit which specialized
  in wireless network software and smart cards for 3G networks. Prior to that,
  he was General Manager for the Networking and Communications Systems Division
  of Motorolas Semiconductor Products Sector. In that position, he oversaw
  several product areas, including microprocessors, memories and transceivers.
  Before joining Motorola, Dr. Black held a number of positions at IBM Microelectronics
  in its Power PC Microprocessors group and in the electronic packaging applications
  and development areas. Dr. Black holds a Bachelor of Science, a Master of Science
  and a Ph.D. in Materials Science and Engineering from Cornell University in
  Ithaca, N.Y. Dr. Black also serves as director on the board of Inside Contactless.
  As of 2007, Dr. Black served as director at Wavecom Deutschland GmbH (Germany).

Bernard Gilly, 51,
  has served as a Director of Wavecom since April 1999. Since November 2005, Bernard
  Gilly is President and General Manager of Fovéa Pharmaceuticals, a biopharmaceutical
  company specialized in the development and commercialization of the retina medical
  treatments. From December 2000 to October 2005 Mr. Gilly has been a partner
  in the Life Sciences team of Sofinnova Partners, a European venture capital
  fund, having joined them in December 2000. From 1992 to 2000, he served as Chief
  Executive Officer of Transgene, a French biotechnology company listed on Nasdaq
  and the Euronext (Eurolist), Paris. From 1994 to June 1997, Dr. Gilly also served
  as Research Director of bioMérieux. Prior to that, he served in various
  capacities at Pasteur Mérieux, including that of Vice President, Research
  and Development, from 1990 to 1994. He received his doctoral degree in bioeconomics
  from the University of Rennes, and holds an AMP from INSEAD. Other outside directorships
  include: High Deal, a privately-held French company; Faust Pharmaceuticals,
  a privately-held French company; CNRS, a French public institute.

Jean-François Heitz,
  58, has been a board member of Wavecom since May 26, 2005. He was formerly Deputy
  Chief Financial Officer, from 2000 to 2003, for Microsoft Corporation U.S.A.
  He originally joined Microsoft France in 1989 where he served as Deputy General
  Manager from 1989 to 1991, then as General Manager, Business Operations from
  1991 to 1994 and as Director F&A, Southern Europe from 1993 to 1994. In
  1994, he joined the group headquarters in the USA as an Assistant Treasurer
  then later was promoted to Corporate Treasurer for the group in 1998. Before
  Microsoft, he held several positions in the Matra group (currently part of the
  Lagardère Group) from 1980 to 1989. He served as assistant to the CEO (Civilian
  Activities), as Group controller for the Automation Division, as VP Finance
  & Legal for Matra Datavision Inc, President of Matra Technology Inc and
  as CFO of the Systems Division. From 1978 to 1980 he worked as head of sales
  and marketing for Unitec Wemco Europe. He began his career in 1974 with the
  group Air Liquide as an Operations Research Engineer. Mr. Heitz is a graduate
  of the École nationale supérieure des Mines de Paris graduating
  Magna Cum Laude. He holds a Master of Science in Industrial Engineering from
  Stanford University, where he graduated Magna Cum Laude. He completed a program
  of Corporate Financial Management at Harvard University. Mr. Heitz is also a
  member of the Board of Directors of Business Objects, Arc International, Bull,
  and Total Immersion. He is also member of theAdvisory Board
  of the Stanford Management Science & Engineering School and of the Seattle
  Symphony Orchestra.

Aram Hékimian,
  52, a co-founder of Wavecom, has served as a Director since 1993 and Deputy
  Chief Executive Officer (Directeur Général Délégué).
  He resigned from this function during the last Board Meeting in October 22,
  2007 but remains director of the Board. In this role he has direct responsibility
  for strategic projects as defined by the C.E.O. and Board of Directors. He was
  head of the software department for Matra Communications from 1984 until 1993.
  Prior to joining Matra, he was a software engineer at Marben, a software engineering
  company, and CS Telecom, a Company active in the field of telecommunications
  and railway signaling systems. Mr. Hékimian has a masters degree
  in science and technology from the University of Paris XII. Other Wavecom group
  directorships: Wavecom Inc. (U.S.); Wavecom Asia Pacific Ltd. (Hong Kong); Wavecom
  Korea Co. Ltd (South Korea); Wavecom Northern Europe Ltd (U.K.); and Wavecom
  Deutschland GmbH (Germany). He has been director of Kapsys, in France, since
  February, 2007.

Stephen Imbler, 56,
  has served as a director of Wavecom since March 2000. He has been CFO for Nextag,
  a U.S. consumer internet company, since April 2004. Stephen Imbler was President
  and Chief Operating Officer of Liquid Audio and served on the Board of Directors
  until April 2003. He previously served as President and Chief Operating Officer
  of Hyperion Solutions through the end of 2001, and as Advisor to the company
  through August 2002. Prior to the 1998 merger between Arbor Software and Hyperion
  Software that created Hyperion Solutions, Mr. Imbler held the position of Senior
  Vice President and Chief Financial Officer at Arbor Software for three years.
  Mr. Imbler previously served as Vice President and Chief Financial Officer of
  Quick Response Services, Inc. during 1994 through 1995; Vice President, Finance
  at Oracle Corporation 1987 through 1993; and various positions at Peat Marwick
  Mitchell (now KPMG) from 1978 to 1987. Mr. Imbler received a masters degree
  in public accounting from the University of Texas and a bachelors degree
  in piano performance from Wichita State University.



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Anthony Maher, 62,
  joined the Wavecom Board of Directors in May of 2003. Mr. Maher had a long professional
  career at Siemens, having joined them in 1978. Throughout his career at Siemens,
  he held various positions in software development and integration, system engineering,
  architecture and processor design both in Germany and the U.S. From October
  1997 until February 2002, Mr. Maher served as a member of the Managing Board
  for Siemens Information and Communication Networks Group. In this role he was
  first responsible for all ICN European business, then later the U.S. operations.
  He was the founding chairman of Mustang Ventures, a venture capital unit at
  Siemens for wireless and wireline business. He also served as Chairman of the
  board of Unisphere Networks, Inc. (a Siemens-owned company), which was later
  acquired by Juniper Networks. He currently is a director of Xtellus and Broadlight
  both privately-held companies), Alvarion Ltd. (a publicly-held company) and
  serves on the supervisory Board of Adva Optical A.G. (a publicly-held company).
  He began his professional career with Bell Telephone Laboratories in Naperville,
  Illinois, contributing to hardware and software design as well as system engineering
  on 4ESS. He graduated cum laude with a Masters degree in Electrical Engineering
  and Physics from the University of Illinois in 1969.

Executive
  officers



Ronald D. Black,
  44, Chief Executive Officer, joined Wavecom on August 16, 2004. He is
  also Director of Wavecom, Inc. Before Wavecom, Dr. Black served as Executive
  Vice President, Client Systems Group at Agere Systems, a leading provider of
  advanced integrated circuit solutions for consumer applications, including wireless.
  Previously, Dr. Black was Vice President at Gemplus, based near Marseilles,
  France, serving as General Manager of the Next-Generation networks Business
  unit which specialized in wireless network software and smart cards for 3G networks.
  Prior to that, he was General Manager for the Networking and Communications
  Systems Division of Motorolas Semiconductor Products Sector. In that position,
  he oversaw several product areas, including microprocessors, memories and transceivers.
  Before joining Motorola, Dr. Black held a number of positions at IBM Microelectronics
  in its Power PC Microprocessors group and in the electronic packaging applications
  and development areas. Dr. Black holds a Bachelor of Science, a Master of Science
  and a Ph.D. in Materials Science and Engineering from Cornell University in
  Ithaca, N.Y.

Olivier Beaujard,
  39, Group Vice President, Business Development joined Wavecom in 1999
  to head up Product Marketing where he set up the Companys marketing activity.
  In 2000 he was promoted to Director of Corporate Business Development. In January
  2004 he served as Marketing Director for the Vertical Applications Business
  Units and became Group VP of Business Development in 2005. He is a member of
  the Executive Committee of Wavecom group. Previously Mr. Beaujard had international
  Sales experience in the value added services platforms for telecommunications
  networks at FERMA. Mr. Beaujard also worked in the smart card industry for GEMPLUS
  were he was responsible for the GSM standardization at ETSI. Mr. Beaujard graduated
  from the Institut national polytechique of Grenoble (INPG-ENSERG) with an electronics
  and telecommunications engineer diploma. He also holds an MBA with honors of
  ESSEC business school.

Chantal Bourgeat,
  43, Chief Financial Officer and Group Vice President for Finance and Administration,
  joined Wavecom in October 2002 as Director of Finance and Administration and
  she was named Chief Financial Officer and Group VP, Finance and Administration
  in September 2004. She is in charge of accounting, business analysis, Investor
  Relations, legal and administrative departments for the group. Prior to joining
  Wavecom, from 1991 to 2000 Ms. Bourgeat held a number of positions in the finance
  structure of Monsanto. Her long career at Monsanto included responsibility in
  business analysis, consolidation, treasury, tax planning and the acquisition
  or sale of business. She was then Finance Director for Europe and Africa for
  Merisant (Former Canderel division of Monsanto). Ms. Bourgeat has a background
  in audit and served as an external auditor at KPMG Audit from 1987 to 1991.
  She holds a degree in Business Analysis from the École supérieure
  de commerce de Paris (1987) and a DECF.

Dominique Cyne, 50,
  Group Vice President for Research and Development, joined Wavecom in
  September of 2002 as APAC Engineering Director. He took on responsibility of
  Wavecoms Hardware Development in September 2005. Immediately prior to
  joining Wavecom, he served as Hardware and Radio Frequency Division head of
  Research and Development for Mitsubishi Electric France. From 1992 to 1998 he
  worked for France Telecom LET (Laboratoire dEssais des Télécommunications)
  as Digital Radio Communication Department manager. Mr. Cyne has
  a degree from INSA, Rennes.

Didier Dutronc, 48,
  Group Vice President and Head of Asia-Pacific Region and Managing Director
  of Wavecom Asia Pacific Ltd. Prior to taking this position in September
  of 2004 he was Group V.P. of the Personal Communications Device Business Division.
  Mr. Dutronc joined Wavecom in March 2003. He is a member of the Executive Committee
  of the Wavecom group. Prior to joining Wavecom, he served as Worldwide VP Sales
  and Marketing for Alcatel Optronics (1997  June 2000) and served as President
  and CEO of Alcatel Optronics, Inc., in Dallas, Texas (from June 2000 to February
  2003 as President and CEO). Prior to joining Alcatel he also worked for Analog
  Devices and Texas Instruments. Mr. Dutronc has a degree in electrical engineering
  from ESME in Paris and received an MBA from IAE in Paris. Wavecom Group directorships:
  Wavecom Asia Pacific Ltd. (Hong Kong) and Wavecom Korea Co. Ltd (South Korea).



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  - Annual Report Form 20-F 200757

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Anders Franzén,
  47, Group Vice President, Chief Operating Officer and President of Wavecom,
  Inc.since April, 2006. He joined Wavecom following the acquisition of Sony
  Ericssons Product Business Unit M2M Com which he headed. Prior to his
  tenure as head of the Sony Ericsson M2M unit, Mr. Franzén was Sony Ericssons
  Corporate Vice President, Head of Global Sourcing. Mr. Franzén joined Sony
  Ericsson when the joint-venture was formed in October 2001, leaving his position
  of Vice President, Head of Sourcing, Ericsson Consumer Products. Mr. Franzén
  came into the Wireless Telecom segment from the automotive industry, where his
  most recent position was Director of Product & Technical Planning at Fords
  Premier Automotive Group in London, U.K. Prior to that, Mr. Franzén held
  a number of positions at Volvo in Sweden, including Senior Vice President, Business
  Development and Vice President, Strategic Sourcing & Purchasing.

Philippe Guillemette,
  42, Group Vice President of Marketing and Chief Technology Officer, has
  been in charge of group marketing since October 2005 and has been Chief Technology
  Officer since 2003. Prior to assuming his current position, he had served as
  Group VP of Technology and Chief Technology Officer. From December 2000 to December
  2002, Mr. Guillemette was Group VP of Research and Development. Mr. Guillemette
  was Assistant Director of Research and Development during 2000, and from June
  1995 until December 1999 he was Director of Software Development. He is a member
  of the Executive Committee of the Wavecom Group. Prior to joining Wavecom in
  1993, Mr. Guillemette was a software engineer at Nortel Networks. He has an
  engineering degree from the École dingénieurs en électronique
  et électrotechnique.

Stefan Lindvall,
  44, Group Vice President, Head of Americas Region since April 2006, following
  the acquisition of Sony Ericssons Product Business Unit M2M where he served
  as the Vice President of Sales and Marketing  Americas, also accumulating
  global responsibility for the development of the business segment automotive
  and fleet management. Before joining Sony Ericsson in this capacity in early
  2005, Lindvall held several senior management positions in Ericssons United
  States operations, notably that of general manager for Ericssons Wireless
  Office Services Unit.

Etienne Menut, 58,Group Vice President for Human Resources, joined Wavecom in July 2002 as
  a consultant and was appointed to his current position in January 2003. He is
  a member of the Executive Committee of Wavecom Group. Prior to joining Wavecom,
  Mr. Menut worked was an independent human resources consultant in France from
  1999 to 2002. From 1992 to 1999, he was Human Resources Director of Microsoft
  France. Mr. Menut also has worked with companies such as Cogema and Matra from
  1977 to 1990. He has a French University masters degree in Business Law.

Claire Oliver, 46,
  Group Director of Quality, joined Wavecom in October 1999. She holds
  this position since January 2005 and is also a member of the Compliance Committee.
  Prior to joining Wavecom from 1992 to 1999 Ms. Oliver worked for Valeo Electronique
  in a number of functions in the quality department including Quality Director
  of the Security Division. Previously she worked as an engineer at Northern Telecom
  where she was responsible for helping to set up a PABX electronic board production
  facility. Earlier in her career she was a development engineer at Honeywell
  SA, specialized in industrial control equipment. She received her degree in
  1985 from the École centrale de Lyon in General Engineering, minor
  in Electronics.

Pierre Piver,48,
  Group Vice President, for the EMEA Region and Automotive. He held his
  position in the automotive sector since October 2006 and has been responsible
  for the EMEA region since February 2008. Previously, he was Head of the Americas
  Region, and President of Wavecom, Inc., a position which he has held since September
  of 2004, moving from his previous position as Group V.P. for the Vertical Applications
  Business Unit. Mr. Piver joined Wavecom in January 2003 as Group V.P. Europe,
  Middle East and Africa Region. Before joining Wavecom, Mr. Piver was the Managing
  Director of Infineon Technologies France, which he joined in September 1996
  when it was the Semiconductor division of Siemens in France. Previously, Pierre
  Piver had occupied various positions in sales and in product marketing from
  1985 to 1989 at RTC Compelec (Philips Semiconductors) in Caen (France) and from
  1989 to 1996, at Texas Instruments in Vélizy (France) and in Freising (Germany).
  Mr. Piver holds a degree in Electronic Engineering from ESME in Paris and a
  Master in Business Administration from EM Lyon. Wavecom Group directorships:
  Wavecom Northern Europe Ltd, (UK).

Pierre Teyssier,43,
  Group Vice President of Operation, has been in this position reporting to
  the CEO since September of 2004. Prior to joining Wavecom in 2001, he worked
  for Axiohm, where he was Director of Manufacturing, holding numerous positions
  from 1989 to 2000 including: manufacturing manager, plant manager, and director
  of purchasing and logistics. From 1988 to 1989 he worked at Enerdis as a software
  engineer. Mr. Teyssier holds a degree in Engineering from ENSI, Caen, France.

Hugues Waldburger,
  44, was appointed Director of Performances and Validation and has held
  this position since March 2006. He had responsibility for Wavecoms Programme
  Management from September 2004 to March 2006. He joined Wavecom in 2003 as engineering
  manager for France for mobile phones. Prior to joining Wavecom he participated
  in the start-up of Pacific Broadband Communications (now Juniper Networks) where
  he created the product integration activity for cable networks. Prior to that
  he held a number of technical management positions for embedded systems in France
  with the electronics group, Thales. Hugues Waldburger holds a degree from the
  École nationale des télécommunications of Paris (ENST).

One executive officer left
  Wavecom in 2007.



58WAVECOM
  - Annual Report Form 20-F 2007

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Committees
  of the Board of Directors



The Board of Directors has
  established the following committees with a view to assisting the directors
  in their duties and ensuring that the Company acts at all times in accordance
  with the highest standards of corporate governance, proper conduct and transparency:

Audit Committee

The Audit Committee provides
  assistance to the Board of Directors in fulfilling its oversight responsibility
  to our Companys shareholders relating to: the integrity of Wavecoms
  financial statements, financial reporting process, internal accounting and financial
  controls, selection and evaluation of the performance of the independent auditors,
  independent auditors qualifications and independence, and the Companys
  compliance with ethics policies, legal and regulatory requirements.

The Audit Committee is directly
  responsible for the appointment (subject to shareholder ratification) and termination
  (subject to the limitations of French law regarding the six-year mandates of
  statutory auditors), compensation and oversight of the work of the independent
  auditors, including resolution of disagreements between management and the auditors
  regarding financial reporting. The Committee must pre-approve all audit and
  permitted non-audit services provided by the independent auditors. The Committee
  is also responsible for reviewing the audit firms internal quality control
  procedures and for assuring, in consultation with management and the Companys
  independent auditors, the adequacy and effectiveness of the Companys accounting
  and financial controls. The Committee shall report any deficiency in the internal
  control procedures to the Companys statutory auditors.

The Audit Committee consists
  only of independent directors and is chaired by an Independent Director who
  is also a financial expert as defined under Nasdaq listing standards. The Chairman
  was Jean-François Heitz until July 24, 2007 when he was replaced by Stephen
  Imbler. The members are appointed by (and may be removed, with or without cause,
  by) the Board of Directors. The current members of the Audit Committee are:
  Jean-François Heitz, Bernard Gilly and Stephen Imbler appointed chairman
  of the Committee by the Board of Directors on July 24, 2007. Therefore the whole
  committee consists of independent Directors. In 2007 the Audit Committee met
  four times with 83% average attendance. Since December 31, 2007 the Audit Committee
  has met once and all members attended the meeting.

Nomination
  and Compensation Committee

The Nomination and Compensation
  Committee proposes the appointment of independent directors, determines the
  compensation of the chairman of the board, the Chief Executive Officer, the
  Deputy Chief Executive Officer and advises on managers and senior officers
  compensation. This Committee consists entirely of independent directors. The
  Committee is also responsible for proposing the level of directors fees.
  The directors fees are distributed to the directors who are not otherwise
  payed a salary by the Company. Until July 31, 2007, the CEO, Deputy CEO and
  Chairman were paid a salary. Since August 1, 2007, only the CEO is paid a salary
  and, therefore, the Chairman and the Deputy CEO are compensated by directors
  fees. The directors fees are distributed in accordance with the effective
  attendance and implication in the board and committees activity. The current
  members of the Nomination and Compensation Committee are: Bernard Gilly (Chairman)
  and Anthony Maher. In 2007, the Nomination and Compensation committee met four
  times with an attendance of 100 %. Since December 31, 2007, the Nomination and
  Compensation Committee has met once and all members attended the meeting.

Strategic
  Studies Committee

The Strategic Studies Committee
  was established in April 2002. This Committee, which includes all members of
  the board as well as external experts or the Companys senior executive
  as and if required has the task of sharing information and exchanging strategic
  evaluations on Wavecoms business and activities. It is chaired by Ronald
  Black, the Companys CEO. This Committee is also expected to propose new
  strategic initiatives and serve as a think tank concerning the strategy of Wavecom,
  its competitors, its market positioning, and critical decisions for its medium
  and long term future. This Committee is convened at the request of the Committee
  Chairman. During 2007 as was already the case in 2006, the Strategic Studies
  Committee was particularly active in studying external growth opportunities,
  the issuing of convertible bonds (OCEANE) and the acquisition of Anyware Technologies
  S.A.

Members of the Strategic
  Studies Committee include: Michel Alard, Aram Hékimian, Jean-François
  Heitz, Bernard Gilly, Stephen Imbler, Anthony Maher. In 2007 the Strategic Studies
  Committee met fourteen times with an average attendance of 83%.

At its November 22, 2006
  meeting, the Strategic Studies Committee created a sub-committee called the
  M&A sub-committee made up exclusively of Wavecom independent
  board members with an objective of independently and

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objectively reviewing the
  Companys strategic projects. This sub-committee established it own charter
  and elected a chairman, currently Anthony Maher. The M&A sub-committee met
  six times in 2007 and its Chairman, Anthony Maher, was particularly active,
  independently from the meetings themselves.

Corporate
  Governance Committee

The mission of the corporate
  governance committee is to assist the Board with the development and implementation
  of the Companys corporate governance principles, to determine the composition
  of Board committees, and to monitor a process to assess Board effectiveness.
  The Committee is instructed to:

| | review and recommend
      corporate governance principles to the Board for adoption;
|- | -------------------------------------------------------------------------------------

| | review the Companys
      management succession plans and make recommendations to the Board regarding
      the plans;
|- | -----------------------------------------------------------------------------------------------------------------------

| | review the Boards
      committee structure and recommend to the Board for its approval directors
      to serve as members of each committee;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | develop and recommend
      to the Board for its approval an annual self-evaluation process of the Board
      and its committees, which is overseen by the Committee;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | periodically review
      the adequacy of the Companys ethics compliance programs, in conjunction
      with the Compliance Committee;
|- | ---------------------------------------------------------------------------------------------------------------------------------------

| | review and reassess
      the adequacy of the Committees charter annually and recommend any
      proposed changes to the Board for approval.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------

The Companys Corporate
  Governance Committee was created by the Board of Directors on December 19, 2003
  and also has a mandate of evaluating the effectiveness of the Board of Directors
  as well as intervening in the functioning of the composition of committees.
  It formulated an update of the Companys Corporate Governance Code during
  2006. The current members of the Corporate Governance Committee are Michel Alard
  and Stephen Imbler. In 2007, the Corporate Governance Committee met once with
  both members being present. It also held a meeting on February 4, 2008 to proceed
  with the evaluation of the activity of the board and committees in 2007 and,
  more generally, the proper corporate governance at Wavecom.

Compliance
  Committee

The Compliance Committee
  assists the Chairman of the Board and the Chief Executive Officer in ensuring
  that the Company complies with all applicable laws and with all provisions of
  its internal Code of Ethics and Business Conduct. The members of the Compliance
  Committee, who are appointed by the Board of Directors, comprise the following
  members of the management: Chantal Bourgeat (Group VP, Finance and Administration,
  Chief Financial Officer), Claire Oliver (Group Quality Assurance Director) and
  Etienne Menut (Group VP, Human Resources). In 2005, the Board of Directors added
  to the committee a representative of the Companys Workers Council.
  Jérome Thuillier was appointed in this capacity and is the Workers
  Councils secretary. Pierre Cosnier (Legal Director) is the Chairman of
  the Compliance Committee. In 2007, the Compliance Committee met twice with an
  average attendance of 100%.

Risk Committee

The Risk Committee was established
  by the Board of Directors in December 2003 at which time a committee charter
  was put in place including objectives, rules governing the functioning of the
  committee and its mission. This charter was reviewed and updated in April 2006.

The Risk Committee provides
  assistance to the CEO and the Board of Directors in fulfilling their overall
  responsibility to assess and monitor risk applicable to the Company. During
  2007, the Risk Committee identified the risks facing Wavecom in a detailed description
  of risks ranked by priority. In its meeting on September 7, 2005, the Board
  of Directors named Chantal Bourgeat chairman of the Risk Committee and also
  decided to enlarge the Committee in order to bring together a representative
  panel from all functions within the Company. The Board also decided that the
  Risk Committee should report to the Audit committee.

Members of the Risk Committee
  include: Chantal Bourgeat (Chairman), Pierre Cosnier, (Legal Director), Vincent
  Laurentin (HR Manager), Gil Groisille (Quality Assurance Manager), Emmanuel
  Maçon-Dauxerre (M2M Sales Director) Frédéric Farago (Business
  Development manager). The Risk Committee met four times in 2007 with an average
  attendance rate of 75%.



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Corporate
  Governance Activities



The internal rules of the
  Board of Directors, also called the Corporate Governance Code (the Code),
  set out the mission and objectives of the Board of Directors as well as its
  functioning rules. The Code also incorporates guidelines relating to the duties
  of directors with respect to the shares they own in the Company. The Code requires
  that one half of the Board of Directors be independent, and sets out the rules
  for determining independence. Among the criteria for independence, a director
  would not be considered independent if: he or she is, or has been during the
  past five years, a salaried employee or a corporate officer (mandataire
  social) of the Company or of a Companys subsidiary; he or she
  is related to any corporate officer (mandataire social) of
  the Company; he or she is a client, supplier, or a bank of the Company; he or
  she is, or has been during the past five years a statutory auditor or non-statutory
  auditor of the Company; or he or she holds 5% or more of the Company share capital
  or he or she has been a director of the Company for more than 12 years.

We currently (as of March
  31, 2008) have four independent directors meeting these requirements out of
  the seven directors composing the Board.

For the second consecutive
  year Wavecom was awarded the Trophées Midcaps on November 29,
  2006 for best corporate governance.

Code of
  Ethics and Business Conduct



The Wavecom Group Code of
  Ethics and Business Conduct (the Code of Ethics) applies to all
  Company directors, officers and employees. The aim of the Code of Ethics is
  to enable the Company employees and officers to decide how to proceed when faced
  with concrete  sometimes complex  business situations by reference
  to clear and precise principles. It applies to conduct both within the group
  and with clients, suppliers and intermediaries. This code is communicated to
  employees at all levels within Wavecom. As of December 31, 2006, all salaried
  employees have been asked to sign an acknowledgement that they are aware of
  the Companys Code of Ethics. This code can be changed or updated by us
  at any time.

Code of
  Ethics for Senior Financial Management



The Wavecom Group Code of
  Ethics for Senior Financial Management (the Code of Ethics) sets
  forth the basic principles by which Wavecom financial management must fulfil
  its responsibilities for accurate, complete and timely financial reporting while
  at the same time safeguarding Wavecoms assets. The Code of Ethics applies
  to all members of senior financial management, defined as all those
  with responsibility for financial statement presentation, or for decisions on
  key accounting policies or judgments, as well as those managers with overall
  responsibility for a legal or reporting entity. Senior financial management
  also includes those with responsibility for communicating financial information
  to the investment community. The Code of Ethics incorporates compliance monitoring
  procedures and provides for the application of sanctions in the event of any
  violation of its provisions. The Code of Ethics is available on our website:
  www.wavecom.com/investors/corporategovernance.

Internal
  controls



Internal controls (unofficial
  translation into English of an excerpt from the Chairmans report to the
  Board of Directors on Internal Controls, as required by French law).

The normative reference
  document adopted by the Company is the COSO (Committee of Sponsoring Organizations
  of the Treadway Commission).

Hence the definition adopted
  of internal controls is the one provided with reference to that document, namely,
  the set of processes, procedures and checks, accounting or otherwise, applied
  by the Board of Directors, the general management and the staff aimed at providing
  a reasonable assurance that objectives are met falling within the following
  categories:

| | implementation and
      optimization of operations (efficiency of the organization and of the processes
      aimed at making sure that these procedures are respected, protection of
      the assets and respect for the decisions and guidelines of the decision-making
      organs);
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | reliability of the
      financial information (quality of the information and reporting systems
      making it possible to guarantee the reliability of the financial information);
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | conformity (observance
      by the Company of the laws, rules and regulations in effect); and
|- | ----------------------------------------------------------------------------------------------

| | internal controls make
      it possible to obtain a reasonable assurance-but not a certainty-that
      the risks will be controlled and that the set objectives will be reached.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|General
      organization of internal control
|----------------------------------------------

Organization of internal
  control is centralized. The internal control structure and procedures are defined
  for the group by the central departments and the departments of the various
  operational functions. The subsidiaries, which manage the operating activities
  in the various countries in which the group works, are integrated into the working
  groups at the time of development of the most operational procedures and are
  responsible for the implementation of procedures in their regions. The internal
  control system of our subsidiaries is not very different from that of our headquarters,
  it is simply adapted to the size and function of the subsidiary.

An internal control
  project was undertaken by the finance department in 2003. A group was set up
  specifically to work on this project. This group defined the major project phases,
  established a time schedule and managed the implementation of some of the phases
  in 2003. This project was actively continued in 2007 as part of our quality
  goal of continuous improvement, including update of description of procedures,
  review of key controls and the annual evaluation of the primary processes that
  significantly impact the Companys accounting and financial reporting.

To reach each of the internal
  control objectives, management has identified and gradually implemented the
  following general internal control principles:

|Control
      environment
|-------------------------

This principle refers to
  the level of awareness of the staff and to the need for internal checks in the
  Companys entire organization. It constitutes the basis of all other internal
  control elements of the Company (example: codes of ethics).

The Company has made efforts
  for some years to establish an adequate control environment by intensifying
  its actions on behalf of better implementation of the principles of corporate
  governance in its management. Thus, several codes of conduct including: Code
  of Corporate Governance, Code of Ethics, Code of Business Conduct and Code of
  Ethics for Financial Officers, have been in effect since 2002 or 2003 in compliance
  with the new obligations instituted by the U.S. law known as the Sarbanes-Oxley
  Act.

The Board of Directors and
  the various committees set up by that Board have significant roles in supervising
  internal controls. Their role is detailed in Item 6 of the report; however,
  we would like to specifically point out that:

| | The code of corporate
      governance specifies that the Board of Directors objective is,
      by regular evaluation of its rules and of its operation, calling if appropriate
      on third parties from outside the Company, to optimize and perfect, insofar
      as possible, the development of the Company with respect to: the clarity
      and transparency of the information communicated by the Company, the clarity
      and transparency of strategic decision-making, of control and installation
      of tools adapted to correct information concerning the Companys cash
      position and its commitments.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The audit committees
      assignment is to assist the Board of Directors in its supervisory assignment
      with respect to the integrity of the Wavecom accounts, the financial reporting
      system, the internal control system as regards accounting and finance, the
      services rendered by the independent auditors, the competence and the independence
      of those auditors, and as concerns observance by the Company of the ethical
      principles and of the legal and regulatory obligations. Commencing in 2006
      this committee will conduct an annual self-evaluation of its function.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The compliance committees
      assignment is to assist the Chief Executive Officer and the Chairman of
      the Board in connection with all responsibilities relating to Wavecoms
      compliance with applicable rules and regulations in effect, as well as to
      the Wavecom code of ethics and to ensure that the internal control procedures
      are evaluated, tested and audited by selected internal auditors. The committee
      relies on the internal auditors, who are trained for the overall audit process
      function, to ensure that the necessary audits and controls are integrated
      into the Companys management system.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The executive committee,
  consisting of the Chief Executive Officer and his direct reports,
  representing key functions in the Company (including the heads of all three
  geographic regions  Europe, Middle-East and Africa (EMEA), Asia-Pacific
  (APAC) and the Americas, representatives from Finance, Human Resources, Marketing
  and Strategy, Research and Development, Operations and Quality, meet regularly
  in order to:

| | handle management of
      the Company;
|- | ---------------------------------------

| | define the Companys
      global strategy;
|- | -------------------------------------------

| | review financial results,
      budget and earnings estimates
|- | -------------------------------------------------------------

| | review measurement
      and performance indicators that have been established;
|- | -------------------------------------------------------------------------------

| | monitor progress on
      key projects, including the internal control project.
|- | ---------------------------------------------------------------------------------

62WAVECOM
  - Annual Report Form 20-F 2007

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Moreover the Company received
  its ISO 9001-2000 certification in November 2005 and its follow up audits in
  October 2006 and 2007. Wavecoms ISO project studied the overall process
  flows within the Company and identified specific points to address in the additional
  internal control project covering all aspects of control and monitoring. We
  consider it essential to have coordination between these two projects in order
  to guarantee proper understanding by all employees of the processes and the
  consistency between their function and various Company activities. This approach
  facilitates process flows and ensures an overall understanding of our processes
  while identifying the key control points. In order to achieve this objective,
  Wavecom has trained a team of internal auditors who will carry out both system
  and internal control audits throughout the year.

A quality policy was put
  in place and widely communicated throughout the entire Company This policy encompasses
  three major points:

| | listen to our customers
      and secure their loyalty by meeting their needs for quality, value and response
      time through innovative products and services;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | maintain a culture
      of continuous improvement that values creativity and teamwork while respecting
      ethical and environmental policies; and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | collaborate with industry
      partners in expanding the market.
|- | -----------------------------------------------------------------

|Risk
      assessment
|---------------------

This point focuses on identification
  and analysis of the risk factors that might affect attainment of objectives.
  Risk assessment makes it possible to define the control activities and subsequently
  develop action plans to reduce risks.

Risk assessment is carried
  out at all levels of the Company and by the various committees, but more particularly
  by the Risk Committee, which assists the Chief Executive Officer and the Board
  of Directors in analyzing and identifying management proposals concerning risks
  the Company faces.

The procedures for risk
  management have as its objectives:

| | to identify potential
      risks and evaluate their potential impact on the Companys activity;
|- | ------------------------------------------------------------------------------------------------

| | to define and put in
      place action plans to regularly monitor and measure those risks that have
      been identified including those identified in Item 3, Risk Factors
      section of this report.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above-mentioned procedures
  include the following steps:

| | identification of all
      potential risks that can impact the activity of the Company;
|- | ----------------------------------------------------------------------------------------

| | define a priority ranking
      of these risks as related to the probability that a risk could happen and
      the level of impact that such an event could have on the Company or its
      profitability; and
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | identification of the
      main ways to prevent the risks identified as high-probability to happen
      by establishing key indicators to be monitored.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

This descriptive analysis
  in an ongoing process and will allow us to, over time, evaluate the efficiency
  and effectiveness of our internal controls.

|Control
      activities
|------------------------

This point concerns the
  application of the norms and procedures to ensure as much as possible appropriate
  implementation of the guidelines laid down by management.

Within the framework of
  the internal control project we pursued in parallel with our ISO certification,
  a substantial effort has been made since 2004 to ensure that all key processes
  are governed by procedures and policies common to the group. These procedures
  where documented as appropriate on an overall outline defined below:

| | Resource management
      procedures
|- | ------------------------------------

| |  | Human resources
| | - | ---------------

| |  | Information technology
      and infrastructure (including all financial and accounting procedures, policies
      and processes)
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| |  | Partnership management
      (suppliers, vendors, contract manufacturers and commercial partners)
| | - | -------------------------------------------------------------------------------------------------

| | Operational procedures
|- | ----------------------

| |  | Customer account management
| | - | ---------------------------

| |  | Contracts (orders,
      production, shipment, invoicing and after-sales)
| | - | -------------------------------------------------------------------------

| |  | Product management
      (feasibility, development, maintenance and end-of-life)
| | - | --------------------------------------------------------------------------------

WAVECOM
  - Annual Report Form 20-F 200763

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| | Management procedures
|- | ---------------------

| |  | Quality system process
      management
| | - | ---------------------------------------

| |  | Strategic processes
      (strategic plan, long range plan, marketing plan and budget)
| | - | --------------------------------------------------------------------------------------

|Information
      and communication
|-----------------------------------

This refers to a general
  process aimed at making sure that the relevant information is identified, gathered
  and disseminated within suitable periods so that the entire Company staff can
  meet its responsibilities. This principle relates to the information flows underlying
  effective internal control procedures, from the management guidelines to the
  action plan.

Management ensures that
  relevant information is shared promptly within the Company using communication
  tools and regular staff meetings.

Since January 1, 2004, the
  head office and the main subsidiaries have been using an integrated information
  system based on an SAP architecture.

Processes have been implemented
  to ensure that information system programs are developed and are maintained
  properly, in accordance with users requirements and in taking into account
  the necessary safety and security controls.

The Company has established
  a usage charter for the information system. This charter describes the rights
  and rules applicable to all employees which regulates the operation and usage
  of the Company Information system.

|Monitoring
|----------

This term refers to verification
  and periodic evaluation of the quality of internal controls by way of the supervisory
  activities carried out by management.

This monitoring takes place
  by way of the various committees set up by the Board of Directors. Within this
  framework, the powers of the compliance committee have been widened to include
  internal controls.

Since 2004 a group of people
  from various departments and regions of the Company have been trained in internal
  auditing, both within the framework of ISO certification and in connection with
  internal controls. At the current time, this group numbers approximately twenty.
  An audit conducted in 2007 covered all of the processes in the Wavecom organization
  including controls established in the context of implementation of Sarbanes-Oxley
  legislation in order to test the relevance and integration of the different
  controls. All the processes were covered in each region. Having conducted these
  audits allowed us to check the suitability of the processes throughout the entire
  Company, gauge employees understanding and to maintain our ISO 9001-2000
  certification.

Points for improvement that
  are identified in audits are monitored for progress routinely by the Director
  of the Quality Systems and the follow-up is reviewed by internal auditors during
  subsequent audits.

|Internal
      controls over financial statements closing process
|-----------------------------------------------------------------

|Organization
      of the financial function within the group
|-------------------------------------------------------------

The Group carries on its
  activity in an international environment, divided between the parent Company
  in France, which performs the functions of a head office and of the operating
  entity for the Europe-Middle East-Africa region, and the two main operational
  entities, in China (Hong Kong) and in the United States (North Carolina). Three
  smaller subsidiaries are located in Europe, and there is one dormant subsidiary
  in Asia.

Each of the three major
  legal entities has its own financial organization, under the responsibility
  of the groups Chief Financial Officer.

|Preparation
      of accounting and financial information
|---------------------------------------------------------

The financial reports are
  developed on the basis of the information provided by the subsidiaries
  financial departments and the accounting firms for the foreign subsidiaries
  and on the basis of data internally gathered and processed through our systems
  for the parent Company. The subsidiaries data are transmitted monthly
  using a single group format and based on a schedule prepared by the head office
  finance departments.

All of the group entities
  are responsible for the information that they forward and for following common
  group procedures. In addition to monthly reporting of information, each entity
  prepares a detailed presentation of our accounts that are submitted to the CFO.

The corporate accounting
  department in France is responsible for preparing the financial statements.
  It ensures of the consistency of the information forwarded by the subsidiaries
  before aggregation and consolidation entries are made.

Two committees were established
  to coordinate preparation, review and communication of the published financial
  information and of the annual report in particular. The first (our Disclosure
  Committee) is charged with the preparation and

64WAVECOM
  - Annual Report Form 20-F 2007

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the coordination of documents
  that ensures that information that will be made public is relevant, correct
  and materially complete. It is made up of the Group CFO, the financial reporting
  director, the director of legal affairs and director of communication and investor
  relations. The second committee (our Review Committee) is made up of representatives
  of the finance area, the executive committee of the Company and the members
  of the Board of Directors. Each representative ensures the correctness of our
  information provided from their respective areas.

|Monthly
      reporting
|-----------------------

We implemented a procedure
  to follow results centered on our monthly reporting processes. The Group financial
  controller is responsible for ensuring that the procedures are correctly followed.
  A detailed budget is created by the operational units in conjunction with the
  Group financial controller and is completed during the last quarter for the
  year to come. Each month a new forecast is developed for the 12 months to come.

A monthly meeting of the
  Groups executive committee and the Group financial controller is held
  with the goal being to study the various reporting indicators and analyzing
  the differences between actual and budget or forecast figures in order to refine
  future forecasts. Action is taken, if necessary, in order to allow us to reach
  our stated goals.

|Key
      processes
|-------------------

Within the framework of
  the analysis of the risks connected with the reliability of financial information,
  the first stage in the internal control project consisted of making a formalized
  analysis of risks, aimed at identifying the processes having an effect on the
  financial information as well as the key risks and control relating thereto.

The most important key procedures
  and controls relate to the following processes:

| | entity level controls
|- | ---------------------

| | financial statement
      closing process;
|- | ------------------------------------------

| | sales process;
|- | --------------

| | process for purchasing
      components;
|- | ----------------------------------------

| | process concerning
      control and security of computer systems;
|- | ------------------------------------------------------------------

| | process of the other
      operating purchases;
|- | -----------------------------------------------

| | payroll process.
|- | ----------------

At the end of 2007, all
  key processes had been described and were implemented at the three principle
  subsidiaries. The key control points were identified for all selected cycles.
  An internal audit was conducted that included performing tests that evaluated
  the application of the key control points. The most important items to be improved
  that were identified in the internal audit are now being worked on and action
  plans have been expanded to include further improvements.

Compensation
  of Directors and Officers



|General
      Policy
|--------------------

It is the responsibility
  of our Nomination and Compensation Committee to review our general policy in
  terms of compensation of our directors and executive officers and issue proposals
  for our Board to decide. The objectives of this policy are to maintain proper
  incentives and recognition of the individual and collective performance of the
  key contributors to the success of Wavecom. In doing so, the Nomination and
  Compensation Committee evaluates objectively and subjectively the effective
  level of compensation and advantages in kind in Wavecom. This evaluation relies
  as much on Wavecoms performance as on each individuals performance
  in itself and in as much as it contributed to Wavecoms performance. This
  evaluation is also made by a benchmarking with the comparable market levels
  of compensation. The Nomination and Compensation Committee review the salaries
  (split in fixed and variable parts, particularly for the CEO but also for the
  whole Steering Committee), compensation in kind (company cars, specific advantages
  such as scholarship allowance and housing), and also equity compensation (free
  shares and stock options).

We paid a total of 4,885,000
  in compensation to our ten highest-paid directors and executive officers during
  the year ended December 31, 2007 (including 1,624,000 related to the payment
  of the retention bonus). Non-salaried board members earn fees based on their
  attendance at board and committee meetings; 250,000 in such directors
  fees were earned by non-salaried board members during 2007. Under French law,
  the aggregate amount of directors fees to be paid to our board members
  must be approved by our shareholders at a general meeting and such aggregate
  amount is allocated among board members by decision of the board.

WAVECOM
  - Annual Report Form 20-F 200765

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The table below sets forth
  the compensations paid to each of the Directors during the years 2005, 2006
  and 2007:

|                                                                                       |                                            
|-------------------------------------------------------------------------------------- | -------------------------------------------
|(in
      euros)                                                                       | Type
      of Compensation                 
|                                                                                       |                                            
|Michel
      Alard, Chairman of the Board of Directors                                 | Fixed                                      
|                                                                                       | Benefits
      in kind                     
|                                                                                       | Variable                                   
|                                                                                       | Sign-on
      or departure bonus           
|                                                                                       | Directors
      Fees                      
|Aram Hékimian,
      Chief Executive Officer then
      Deputy Chief Executive Officer | Fixed                                      
|                                                                                       | Benefits
      in kind                     
|                                                                                       | Variable                                   
|                                                                                       | Sign-on
      or departure bonus           
|                                                                                       | Directors
      Fees                      
|Ronald
      D. Black, Chief Executive Officer                                         | Fixed                                      
|                                                                                       | Benefits
      in kind                     
|                                                                                       | Variable                                   
|                                                                                       | Sign-on
      or departure bonus (see below
|André
      Chieng*, Board Member                                                      | Directors
      Fees                      
|Delphis
      SA (Marc Fourrier)*, Board Member                                        | Directors
      Fees                      
|Bernard
      Gilly, Board Member                                                      | Directors
      Fees                      
|Jean-François
      Heitz, Board Member                                                | Directors
      Fees                      
|Stephen
      Imbler, Board Member                                                     | Directors
      Fees                      
|Anthony
      Maher, Board Member                                                      | Directors
      Fees                      
|                                                                                       |                                            

|* | These Board members
      have resigned from their position
|- | -----------------------------------------------------------

In addition to cash compensation,
  38 of our employees including Dr. Black have received stock options, and four
  independent directors have received stock warrants. During 2007, we granted
  stock warrants to independent directors to purchase a total of 40,000 shares
  with an exercise price of 21.90 per share and an expiration date of May
  16, 2011. During 2007, we granted stock options to executive officers to purchase
  a total of 372,650 shares, with an exercise price of 24.21 per share and
  an expiration date of June 7, 2017.

In addition, during 2007,
  55 of our employees and Dr. Black were granted free shares. A total of 155,650
  free shares were granted. Under French Law, the shares vest after a two-year
  period which means that they are only effectively acquired and owned by the
  beneficiaries after two years. This two year period shall expire on June 8,
  2009. In addition, for a further two years, the beneficiary cannot transfer
  or sell the shares. This two-year period expires on June 8, 2011.

Ronald D. Black, Chief Executive
  Officer, joined Wavecom in August of 2004 and received total compensation 808,277
  in 2005 including a sign-on bonus of 96,000, 723,500 in 2006 and
  802,500 in 2007. In addition, Dr. Black has received to date, a total of 333,494
  stock options, 302,700 founders warrants and 155,823 free shares (information
  regarding exercise prices of these awards is provided in this report). Dr. Black
  is also entitled to the use of a Company car and an expatriate package including
  a housing and school allowance of approximately 126,000 per year.

Michel Alard, Chairman of
  the Board, received in base salary 108,000 in 2005, 39,996 in 2006
  and 33,331 in 2007. He received a performance award of 30,000 in
  2006 but none in 2007. Aram Hékimian, Deputy Chief Executive Officer, received
  in base salary 108,000 in 2005, 39,996 in 2006 and 33,331
  in 2007. He received a 35,000 performance award bonus in 2006 but none
  in 2007. Both Mr. Alard and Mr. Hékimian are entitled to the use of Company
  cars or the maintenance of one vehicle in lieu of a Company car.

Compensation paid to our
  Chief Executive Officer is monitored by the Compensation and Nomination Committee
  and is set by our Board of Directors. Dr. Black does not participate in nor
  vote on such decisions. The performance-based bonus of Dr. Black is decided
  by the Board of Directors based on the personal achievement and Company objectives.

Until July 31, 2007 and
  due to the fact that they were paid a salary, neither Mr. Alard nor Mr. Hékimian
  received any fees related to their positions as members of the Board of Directors,
  nor were they granted warrants, stock options or

66WAVECOM
  - Annual Report Form 20-F 2007

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founders warrants.
  From August 1, 2007 onwards, Mr. Alard and Mr. Hékimian no longer receive
  a salary and therefore receive directors fees as members of the Board.

In the event of a negotiated
  merger, acquisition of the Company, or hostile takeover bid on the shares of
  the Company, that results in Dr. Black being terminated within six months following
  this event and if Dr. Black is not offered an opportunity to perform functions
  of an equivalent level, Wavecom has undertaken to pay to Dr. Black a severance
  payment (except in case of gross or wrongful misconduct). The gross amount of
  this severance payment is equal to three times the annual fixed salary (i.e.
  three times 421,500), including the severance payment provided by the
  applicable collective bargaining agreement.

Dr. Black shall be entitled
  to participate in all employees benefit plans of the Company including,
  but not limited to pension, profit sharing, medical coverage, education, or
  other retirement or welfare benefits that the Company has adopted or may adopt,
  maintain or contribute to for the benefit of its senior executives at a level
  commensurate with his positions subject to satisfying the applicable eligibility
  requirements.

For the year 2007, the Board
  of Directors decided to grant a bonus of 281,000 to Ronald Black. The
  Board of Directors also fixed compensation for 2008 at 421,500 base compensation
  and 281,000 target performance bonus for Ronald Black.

Wavecom accrued for all
  its employees, for the years ended December 31, 2005, 2006 and 2007, 451,000,
  507,000 and 710,000, respectively to provide pension, retirement
  or similar benefits.

Share Ownership
  and Option and Warrant Information



Except as described in Item
  7 below, as of March 31, 2008, each of our directors and executive officers
  beneficially owns less than 1% of the share capital of Wavecom S.A. (and none
  of such share capital has voting rights which are different from those of our
  other shareholders).

On September 21, 1998, our
  shareholders authorized the creation of a stock option plan and a founders
  warrant plan for employees. This plan was modified at a shareholders meeting
  on December 19, 2001. As of December 31, 2007, there were outstanding options,
  founders warrants (BCEs), free shares and warrants (BSAs) to purchase a total
  of 2,538,064 shares, of which options, founders warrants, free shares and warrants
  to purchase 1,778,735 shares were held by our current directors and executive
  officers and of these a total of 883,256 shares were available for exercise
  pursuant to the stock option plan and the founders warrant plan.

During 2007, the following
  ten employees were granted the largest number of stock options or founders
  warrants:

|                            |                                                                        
|--------------------------- | -----------------------------------------------------------------------
|Name                        | Position                                                               
|                            |                                                                        
|Ronald
      Black*         | Chief
      Executive Officer                                          
|                            |                                                                        
|Philippe
      Guillemette* | Group
      Vice President of Marketing and Chief Technology Officer   
|                            |                                                                        
|Anders
      Franzen*       | Group
      VP, Chief Operating Officer and President of Wavecom Inc   
|Emmanuel
      Walckenaer   | Wavecom
      VP, Head of IDS Services                                 
|Chantal
      Bourgeat*     | Group
      VP for Finance & Administration and Chief Financial Officer
|Didier
      Dutronc*       | Group
      VP and Head of Asia Pacific Region                         
|Dominique
      Cyne*       | Group
      VP, Head of Research and Development                       
|Stefan
      Lindvall*      | Group
      VP, Head of Americas Region                                
|Frank
      Souguir*        | Group
      VP                                                         
|Pierre
      Teyssier*      | Group
      VP of Operations                                           
|                            |                                                                        

|* | Included in the group
      executive officers
|- | ------------------------------------------------

WAVECOM
  - Annual Report Form 20-F 200767

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During 2007, the following
  ten employees exercised the largest number of stock options or founders
  warrants:

|                        |                                                                        
|----------------------- | -----------------------------------------------------------------------
|Name                    | Position                                                               
|                        |                                                                        
|Pierre
      Piver*     | Group
      VP, head of Europe, Middle-East and Africa region          
|                        |                                                                        
|Luc Degaudenzi          | Group
      VP, Program                                                
|                        |                                                                        
|                        |                                                                        
|Etienne
      Menut*    | Group
      VP, Human Resources                                        
|Lisa-Ann
      Sanders  | Investor
      Relations Director                                      
|Dominique
      Cyne*   | Group
      Vice President for Research and Development                
|                        |                                                                        
|Didier
      Dutronc*   | Group
      VP and Head of Asia Pacific Region                         
|                        |                                                                        
|Franck
      Souguir*   | Group
      VP                                                         
|Olivier
      Beaujard* | Group
      VP, Business development                                   
|Chantal
      Bourgeat* | Group
      VP for Finance & Administration and Chief Financial Officer
|Jamie
      Garroch     | Product
      marketing Director                                       
|                        |                                                                        
|                        |                                                                        

|* | included in the group
      executive officers.
|- | -------------------------------------------------

68WAVECOM
  - Annual Report Form 20-F 2007

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The table below indicates
  the number of stock options, founders warrants, free shares or warrants
  granted to members of the Board of Directors or Executive Officers that have
  not been exercised:

|                           |                                                                      
|-------------------------- | ---------------------------------------------------------------------
|Beneficiary                | Title                                                                
|                           |                                                                      
|Ronald
      Black         | Chief
      Executive Officer                                        
|Olivier
      Beaujard     | Group
      VP, Business development                                 
|Chantal
      Bourgeat     | Chief
      Financial Officer & Group VP for Finance & Administration
|Dominique
      Cyne       | Group
      Vice President for Research and Development              
|Didier
      Dutronc       | Group
      VP and Head of Asia-Pacific region                       
|Anders
      Franzén       | Group
      VP, Chief Operating Officer                              
|Bernard
      Gilly        | Board
      Member                                                   
|Philippe
      Guillemette | Group
      VP of Marketing and Chief Technology Officer             
|Stephen
      Imbler       | Board
      Member                                                   
|Jean-François
      Heitz  | Board
      Member                                                   
|Stefan
      Lindvall      | Group
      Vice President, Head of Americas Region                  
|Anthony
      Maher        | Board
      Member                                                   
|Etienne
      Menut        | Group
      VP, Human Resources                                      
|Claire
      Oliver        | Group
      Director of Quality                                      
|Pierre
      Piver         | Group
      VP and Head of Europe, Middle-East and Africa region     
|Frank
      Souguir        | Group
      VP                                                       
|Pierre
      Teyssier      | Group
      VP of Operations                                         
|Hugues
      Waldburger    | Director
      of Performances and Validation                        
|                           |                                                                      

|* | Founders warrants,
      options and warrants eligible to be exercised as of December 31, 2007, are
      included in the column dated March 31, 2008.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------

The table below indicates
  the number of exercised options granted and exercised by the ten highest paid
  non-board-member employees:

|                                                                                                    |                                                            
|--------------------------------------------------------------------------------------------------- | -----------------------------------------------------------
|                                                                                                    | Total
      number 
      of options or free shares granted
|                                                                                                    |                                                            
|Options
      or free shares granted, during 2007 to the ten highest paid employees.                | 187,000                                                    
|Options
      or founders warrants exercised, during 2007 by the ten highest paid
      employees. | 67,682                                                     
|Options,
      founders warrants or free shares granted to the top ten salaried beneficiaries      | 739,188                                                    
|                                                                                                    |                                                            

WAVECOM
  - Annual Report Form 20-F 200769

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The table below sets forth
  the options and founders warrants granted to each director in 2007:

|                                                                                      |                                                                         
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------
|Options,
      free shares or founders warrants granted during 2007 to Board Members | Number
      of total options, founders warrants or free shares granted
|                                                                                      |                                                                         
|Ronald
      Black                                                                    | 155,300                                                                 
|Bernard
      Gilly                                                                   | 10,000                                                                  
|Jean-François
      Heitz                                                             | 10,000                                                                  
|Stephen
      Imbler                                                                  | 10,000                                                                  
|Anthony
      Maher                                                                   | 10,000                                                                  
|                                                                                      |                                                                         

Three Board Members exercised
  69,999 options during 2007.

Options expire ten years
  after the grant date (except options granted to Board members that expire four
  or five years after grant date). Founders warrants, which were issued
  to our French tax resident employees, expire after five years, as is required
  by French law. Any founders warrants remaining unexercised at the expiration
  date automatically convert to stock options with a five-year term remaining.
  Employees leaving the Company have up to three months following their date of
  termination of employment to exercise eligible founders warrants or options;
  any remaining unvested or unexercised founders warrants or options are
  then forfeited. Founders warrants were issued to French employees to take
  advantage of favourable tax treatment for both employees and Wavecom. These
  tax benefits are not available for stock options in France. Other than the expiration
  dates, the terms of the founders warrants are identical to the stock options.

Employees
  and independent contractors



The table below sets forth
  our total number of employees and independent contractors at the end of each
  of the past three years:

|                        |          
|----------------------- | ---------
|At                      | Employees
|                        |          
|December
      31, 2007 | 420      
|December
      31, 2006 | 384      
|December
      31, 2005 | 290      
|                        |          

Headcount increased by 43
  during 2007.

Over the years, as is common
  practice for French companies operating in technology sectors, a fairly significant
  number of the staff at our Company has consisted of independent contractors
  and temporary employees. We have, however, reduced our dependence on independent
  contractors, over the last three years this number, as a percentage of total
  employees, has remained relatively stable  approximately 12% at year-end
  2005 and 12.5% at December 31, 2006 and 13% at December 31, 2007.

The employee turnover rate
  for Wavecom S.A. in France (as measured by attrition, excluding headcount reduction
  resulting from restructurings) for the last three years was: 10.8% in 2005,
  5% in 2006 and 2.5% in 2007.

70WAVECOM
  - Annual Report Form 20-F 2007

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We employ a large number
  of engineers (both as salaried employees and independent contractors) most of
  whom are based in France and in the United States. As of December 31, 2006 the
  breakdown of staff (salaried and independent contractors) by functional areas
  and geography was as follows:

|                                        |                 
|--------------------------------------- | ----------------
|Function                                | %
      of total
|                                        |                 
|Research
      and Development          | 53              
|Production,
      logistics and quality | 6               
|Sales
      and Marketing               | 27              
|Finance
      and Administration        | 14              
|                                        |                 

|                                  |                 
|--------------------------------- | ----------------
|Geography                         | %
      of total
|                                  |                 
|Europe,
      Middle East, Africa | 64              
|Asia Pacific                      | 14              
|Americas                          | 22              
|                                  |                 

Employment contracts with
  all French employees are subject to the provisions of the convention collective
  SYNTEC, the French collective bargaining agreement applicable to employees
  in our industry. In addition, as is required by French law, the Company management
  holds periodic meetings with employee representatives of the workers council
  (comité dentreprise), employees representatives (délégués
  du personnel) and security and safety committee (comité dhygiène
  et de sécurité). There is no union representative inside the Company.

WAVECOM
  - Annual Report Form 20-F 200771

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Item
  7:   Major shareholders and Related Party Transactions

Major shareholders



The following table sets
  forth certain information regarding beneficial ownership of our shares (including
  ADSs) by each person known by us to own beneficially more than 5% of our outstanding
  shares (none of whom has voting rights which are different from our other shareholders)
  as of March 31, 2008, based on our legal share capital of 15,800,131 shares
  as of that date. To our knowledge, we are not directly or indirectly owned or
  controlled by any corporation or by any foreign government.

Stock options, founders
  warrants and free shares awarded to employees represent a potential increase
  of 16.1% of our current outstanding shares.

|                                                                          |                                
|------------------------------------------------------------------------- | -------------------------------
|                                                                          | Shares
      beneficially owned
|Name
      of beneficial owner                                            | Number                         
|                                                                          |                                
|Michel
      Alard(1)                                                     | 1,588,533                      
|Aram Hékimian(2)                                                          | 1,800,381                      
|Jo Hambro
      Capital                                                   | 903,641                        
|Lansdowne
      Partners                                                  | 831,455                        
|Sloane
      Robinson                                                     | 898,654                        
|                                                                          |                                
|Total                                                                     | 6,022,664                      
|                                                                          |                                
|% Based
      on total number of shares outstanding, as of March 31, 2008 | 15,800,131                     
|                                                                          |                                

|(1) | Michel Alards
      share total includes shares owned by his immediate family.
|--- | -------------------------------------------------------------------------------

|(2) | Aram Hékimians
      share total includes shares owned by his immediate family.
|--- | --------------------------------------------------------------------------------

72WAVECOM
  - Annual Report Form 20-F 2007

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The following table presents
  the shares owned by major shareholders, Wavecom directors and the dilution potential
  related to options held by Wavecom employees and directors. French law requires
  all directors to hold at least one share of the Companys stock.

|                                            |                           
|------------------------------------------- | --------------------------
|                                            | As
      of March 31, 2008
|                                            | Shares                    
|                                            |                           
|Major
      shareholders                    |                           
|Aram Hékimian,
      Director(1)            | 1,800,381                 
|Michel
      Alard, Director(1)             | 1,588,533                 
|Jo Hambro
      Capital                     | 903,641                   
|Sloane
      Robinson                       | 898,654                   
|Lansdowne
      Partners                    | 831,455                   
|Directors                                   |                           
|Ronald
      Black, Director                | 1                         
|Bernard
      Gilly, Director               | 1                         
|Jean-François
      Heitz, Director         | 100                       
|Stephen
      Imbler, Director              | 10,000                    
|Anthony
      Maher, Director               | 1                         
|Other                                       |                           
|Shares
      held in treasury stock(3)      | 544,322                   
|Shares
      held by non-director employees |                           
|Shares
      held by directors              |                           
|Public                                      | 9,223,042                 
|                                            |                           
|TOTAL                                       | 15,800,131                
|                                            |                           

|(1) | Figures include shares
      and/or voting rights held directly or indirectly (both registered and non-registered)
      by members of their families.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Figures and percentages
      take into account 2,538,064 shares that could be issued if all options and
      founders warrants were exercised.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | As of December 31,
      2007 the Company held 544,322 shares that were part of 2 repurchase programs
      with a purchase price of the shares going from  7,94 to  20,21.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Major shareholders have
  the same voting rights as all shareholders: one share equals one vote.

The Company has no knowledge
  of any other significant shareholders than those mentioned above.

WAVECOM
  - Annual Report Form 20-F 200773

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Major changes
  in ownership



Several of our directors
  and executive officers sold shares in our initial public offering in June 1999,
  in our follow-on public offering in June 2000 and during the course of 2003
  and 2004. Mr. Michel Alard, Chairman of the Board of Directors sold a total
  of 57,000 Wavecom shares in November 2005 at an average selling price of 11.79.
  In 2007, M. Michel Alard (and his immediate family) sold 119,000 Wavecom shares
  at prices ranging between 19.39 and 21.29. In 2007, M. Aram Hékimian
  (and his immediate family), Deputy CEO until October 22 2007, sold 250,000 Wavecom
  shares at prices ranging between 21 and 27.11.

The following table sets
  forth the related historic changes in these holdings as a percentage of our
  legal capital as of the given date:

|                                         |                                             
|---------------------------------------- | --------------------------------------------
|Name                                     | Percentage
      as of 
      March 31, 2006
|                                         |                                             
|Michel
      Alard                       | 11.9                                        
|Aram Hékimian                            | 14.2                                        
|Delphis
      S.A.                       | 6.8                                         
|David
      J. Greene                    | 3.2                                         
|Jo Hambro
      Capital                  |                                            
|Lansdowne
      Partners                 |                                            
|Sloane
      Robinson                    |                                            
|                                         |                                             
|Total
      number of shares outstanding | 15,531,813                                  
|                                         |                                             

|*
      according to declarations given below :
|-----------------------------------------------

|(1) | as of December 31,
      2007, percentage declared to the S.E.C.
|--- | ----------------------------------------------------------------

|(2) | as of July 31, 2007,
      percentage of our legal capital held by Jo Hambro Capital
|--- | ------------------------------------------------------------------------------------

|(3) | as of October 25, 2007,
      percentage of our legal capital held by Lansdowne Partners
|--- | ----------------------------------------------------------------------------------------

|(4) | as of June 13, 2007,
      percentage of our legal capital held by Sloane Robinson
|--- | ----------------------------------------------------------------------------------

Geographic
  Distribution of shareholders



There were nine holders
  of record of our ADSs and approximately 1,400 beneficial holders as of March
  31, 2008. ADSs (1,718,330) represented approximately 10.6% of our issued and
  outstanding shares as of March 31, 2008. Our ADSs are issued by The Bank of
  New York, as depositary. Each ADS represents one share.

Related
  Party Transactions



None.

74WAVECOM
  - Annual Report Form 20-F 2007

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Item
  8:  Financial Information

Financial Statements



See Item 18 and the financial
  statements beginning on page F-1 of this annual report.

Legal Proceedings



The Claims Committee meets
  regularly (seven meetings in 2007) to evaluate current or potential claims or
  proceedings and their future developments. This Committee is chaired by the
  Group Legal Director and has members from finance, quality and sales. One of
  the objectives of these monthly reviews is to consider any changes in the information
  relating to claims, to consider any changes in their status and to determine
  if and when provisions should be established. This committee also advises as
  to the management of current cases and proposes action plans.

Provisions have been made
  for each of the main proceedings. In compliance with AMF (Autorité des
  Marchés Financiers  the French stockmarket authority) recommendations,
  the committee implements a global provisioning methodology based on the following
  criteria:

| | litigation matters
      that are provisioned are either those involving disputes which have been
      brought before a judge or court, or those which have been precisely and
      clearly expressed by a claimant (on the legal grounds of the claim and the
      damage evaluation) ;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | the amount of the provision
      corresponds to a specific identified risk, analyzed case-by-case and after
      deliberation of the committee.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

We are not aware of any
  other threatened or potential material claim, demand or lawsuit involving Wavecom
  except as described in Note 13, page F-28 of notes to consolidated financial
  statements.



Significant
  Changes


---



Except as disclosed elsewhere
  in this annual report, no significant change has occurred in our overall business
  or financial situation since the date of our most recent annual financial statements.



Dividends


---



Wavecom has never paid dividends
  on its shares. We intend to retain any future earnings for investment in the
  development and expansion of our business and do not expect to pay any cash
  dividends on our shares in the foreseeable future.

WAVECOM
  - Annual Report Form 20-F 200775

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Item
  9:  The Offer and Listing



Price
  Range of Shares and ADSs


---



Our shares are currently
  listed on NYSE Euronext (Eurolist compartment B) Paris (7306), and have been
  since June 14, 1999. Our ADSs are currently listed on the Nasdaq Global Market
  under the symbol WVCM and have been since June 9, 1999. The following
  table sets forth the range of high and low closing sale prices of our shares
  and ADSs for the periods indicated:

|                                   |                    
|---------------------------------- | -------------------
|                                   | Per
      Share ()
|                                   | High               
|                                   |                    
|Year ended
      December 31, 2003 | 18.66             
|Year ended
      December 31, 2004 | 6.46              
|Year ended
      December 31, 2005 | 13.28             
|Year ended
      December 31, 2006 | 12.69             
|Year ended
      December 31, 2007 | 
      29.00      
|Year
      ended December 31, 2006 |                    
|First
      Quarter 2006           | 12.12             
|Second
      Quarter 2006          | 12.69             
|Third
      Quarter 2006           | 11.69             
|Fourth
      Quarter 2006          | 10.95             
|Year
      ended December 31, 2007 |                    
|First
      Quarter 2007           | 17.48.            
|Second
      Quarter 2007          | 29.00             
|Third
      Quarter 2007           | 28.50             
|Fourth
      Quarter 2007          | 20.32             
|Most
      recent six months       |                    
|October
      2007                 | 20.32             
|November
      2007                | 16.83             
|December
      2007                | 14.24             
|January
      2008                 | 12.43             
|February
      2008                | 11.81             
|March
      31, 2008               | 7.95              
|                                   |                    

|(Source:
      http://club.euronext.com, and www.nasdaq-online.com)
|-------------------------------------------------------------------

There were nine holders
  of record our ADSs and approximately 1,400 beneficial holders as of March 12,
  2008. ADSs (1,672,144) represented approximately 10.6% of our issued and out0standing
  shares as of March 2, 2008. ADSs are issued by The Bank of New York, as depositary.
  Each ADS represents one share.

On March 31, 2008 the closing
  price for our ADSs on the Nasdaq Global Exchange was $11.66 and the closing
  price for our shares on the NYSE Euronext (Eurolist Compartment B) was 7.40.

76WAVECOM
  - Annual Report Form 20-F 2007

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Item
  10:  Additional Information



Memorandum
  and articles of association


---



The description of our organizational
  documents filed with the Securities and Exchange Commission on Form F-1, registration
  number 333-11764, on June 6, 2000, and set forth therein under the section Description
  of Share Capital is incorporated by reference in this Annual Report, except
  to the extent that it has been updated by the information set forth below. An
  English translation of our By-Laws is attached as Exhibit 1 to this Annual Report.



Objects
  and purposes


---



Our objects and purposes,
  as specified in Article 3 of our By-Laws, are, in France and abroad: fundamental
  and applied research, and the development of systems and products in the areas
  of radio-transmission, radio-communication, telecommunications, electronics
  and data processing markets; and, within these sectors: the design, manufacturing
  and commercialization of components, products and software; any provision of
  services; the registration and exploitation of patterns, patents, trademarks,
  and manufacturing processes; the establishment, organization, and delivery of
  lectures, seminars, debates, conferences and more generally of any activity
  relating to training schemes; the publishing of books, newspapers, information
  bulletins, articles and the distribution of any audio-visual aids; the direct
  or indirect holding of shares within any existing companies or companies to
  be set up, the business purposes of which is linked, related or similar to that
  of the Company; and more generally, any industrial, commercial, financial, civil,
  personal property or real estate operations directly or indirectly linked to
  the business purposes stated above or related or similar to business purposes
  or likely to facilitate the performance or development thereof.

Composition of share
capital



We have only one class of
  shares. As of December 31, 2007, this class consisted of 15,796,591 authorized
  ordinary shares all of which were outstanding as of such date, with a nominal
  value of 1 per share, resulting in a share capital of 15,796,591
  in nominal value, as approved by the Board of Directors on January 29, 2008.
  This number includes 544,322 shares that are held in treasury and are deemed
  to be outstanding under French law but have no voting or dividend rights. All
  of our outstanding shares are fully paid. Each share is entitled to one vote
  on all matters submitted to our shareholders.

Dividend and liquidation
rights



Upon recommendation of our
  Board of Directors, our shareholders may decide to allocate all or a part of
  any distributable profits among special or general reserves, to carry them forward
  to the next fiscal year as retained earnings, or to allocate them to the shareholders
  as dividends. shareholders holding a certain percentage (according to a formula
  relating to the Companys share capital) of our shares or a duly authorized
  association of shareholders holding their shares in registered form for at least
  two years and holding a certain percentage (1%) of our voting rights may require
  our Board of Directors to propose the declaration of a dividend at an ordinary
  general meeting of shareholders. If shareholders at this meeting approve the
  proposal, dividends are declared.

Attendance and voting
at shareholders meetings



Our Board of Directors is
  required to convene an annual general meeting of shareholders for approval of
  the annual accounts. This meeting must be held within six months of the end
  of our fiscal year. However, the president of the French Commercial court (or
  tribunal de commerce), may order an extension of this six-month
  period. We may convene other ordinary and extraordinary meetings at any time
  during the year. Meetings of shareholders may be convened by our Board of Directors
  or, if it fails to call a meeting, by our statutory auditors or by a court-appointed
  agent. A Shareholder or shareholders holding at least 5% of our share capital,
  a duly authorized association of shareholders holding their shares in registered
  form for at least two years and holding a certain percentage (1%) of our voting
  rights, or the Workers Council or another interested party under certain circumstances,
  may request that the court appoint an agent. The notice of a meeting must state
  the agenda for the meeting.

French law requires that
  a preliminary notice of a listed Companys general shareholders meeting
  be published in the Bulletin des annonces légales obligatoires (BALO)
  at least 35 days prior to the meeting. The preliminary notice must first be
  sent to the French securities authority, the Autorité des marchés
  financiers (AMF) with an indication of the date it is to

WAVECOM
  - Annual Report Form 20-F 200777

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be published in the BALO.
  The AMF also recommends that such preliminary notice be published in a newspaper
  of national circulation in France. The preliminary notice must include the agenda
  of the meeting and a draft of the resolutions that will be submitted to a shareholders
  vote. Up to 25 days before the date of the corresponding shareholder meeting,
  one or more shareholders holding a certain percentage, (currently 1.76% (according
  to a formula relating to the Companys share capital) of our share capital,
  a duly authorized association of shareholders holding their shares in registered
  form for at least two years and holding a certain percentage of our voting rights
  (1%), or the Employee Committee may propose additional resolutions.

Under French law, a quorum
  requires the presence, in person or by proxy (including those voting by mail)
  of shareholders having at least (1) 20% of the shares entitled to vote in the
  case of an ordinary general shareholders meeting or (2) 25% of the shares
  entitled to vote in the case of any other extraordinary general shareholders
  meeting. If a quorum is not present at any meeting, the meeting is adjourned.
  There is no quorum requirement when an ordinary general meeting is reconvened,
  but the reconvened meeting may consider only questions which were on the agenda
  of the adjourned meeting. When an extraordinary general meeting is reconvened,
  the quorum required is 20% of the shares entitled to vote. If a quorum is not
  present at a reconvened meeting requiring a quorum, then the meeting may be
  adjourned for a maximum of two months. French law regarding quorum requirements
  as described above do not meet Nasdaqs quorum requirement of Rule 4350(f)
  of the rules of the Nasdaq stock market which requires a quorum to be the presence
  of at least one third of the outstanding shares of the Companys voting
  stock. While Wavecom has received an exemption to this rule from Nasdaq, it
  makes every effort to encourage Shareholder participation at shareholders
  meetings, including holding the meetings at easily accessible sites in central
  Paris.

Repurchase and redemption
of shares



Under French law, we may
  not acquire our shares except:

| | to reduce our share
      capital under certain circumstances with the approval of our shareholders
      at an extraordinary general meeting;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | to provide shares for
      distribution to employees under a profit-sharing or share option plan; and
|- | ------------------------------------------------------------------------------------------------------

| | for a specific purpose
      (including stabilization of quotations on a French regulated stock exchange)
      approved by our shareholders at an ordinary general meeting, such shareholders
      authorization being given for a period to be decided by the shareholders
      resolution and which may not exceed 18 months.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amounts repurchased
  under (2) and (3) may not, in either case, result in us holding more than 10%
  of our issued shares. In the event that such repurchases result in us holding
  more than 10% of our issued shares, we are required to transfer any shares in
  excess of the 10% threshold within one year. French law requires that we cancel
  any shares in excess of this 10% limit that have not been transferred within
  the one-year period. Shares repurchased under (3) may be cancelled by an extraordinary
  general shareholders meeting, although no more than 10% of our registered
  capital may be cancelled in any 24-month period.

On May 16, 2007, our shareholders
  approved a new share repurchase program to replace the existing one. Under the
  share repurchase program, the Company currently holds 3.44% of its shares in
  treasury stock (544,322 shares). A resolution will be put forth at the general
  shareholders meeting of May 14, 2008 to approve a new share repurchase program
  to replace the current one. We are required to notify the AMF (French stock
  market authority) on a monthly basis of our trading program in our own shares.

When we purchase our own
  shares, they must be held in registered form and be fully paid. These shares
  are deemed to be outstanding under French law, but are not entitled to any dividends
  or voting rights, and we may not exercise preferential subscription rights.
  Our shareholders, at an extraordinary general meeting, may decide not to take
  such shares into account in determining the preferential subscription rights
  attached to the other shares. In the absence of such a decision, the rights
  attached to any shares held by us must either be sold on the market before the
  end of the subscription period or distributed to other shareholders on a pro
  rata basis.

As of December 31, 2007,
  we held:

| | 156,345 shares purchased
      in March 2003 at prices ranging from 7.94 to 8.69,
|- | -----------------------------------------------------------------------------------

| | 387,977 shares purchased
      in July and August 2007 at prices ranging from 18.80 to 20.21.
|- | -----------------------------------------------------------------------------------------------

At the extraordinary meeting
  of shareholders of December 22, 2005, the shareholders authorized the board
  to grant 156,345 free shares to the employees or the CEO of the Company. Under
  this authorization, 155,673 free shares were granted by the board on May 17,
  2006. At the extraordinary meeting of shareholders of February 9, 2007, the
  shareholders authorized the board to grant 155,300 free shares to the employees
  or the CEO of the Company. At the extraordinary meeting of shareholders of May
  16, 2007, the shareholders authorized the board to grant 233,000 free

78WAVECOM
  - Annual Report Form 20-F 2007

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shares to the employees
  or the CEO of the Company. Under these authorizations, 155,650 free shares were
  granted by the board on June 7, 2007.

Requirement for holdings
exceeding certain percentages



French law provides that
  any individual or entity, acting alone or in concert with others, that comes
  or ceases to hold, directly or indirectly, more than 5%, 10%, 15%, 20%, 25%,
  1/3, 50%, 2/3, 90%, 95% of our outstanding voting shares (including a holder
  of ADS) or the voting rights attached to our shares, must notify us by registered
  letter (with return receipt) within five trading days, inclusive, from the date
  that the threshold is crossed by virtue of the total number of shares held.
  Such individual or entity must also notify the AMF by registered letter (with
  return receipt) within five trading days of exceeding or falling below such
  thresholds, either above or below. A filing fee, determined by the AMF, may
  be assessed at the time a declaration is made. Information regarding the passing
  of thresholds of ownership is made public by the AMF. Failure to comply with
  the above stated stipulations will result in the suspension of the voting rights
  attached to at the shares exceeding the thresholds crossed and not declared
  at all shareholders meetings which could be held up until the expiration of
  a time limit of two years, inclusive, from the date that a corrective declaration
  is made. Also, a shareholder who does not comply with the notification requirements
  may have all or part of its voting rights suspended for up to 5 years by the
  commercial court at the request of our Chairman, any of our shareholders or
  the AMF, or may be subject to criminal penalties and fines.In case of the crossing
  of the 10% and 20% thresholds, the individual acting alone or in concert with
  others, must notify us and the AMF by registered letter (with return receipt)
  within ten trading days of his intentions as to the objectives he is pursuing.
  To permit holders to give the required notice, we are required to publish in
  the BALO (the official journal for legal notifications in France) no later than
  15 calendar days after the annual ordinary general meeting of shareholders information
  with respect to the total number of voting rights outstanding as of the date
  of such meeting. In addition, if the number of outstanding voting rights changes
  by 5% or more between two annual ordinary general meetings, we are required
  to publish in the BALO, within 15 calendar days of such change, the number of
  voting rights outstanding and provide the AMF with written notice of such information.
  The AMF publishes the total number of voting rights so notified by all listed
  companies in a weekly notice (avis), indicating the date that each such
  number was last updated. Furthermore, every month, we must notify the AMF of,
  and publish, the total number of voting rights and shares of our share capital
  if the number of available voting rights and shares so notified has changed
  compared with the last published information. Under the regulations of the AMF
  and subject to its limited exemptions, any person or persons acting in concert
  who comes to own more than 33 1/3% of our share capital or voting rights must
  initiate a public tender offer for the balance of our share capital and the
  balance of the securities giving access to our share capital (including, for
  these purposes, all securities convertible into or exchangeable for equity securities).

We have only one class of
  shares. As of December 31, 2007, this class consisted of 15,796,591 authorized
  ordinary shares all of which shares were outstanding as of such date, with a
  nominal value 1 per share, resulting in a share capital of 15,796,591
  in nominal value, as approved by the Board of Directors on January 29, 2008.
  This number includes 544,322 shares that are held in treasury and are deemed
  to be outstanding under French law but have no voting or dividend rights. All
  of our outstanding shares are fully paid. Each share is entitled to one vote
  on all matters submitted to our shareholders.

Material Contracts



In 2007, we entered into
  an entirely renegotiated definitive manufacturing agreement with Solectron,
  now part of the Flextronics group. A preliminary agreement had been negotiated
  and signed on August 16, 2005. This definitive agreement is in fact composed
  of three different agreements: a Cooperation Agreement, a Global Manufacturing
  Agreement and a Supply Chain Agreement. All three agreements were finalized
  and executed on November 29, 2007. The agreements are non transferable without
  the prior consent of the other party. Our relationship with Solectron is further
  described in Item 3 Key Information  Risk Factors.

A Share Purchase Agreement
  was signed with the shareholders of Anyware Technologies on January 31, 2008,
  relating to the acquisition by Wavecom of 100% of the shares of Anyware Technologies.

We have an important customer,
  distributor and supplier base, with whom we have either signed contracts or
  we operate under our general terms and conditions. It is not unusual in our
  industry that these contracts be non transferable without the prior consent
  of the other party, and moreover could be terminated in case of change of control.

Exchange Controls



Under current French exchange
  control regulations, there are no limitations on the amount of payments that
  may be remitted by us to non-residents of France. Laws and regulations concerning
  foreign exchange controls do require, however,

WAVECOM
  - Annual Report Form 20-F 200779

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that all payments or transfers
  of funds made by a French resident to a non-resident be handled by an authorized
  intermediary bank. All credit establishments in France, including all registered
  banks, are accredited intermediaries.

Neither French law nor our
  by-laws presently impose any restrictions on the ability of non-French holders
  to hold or vote the Shares.

Taxation



|General
|-------

The following discussion
  generally summarizes the material French tax consequences and the material U.S.
  federal income tax consequences of the purchase, ownership and disposition of
  shares or ADSs by U.S. holders. U.S. holders are holders who are for United
  States federal income tax purposes:

| | individuals who are
      citizens or residents of the United States;
|- | ---------------------------------------------------------------------

| | corporations, or other
      entities, taxable as corporations, created or organized under the laws of
      the United States or of any political subdivision thereof or the District
      of Columbia;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | estates, the income
      of which is subject to U.S. federal income taxation regardless of its source;
      or
|- | ----------------------------------------------------------------------------------------------------------------

| | trusts, the administration
      of which are subject to the primary supervision of U.S. courts and one or
      more U.S. persons have the authority to control all substantial decisions
      of the trusts;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | and, solely for purposes
      of the discussion of French tax consequences below, only the above-described
      holders:
|- | --------------------------------------------------------------------------------------------------------------------------

| | whose ownership of
      shares or ADSs is not effectively connected with a permanent establishment
      or fixed base in France;
|- | ----------------------------------------------------------------------------------------------------------------------------------

| | who, in the case of
      individuals or other non-corporate holders, other than partnerships or trusts,
      are residents of the United States;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | that, in the case of
      United States corporations other than regulated investment companies, do
      not own, directly or indirectly, 10% or more of our outstanding voting share
      capital;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | that, in the case of
      United States corporations that are regulated investment companies, do not
      own, directly or indirectly, 10% or more of our outstanding voting share
      capital if less than 20% of such corporations shares are owned by
      persons who are not citizens or residents of the United States;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | that in the case of
      partnerships or trusts that are treated as residents of the United States
      as defined by the income tax convention between the United States and France
      dated August 31, 1994 (referred to herein as the U.S.-France Income Tax
      Convention), to the extent that its partners, beneficiaries or grantors
      are themselves individuals or other non-corporate entities that are residents
      of the United States, or United States corporations, other than regulated
      investment companies, that do not own, directly or indirectly, 10% or more
      of our outstanding voting share capital.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This discussion may not
  describe all of the tax considerations related to the purchase, ownership and
  disposition of shares or ADSs that may be relevant to a holder in light of that
  holders particular tax situation. In particular, this discussion deals
  only with holders that hold shares or ADSs as capital assets, as that term is
  defined in the U.S. Internal Revenue Code, and does not address special tax
  rules applicable to special classes of taxpayers, such as U.S. expatriates,
  regulated investment companies, financial institutions, insurance companies,
  holders that own, directly, indirectly or by attribution, 10% or more of our
  outstanding voting share capital, tax-exempt organizations, securities dealers,
  persons subject to the U.S. alternative minimum tax, persons who are owners
  of an interest in a partnership or other pass-through entity that is a holder
  of shares or ADSs, persons that will hold shares or ADSs as part of an integrated
  investment, including a straddle, hedging or conversion transaction, comprised
  of shares or ADSs and one or more other positions for tax purposes and persons
  that have a functional currency other than the U.S. dollar. The discussion also
  does not include the tax consequences of the exchange or other disposition of
  foreign currency in connection with the purchase or disposition of shares or
  ADSs.

The statements on United
  States tax law are based on the tax laws of the United States, and the statements
  on French tax law are based upon the tax laws and practice of France, in effect
  on the date of this annual report, as well as on the U.S.-France Income Tax
  Convention, as in effect on such date, all of which are subject to change, possibly
  with retroactive effect. In addition, the statements are based, in part, upon
  the representations of the Bank of New York and the assumption that each obligation
  in the Deposit Agreement and any related agreement will be performed in accordance
  with its terms.

This discussion is intended
  to be a general summary and does not constitute a complete and in depth analysis
  of all potential tax effects that may affect ownership or disposition of the
  shares or ADSs and does not encompass all individual circumstances. Owners and
  prospective purchasers of shares or ADSs are urged to consult their own advisors
  as to the tax consequences of the purchase, ownership and disposition of shares
  or

80WAVECOM
  - Annual Report Form 20-F 2007

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ADSs in light of their
  particular circumstances, including the effect of any state or local and other
  foreign tax laws.

|French
      taxation of U.S. holders
|-------------------------------------

The following discussion
  generally summarizes the material French tax consequences to U.S. holders of
  the acquisition, ownership and disposition of shares or ADSs.

Holders of ADSs deemed
  to be owners of shares:For purposes of the U.S.-France Income Tax Convention,
  owners of ADSs will be treated as the owners of the shares represented by such
  ADSs. Exchanges, deposits and withdrawals of shares for ADSs or ADSs for shares
  by a holder will not result in the imposition of a French tax.

As of January 1, 2005, the
  avoir fiscal or tax credit system has, with certain exceptions,
  been terminated and replaced by a rule where, generally speaking, 50% of the
  dividend is subjected to French income tax. This rule applies to individuals
  who are non-residents of France as well as residents, to the extent the non-resident
  individual is resident in a treaty country.

The U.S.-France Income Tax
  Convention generally provides that an individual shareholder who is resident
  of the United States and fulfils specific conditions may generally apply to
  the French tax authorities for the following:

| | a lower rate of withholding
      tax, generally 15%; and
|- | ---------------------------------------------------------

| | for dividends declared
      in 2004 but actually distributed in 2005, a refund of the avoir
      fiscal, after deduction of withholding tax payable on the avoir
      fiscal providing the application is made prior to January 1, 2006.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We do not expect to pay
  dividends in the foreseeable future. If we do pay a dividend, U.S. holders are
  urged to consult their own tax advisors as to the application of the U.S.-France
  Income Tax Convention and the internal tax law of France to their particular
  circumstances

|Sale,
      exchange or other disposition of shares or ADSs:
|------------------------------------------------------------

Under the U.S.-France income
  tax convention, no French tax is levied on any capital gain derived from the
  sale, exchange or other disposition of shares or ADSs by a U.S. holder.

|Estate
      and Gift Tax
|-------------------------

Under the U.S.-France Estate
  and Gift Tax Convention, dated November 24, 1978, a transfer of shares or ADSs
  by gift or by reason of the death of a U.S. holder entitled to benefits under
  that convention will not be subject to French gift or inheritance tax, unless
  the donor or the decedent was domiciled in France at the time of making the
  gift, or of his or her death, or the shares or ADSs were used or held for use
  in the conduct of a business or profession through a permanent establishment
  or fixed base in France.

The new Estate and Gift
  Tax Protocol, signed on December 8, 2004, but not yet ratified, will not affect
  the above but will remedy some of the negative estate planning consequences
  for French nationals, and will treat them generally in the same manner as U.S.
  citizens.

|Wealth
      Tax
|----------------

You will not be subject
  to French wealth tax for your shares or ADSs if both of the following apply
  to you:

| | you are not a French
      resident for purposes of French taxation; and
|- | ------------------------------------------------------------------------

| | you own less than 10%
      of Wavecoms share capital or ADSs, either directly or indirectly,
      provided your shares do not enable you to exercise influence over Wavecom.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Transfer
      taxes
|--------------------

Transfers of a listed companys
  shares will not be subject to French registration or transfer taxes, unless
  the transfer is affected by means of a written agreement that is executed within
  France. Should such written agreement be executed within France, it would be
  subject to transfer taxes at the rate of 1.1% to a maximum of 4,000 per
  transaction. A stock exchange stamp may be due in some cases.

|U.S.
      Taxation of U.S. Holders
|-----------------------------------

The following discussion
  generally summarizes the material U.S. federal income tax consequences to U.S.
  holders of the purchase, ownership and disposition of shares or ADSs.

Holders of ADSs deemed
  to be owners of shares:For purposes of the U.S. Internal Revenue Code,
  a U.S. holder of ADSs will be treated as the owner of the underlying shares
  represented by such ADSs. Exchanges, deposits and withdrawals of shares for
  ADSs or ADSs for shares by a U.S. holder will not result in recognition of gain
  or loss for U.S. federal income tax purposes.



WAVECOM
  - Annual Report Form 20-F 200781

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Dividends: Subject
  to the discussion below under the heading Passive Foreign Investment Company,
  the gross amount of a cash distribution (including the amount of foreign taxes,
  if any, withheld therefrom) paid on a share or ADS will be a dividend for U.S.
  federal income tax purposes to the extent paid out of our current or accumulated
  earnings and profits (as determined for U.S. federal income tax purposes). avoir
  fiscal and précompte payments will be considered
  dividends to the same extent. To the extent that a distribution exceeds our
  earnings and profits, it will be treated as a non-taxable return of capital
  to the extent of the U.S. holders adjusted tax basis in such share or
  ADS and thereafter as capital gain. Dividends paid by us generally will be treated
  as foreign source income and will not be eligible for the dividends-received
  deduction generally allowed to corporate shareholders under the U.S. federal
  income tax law.

Dividends paid in euros
  will be includable in income in a U.S. dollar amount based on the prevailing
  U.S. dollar-euro exchange rate on the date of receipt by the depositary, in
  the case of ADSs, or the date of receipt by the U.S. holder of shares, whether
  or not the payment is converted into U.S. dollars at that time. A U.S. holder
  will have a tax basis in any euros distributed equal to such U.S. dollar amount.
  Any gain or loss recognized upon a subsequent sale or conversion of the euros
  generally will be U.S. source ordinary income or loss. A U.S. holder may also
  recognize foreign currency gain or loss, which will be U.S. source ordinary
  income or loss, on a subsequent conversion or other disposition of any refund
  of the excess withholding tax initially withheld from a dividend payment if
  the refund is converted into U.S. dollars at an exchange rate different than
  the rate used to translate the U.S. holders dividend income.

Dividend income is generally
  taxed as ordinary income. However, a maximum U.S. federal income tax rate of
  15% will apply to qualified dividend income received by individuals
  (as well as certain trusts and estates) in taxable years beginning before January
  1, 2011, provided that certain holding period requirements are met. Qualified
  dividend income includes dividends paid on shares of U.S. corporations
  as well as dividends paid on shares of qualified foreign corporations
  if, among other things: (i) the shares of the foreign corporation are readily
  tradable on an established securities market in the U.S. or (ii) the foreign
  corporation is eligible with respect to substantially all of its income for
  the benefits of a comprehensive income tax treaty with the U.S. which contains
  an exchange of information program (a qualifying treaty). ADRs backed
  by our shares are readily tradable on the Nasdaq National Market. In addition,
  the U.S.-France income tax convention is a qualifying treaty. Accordingly, we
  believe that dividends paid by us with respect to our shares or ADSs should
  constitute qualified dividend income for U.S. federal income tax
  purposes, provided that the holding period requirements are satisfied and none
  of the other special exceptions apply.

The amount of foreign income
  taxes that may be claimed as a credit against U.S. federal income tax in any
  year is subject to certain complex limitations and restrictions, which must
  be determined on an individual basis by each U.S. holder. The limitations include,
  among others, rules that may limit foreign tax credits allowable with respect
  to specific classes of income to the U.S. federal income taxes otherwise payable
  with respect to each such class of income. Dividends paid by us generally will
  be foreign source passive income for U.S. foreign tax credit purposes.

We do not expect to pay
  dividends in the foreseeable future. If we do pay a dividend, U.S. holders are
  urged to consult their own tax advisors as to the application of the U.S.-France
  Income Tax Convention and the U.S. federal income tax rules applicable to dividends.

Sale, exchange or other
  disposition of shares or ADSs:Unless a non-recognition provision applies,
  upon a sale, exchange or other disposition of shares or ADSs, a U.S. holder
  will recognize gain or loss for U.S. federal income tax purposes equal to the
  difference between the amount realized (determined in U.S. dollars) upon the
  disposition and such U.S. holders adjusted tax basis in the shares or
  ADSs. Subject to the discussion below under the heading Passive Foreign
  Investment Company, such gain or loss generally will be a capital gain
  or loss. Such capital gain or loss will be long-term capital gain or loss if
  the U.S. holder has held the share or ADS for more than one year at the time
  of the disposition. If the U.S. holder is an individual, trust or estate, long-term
  capital gain realized upon a disposition of a share or ADS and before the end
  of a taxable year which begins before January 1, 2011 generally will be subject
  to a maximum U.S. federal income tax rate of 15%. Gains on the sale of shares
  or ADSs held for one year or less will be treated as short-term capital gain
  and taxed as ordinary income at the U.S. holders marginal income tax rate.
  Capital losses may only be used to offset capital gains, except that U.S. individuals
  may deduct up to $3,000 of net capital losses against ordinary income. U.S.
  holders should consult their own tax advisors regarding the availability of
  this offset.

No French tax is imposed
  on the capital gains of a U.S. holder arising from the sale, exchange or other
  disposition of shares or ADSs provided that certain requirements of the U.S.-France
  Income Tax Convention are satisfied. See French Taxation of U.S. Holders-Sale,
  Exchange or Other Disposition of Shares or ADSs. In the event that French
  tax is imposed on capital gains from the sale, exchange or other disposition
  of shares or ADSs, U.S. holders should consult their own tax advisors with respect
  to their ability based on their particular circumstances to claim a credit for
  such tax against their U.S. federal income tax.

The surrender of ADSs in
  exchange for shares and the surrender of shares in exchange for ADSs will not
  be a taxable event for U.S. federal income tax purposes. Accordingly, a U.S.
  holder will not recognize any gain or loss upon such surrender.



82WAVECOM
  - Annual Report Form 20-F 2007

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Passive Foreign Investment
  Company: We believe that we will not be treated as a Passive Foreign Investment
  company, or PFIC, for U.S. federal income tax purposes for our taxable year
  ending December 31, 2007. However, a companys status as a PFIC is a factual
  determination that is made annually and depends on, among other things, a valuation
  of the companys assets, including goodwill and other intangible assets.
  We cannot guarantee that we will not be treated as a PFIC for the current year
  or some future years.

We will be classified as
  a PFIC in a particular taxable year if either:

| | 75% or more of our
      gross income for the taxable year is passive income, which includes
      dividends, interest, royalties, rents, annuities, and some types of gains;
      or
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | the average percentage
      of the value of our assets that produce or are held for the production of
      passive income is at least 50%. The U.S. Internal Revenue Service has indicated
      that cash balances, even if held as working capital, are considered to be
      assets that produce passive income.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The proceeds of our 2007
  convertible debt offering, if not timely invested in assets that do not produce
  passive income, could cause us to be treated as a PFIC in 2008 or late years.
  If we are classified as a PFIC, generally any gain recognized by a U.S. holder
  upon the sale or disposition of our shares or ADSs, or the receipt of certain
  distributions, would be treated as ordinary income. In this case, this income
  would be allocated over the U.S. holders holding period for the holders
  shares or ADSs, would be taxed at the highest applicable tax rate in effect
  for the year to which it is allocated, and an interest charge would be imposed
  on the amount of deferred tax attributable to the income allocated to prior
  taxable years.

If we were determined to
  be a PFIC, however, a U.S. holder could elect to treat the shares or ADSs as
  an interest in a Qualified Electing Fund, by making a QEF Election,
  in which case the holder would be required to include in income the holders
  proportionate share of our income and net capital gain in years in which we
  were a PFIC, but any gain subsequently recognized upon the sale by the holder
  of the shares or ADSs would generally be taxed as a capital gain. Alternatively,
  if our stock were treated as marketable stock for PFIC purposes, a U.S. holder
  could make a Mark-to-Market Election, pursuant to which the holder
  would be required to include as ordinary income annually the excess of the fair
  market value of the shares or ADSs over the holders tax basis therein.
  Any gain subsequently recognized upon the disposition by the holder of the shares
  or ADSs would also be taxed as ordinary income in the year of the disposition.
  The holders basis in the shares or ADSs would be adjusted to reflect any
  such income amounts.

U.S. holders are urged to
  consult their own tax advisors concerning the potential application of the PFIC
  rules to their ownership and disposition of shares or ADSs. U.S. holders also
  should consult with their own tax advisors regarding the eligibility, manner
  and advisability of making the QEF Election or Mark-to-Market Election if we
  are treated as a PFIC.

Information reporting
  and backup withholding: Dividend payments with respect to shares or ADSs
  and proceeds from the sale, exchange or other disposition of shares or ADSs
  may be subject to information reporting to the U.S. Internal Revenue Service
  and possible U.S. backup withholding (currently at a 28% rate). Backup withholding
  will not apply to a U.S. holder, however, if the holder furnishes a correct
  taxpayer identification number and makes any other required certification or
  if the holder is otherwise exempt from backup withholding. If the U.S. holder
  is required to establish the holders exempt status or provide other certifications,
  the holder generally must provide such certifications on U.S. Internal Revenue
  Service Form W-9.

Backup withholding is not
  an additional tax. Amounts withheld as backup withholding may be credited against
  a holders U.S. federal income tax liability, and the holder may obtain
  a refund of any excess amounts withheld under the backup withholding rules by
  filing the appropriate claim for refund with the U.S. Internal Revenue Service
  and furnishing any required supporting information.

Documents on Display



We are subject to the reporting
  requirements of the U.S. Securities Exchange Act of 1934 (the Exchange
  Act) applicable to foreign private issuers. In connection with the Exchange
  Act, we file reports, including this annual report on Form 20-F, and other information
  with the Securities and Exchange Commission. Such reports and other information
  are available on the SECs website at www.sec.gov, and may also be inspected
  and copied at prescribed rates at the public reference facilities maintained
  by the SEC at its Public Reference Room, 100 F Street, N.E., Washington, D.C.
  20549: information on the SECs public reference. Access to the Public
  Reference Room may be obtained by calling the SEC at 800-SEC-0330. Such reports
  and other information may be obtained, upon written request, from The Bank of
  New York, as depositary, at its office located at 101 Barclay Street, New York,
  NY 10286.

WAVECOM
  - Annual Report Form 20-F 200783

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Item
  11:  Quantitative and Qualitative Disclosures about Market Risk

|
|

The following discusses
  our exposure to market risk related to changes in equity prices and foreign
  currency exchange rates. This discussion contains forward-looking statements
  that are subject to risks and uncertainties. Actual results could vary materially
  as a result of a number of factors, including those set forth in the Risk Factors
  section.

We publish our consolidated
  financial statements in euros and the functional currency of Wavecom S.A. is
  the euro. In 2007, we recorded 56% of our total revenues in U.S. dollars, with
  virtually all the rest in euros. We purchase many of our components for U.S.
  dollars and the operating expenses of our U.S. subsidiaries are in U.S. dollars.
  The operating expenses of our Hong Kong subsidiary are primarily in Hong Kong
  dollars. Most of our other operating expenses are in euros. U.S. dollar purchases
  and expenses represented approximately 62% of our cost of revenues and operating
  expenses in 2007. A strengthening of the euro against the U.S. dollar and other
  currencies in which we receive revenues could reduce our reported revenues and
  our reported operating and net results. We incurred a net foreign exchange loss
  for 2007 of 1.4 million compared to a net foreign exchange loss in 2006
  (1.9 million) and a net foreign exchange gain in 2005 (4.1 million).
  We began to use a combination of options and forward exchange contracts in order
  to minimize the risk to our estimated net dollar cash flows. Because these financial
  instruments do not always hedge specific transactions, they may be accounted
  for as speculative transactions; with the fair market value of the instruments
  being recorded on our balance sheet and their changes in market value recognized
  in our profit and loss accounts at the end of each accounting period.

See also Item 5: Operating
  and Financial Review and Prospects-Impact of currency fluctuations and
  Note 5 to our consolidated financial statements.

Item
  12:  Description of Securities other than Equity Securities

Not applicable

84WAVECOM
  - Annual Report Form 20-F 2007

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PART
  II

|                                                                                                  | Page | 
|------------------------------------------------------------------------------------------------- | ---- | 
|Item
      13: Defaults, Dividend Arrearages and Delinquencies                                    | 86   | 
|Item
      14: Material Modifications to the Rights of Security Holders and Use of
      Proceeds | 86   | 
|Item
      15: Controls and Procedures                                                            | 86   | 
|Item
      16A: Audit Committee Financial Expert                                                  | 88   | 
|Item
      16B: Code of Ethics for Financial Officers                                             | 88   | 
|Item
      16C: Principal Accountant Fees and Services                                            | 88   | 
|Pre-Approval
      Policies for Audit and Non-Audit Services                                      | 88   | 
|Item
      16D: Exemption from the Listing Standards for Audit Committees                         | 89   | 
|Item
      16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers            | 89   | 

WAVECOM
  - Annual Report Form 20-F 200785

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Item
  13:  Defaults, Dividend Arrearages and Delinquencies

Not applicable

Item
  14:  Material Modifications to the Rights of Security Holders and
  Use of Proceeds

Not applicable

Item
  15:  Controls and Procedures

We have adopted and maintain
  disclosure controls and procedures that are designed to ensure that information
  required to be disclosed in the reports that we file or submit under the Securities
  Exchange Act of 1934, as amended, is recorded, processed, summarized and reported
  within the required time periods and that such information is accumulated and
  communicated to our management, including our Chief Executive Officer and Chief
  Financial Officer, as appropriate, to allow for timely decisions regarding required
  disclosure.

Our management, with the
  participation of our Chief Executive Officer and Chief Financial Officer, evaluated
  the effectiveness of our disclosure controls and procedures (as defined in Rules
  13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December
  31, 2007. Based on this evaluation, our Chief Executive Officer and Chief Financial
  Officer concluded that, as of December 31, 2007, our disclosure controls and
  procedures are effective to provide reasonable assurance that material information
  relating to Wavecom, including its consolidated subsidiaries, is made known
  to our Chief Executive Officer and Chief Financial Officer by others within
  those entities, on a timely basis.

|Managements
      Annual Report on Internal Control over Financial Reporting
|-----------------------------------------------------------------------------

Our management is also responsible
  for establishing and maintaining adequate internal control over financial reporting.
  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
  promulgated under the U.S. Securities Exchange Act of 1934 as a process designed
  by, or under the supervision of, our chief executive and chief financial officers
  and effected by our board, management and other personnel, to provide reasonable
  assurance regarding the reliability of financial reporting and the preparation
  of financial statements for external purposes in accordance with U.S. generally
  accepted accounting principles, and includes those policies and procedures that:

| | pertain to the maintenance
      of records that in reasonable detail accurately and fairly reflect the transactions
      and dispositions of the assets of our Company;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of financial statements in accordance with generally accepted accounting
      principles, and that receipts and expenditures of our Company are being
      made only in accordance with authorizations of management and board of our
      Company; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | provide reasonable
      assurance regarding prevention or timely detection of unauthorized acquisition,
      use or disposition of our Companys assets that could have a material
      effect on our financial statements.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our management assessed
  the effectiveness of our internal control over financial reporting as of December
  31, 2007. In making this assessment, our management used the criteria set forth
  by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
  in Internal Control-Integrated Framework. Based on our assessment,
  management concluded that, as of December 31, 2007, our internal control over
  financial reporting is effective based on those criteria.

No change in our internal
  control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
  under the Exchange Act) occurred during the fiscal year ended December 31, 2007,
  that has materially affected, or is reasonably likely to materially affect,
  our internal control over financial reporting. We may in the ordinary course
  make changes in our internal control processes from time to time.

Ernst & Young Audit,
  the independent registered public accounting firm that audited the consolidated
  financial statement in this annual have issued an attestation report, as stated
  in their report beginning on page 87 of this report.

April 7, 2008

| | /s/
      Ronald D. Black | /s/
      Chantal Bourgeat
| | ------------------------- | --------------------------

| | Ronald
      D. Black | Chantal
      Bourgeat
| | --------------------- | ----------------------

| | Chief
      Executive Officer | Chief
      Financial Officer
| | ----------------------------- | -----------------------------

86WAVECOM
  - Annual Report Form 20-F 2007

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|Report
      of Independent Registered Public Accounting Firm
|-------------------------------------------------------------

|The
      Board of Directors and Shareholders of Wavecom S.A.
|-------------------------------------------------------------

We have audited Wavecom
  S.A.s internal control over financial reporting as of December 31, 2007,
  based on criteria established in Internal Control-Integrated Framework issued
  by the Committee of Sponsoring Organizations of the Treadway Commission (the
  COSO criteria). Wavecoms management is responsible for maintaining effective
  internal control over financial reporting, and for its assessment of the effectiveness
  of internal control over financial reporting included in the accompanying Managements
  Annual Report on Internal Control over Financial Reporting. Our responsibility
  is to express an opinion on the companys internal control over financial
  reporting based on our audit.

We conducted our audit in
  accordance with the standards of the Public Company Accounting Oversight Board
  (United States). Those standards require that we plan and perform the audit
  to obtain reasonable assurance about whether effective internal control over
  financial reporting was maintained in all material respects. Our audit included
  obtaining an understanding of internal control over financial reporting, assessing
  the risk that a material weakness exists, testing and evaluating the design
  and operating effectiveness of internal control based on the assessed risk,
  and performing such other procedures as we considered necessary in the circumstances.
  We believe that our audit provides a reasonable basis for our opinion.

A companys internal
  control over financial reporting is a process designed to provide reasonable
  assurance regarding the reliability of financial reporting and the preparation
  of financial statements for external purposes in accordance with generally accepted
  accounting principles. A companys internal control over financial reporting
  includes those policies and procedures that (1) pertain to the maintenance of
  records that, in reasonable detail, accurately and fairly reflect the transactions
  and dispositions of the assets of the company; (2) provide reasonable assurance
  that transactions are recorded as necessary to permit preparation of financial
  statements in accordance with generally accepted accounting principles, and
  that receipts and expenditures of the company are being made only in accordance
  with authorizations of management and directors of the company; and (3) provide
  reasonable assurance regarding prevention or timely detection of unauthorized
  acquisition, use, or disposition of the companys assets that could have
  a material effect on the financial statements.

Because of its inherent
  limitations, internal control over financial reporting may not prevent or detect
  misstatements. Also, projections of any evaluation of effectiveness to future
  periods are subject to the risk that controls may become inadequate because
  of changes in conditions, or that the degree of compliance with the policies
  or procedures may deteriorate.

In our opinion, Wavecom
  S.A. maintained, in all material respects, effective internal control over financial
  reporting as of December 31, 2007, based on the COSO criteria.

We also have audited, in
  accordance with the standards of the Public Company Accounting Oversight Board
  (United States), the consolidated balance sheets of Wavecom as of December 31,
  2007, 2006 and 2005, and the related consolidated statements of income, shareholders
  equity, and cash flows for each of the three years in the period ended December
  31, 2007 of Wavecom S.A. and our report dated April 7, 2008 expressed an unqualified
  opinion thereon.

/S/ Ernst
  & Young Audit

Represented
  by Jean-Yves Jégourel

Paris-La Défense, France

April 7, 2008

WAVECOM
  - Annual Report Form 20-F 200787

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Item
  16A:  Audit Committee Financial Expert

Our Board of Directors has
  determined that we have at least one independant audit committee financial expert,
  independant director Stephen Imbler, serving on our Audit Committee.

Item
  16B:  Code of Ethics for Financial Officers

We have adopted a written
  code of ethics that applies to senior members of our financial management team,
  including our principal executive officer, principal financial officer and principal
  accounting officer. We have posted this code of ethics on our website at www.wavecom.com.

You may request a copy of
  our code of ethics, at no cost, by writing to or telephoning us as follows:

WAVECOM
  S.A.3, esplanade
  du Foncet
  92442 Issy-les-Moulineaux Cedex
  France
  Attention: Investor Relations
  Tel. 011 33 1 46 29 08 00

Item
  16C:  Principal Accountant Fees and Services

During each of the last
  two fiscal years, Ernst & Young Audit has acted as our independent auditors
  and MBV & Associés has acted as our French statutory auditor.

The detail of fees paid
  for Ernst & Young Audit fees and NBV and associés for fiscal years
  2006 and 2007 are set forth below:

|                               |                          
|------------------------------ | -------------------------
|(amounts
      in  thousands) | Ernst
      & Young Audit
|                               | Amounts                  
|                               | 2007                     
|                               |                          
|Audit
      fees               | 617                      
|Audit-related
      fees       | 60                       
|Tax fees                       | 5                        
|Total                          | 682                      
|                               |                          

Audit fees include fees
  associated with the annual audits (financial statements and internal control)
  and reviews of our quarterly financial results submitted on Form 6-K.

Audit-related fees principally
  include reports required to be issued for French statutory purposes, and related
  to French regulated offerings.

Tax fees include principally
  fees associated with tax compliance services at foreign subsidiaries.

Pre-Approval Policies
for Audit and Non-Audit Services



Prior to the engagement
  of Ernst & Young Audit and MBV & Associés each year, the engagements
  are approved by our Board of Directors and by vote of our shareholders at our
  annual general meeting. Our audit committee has also adopted its own rules of
  procedure. The audit committees rules of procedure provide for a process
  with respect to the prior approval of all non-audit services to be performed
  by our independent auditors or our statutory auditors. Our Board of Directors
  also reviews the internal control, disclosure and audit processes.

For the fiscal year 2007,
  our audit committee approved all of the audit services provided by Ernst &
  Young Audit and MBV & Associés, and all of the audit-related services
  or tax consulting services provided by Ernst & Young Audit and MBV &
  Associés and all of the other services provided by Ernst & Young Audit
  and MBV & Associés

88WAVECOM
  - Annual Report Form 20-F 2007

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Item
  16D:  Exemption from the Listing Standards for Audit Committees

Not applicable.

Item
  16E:  Purchases of Equity Securities by the Issuer and Affiliated
  Purchasers

On May 16, 2007, our shareholders
  approved a new share repurchase program to replace the existing one.

Under the share repurchase
  program, the Company currently holds 3.44% of its shares in treasury stock (544,322
  shares). A resolution will be put forth at the general shareholders meeting
  of May 14, 2008 to approve a new share repurchase program to replace the current
  one. We are required to notify the AMF (French stock market authority) on a
  monthly basis of our trading program in our own shares.

As of December 31, 2007,
  we held:

| | 156,345 shares purchased
      in March 2003 at prices ranging from 7.94 to 8.69,
|- | -----------------------------------------------------------------------------------

| | 387,977 shares purchased
      in July and August 2007 at prices ranging from 18.80 to 20.21.
|- | -----------------------------------------------------------------------------------------------

|Issuer
      Purchases of Shares in 2007
|----------------------------------------

|                                     |                                       
|------------------------------------ | --------------------------------------
|Period                               | Total
      number of shares purchased
|                                     |                                       
|From July
      30 to July 31 2007   | 97,179                                
|From August
      1 to August 8 2007 | 290,798                               
|                                     |                                       

WAVECOM
  - Annual Report Form 20-F 200789

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Glossary

3G:Wireless network
  standards for 3rd generation. These networks will allow access to
  a large array of new services, including fast internet access made possible
  because of the introduction of packet radio technology to the wireless
  communication networks.

ASIC:An
  application-specific integrated circuit (ASIC) is an integrated circuit (IC)
  customized for a particular use, rather than intended for general-purpose use.
  For example, a chip designed solely to run a cell phone is an ASIC.

Analog standard:Transmission
  standard traditionally used as an alternative to the digital standard with which
  information (sound, text or images) are codified and transformed into series
  of numbers.

Bandwidth:The amount
  of data that can be transmitted in a fixed amount of time. For digital devices,
  the bandwidth is usually expressed in bits per second (bps) or bytes per second.
  For analog devices, the bandwidth is expressed in cycles per second, or Hertz
  (Hz). Generally a communications channel is defined by its lowest and highest
  frequency.

Bluetooth:A short-range
  radio technology aimed at simplifying communications making it possible to transmit
  signals among internet devices and between devices and the internet.

CDMA:Code Division
  Multiple Access A wireless network standard which is competitive with the GSM
  standard and used primarily in the United Sates and some Asian countries, including
  Korea.

CellularNetwork:
  A radio network made up of several radio cells each served by a fixed transmitter,
  known as a cell site or base station that cover different areas in an effort
  to provide radio coverage over a wider area than the area of one cell.

EDGE:Enhanced Data
  GSM Environment A faster version of the GSM standard. It represents an interim
  step between GSM and 3G (Wideband-CDMA).

EMS:Electronic Manufacturing
  Services Production outsourcing specialists for the electronics industry.

Firmware: In computing,
  firmware is software that is embedded in a hardware device. It is often provided
  on flash ROMs or as a binary image file that can be uploaded onto existing hardware
  by a user.

Wireless terminals:Any
  device used to transmit and receive voice and data via wireless networks including
  (mobile telephones, fax machines, modems, etc.).

GPRS: General Packet
  Radio Services A system for transmitting data via packets with improved data
  flow on GSM networks.

GSM:Global System
  for Mobile communications Digital transmission standard used by wireless networks.
  GSM is the main wireless network standard in Europe.

HSDPA:High-Speed
  Downlink Packet Access  An upgrade to UMTS supporting speeds in the 10
  megabytes-per-second class.

Interconnectivity:The
  mechanism for establishing a connection between networks using different standards
  where the goal is to give all subscribers of one operator network the possibility
  to communicate with subscribers of other operators networks.

ISO:International
  Standard Organization International organisation charged with establishing worldwide
  standards in a variety of areas.

I/O:Input/Output
  devices  Inputs are the signals received by the unit, and outputs are
  the signals sent from it. In many cases, it is the collection of interfaces
  that information processing systems use to communicate with each other.

MMS:Multi-media
  Messaging System Electronic messaging system including electronic mail or e-mail.

Open AT®: Open
  AT® Software Suite is Wavecom-owned and consists of five elements; Open
  AT® IDE (Integrated Development Environment), Open AT® Applications,
  Open AT® Plug-Ins, Open AT® OS and Open AT® Firmware. With this
  suite of software comes fully develop the power of Wavecoms Wireless CPU®
  portfolio from real-time application design to over-the-air software upgrades
  and maintenance.

PCD:Personal communication
  device Any number of wireless terminals used by individuals to communicate via
  wireless networks including: mobile telephones, connected personal digital assistants
  and smartphones;

Protocol Stack:A
  protocol stack (sometimes communications stack) is a particular software implementation
  of a computer networking protocol suite. The terms are often used interchangeably.
  Strictly speaking, the suite is the definition of the protocols, and the stack
  is the software implementation of them.



WAVECOM
  - Annual Report Form 20-F 2007G-1

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SIM:Subscriber Identity
  Module Subscriber identification card allowing access to services on the GSM
  network. In order to function, the card is inserted into a mobile telephone
  or other wireless terminal.

SMS:Short Message
  Service Short written messages which are transmitted via data channels on the
  GSM mobile network. The maximum length of any message is 160 characters. Transmission
  on the GSM network is standardized. A short message server which is integrated
  into the mobile network ensures an interface between the mobile and fixed environments.

Quad-band:Ability
  to operate on four different frequency bands.

TCP/IP:Transmission
  Control Protocol and Internet Protocol  Together define the basic rules
  for how information is transmitted across the Internet as well as on many local
  area networks in packet form.

Telematics 
  A generic term for a wireless network supporting the collection and dissemination
  of data in vehicle tracking and positioning, online navigation, and other emergency
  assistance. Also, used in the power utility industry for meter reading and load
  control.

W-CDMA:Wideband
  Code Division Multiple Access The first standard of the third generation which
  was commercially available in Japan in a specific limited geographic area in
  2001 and should be available in Europe and the rest of Asia by 2005, also known
  as 3G and UMTS.

WLL:Wireless Local
  Loop A communication network covering a narrowly defined physical area using
  radio transmission for voice and data communication. These networks can functionally
  substitute fixed-line networks in areas where no infrastructure currently exists.

Wireless CPU®:
  A term that refers to Wavecoms main products as Wireless (Central Processing
  Unit), it is a protected name in France.

Wireless Microprocessor®:
  A term referring to Wavecoms newest line of Wireless CPU® product
  that is the smallest yet most powerful of Wavecoms line taking the shape
  and design of a microprocessor. This is a protected name in France.

WISMO: Wavecom trademark
  abbreviation standing for Wireless Standard Module. These highly
  integrated modules contain all of the hardware and software required to make
  wireless devices that work on the GSM/GPRS and CDMA standards.

G-2WAVECOM
  - Annual Report Form 20-F 2007

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PART
  III

|                                    | Page | 
|----------------------------------- | ---- | 
|Item
      17: Financial Statements | 91   | 
|Item
      18: Financial Statements | 91   | 
|Item
      19: Exhibits             | 92   | 
|Exhibit
      Index                 | 92   | 

90WAVECOM
  - Annual Report Form 20-F 2007

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Item
  17:  Financial Statements

Not applicable.

Item
  18:  Financial Statements

The following financial
  statements are filed as part of this annual report:

|Report
      of Independent Registered Public Accounting Firm                                                              | F-2 | 
|-------------------------------------------------------------------------------------------------------------------------- | --- | 
|Consolidated
      Statements of Operations for the years ended December 31, 2005, 2006 and
      2007                     | F-3 | 
|Consolidated
      Balance Sheets at December 31, 2005, 2006 and 2007                                                      | F-4 | 
|Consolidated
      Statement of Changes in shareholders Equity for the years ended December
      31, 2005, 2006 and 2007 | F-5 | 
|Consolidated
      Statements of Cash Flows for the years ended December 31, 2005, 2006 and
      2007                     | F-6 | 
|Notes
      to Consolidated Financial Statements                                                                           | F-7 | 

WAVECOM
  - Annual Report Form 20-F 200791

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Item
  19:  Exhibits

|1.1 | Memorandum and articles
      of association (incorporated by reference of the Exhibits  to the
      Registrants Registration Statement on Form F1, File No. 333-11764).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1.2* | Statuts
      (By-Laws) of the Registrant, updated as of February 7, 2006 (English Translation).
|---- | ------------------------------------------------------------------------------------------------

|2.1 | Form of Deposit Agreement
      among the Registrant, The Bank of New York, as Depositary, and the Holders
      of American Depositary Shares issued hereunder (incorporated by reference
      to Exhibit 4.1 to the Registrants Registration Statement on Form F1, File
      No. 333-10372).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.2 | Form of American Depositary
      Receipt (incorporated by reference to Exhibit 4.2 to the Registrants Registration
      Statement on Form F1, File No. 333-10372).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1** | GSM Essential Properties
      Cross License Agreement, dated January 6, 1999, between the Registrant and
      Motorola, Inc. (incorporated by reference to Exhibit 10.3 to the Registrants
      Registration Statement on Form F1, File No. 333-10372).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2** | GSM/DCS 1800/1900 Patent
      License Agreement between Wavecom S.A. and Koninklijke Philips Electronics
      N.V., dated October 9, 2001 (incorporated by reference to Exhibit 4.6 to
      the Registrants Annual Report on Form 20F, filed with the Commission on
      June 28, 2002).
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3** | Agreement relating
      to a cross-license of essential GSM patents between Wavecom S.A. and Siemens
      Aktiengesellschaft, effective as of October 31, 2001 (incorporated by reference
      to Exhibit 4.7 to the Registrants Annual Report on Form 20F, filed with
      the Commission on June 28, 2002).
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.4** | GSM patent non assertion
      agreement with NEC Corporation, effective November 19, 2002 (incorporated
      by reference to Exhibit 4.8 to the Registrants Annual Report on Form 20F,
      filed with the Commission on May 21, 2003).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.5** | Patent License Agreement
      with Thomson Licensing S.A. and Alcatel S.A., effective January 1, 2003
      (incorporated by reference to Exhibit 4.9 to the Registrants Annual Report
      on Form 20F, filed with the Commission on May 21, 2003).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.6** | Agreement relating
      to a cross-license of essential GSM patents between Wavecom S.A. and Nokia
      Corporation, effective as of December 31, 2003. (incorporated by reference
      to Exhibit 4.8 to the Registrants Annual Report on Form 20-F, filed with
      the Commission on April 16, 2003).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.7** | GSM patent non-assertion
      agreement with Mitsubishi Electronics Corporation, effective June 30, 2004
      (incorporated by reference to Exhibit 4.10 to the Registrants Annual
      Report on Form 20-F, filed with the Commission April 7, 2005).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.8** | Global patent cross-license
      agreement for GSM, GPRS and EDGE with Telefonaktiebolaget LM Ericsson effective
      July 1, 2004 (incorporated by reference to Exhibit 4.10 to the Registrants
      Annual Report on Form 20-F, filed with the Commission April 7, 2005).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.9+ | Asset Purchase Agreement
      dated as of March 17, 2006 between Sony Ericsson Mobile Communications A.B.
      and Wavecom S.A. (incorporated by reference to Exhibit 4.11 to the Registrants
      Annual Report on Form 20-F, filed with the Commission April 11, 2007).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.10*+ | Cooperation
      Agreement dated as of November 29, 2007 between Wavecom S.A. and Solectron.
|------ | ---------------------------------------------------------------------------------------------

|4.11*+ | Supply
      Chain Agreement dated as of November 29, 2007 between Wavecom S.A. and Solectron.
|------ | ----------------------------------------------------------------------------------------------

|4.12*+ | Global
      manufacturing agreement dated as of November 29, 2007 between Wavecom S.A.
      and Solectron.
|------ | ------------------------------------------------------------------------------------------------------------

|8* | List
      of subsidiaries of the Registrant.
|-- | ---------------------------------------------

|10* | Consent
      of Ernst & Young Audit.
|--- | -------------------------------------

|12.1* | Certification
      of the Chief Executive Officer.
|----- | ---------------------------------------------------

|12.2* | Certification
      of Chief Financial Officer.
|----- | -----------------------------------------------

|13.1* | Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|----- | --------------------------------------------------------------------------------------

|13.2* | Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|----- | --------------------------------------------------------------------------------------

---

|* | Filed herewith.
|- | ---------------

|** | The Registrant has
      received confidential treatment of portions of this agreement.
|-- | ---------------------------------------------------------------------------------------

|+ | The Registrant has
      requested confidential treatment of portions of this agreement, which portions
      have been filed separately with the Commission.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

92WAVECOM
  - Annual Report Form 20-F 2007

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SIGNATURE

Wavecom S.A. hereby confirms
  that it meets all of the requirements for filing on Form 20-F and that it has
  duly caused and authorized the undersigned to sign this annual report on its
  behalf.

|                                             | WAVECOM
        S.A.                                                                                                   | 
|-------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | 
|Date:
      April 8, 2008
      WAVECOM S.A. | By:  /s/
        CHANTAL BOURGEAT
        Chantal
        Bourgeat
                    Chief
        Financial Officer | 

WAVECOM
  - Annual Report Form 20-F 200793

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INDEX
  TO CONSOLIDATED FINANCIAL STATEMENTS

| |                                                                                                                            | Page | 
| | -------------------------------------------------------------------------------------------------------------------------- | ---- | 
| | Report
      of Independent Registered Public Accounting Firm                                                              | F-2  | 
| |                                                                                                                            |      | 
| | Consolidated
      Statements of Income for the years ended December 31, 2005, 2006 and 2007                               | F-3  | 
| |                                                                                                                            |      | 
| | Consolidated
      Balance Sheets at December 31, 2005, 2006 and 2007                                                      | F-4  | 
| |                                                                                                                            |      | 
| | Consolidated
      Statement of Changes in Shareholders Equity for the years ended December
      31, 2005, 2006 and 2007 | F-5  | 
| |                                                                                                                            |      | 
| | Consolidated
      Statements of Cash Flows for the years ended December 31, 2005, 2006 and
      2007                     | F-6  | 
| |                                                                                                                            |      | 
| | Notes
      to Consolidated Financial Statements                                                                           | F-7  | 
| |                                                                                                                            |      | 

| | Note
      1:  | Nature
        of business and summary of significant accounting policies | F-7  | 
| | -------------- | ------------------------------------------------------------------------- | ---- | 
| | Note
      2:  | Inventory                                                                 | F-14 | 
| | Note
      3:  | Prepaid
        expenses and other current assets                         | F-14 | 
| | Note
      4:  | Financial
        instruments and Derivatives                             | F-15 | 
| | Note
      5:  | Intangible
        and tangible assets, net                               | F-17 | 
| | Note
      6:  | Business
        combinations                                             | F-18 | 
| | Note
      7:  | Capital
        lease obligations                                         | F-20 | 
| | Note
      8:  | Other
        accrued expenses                                            | F-20 | 
| | Note
      9:  | Convertible
        bonds                                                 | F-23 | 
| | Note
      10: | Other
        liabilities                                                 | F-24 | 
| | Note
      11: | Shareholders
        equity                                              | F-24 | 
| | Note
      12: | Stock-based
        compensation                                          | F-28 | 
| | Note
      13: | Impairment
        of intangible assets                                   | F-29 | 
| | Note
      14: | Interest
        income (expenses)                                        | F-29 | 
| | Note
      15: | Income
        taxes                                                      | F-29 | 
| | Note
      16: | Net
        income per share                                              | F-32 | 
| | Note
      17: | Commitments
        and contingencies                                     | F-32 | 
| | Note
      18: | Employees                                                                 | F-33 | 
| | Note
      19: | Compensation
        of executive officers                                | F-33 | 
| | Note
      20: | Segments                                                                  | F-33 | 
| | Note
      21: | Subsequent
        events (unaudited)                                     | F-35 | 

WAVECOM
  - Annual Report Form 20-F 2007F-1

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Report
  of Independent Registered Public Accounting Firm

|The
      Board of Directors and Shareholders of Wavecom S.A.
|-------------------------------------------------------------

We have audited the accompanying
  consolidated balance sheets of Wavecom S.A. as of December 31, 2005, 2006 and
  2007, and the related consolidated statements of income, shareholders
  equity and cash flows for each of the three years in the period ended December
  31, 2007. These consolidated financial statements are the responsibility of
  Wavecoms management. Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits.

We conducted our audits
  in accordance with the standards of the Public Company Accounting Oversight
  Board (United States). Those standards require that we plan and perform the
  audit to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audits provide a reasonable basis for our
  opinion.

In our opinion, the consolidated
  financial statements referred to above present fairly, in all material respects,
  the consolidated financial position of Wavecom, S.A. at December 31, 2005, 2006
  and 2007, and the consolidated results of its operations and its cash flows
  for each of the three years in the period ended December 31, 2007, in conformity
  with U.S. generally accepted accounting principles.

As discussed in Note 1 to
  the consolidated financial statements, Wavecom S.A. adopted, as of January 1,
  2006 the provisions of Statement of Financial Accounting Standards No 123(R),
  Share-Based Payment.

We also have audited, in
  accordance with the standards of the Public Company Accounting Oversight Board
  (United States), Wavecoms internal control over financial reporting as
  of December 31, 2007, based on criteria established in Internal Control-Integrated
  Framework issued by the Committee of Sponsoring Organizations of the Treadway
  Commission and our report dated April 7, 2008 expressed an unqualified opinion
  thereon.

ERNST & YOUNG Audit
  Represented by Jean-Yves Jégourel
  Paris-La Défense, France
  April 7, 2008

F-2WAVECOM
  - Annual Report Form 20-F 2007

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Consolidated
  statements of income

|                                                      |     
|----------------------------------------------------- | ----
|                                                      |     
|(in
      thousands, except share and per share data) | Note
|                                                      |     
|Revenues:                                             |     
|Product
      sales                                   |     
|Service
      revenue                                 |     
|Licensing
      revenue                               |     
|                                                      |     
|Total
      revenues                                  | 1   
|                                                      |     
|Cost
      of revenues:                               |     
|Cost of
      goods sold                              |     
|Cost of
      services                                |     
|                                                      |     
|Total
      cost of revenues                          |     
|                                                      |     
|Gross
      profit                                    |     
|                                                      |     
|Operating
      expenses:                             |     
|Research
      and development                        |     
|Sales
      and marketing                             |     
|General
      and administrative                      |     
|Acquired
      in process technology                  | 6   
|Restructuring
      costs                             |     
|                                                      |     
|Total
      operating expenses                        |     
|                                                      |     
|Operating
      income                                |     
|                                                      |     
|Other
      income (expenses):                        |     
|Interest
      expense                                | 14  
|Interest
      income                                 | 14  
|Foreign
      exchange gain (loss)                    |     
|                                                      |     
|Income
      before income taxes                      |     
|                                                      |     
|Income
      tax expense (benefit)                    | 15  
|                                                      |     
|Net income                                            |     
|                                                      |     
|Basic
      net income per share                      | 16  
|                                                      |     
|Diluted
      net income per share                    | 16  
|                                                      |     
|Number
      of shares used for computing:            |     
|
      basic                                         |     
|
      diluted                                       |     
|                                                      |     

See notes
  to financial statements

WAVECOM
  - Annual Report Form 20-F 2007F-3

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Consolidated
  balance sheets

|                                                                                                                                                                                            |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                            |     
|(in
      thousands, except share data)                                                                                                                                                     | Note
|                                                                                                                                                                                            |     
|ASSETS                                                                                                                                                                                      |     
|Current
      assets:                                                                                                                                                                       |     
|Cash and
      cash equivalents                                                                                                                                                             |     
|Marketable
      securities                                                                                                                                                                 | 1   
|Accounts
      receivable (less allowance for doubtful accounts of 3,628, 3,346
      and 2,631 at December 31, 2005, 2006 and 2007, respectively)                                       |     
|Inventory                                                                                                                                                                                   | 2   
|Value
      added tax recoverable                                                                                                                                                           |     
|Prepaid
      expenses and other current assets                                                                                                                                             | 3   
|Deferred
      tax assets                                                                                                                                                                   | 14  
|                                                                                                                                                                                            |     
|Total
      current assets                                                                                                                                                                  |     
|                                                                                                                                                                                            |     
|Long-term
      investments                                                                                                                                                                 |     
|Other
      assets and Interests in associates                                                                                                                                              |     
|Research
      tax credit                                                                                                                                                                   |     
|Income
      tax receivable                                                                                                                                                                 | 14  
|Intangible
      and tangible assets, net                                                                                                                                                   | 5   
|Goodwill                                                                                                                                                                                    | 5,6 
|                                                                                                                                                                                            |     
|Total
      assets                                                                                                                                                                          |     
|                                                                                                                                                                                            |     
|LIABILITIES
      AND SHAREHOLDERS EQUITY                                                                                                                                                  |     
|Current
      liabilities:                                                                                                                                                                  |     
|Accounts
      payable                                                                                                                                                                      |     
|Accrued
      compensation                                                                                                                                                                  |     
|Current
      portion of other accrued expenses                                                                                                                                             | 8   
|Current
      portion of convertible bonds                                                                                                                                                  | 9   
|Current
      portion of capitalized lease obligations                                                                                                                                      | 7   
|Deferred
      revenue and advances received from customers                                                                                                                                 |     
|Other
      liabilities                                                                                                                                                                     | 10  
|                                                                                                                                                                                            |     
|Total
      current liabilities                                                                                                                                                             |     
|                                                                                                                                                                                            |     
|Long-term
      liabilities:                                                                                                                                                                |     
|Long-term
      portion of other accrued expenses                                                                                                                                           | 8   
|Long-term
      portion of convertible bonds                                                                                                                                                | 9   
|Long-term
      portion of capitalized lease obligations                                                                                                                                    | 7   
|Other
      long-term liabilities                                                                                                                                                           |     
|                                                                                                                                                                                            |     
|Total
      long-term liabilities                                                                                                                                                           |     
|                                                                                                                                                                                            |     
|Shareholders
      equity:                                                                                                                                                                 |     
|Shares,
      1 nominal value, 15,796,591 shares authorized, issued and outstanding
      at december 31, 2007 (15,554,153 at December 21, 2006 and 15,531,813 at
      December 21, 2005) |     
|Additional
      paid in capital                                                                                                                                                            |     
|Treasury
      stock at cost (544,322 shares at December 31, 2007 and 156,345 shares at
      December 31, 2006 and 2005)                                                                   |     
|Accumulated
      deficit                                                                                                                                                                   |     
|Accumulated
      other comprehensive loss                                                                                                                                                  | 1   
|                                                                                                                                                                                            |     
|Total
      shareholders equity                                                                                                                                                            | 11  
|                                                                                                                                                                                            |     
|Total
      liabilities and shareholders equity                                                                                                                                            |     
|                                                                                                                                                                                            |     

See notes
  to financial statements

F-4WAVECOM
  - Annual Report Form 20-F 2007

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Consolidated
  statement of changes in shareholders equity

|                                                                                                                                                                        |           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|                                                                                                                                                                        |           
|(in
      thousands, except share and per share data)                                                                                                                   |           
|Ordinary
      shares                                                                                                                                                   |           
|Shares                                                                                                                                                                  |           
|                                                                                                                                                                        |           
|Balance
      at January 1, 2005                                                                                                                                        | 15,506,290
|                                                                                                                                                                        |           
|Issuance
      of shares in connection with the exercise of 9,128 founders warrants
      at an exercise price of 4.57                                                | 9,128     
|Issuance
      of shares in connection with the exercise of 9,729 options at an exercise
      price of 8.07                                                           | 9,729     
|Issuance
      of shares in connection with the exercise of 6,666 warrants to members of
      the board of directors at an exercise price of 7.04                     | 6,666     
|Comprehensive
      income:                                                                                                                                             |           
|Net income                                                                                                                                                              |           
|Unrealized
      gain on financial instruments                                                                                                                          |           
|Foreign
      currency translation                                                                                                                                      |           
|                                                                                                                                                                        |           
|Total
      comprehensive income                                                                                                                                        |           
|                                                                                                                                                                        |           
|Balance
      at December 31, 2005                                                                                                                                      | 15,531,813
|                                                                                                                                                                        |           
|Issuance
      of shares in connection with the exercise of 3,436 founders warrants
      and 1,523 options at an exercise price of 4.19                              | 4,959     
|Issuance
      of shares in connection with the exercise of 6,929 founders warrants
      and 3,786 options at an exercise price of 8.07                              | 10,715    
|Issuance
      of shares in connection with the exercise of 6,666 warrants to members of
      the board of directors at an exercise price of 5.68                     | 6,666     
|Comprehensive
      income:                                                                                                                                             |           
|Net income                                                                                                                                                              |           
|Unrealized
      gain on financial instruments                                                                                                                          |           
|Stock-based
      employee compensation                                                                                                                                 |           
|Foreign
      currency translation                                                                                                                                      |           
|                                                                                                                                                                        |           
|Total
      comprehensive income                                                                                                                                        |           
|                                                                                                                                                                        |           
|Balance
      at December 31, 2006                                                                                                                                      | 15,554,153
|                                                                                                                                                                        |           
|Purchase
      of treasury stock                                                                                                                                        |           
|Issuance
      of shares in connection with the exercise of 22,054 founders warrants
      and 4,061 options at an exercise price of 4.19                             | 26,115    
|Issuance
      of shares in connection with the exercise of 4,300 options at an exercise
      price of 4.57                                                           | 4,300     
|Issuance
      of shares in connection with the exercise of 6,666 warrants to members of
      the board of directors at an exercise price of 6.55                     | 6,666     
|Issuance
      of shares in connection with the exercise of 20,000 warrants to members
      of the board of directors at an exercise price of 7,04                    | 20,000    
|Issuance
      of shares in connection with the exercise of 56,225 founders warrants
      and 30,966 options at an exercise price of 8.07                            | 87,191    
|Issuance
      of shares in connection with the exercise of 13,916 founders warrants
      at an exercise price of 9.62                                               | 13,916    
|Issuance
      of shares in connection with the exercise of 8,957 options and 3,333 warrants
      to members of the board of directors at an exercise price of 10.62  | 12,290    
|Issuance
      of shares in connection with the exercise of 6,500 options and 40,000 warrants
      to members of the board of directors at an exercise price of 11.18 | 46,500    
|Issuance
      of shares in connection with the exercise of 15,914 founders warrants
      and 9,546 options at an exercise price of 11.40                            | 25,460    
|Comprehensive
      income:                                                                                                                                             |           
|Net income                                                                                                                                                              |           
|Unrealized
      gain on financial instruments                                                                                                                          |           
|Stock-based
      employee compensation                                                                                                                                 |           
|Foreign
      currency translation                                                                                                                                      |           
|                                                                                                                                                                        |           
|Total
      comprehensive income                                                                                                                                        |           
|                                                                                                                                                                        |           
|Balance
      at December 31, 2007                                                                                                                                      | 15,796,591
|                                                                                                                                                                        |           

See notes
  to financial statements

WAVECOM
  - Annual Report Form 20-F 2007F-5

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Consolidated
  statements of cash flows

|                                                                                                            |                               
|----------------------------------------------------------------------------------------------------------- | ------------------------------
|                                                                                                            | Years
      ended December 31,
|(in
      thousands)                                                                                        | 2005                          
|                                                                                                            |                               
|Cash
      flows from operating activities:                                                                 |                               
|Net income                                                                                                  | 8,694                        
|Adjustments
      to reconcile net income (loss) to net cash provided (used) by operating
      activities: |                               
|Amortization
      and impairment of intangible and tangible assets                                         | 6,136                         
|Amortization
      of debt issue costs                                                                      |                              
|Share-based
      compensation                                                                              |                              
|Loss (gain)
      on sales and retirement of tangible assets                                                | 1,204                         
|Acquisition
      of marketable securities, net                                                             |                              
|Deferred
      tax assets                                                                                   |                              
|Changes
      in operating assets and liabilities:                                                          |                               
|Accounts
      receivable                                                                                   | 1,186                         
|Inventory                                                                                                   | 10,284                        
|Value
      added tax recoverable                                                                           | 261                           
|Prepaid
      expenses and other current assets                                                             | 2,948                         
|Recoverable
      taxes                                                                                     | (79                           
|Accounts
      payable and other accrued expenses                                                           | (28,237                       
|Accrued
      compensation                                                                                  | (1,232                        
|Interets
      on loan                                                                                      |                              
|Deferred
      revenue and advances received from customers                                                 | 1,651                         
|Other
      payables                                                                                        | 23                            
|Other                                                                                                       | 61                            
|                                                                                                            |                               
|Net cash
      provided (used) by operating activities                                                      | 2,900                         
|                                                                                                            |                               
|Cash
      flows from investing activities:                                                                 |                               
|Disposal
      (acquisition) of long-term investments                                                       | 5,432                         
|Purchases
      of intangible and tangible assets                                                           | (1,688                        
|Acquisition
      of certain assets, net of cash acquired(1)(2)                                             |                              
|Proceeds
      from sale of intangible and tangible assets                                                  | 959                           
|Purchase
      of interets in associates                                                                    |                              
|                                                                                                            |                               
|Net cash
      provided (used) by investing activities                                                      | 4,703                         
|                                                                                                            |                               
|Cash
      flows from financing activities:                                                                 |                               
|Proceeds
      from convertible bonds (net of debt issue costs of 2,501)                                   |                              
|Principal
      payments on capital lease obligations                                                       | (447                          
|Purchase
      of treasury stock                                                                            |                              
|Proceeds
      from exercise of stock options and founders warrants                                        | 167                           
|                                                                                                            |                               
|Net cash
      used in financing activities                                                                 | (280                          
|                                                                                                            |                               
|Effect
      of exchange rate changes on cash and cash equivalents                                          | 22                            
|                                                                                                            |                               
|Net increase
      (decrease) in cash and cash equivalents                                                  | 7,345                         
|Cash and
      cash equivalents, beginning of year                                                          | 53,318                        
|                                                                                                            |                               
|Cash
      and cash equivalents, end of year                                                                | 60,663                       
|                                                                                                            |                               
|Supplemental
      disclosures of cash flow information:                                                    |                               
|Cash paid
      during the year for:                                                                        |                               
|Interest                                                                                                    | 207                           
|Income
      tax                                                                                            | 452                           
|Cash received
      during the year for:                                                                    |                               
|Interest                                                                                                    | 1,226                         
|                                                                                                            |                               

|(1) | Including 1,852
      of cash included in the acquired assets from M2M division of Sony Ericsson
      and 61 from assets acquired from Nexgen.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Including 16,454
      of intangible and tangible assets.
|--- | ----------------------------------------------------------

See notes
  to financial statements

F-6WAVECOM
  - Annual Report Form 20-F 2007

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Notes
  to Consolidated Financial Statements

(actual amounts in euros
  unless otherwise stated)

|Note
      1. | Nature
      of business and summary of significant accounting policies
|------------- | -----------------------------------------------------------------------

|Nature
      of business
|------------------------

Wavecom S.A. (Wavecom
  or the Company) is organized as a société anonyme,
  or limited liability company, under the laws of the Republic of France. Wavecom
  was founded in 1993 and is publicly traded on NYSE Euronext (Eurolist), Paris
  in France and on the Nasdaq National Market in the U.S. Wavecom is a global
  technology company that develops, markets and sells wireless platforms that
  can be embedded into virtually any machine or device, thus enabling it to transmit
  and receive both data and voice communications via wireless cellular network
  operators. Its highly sophisticated wireless platforms, are sold as wireless
  central processing units (Wireless CPU®s - including both smart modems and
  modules) and integrate all of the necessary software and hardware on miniature
  circuit board platforms that can be used for a wide variety of applications.
  Wavecom also provide its customers with development tools and engineering support
  services to facilitate the design and operation of innovative wireless products.

|Basis
      of presentation
|---------------------------

The accompanying financial
  statements were prepared in accordance with accounting principles generally
  accepted in the United States. The preparation of financial statements requires
  management to make estimates and assumptions that affect the amounts reported
  in the financial statements and accompanying footnotes. Actual results could
  differ from those estimates.

The consolidated financial
  statements include the accounts of Wavecom S.A., its wholly-owned subsidiaries
  Wavecom, Inc. (a Delaware corporation) and Wavecom Asia Pacific Ltd. (a Hong
  Kong corporation), both of which commenced operations in 1998; Wavecom Korea
  Co. Ltd and Wavecom Deutschland GmbH, branches transformed into subsidiaries
  in 2002; Wavecom Northern Europe Ltd (an English company) created in 2003; NexGen
  Software S.A.S., consolidated from its acquisition date, on June 2, 2006. Arguin
  Communications Inc. (wholly-owned at year-ended December 31, 2004) was dissolved
  for a loss of 12,000 in December 2005 and is no longer included in the
  consolidation scope since that date. Since July 9, 2007, Wavecom has an investment
  of 9.5% in Sunlink Wavecom Limited, representing an investment of 13,000
  as of December 31, 2007, which is accounted for using the equity method as Wavecom
  exercises significant influence. Wavecom Korea Co. Ltd was still a dormant company
  in 2007.

Inter-company accounts and
  transactions have been eliminated in consolidation.

Certain prior year amounts
  have been reclassified to conform to current year presentation.

|Foreign
      currency
|----------------------

The reporting currency of
  Wavecom, for all years presented, is the euro ().

The functional currency
  of each subsidiary is its local currency. In accordance with Statement of Financial
  Accounting Standards No. 52, all accounts in the financial statements are translated
  into euro from the functional currency at exchange rates as follows: (1) asset
  and liability accounts at year-end rates, (2) income statement accounts at average
  exchange rates for the year, and (3) shareholders equity accounts at historical
  exchange rates. Foreign currency translation gains and losses are recorded as
  a separate component of shareholders equity.

Realized and unrealized
  foreign currency transaction gains and losses are reflected in net income (loss).

|Revenue
      recognition
|-------------------------

The Companys revenue
  is derived from three primary sources (by order of importance): sales of products
  composed of wireless standard modules and wireless modems, revenue from technical
  support and other services, and license fees.

Product sales - Revenue
  from product sales is recognized when (i) persuasive evidence of an arrangement
  exists, (ii) the product is delivered (at the time the products are shipped
  and risk of loss has been passed to the buyer), (iii) the price is fixed or
  determinable and (iv) collection of the price is reasonably assured. If any
  of these criteria are not met, recognition of revenues is deferred until such
  time as all of the criteria are met. The Companys product sales are not
  sold with a right of return unless our product is defective and covered by warranty.
  The Companys sales typically do not include multiple product and/or service
  elements. Although the products sold have embedded software, Wavecom believes
  that software is incidental to the products they provide. In addition, the Company
  does not provide post-contract customer support or maintenance for the software
  (either free of charge or for a fee) embedded in the products. The contracts
  do not provide for upgrading or updating any Wavecom embedded software.

Service revenue - Revenue
  from services is recognized when the services are performed, there is no material
  continuing performance and collection is reasonably assured. Revenue on service
  arrangements contingent on final customer

WAVECOM
  - Annual Report Form 20-F 2007F-7

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acceptance is deferred until
  such acceptance has been received, and all other criteria for revenue recognition
  have been met. The costs associated with these arrangements are recognized as
  incurred.

Licensing revenue - Revenue
  from licensing fees is recognized pursuant to the requirement of Statement of
  Position (SOP) 97-2, Software Revenue Recognition, as
  amended. Revenue from sales of licenses to customers is recognized when (i)
  the Company enters into a legally binding arrangement with customers, (ii) when
  the Company delivers the software (assuming no significant obligations exist),
  (iii) collection of the resulting is probable and (iv) the amount of fees is
  fixed and determinable. If any of these criteria are not met, revenue recognition
  is deferred until such time as all of the criteria are met. If the contract
  for a licensing agreement includes a clause allowing for free updates if and
  when available and if vendor specific objective evidence of fair value for this
  post-contract customer support can not be determined at the time the contract
  is signed, the revenue must be recognized over of life of the contract.

|Costs
      of goods sold
|-------------------------

Costs of goods/services
  sold include all direct and indirect cost incurred with the sale including shipping
  and handling cost.

|Shipping
      and handling costs
|---------------------------------

Shipping and handling costs
  incurred by the Company are reflected in cost of goods sold.

Shipping costs billed to
  customers are immaterial.

|Research
      and development
|------------------------------

Wavecom charges all research
  and development costs to expense as incurred.

|Advertising
      costs
|-----------------------

The Company expenses advertising
  costs as incurred. Advertising expenses totaled 282,000, 462,000
  and 229,000 in the years ended 2007, 2006 and 2005, respectively.

|Net
      income per share
|--------------------------

Net income per share amounts
  are computed using the weighted average number of shares outstanding.

Basic earnings per share
  excludes the dilutive effects of options and warrants, and reflects only the
  actual ordinary shares outstanding. In 2007, 2006 and 2005, diluted earnings
  per share includes the effects of dilutive options, warrants, free shares and
  convertible bonds as if they had been exercised. Diluted earnings per share
  also includes the effects of the dilutive bonds if they had been converted using
  the if-converted method.

|Concentration
      of risk
|---------------------------

Financial instruments that
  potentially subject Wavecom to concentrations of credit risk consist principally
  of cash and cash equivalents, marketable securities, trade receivables and financial
  instruments (i.e. derivatives).

Wavecom has cash investment
  policies that limit investments to short-term low-risk instruments. Wavecoms
  cash is held principally in euros and U.S. dollars and concentrated primarily
  in seven major banks and financial institutes in Paris and one major bank in
  Hong Kong. At December 31, 2007, Wavecom had marketable securities composed
  of short term money market funds (monetary Société dInvestissement
  à Capital Variable or SICAV and Fonds Commun de Placements
  or FCP ) totaling 134.6 million. At December 31, 2006 and
  2005, Wavecom had no cash or cash equivalents invested in short-term money-market
  accounts bearing variable rates of interest. Net interests income generated
  by the marketable securities for the years ended December 31, 2007, 2006 and
  2005 amounted to 3,035,000, 1,338,000 and 1,225,000, respectively.

In addition, at December
  31, 2007, Wavecom had 3.7 million of pledged securities invested in short
  term money market funds (monetary SICAV) classified as long-term investments
  in the accompanying Consolidated Balance Sheets (3.6 million as of December
  31 2006 and 2005).

The underlying investments
  of monetary SICAV and monetary FCP are comprised of low risk investments with
  a short-term fixed maturity date such as government bonds, certificates of deposit
  and Euro commercial paper. The Companys marketable securities are held
  principally in euros and primarily among reputable financial institution such
  as Natixis, HSBC, Groupama, UBS, and BNP Paribas.

The criteria for selection
  of such marketable securities are, by order of importance:

| | Safety of capital
|- | -----------------

| | Liquidity
|- | ---------

| | Yield
|- | -----

F-8WAVECOM
  - Annual Report Form 20-F 2007

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| | Wavecom
      is ensuring the safety and preservation of its invested funds by:
| | -------------------------------------------------------------------------------

| | Investing in only the
      lowest risk type of securities
|- | ----------------------------------------------------------

| | Pre-qualifying all
      financial institutions with whom Wavecom will do business
|- | ----------------------------------------------------------------------------------

| | Diversifying the portfolio
      to minimize the adverse effects of the failure of any one issuer or banker.
|- | ------------------------------------------------------------------------------------------------------------

| | Routinely monitoring
      the portfolio to anticipate and respond appropriately to a significant reduction
      in credit rating, and to follow-up the anticipation on interest rate (i.e.
      using appropriate benchmark in case of change on yield curve).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Wavecom had no variable
  rate debt at December 31, 2007.

By December 31, 2006, most
  of the production of the business acquired in 2006 was being transferred to
  Wavecoms historical sub contractor, but certain products of the acquired
  activity were still being produced by two sub-contactors located in Mexico.
  The total transfer was finalized by December 31, 2007. As a result, all the
  production of Wavecom is now sub contracted to one plant located in China. Wavecom
  believes that alternate sub-contractors can be identified if the current manufacturer
  is unable to meet Wavecoms requirements.

Wavecom sells its products
  to customers in a variety of industries principally in Europe, Asia/Pacific,
  North America and Africa. Wavecom performs ongoing credit evaluations of its
  customers and maintains allowances for potential credit losses. To date, such
  losses have been within managements expectations. Wavecom generally requires
  no collateral, but does request advance payments or letters of credit in order
  to secure payment in certain circumstances.

A summary of the activity
  in the allowance for doubtful accounts is as follows:

|                              |                        
|----------------------------- | -----------------------
|Year
      ended December 31, |                        
|(in
       thousands)        | Beginning
      balance
|                              |                        
|2005                          | 3,233                  
|2006                          | 3,628                  
|2007                          | 3,346                  
|                              |                        

For the year ended December
  31, 2005, certain customers represented revenues in excess of 10% of Wavecoms
  total consolidated revenues. For the years ended December 31, 2006 and 2007,
  no customer exceeded 10% of consolidated revenues. The amounts of annual revenues,
  and corresponding outstanding accounts receivable at December 31, from these
  customers were as follows:

|                                                 |         
|------------------------------------------------ | --------
|                                                 | 2005    
|(in
       thousands)                           | Revenues
|                                                 |         
|Customer
      A (EMEA and Asia-Pacific regions) | 14,115 
|Customer
      B (Asia-Pacific region)           | 7,350   
|Customer
      C (Asia-Pacific region)           | 2,250   
|                                                 |         

Sales to customers by geographic
  region are summarized as follows:

|                               |                               
|------------------------------ | ------------------------------
|                               | Years
      ended December 31,
|(in
       thousands)         | 2005                          
|                               |                               
|China                          | 23,205                       
|South
      Korea              | 3,097                         
|Rest of
      Asia             | 23,160                        
|France                         | 22,134                        
|Rest of
      Europe           | 43,566                        
|United
      States of America | 11,319                        
|Rest of
      Americas         | 280                           
|Rest of
      world            | 2,471                         
|                               |                               
|                               | 129,232                      
|                               |                               

WAVECOM
  - Annual Report Form 20-F 2007F-9

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Geographic region is determined
  by the customers invoice address and may not indicate the final destination
  of product usage.

Substantially most of the
  Companys long-lived assets are located in France and at our main contract
  manufacturers production facilities in China.

|Cash
      and Cash equivalents
|-------------------------------

Wavecom considers all highly
  liquid investments with an original maturity of three months or less and money
  market mutual funds, to be cash equivalents. At December 31, 2007, Wavecom had
  134,610,000 invested in money market accounts, including SICAV and FCPs,
  with no fixed maturity, earning interest at short-term variable rates. Such
  accounts did not meet the Cash equivalents criteria and were recorded as Marketable
  Securities.

At December 31, 2005 and
  2006, Wavecom did not have amounts invested in money market accounts.

|Inventory
|---------

Inventories are valued at
  the lower of actual cost or market. Costs include:

| | latest costs of purchase
      (including taxes, transport, and handling) net of trade discounts received,
|- | ----------------------------------------------------------------------------------------------------------

| | costs of manufacturing
      (including fixed and variable manufacturing overheads) updated at each reporting
      date.
|- | -------------------------------------------------------------------------------------------------------------------------

|Value
      added tax recoverable
|---------------------------------

Value added tax recoverable
  consists of value added tax paid by Wavecom to vendors and suppliers located
  in the European Union and recoverable from the tax authorities. Value added
  tax recoverable is collected on a monthly basis. As of December 31, 2005 and
  2007, the Company had value added tax credits, immediately recoverable, of 120,000
  and 89,000, respectively. As of December 31, 2006, the Company had no
  value added tax credits recoverable.

|Long-term
      investments
|---------------------------

A bank guarantee was issued
  in favor of the owners of leased office space, in order to secure annual lease
  payments. This guarantee was secured by pledges of investments composed only
  of monetary SICAVs. The outstanding guarantee expires on July 15, 2008 but will
  be renewed annually until the end of the lease in July 2011. These investments
  have been classified as long-term investments in the consolidated balance sheet
  and amounted to 3,585,000, 3,639,000 and 3,731,000 at December
  31, 2005, 2006 and 2007, respectively.

|Other
      assets and Interests in associates
|----------------------------------------------

Other assets primarily include
  security deposits for leased properties and borrowing costs which are amortized
  using a straight-line method over the period from the date of issuance until
  the date of possible early redemption date at option of the Company.

Interests in associates
  represent the share of the results of the company Sunlink Wavecom, amounted
  to 15,000 as of December 31, 2007.

|Intangible
      and tangible assets, net
|-----------------------------------------

Intangible and tangible
  assets are stated at cost less accumulated amortization or depreciation. Leases
  are capitalized in accordance with Financial Accounting Standards Board Statement
  No 13 Accounting for leases (SFAS 13). Depreciation and amortization
  is computed using the straight-line method over the following estimated useful
  lives:

|                                                |                                      
|----------------------------------------------- | -------------------------------------
|Acquired
      intangible assets                | 11
      months to 4 years           
|Laboratory
      equipment                      | 1-5
      years                      
|Computer
      equipment and purchased software | 1-5
      years or contractual term  
|Furniture
      and office equipment            | 3-5
      years                      
|Leasehold
      improvements                    | 10
      years, or lease term if less
|                                                |                                      

Amortization of capitalized
  leased equipment is included in depreciation expense.

Wavecom reviews for the
  impairment of long-lived assets whenever events or changes in circumstances
  indicate that the carrying amount of an asset may not be recoverable. If factors
  indicate that a long-lived asset, or group of assets should be evaluated for
  possible impairment, the Company uses an estimate of the undiscounted net cash
  flow over the remaining life of the long-lived assets, or group of assets in
  measuring whether the carrying value is recoverable. If an asset, or group of
  assets are not recoverable, an impairment loss would be measured by reducing
  the carrying value to fair value, absent quoted market prices, based on a discounted
  cash flow analysis.

F-10WAVECOM
  - Annual Report Form 20-F 2007

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The fair values of intangible
  assets acquired through the business combinations as disclosed in Note 6, were
  determined using an independent appraisal using facts available at the acquisition
  date. The preliminary allocation of the assets acquired and liabilities assumed
  were included in the consolidated financial statements as of December 31, 2006.
  The purchase price allocation was finalized during the year ended December 31,
  2007. No subsequent revisions have modified the preliminary purchase price allocation
  presented in the consolidated financial statements as of December 31, 2006.

|Goodwill
|--------

Goodwill represents the
  excess of purchase price over the fair value of identifiable net assets of business
  acquired. Goodwill is not amortized but instead tested at least annually for
  impairment or more frequently when events or changes in circumstances indicate
  that the asset might be impaired by comparing the carrying value to the fair
  value of the reporting unit to which it is assigned.

Under Statement of Financial
  Accounting Standards No 142, goodwill and other intangible assets,
  the impairment test is performed in two steps. The first step compares the fair
  value of the reporting unit with its carrying amount, including goodwill. If
  the fair value of the reporting unit is less than its carrying amount, a second
  step is performed to measure the amount of impairment loss. The second step
  allocates the fair value of the reporting unit to the Companys tangible
  and intangible assets and liabilities. This derives an implied fair value for
  the reporting units goodwill. If the carrying amount of the reporting
  units goodwill exceeds the implied fair value of that goodwill, an impairment
  loss is recognized equal to that excess. For the purpose of any impairment test,
  the Company relies upon projections of future undiscounted cash flows and takes
  into account assumptions regarding the evolution of the market and its ability
  to successfully develop and commercialize its products.

Changes in market conditions
  could have a major impact on the valuation of these assets and could result
  in additional impairment losses.

|Accrued
      royalties
|-----------------------

Wavecoms products
  are designed to conform to certain wireless industry standards. Certain essential
  technologies are patented by third-parties and Wavecom uses these essential
  technologies. Some of the patents Wavecom uses are under licensing agreements
  for which Wavecom pays royalties. Other technologies Wavecom uses are not with
  license rights. Wavecom has concluded licensing agreements with eight patent
  holders for technologies deemed to be essential for Wavecoms products.
  The last two contracts were signed in 2004. Wavecom may enter into license arrangements
  with other patent holders. Wavecoms management considers that it is probable
  that these other patent holders may claim that the technology covered by their
  patents is essential to Wavecoms products and, as such, may request royalty
  payments for the use of such technology.

Wavecom negotiates individual
  license agreements with each GSM/GPRS essential patent holder declared at ETSI
  (the European Telecommunications Standards Institute). The negotiations are
  based on the number of families of patents declared at ETSI by each individual
  essential patent holder compared to the total number of essential patents declared
  and listed at ETSI. Royalties calculated by Wavecom correspond to a certain
  percentage of the net selling price of Wavecoms products.

The total percentage of
  royalties related to essential patents as a part of net selling price has been
  evaluated using the history of the essential patents license agreements the
  Company has already signed (8 agreements have been signed since early 1999)
  and external analyses. Because Wavecom does not currently have licensing agreements
  for all of the essential patents declared and listed at ETSI, the Company accrues
  royalties based on its estimate of the amounts or percentages which it believes
  will probably be due under future essential patents licensing agreements they
  will enter into. Such estimates are based on terms which are not materially
  different from already signed agreements.

The ultimate royalty paid
  by the Company may differ from the amounts accrued.

Royalty costs are recorded
  as cost of goods sold in the Companys Statement of Income. Accrued royalties
  are included in Other accrued expenses in the Companys consolidated balance
  sheet.

|Warranty
      accrual
|----------------------

The Company offers a warranty
  for all its products. The specific terms and conditions of those warranties
  vary depending upon the product sold and the customer. Wavecom accrues for the
  costs of providing warranty service at the time the warranty period begins which
  is typically when title passes. The provision is computed based on a statistical
  rate for specific warranty issues and actual experience.

Factors that affect Wavecoms
  estimate of warranty liability include the number of units sold, historical
  and anticipated rates of warranty claims, and cost per claim. Wavecom periodically
  assesses the adequacy of its recorded warranty liabilities and adjusts the amounts
  as necessary. The warranty accrual is included in Other accrued expenses in
  the Companys consolidated balance sheet.

WAVECOM
  - Annual Report Form 20-F 2007F-11

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|Convertible
      bonds
|-----------------------

The Companys convertible
  bonds which are convertible into a fixed number of shares (subject to certain
  adjustments) of common stock of the Company at a specified price at the option
  of the holder and which were sold at a price or have a value at issuance not
  in excess of the face amount are accounted for as one unit and recorded as a
  liability at its carrying value in its entirety in accordance with Accounting
  Principles Board Opinion (APB) 14: Accounting for Convertible Debt
  and Debt Issued with Stock Purchase Warrants, Emerging Issues Task Force (EITF)
  00-19: Accounting for Derivative Financial Instruments Indexed to, and Potentially
  Settled in, a Companys Own Stock, and SFAS 133: Accounting for
  Derivative Instruments and Hedging Activities. Borrowing costs are capitalized
  (classified as other assets) and are amortized using a straight-line
  method over the period from the date of issuance until the date of possible
  early redemption date at option of the company.

The fair value of bonds
  is estimated using the listed market value of the bonds (NYSE Euronext convertible
  code FR0010497131).

|Other
      long-term liabilities
|---------------------------------

As of December 31, 2005,
  2006 and 2007, other long term liabilities include the long term portion of
  a lease incentive payment received from an office landlord which is being amortized
  over the lease term, expiring July, 2011, as a reduction to operating expense.
  Amortization of the lease incentive payment for the years ended December 31
  2005, 2006 and 2007 was 637,000 242,000 and 242,000 respectively.
  The decrease from the year ended December 31, 2005 to the year ended December
  31, 2006 was the result of vacating several floors in 2005.

|Income
      taxes
|------------------

In accordance with Statement
  of Financial Accounting Standards No. 109 Accounting for Income Tax (SFAS
  109), the liability method is used in accounting for income taxes.
  Under this method, deferred tax assets and liabilities are determined based
  on the difference between financial reported amount and the related tax bases
  of assets and liabilities and are measured using the enacted tax rates and laws
  that will be in effect when the differences are expected to reverse. Deferred
  tax assets are recognized for all unused tax losses to the extent that it is
  probable that taxable profit will be available against which the losses can
  be utilized. Significant Management judgment is required to determine the amount
  of deferred tax assets that can be recognized, based upon the likely timing
  and level of future tax planning strategies. A valuation allowance is established
  if, based on the weight of available evidence, it is more likely than not that
  some portion or all of the deferred tax asset will not be realized.

On January 1, 2007 the Company
  adopted FASB Interpretation No. 48 (FIN 48), Accounting for
  Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109,
  which clarifies the accounting for uncertainty in income tax positions. Under
  FIN 48, the impact of an uncertain income tax position on the income tax return
  must be recognized at the largest amount that is more-likely-than-not to be
  sustained upon audit by the relevant taxing authority. An uncertain income tax
  position will not be recognized if it has less than a 50% likelihood of being
  sustained. Additionally, FIN 48 provides guidance on derecognition, classification,
  interest and penalties, accounting in interim periods, disclosure and transition.

There were no unrecognized
  tax benefits as of the date of adoption January 1, 2007. As a result of the
  implementation of FIN 48, the Company did not recognize an increase in the liability
  for unrecognized tax benefits. There are no unrecognized tax benefits included
  in the balance sheet that would, if recognized, affect the effective tax rate.
  The Companys practice is to recognize interest and/or penalties related
  to income tax matters in general and administration expense. The Company had
  an accrual for interest or penalties on the Companys balance sheets at
  December 31, 2007 for an amount of 260,000 and has recognized this amount
  in the consolidated statement of income for the year ended December 31, 2007.

|Employee
      stock options and warrants and free shares
|---------------------------------------------------------

Under U.S. GAAP, effective
  January 1, 2006, the Group adopted SFAS No. 123 (Revised 2004) Accounting
  for Share - Based Payment (SFAS 123(R)), which superseded
  Accounting Principles Board Opinion No. 25 Accounting for Stock Issued
  to its Employees (APB 25). SFAS 123(R) requires the recognition
  of stock-based compensation expenses for all share-based payment awards based
  on their fair value. In March 2005, the Securities and Exchange Commission issued
  Staff Accounting Bulletin No. 107 (SAB 107) relating to SFAS 123(R).
  The Group applied the provisions of SAB 107, which relate to share-based payments,
  in its adoption of SFAS 123(R).

Prior to the adoption of
  SFAS 123(R), the Group accounted for share-based payment arrangements under
  APB 25 which requires that compensation expense be recorded only when the market
  price of the stock at the measurement date exceeds the amount the employee is
  required to pay upon exercise of the option.

Under SFAS 123(R), the Group
  elected the Modified Prospective Application transition method.
  Under this method, stock-based compensation expense recognized in the year ended
  December 31, 2006 included (1) compensation expense for all share-based payments
  granted prior to, but not yet vested as of January 1, 2006, based on the grant-date
  fair values estimated in accordance with the original provisions of SFAS 123
  and determined using a binomial valuation model and (2)

F-12WAVECOM
  - Annual Report Form 20-F 2007

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compensation expense for
  all share-based payments granted subsequently to January 1, 2006, based on the
  grant date fair value estimated in accordance with the original provisions of
  SFAS 123 and determined with the same valuation model.

The main assumptions of
  this model are the following:

| | stock prices, at the
      grant date;
|- | --------------------------------------

| | exercise price, established
      the day when the equity instrument is granted by the Board of directors
      or the shareholders general meeting and is at least equal to highest
      of the two following values: (i) the average of the twenty closing prices
      on Eurolist preceding the date of grant and (ii) the closing price on Eurolist
      of the day before the date of grant;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | risk-free interest
      rate, given in reference to the rate of French treasury bonds corresponding
      to the expected life of each equity instrument;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | expected volatility,
      based on mean reversion method applied to the series of historical daily
      profitabilities of the four years before the grant date, to be consistent
      with the four year vesting period;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | expected dividend yield
      of zero, based on the fact that the Company has never paid dividends and
      has no present intention to pay dividends.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------

Wavecom recorded 2,090,000
  and 4,810,000 of stock compensation expense in its Consolidated Statement
  of Income for the years ended December 31, 2006 and 2007, respectively. Stock
  compensation expense is further described in Note 12.

SFAS 123R requires the presentation
  of pro forma information for the comparative period prior to the adoption
  as if Wavecom had accounted for all our employee stock options under the fair
  value method of the original SFAS 123. The following table illustrates the effect
  on net income (loss) and net income (loss) per share if the Company had applied
  the fair value recognition provisions of SFAS 123 to stock-based employee compensation
  for the year ended December 31, 2005.

|                                                                                                                                                        |                             
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------
|                                                                                                                                                        | Year
      ended December 31
|(In
       thousands, except per share data)                                                                                                           | 2005                        
|                                                                                                                                                        |                             
|Net income,
      as reported                                                                                                                           | 8,694                      
|Add: Stock-based
      employee compensation expense included in reported net income, net of related
      tax effects                                  |                            
|Deduct:
      Total stock-based employee compensation expense determined under fair value
      based method for all awards, net of related tax effects | (4,649                      
|                                                                                                                                                        |                             
|Pro
      forma net income                                                                                                                              | 4,045                      
|                                                                                                                                                        |                             
|Earnings
      per share:                                                                                                                               |                             
|Basic
       as reported                                                                                                                               | 0.57                       
|Basic
       pro forma                                                                                                                                 | 0.26                       
|Diluted
       as reported                                                                                                                             | 0.56                       
|Diluted
       pro forma                                                                                                                               | 0.26                       
|Weighted
      average assumptions:                                                                                                                     |                             
|Expected
      holding period (years)                                                                                                                   | 5                           
|Risk-free
      interest rate                                                                                                                           | 3.34                        
|Volatility                                                                                                                                              | 66                          
|Expected
      dividend yield                                                                                                                           | N/A                         
|                                                                                                                                                        |                             

The pro forma information
  compensation cost may not be representative of that to be expected in future
  years.

|Accumulated
      other comprehensive loss
|------------------------------------------

Accumulated other comprehensive
  loss consists of (i) foreign currency translation adjustments for (1,770,000),
  (1,944,000), and (1,247,000) at December 31, 2007, 2006 and 2005,
  respectively and (ii) unrealized gains and (losses) on cash flow hedges under
  SFAS 133 of (113,000), and 29,000 at December 31, 2006 and 2005,
  respectively. Wavecom had no outstanding cash flow hedges at December 31, 2007.

WAVECOM
  - Annual Report Form 20-F 2007F-13

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|Recent
      accounting pronouncements
|--------------------------------------

On September 15, 2006, the
  FASB issued Statement of Financial Accounting Standards No. 157 Fair
  Value Measurements (SFAS 157). SFAS No. 157 defines fair
  value, establishes a framework for measuring fair value and expands disclosures
  about fair value measurements. SFAS 157 is effective as of the beginning of
  the first fiscal year beginning after November 15, 2007. The Company does not
  anticipate that the adoption of this statement will have a material effect on
  the Companys financial condition and results of operations.

On February 15, 2007, the
  FASB issued Statement of Financial Accounting Standards No. 159 The
  Fair Value Option for Financial Assets and Financial Liabilities: Including
  an amendment of FASB Statement No. 115 (SFAS 159). SFAS
  No. 159 permits all entities to elect to measure many financial instruments
  and certain other items at fair value with changes in fair value reported in
  earnings. SFAS 159 is effective as of the beginning of the first fiscal year
  that begins after November 15, 2007, with earlier adoption permitted. The Company
  does not anticipate that the adoption of this statement will have a material
  effect on the Companys financial condition and results of operations.

In December 2007, the FASB
  issued FASB Statement No. 141 (Revised 2007) Business Combinations
  (SFAS 141(R)), which requires the Company to record fair value estimates
  of contingent consideration and certain other potential liabilities during the
  original purchase price allocation, expense acquisition costs as incurred and
  does not permit certain restructuring activities previously allowed under Emerging
  Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting.
  SFAS 141(R) applies prospectively to business combinations for which the acquisition
  date is on or after the beginning of the first annual reporting period beginning
  on or after December 15, 2008, except for the presentation and disclosure requirements,
  which shall be applied retrospectively for all periods presented. The Company
  will adopt this standard at the beginning of the Companys fiscal year
  ending November 30, 2009 for all prospective business acquisitions. The Company
  has not determined the effect that the adoption of SFAS No. 141(R) will have
  on the financial results of the Company.

In December 2007, the FASB
  issued FASB Statement No. 160 Noncontrolling Interests in Consolidated
  Financial Statements - an amendment of ARB No. 51 (SFAS 160),
  which causes noncontrolling interests in subsidiaries to be included in the
  equity section of the balance sheet. SFAS 160 applies prospectively to business
  combinations for which the acquisition date is on or after the beginning of
  the first annual reporting period beginning on or after December 15, 2008, except
  for the presentation and disclosure requirements, which shall be applied retrospectively
  for all periods presented. The Company will adopt this standard at the beginning
  of the Companys fiscal year ending November 30, 2009 for all prospective
  business acquisitions. The Company has not determined the effect that the adoption
  of SFAS 160 will have on the financial results of the Company.

|Note
      2. | Inventory
|------------- | ---------

Components of net inventory
  are:

|                                                                   |                   
|------------------------------------------------------------------ | ------------------
|                                                                   | December
      31,
|(in
       thousands)                                             | 2005              
|                                                                   |                   
|Finished
      goods                                               | 3,672            
|Components
      and finished goods held by contract manufacturers | 2,776             
|                                                                   |                   
|                                                                   | 6,448            
|                                                                   |                   

Wavecom bears the risk of
  ownership of inventory components held by its contract manufacturers to be used
  for its products, although these components continue to be legally owned by
  its contract manufacturers.

|Note 3. | Prepaid expenses
      and other current assets
|------- | -----------------------------------------------

Prepaid expenses and other
  current assets include:

|                                                      |                   
|----------------------------------------------------- | ------------------
|                                                      | December
      31,
|(in
       thousands)                                | 2005              
|                                                      |                   
|Suppliers
      credit note accruals                 | 6                
|Prepaid
      expenses                                | 2,589             
|Other
      current assets                            | 146               
|                                                      |                   
|Total
      prepaid expenses and other current assets | 2,741            
|                                                      |                   

F-14WAVECOM
  - Annual Report Form 20-F 2007

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Credit notes from suppliers
  are accrued at the end of each period, based on amounts which have been negotiated
  and accepted by Wavecoms contract manufacturers.

Prepaid expenses consist
  primarily of prepaid rent and other operating expenses.

|Note 4. | Financial instruments
      and Derivatives
|------- | -------------------------------------------

Wavecom uses financial instruments,
  including derivatives such as foreign currency forward and options contracts,
  to reduce the foreign exchange risk on cash flows from firm and highly probable
  commitments denominated in U.S. dollar. The Company complies with the Financial
  Accounting Standards Board issued Statement No 133, Accounting for Derivative
  Instruments and Hedging Activities,as amended (SFAS 133). SFAS
  133 requires the recognition of all financial instruments including derivatives
  at fair value. Changes in fair value are recorded in current earnings or other
  comprehensive income, depending on whether the derivative is designated as a
  hedge, its effectiveness as a hedge, and the type of hedge transaction. Any
  change in the fair value of the derivatives deemed ineffective as a hedge is
  immediately recognized in earnings.

The following tables present
  fair values of derivative financial instruments at December 31, 2005, 2006 and
  2007:

|                                                                                                               |                           
|-------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                                                               | At
      December 31, 2005
|                                                                                                               | Notional
      Amount     
|                                                                                                               |                           
|                                                                                                               | (in
      $ thousands)    
|Fair Value
      hedges of payables invoiced in U.S. dollars and to be paid within 2 months:                   |                           
|Forward
      and option contracts buying U.S. dollars against euros                                           | 1,000                     
|Cash Flow
      hedges of net receivables transactions to be invoiced and paid within 1
      year:            |                           
|Forward
      and option contracts buying U.S. dollars against euros                                           | 4,500                     
|                                                                                                               |                           
|Total                                                                                                          | $5,500                    
|                                                                                                               |                           
|Fair Value
      hedges of net receivables invoiced in U.S. dollars and to be collected within
      2 months: |                           
|Forward
      and option contracts selling U.S. dollars against euros                                          | $2,100                    
|                                                                                                               |                           
|Total                                                                                                          | $2,100                    
|                                                                                                               |                           

|                                                                                                               |                           
|-------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                                                               | At
      December 31, 2006
|                                                                                                               | Notional
      Amount     
|                                                                                                               |                           
|                                                                                                               | (in
      $ thousands)    
|Cash Flow
      hedges of net receivables transactions to be invoiced and paid within 1
      year:            |                           
|Forward
      and option contracts buying U.S. dollars against euros                                           | 2,500                     
|                                                                                                               |                           
|Total                                                                                                          | $2,500                    
|                                                                                                               |                           
|Fair Value
      hedges of net receivables invoiced in U.S. dollars and to be collected within
      2 months: |                           
|Forward
      and option contracts selling U.S. dollars against euros                                          | 2,000                     
|                                                                                                               |                           
|Total                                                                                                          | $2,000                    
|                                                                                                               |                           

|                                                                                                               |                           
|-------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                                                               | At
      December 31, 2007
|                                                                                                               | Notional
      Amount     
|                                                                                                               |                           
|                                                                                                               | (in
      $ thousands)    
|Fair Value
      hedges of net receivables invoiced in U.S. dollars and to be collected within
      2 months: |                           
|Forward
      and option contracts selling U.S. dollars against euros                                          | 8,600                     
|                                                                                                               |                           
|Total                                                                                                          | $8,600                    
|                                                                                                               |                           

WAVECOM
  - Annual Report Form 20-F 2007F-15

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At December 31, 2007, the
  Company had no outstanding cash flow hedges.

The net foreign currency
  exposure, presented in the table below, relates to Companys assets and
  liabilities as of December 31, 2005, 2006 and 2007, which are denominated in
  foreign currencies and then converted into euros.

|                                                                   |                           
|------------------------------------------------------------------ | --------------------------
|                                                                   | At
      December 31, 2005
|(in
       thousands)                                             | USD                       
|                                                                   |                           
|Assets                                                             | 17,164                   
|Hedging
      of assets in foreign currencies (balance sheet)      | 1,780                     
|                                                                   |                           
|Net
      assets after hedging                                     | 15,384                   
|                                                                   |                           
|Liabilities                                                        | 7,364                    
|Hedging
      of liabilities in foreign currencies (balance sheet) | 848                       
|                                                                   |                           
|Net
      liabilities after hedging                                | 6,516                    
|                                                                   |                           

The fair value of foreign
  currency related derivatives are included in the balance sheet in other
  assets and other liabilities. The earnings impact of cash
  flow hedges relating to forecasted transactions is reported in foreign exchange
  gain or loss. Realized and unrealized gains and losses on these instruments
  deemed effective for hedge accounting are deferred in accumulated other comprehensive
  income until the underlying transaction is recognized in earnings or the instruments
  are designated as hedges.

During the year ended December
  31, 2007, the Company recorded a gain of 85,000 (loss of (113,000)
  for the year ended December 31, 2006) in other comprehensive income related
  to the effective portion of the change in fair value of its cash flow hedges.

During the year ended December
  31, 2006, the Company recognized a net loss of 15,000 for the year ended
  December 31, 2006 (net gain of 6,000 for the year ended December 31, 2005)
  related to the ineffective portion of its hedging instruments and a net loss
  of 26,000 for the year ended December 31, 2006 (net gain of 8,000
  for the year ended December 31, 2005) related to the portion of the hedging
  instrument the Company excluded from its assessment of hedging effectiveness.
  During the year ended December 31, 2007, the Company has no ineffective portion
  of its hedging instruments and no portion of the hedging instrument the Company
  excluded from its assessment of hedging effectiveness.

The derivatives have maturity
  dates of less than 12 months. Management believes counterparty risk on financial
  instruments is minimal since the Company deals with major banks and financial
  institutions.

The use of different estimations,
  methodologies and assumptions could have a material effect on the estimated
  fair value amounts. The methodologies are as follows:

| | Cash, Cash equivalents,
      marketable securities, accounts receivable, accounts payable, other receivable
      and accrued liabilities: due to the short-term nature of these balances,
      carrying amounts approximate fair value. Due to the sale and repurchase
      of marketable securities on December 31, 2007 , their fair value equals
      the market value
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Long-term investments:
      such investments are composed of monetary SICAV with traded market prices.
      Due to the sale and repurchase of these SICAV on December 31, 2007, 2006
      and 2005, their fair value equals the market value. Their fair values amounted
      to 3,731,000, 3,639,000, and 3,585,000 at December 31,
      2007, 2006 and 2005, respectively.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Foreign exchange
      forward and option contracts: the fair values of foreign exchange forward
      and option contracts were calculated using the market price that Wavecom
      would pay or receive to settle the related agreements, by reference to published
      exchange rates.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Convertible bonds: the fair value of bonds is estimated using the lasted market value
      at balance date. See Note 9
|- | -----------------------------------------------------------------------------------------------------------------------

F-16WAVECOM
  - Annual Report Form 20-F 2007

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|Note 5. | Intangible and tangible
      assets, net
|------- | -----------------------------------------

Intangible and tangible
  assets, net include:

|                                          |                           
|----------------------------------------- | --------------------------
|                                          | December
      31,        
|                                          | 2005                      
|                                          |                           
|(in
       thousands)                    | Net
      book
      value
|                                          |                           
|Intangible
      assets :                 |                           
|Customer
      relationships              |                         
|Non-compete
      agreement               |                          
|Technology                                |                          
|NexGen
      protocol stack               |                          
|                                          |                           
|Subtotal
      acquired intangible assets |                          
|                                          |                           
|Tangible
      assets :                   |                           
|Laboratory
      and testing equipment    | 2,240                     
|Computer
      equipment and software     | 1,112                     
|Furniture
      and office equipment      | 345                       
|Leasehold
      improvements              | 1,555                     
|Other                                     | 984                       
|                                          |                           
|Total                                     | 6,236                    
|                                          |                           

Change in the net book value
  of intangible and tangible assets are as follows :

|                                                                    |                   
|------------------------------------------------------------------- | ------------------
|                                                                    | December
      31,
|(in
       thousands)                                              | 2005              
|                                                                    |                   
|Beginning
      of year balance, net of depreciation & amortization | 12,617           
|Acquisitions                                                        | 1,776             
|Tangible
      and intangible assets acquired(1)                    |                  
|Sales
      and retirements                                         | (11,646           
|Depreciation
      and impairment expenses                          | (6,136            
|Accumulated
      depreciation on sales and retirements             | 9,500             
|Translation
      adjustment                                        | 125               
|                                                                    |                   
|End of
      year balance, net of depreciation & amortization       | 6,236            
|                                                                    |                   

|(1) | assets related to Sony
      Ericsson and NexGen acquisitions
|--- | -------------------------------------------------------------

Based on the current amount
  of intangible assets, the estimated amortization expense for each of the succeeding
  5 years is as follows:

| | 2008: 3,221,000
|- | ----------------

| | 2009: 2,699,000
|- | ----------------

| | 2010: 813,000
|- | --------------

| | 2011: 0
|- | --------

| | 2012: 0.
|- | ---------

In 2005, an amount of 372,000
  was recorded as impairment expenses related to certain production equipment
  used for making products whose production was shut down earlier than initially
  planned. The impairment charge was based on the expected future cash flows to
  be generated from these assets and the related residual values on disposal.
  (See Note 13). The related expenses were recorded as cost of goods sold in the
  consolidated statements of income. No further impairment expenses were recorded
  in 2006 and 2007.

WAVECOM
  - Annual Report Form 20-F 2007F-17

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The cost of equipment purchased
  under capital leases included in intangible and tangible assets at December
  31, 2005, 2006 and 2007 totaled 6,531,000, 5,719,000 and 5,529,000,
  respectively. Accumulated amortization of this equipment totaled 6,164,000,
  5,131,000 and 5,028,000 at December 31, 2005, 2006 and 2007, respectively.

As of December 31, 2007,
  Wavecom identified no other events or changes in circumstances which indicate
  that the carrying amount of an asset may not be recoverable.

|Note 6. | Business combinations
|------- | ---------------------

|Sony
      Ericsson M2M Communications
|--------------------------------------

On April 26, 2006, Wavecom
  acquired certain assets of Sony Ericssons M2M Communications business
  unit which specializes in automotive and industrial wireless solutions, in a
  cash transaction.

The preliminary allocation
  of the assets acquired and liabilities assumed were included in the consolidated
  financial statements as of December 31, 2006. At April 26, 2007, no subsequent
  revisions were required that have modified the preliminary purchase price allocation
  presented in the consolidated financial statements as of December 31, 2006.

The final purchase price
  for Sony Ericssons M2M Communications business unit was 31,206,000.

The Sony Ericssons
  M2M Communications business unit acquisition is accounted for under the purchase
  method of accounting. Accordingly, the results of Sony Ericssons M2M Communications
  business unit are included in the consolidated financial statements from the
  acquisition date, April 30, 2006.

The Company has allocated
  the purchase price to the Sony Ericsson assets acquired and liabilities assumed
  at fair value, using of an independent appraisal. The excess of fair value of
  the net tangible and intangible assets acquired compared to the amount paid
  has been reflected as goodwill in accordance with SFAS. 141. The following table
  summarizes the fair values of the assets acquired and liabilities assumed at
  the date of acquisition:

|                                          |                 
|----------------------------------------- | ----------------
|(in
       thousands)                    | Fair
      value
|                                          |                 
|Acquired
      assets:                    |                 
|Inventory                                 | 872             
|Accounts
      receivable                 | 10,055          
|Cash and
      cash equivalents           | 1,852           
|                                          |                 
|Total
      current assets                | 12,779          
|                                          |                 
|Intangible
      assets, net              | 13,300          
|Tangible
      assets, net                | 1,604           
|                                          |                 
|Total
      assets                        | 27,683          
|                                          |                 
|Assumed
      liabilities:                |                 
|Accounts
      payable                    | 5,959           
|                                          |                 
|Total
      current liabilities           | 5,959           
|                                          |                 
|Total
      liabilities                   | 5,959           
|                                          |                 
|Net
      assets acquired                 | 21,724          
|In-process
      research and development | 1,450           
|Residual
      Goodwill                   | 8
      032     
|                                          |                 
|Total
      consideration                 | 31,206          
|                                          |                 

F-18WAVECOM
  - Annual Report Form 20-F 2007

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The components of the intangible
  assets listed in the above table and valued in connection with the acquisition
  consisted of:

|                             |   
|---------------------------- | --
|(in
       thousands)       |   
|                             |   
|Customer
      relationships | (a
|Non-compete
      agreement  | (b
|Technology                   | (c
|                             |   

|(a) | The customer relationships
      were measured using the excess earnings method on the basis of varying revenue
      assumptions (including probability of renewals at the expiration of contracts),
      new customer recruitment costs and a discount rate of 14%.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The non-compete agreement,
      conclude for a period of three years, was valued by modeling the impact
      on the present value (discount rate of 12% used) of future free cash flows
      of the acquired activity if Sony Ericsson were to compete.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | The acquiring technology
      was measured using the relief from royalty method, on the basis of a royalty
      rate of 4% and a discount rate of 11%.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

1,450,000 of the purchase
  price represents the estimated fair value of projects that, as of acquisition
  date, had not reached technology feasibility and had no alternative use. Accordingly,
  this amount was immediately expensed in the consolidated statement of income
  during the second quarter of 2006 and is included as Acquired in process technology
  in the consolidated statement of income for the year ended December 31, 2006.

The Company believes that
  the goodwill recognized above is attributed to the expected benefits of this
  acquisition in terms of synergies and geographic exposure.

The following unaudited
  pro forma financial information assumes that the acquisition of Sony
  Ericssons M2M Communications business unit was completed as of January
  1, 2005.

|                                                 |                           
|------------------------------------------------ | --------------------------
|                                                 | Year
      end December 31
|(in
      euros thousands except for share data) | 2005                      
|                                                 |                           
|Revenues                                         | 196,204                   
|Gross
      profit                               | 73,643                    
|Income
      before income taxes                 | (4,841                    
|Net income                                       | (5,236                    
|Net income
      per share Basis                 | (0.34                     
|Net income
      per share Diluted               | (0.33                     
|                                                 |                           

These financials data have
  been prepared using Wavecom historical financials statements for the years ended
  December 31, 2006 and 2005 and available unaudited financial information on
  the Sony Ericssons M2M Communications business unit for the year ended
  December 31, 2005 and for the four month period ended April 30, 2006. These
  historical financial statements have been adjusted to reflect Wavecom specific
  costs structure in term of cost of good sold and operating expenses. In addition,
  amortization of acquired intangible assets has been computed as if the acquisition
  took place on January 1st, 2005. Interest income has also been adjusted to reflect
  a cash payment on January 1st, 2005.

The unaudited pro forma
  information is presented for information purposes and does not purport to be
  indicative of results that would have been achieved if the acquisition had taken
  place at the beginning of the year ended December 31, 2005 presented nor does
  it purport to be indicative of the results that will be achieved in the future.

The acquired business has
  been fully integrated into the historical business of Wavecom subsequent to
  the acquisition and is not considered as a separate business or activity. It
  is therefore not possible to present separately the results generated by this
  acquired business for the period after the acquisition date.

|NexGen
      Software
|---------------------

On June 15, 2006, Wavecom
  acquired 100% of the outstanding stock of NexGen Software S.A.S for cash consideration
  of 400,000. This acquisition brought to Wavecom its internally-developed
  TCP/IP (internet) suite of protocol stacks and internet software expertise along
  with a worldwide customer base of over 100 clients. The Company believes that
  this acquisition eliminated its reliance on external, third-party, TCP/IP vendors
  and further strengthened its already extensive software expertise while adding
  IPs (Internet Protocols) developed exclusively by NexGen Software specifically
  for machine-to-machine communication.

The transaction has been
  accounted for under the purchase method of accounting. Accordingly, assets acquired
  and liabilities assumed were measured at fair value on the acquisition date
  in application of the purchase method.

The net assets and liabilities
  acquired, on the basis of the situation as of May 31, 2006, amounted to 215,000.
  The intangible asset identified in connection with the acquisition and valued
  at 100,000 consists of an internally-developed

WAVECOM
  - Annual Report Form 20-F 2007F-19

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TCP/IP (internet) suite
  of protocol stacks, which is depreciated on its estimated useful life of 2 years
  from June 1, 2006. The excess of purchase price over the fair value of net assets
  acquired and identifiable intangibles, or residual goodwill, amounted to 85,000.

|Note 7. | Capital lease obligations
|------- | -------------------------

Future minimum lease payments
  under capitalized lease obligations for the years ending December 31 were as
  follows (in  thousands):

|                                                  |     
|------------------------------------------------- | ----
|2008                                              | 229
|2009                                              | 202 
|2010                                              | 124 
|2011                                              | 25  
|2012                                              | 8   
|                                                  |     
|Total
      minimum lease payments                | 588 
|Less amount
      representing interest           | (41 
|                                                  |     
|Present
      value of net minimum lease payments | 547 
|Less current
      portion                        | 207 
|                                                  |     
|Long-term
      portion                           | 340
|                                                  |     

|Note 8. | Other accrued expenses
|------- | ----------------------

Other accrued expenses consist
  principally of accruals for royalties, warranty costs and various other tax
  and general expense.

|Long
      term portion
|-----------------------

|                        |                   
|----------------------- | ------------------
|                        | December
      31,
|(in
       thousands)  | 2005              
|                        |                   
|Accrued
      royalties | 16,230           
|Warranty
      accrual  | 94                
|Other
      accruals    | 451               
|                        |                   
|Total                   | 16,775           
|                        |                   

|Short
      term portion
|------------------------

|                                           |                   
|------------------------------------------ | ------------------
|                                           | December
      31,
|(in
       thousands)                     | 2005              
|                                           |                   
|Warranty
      accrual                     | 1,457            
|Headcount
      restructuring cost accrual | 357               
|Other
      accruals                       | 2,017             
|                                           |                   
|Total                                      | 3,831            
|                                           |                   

F-20WAVECOM
  - Annual Report Form 20-F 2007

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Other accrued expenses changes
  for the years ended December 31, 2005, 2006 and 2007 were the following:

|                                                             |                                             
|------------------------------------------------------------ | --------------------------------------------
|(in
       thousands)                                       | Balance
      at
      January 1,
      2005
|                                                             |                                             
|Accrued
      royalties                                      | 14,831                                     
|Warranty
      accrual                                       | 2,014                                       
|Headcount
      restructuring cost accrual                   | 8,132                                       
|Other
      accruals :                                       |                                             
|Costs
      associated with an anticipated exiting of leases | 151                                         
|Customers
      claims                                       | 1,915                                       
|Tax audit                                                    | 2,583                                       
|Third-party
      litigations                                | 590                                         
|Other                                                        | 2,001                                       
|                                                             |                                             
|Subtotal
      other accruals                                | 7,240                                       
|                                                             |                                             
|Total                                                        | 32,217                                     
|                                                             |                                             

|                                                             |                                             
|------------------------------------------------------------ | --------------------------------------------
|(in
       thousands)                                       | Balance
      at
      January 1,
      2006
|                                                             |                                             
|Accrued
      royalties                                      | 16,230                                     
|Warranty
      accrual                                       | 1,551                                       
|Headcount
      restructuring cost accrual                   | 357                                         
|Other
      accruals :                                       |                                             
|Costs
      associated with an anticipated exiting of leases | 41                                          
|Customers
      claims                                       | 703                                         
|Third-party
      litigations                                | 590                                         
|Other                                                        | 1,134                                       
|                                                             |                                             
|Subtotal
      other accruals                                | 2,468                                       
|                                                             |                                             
|Total                                                        | 20,606                                     
|                                                             |                                             

WAVECOM
  - Annual Report Form 20-F 2007F-21

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|                                           |                                             
|------------------------------------------ | --------------------------------------------
|(in
       thousands)                     | Balance
      at
      January 1,
      2007
|                                           |                                             
|Accrued
      royalties                    | 15,378                                     
|Warranty
      accrual                     | 1,163                                       
|Headcount
      restructuring cost accrual | 150                                         
|Other
      accruals :                     |                                             
|Customers
      claims                     | 1,209                                       
|Tax audit                                  |                                            
|Third-party
      litigations              | 524                                         
|Other                                      | 1,246                                       
|                                           |                                             
|Subtotal
      other accruals              | 2,979                                       
|                                           |                                             
|Total                                      | 19,670                                     
|                                           |                                             

Accrued royalties represents
  an accrual for amounts due to patents holders for technology used in the Companys
  products. Following an in-depth analysis in 2005, the Company changed in 2006
  its estimation of the amounts that may be due to patent holders with which no
  formal arrangement exists. This change resulted in a positive impact to both
  operating results and net income of 2,900,000 and to net earnings per
  share of 0.13 in 2006, which is the net effect of a reversal for prior
  estimates no longer deemed necessary having expired under the new methodology
  offset by changes in the accrual rate on current revenues that may be subject
  to future royalties for future agreements not yet entered into. Actual royalties
  paid for use of technology for which the Company has no formal agreement could
  differ from the estimates.

Headcount restructuring
  costs accruals are related to the restructuring plans in 2004 following our
  decision to exit the handset business and include headcount reduction costs
  and associated charges, severance and outplacement.

Cost associated with an
  anticipated exit of leases are linked to expenses related to offices that we
  vacated in 2003 before the end of the lease.

Customer claims represent
  accruals other then warranty that might be required, on a case by case basis,
  to cover the impact of specific technical issues which are not covered in our
  standard warranty. Such issues, mainly include defects in a specific hardware
  component and software corruption. These defects may lead to a decision by Wavecom
  to offer a customer compensation for part of the customers costs arising
  from these issues, following a specific, documented and justified claim.

In July 2004, Wavecom received
  a notification from the Tax authorities related to fiscal years 1999 to 2001.
  This provision mainly covers amounts claimed by the Tax authorities for business
  taxes for fiscal years 2001 and 2002. These expenses were settled during the
  year 2005.

During 2007, Wavecom received
  a notification from the Tax authorities related to fiscal years 2004 and 2005.
  A provision of 78,000 covering business tax for fiscal year 2005 has been
  recorded. The tax authorities contested also a portion of Wavecoms research
  and development tax credits for the years 2004 and 2005 for a total of 95,000,
  no provision was recorded for this later claim as this tax adjustment was based
  on the same conclusion of the previous tax audit that the Company are currently
  contesting. The amount of tax audit also included penalty costs notified in
  2007 related the Research tax credit adjustment (see Note 10).

Other accruals are mainly
  related to business tax and social taxes, and to retirement accruals associated
  with French statutory pension plans.

Wavecom contributes to a
  defined benefit pension plan for personnel in France in accordance with French
  law by contributing amounts based on salaries to the relevant government agencies.
  There exists no actuarial liability in connection with these plans. French law
  also requires payment of a lump sum retirement indemnity to employees based
  upon years of service and compensation at retirement. Benefits do not vest prior
  to retirement. Wavecoms obligation, for the years ended December 31, 2005,
  2006 and 2007, amounted to 451,000, 507,000 and 710,000, respectively,
  and is calculated as the present value of estimated future benefits to be paid.
  No employee retired during the last three years.

F-22WAVECOM
  - Annual Report Form 20-F 2007

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The main assumptions used
  in the calculation are the following:

|                                |                      
|------------------------------- | ---------------------
|                                | 2005                 
|                                |                      
|Rate of
      discount          | 4                    
|Salary
      increase           | 2.5                  
|Retirement
      age            | 60
      and 65 years
|Weighted
      average turnover | 5.83                 
|                                |                      

In the United Stated, eligible
  employees can participate in Wavecom, Incs 401(k) retirement plan. This
  plan has been converted to a Safe harbor Plan beginning of January 2006, thereby
  providing 100% employer matching funds on the first 3% of employee contributions
  and 50% matching funds on an additional 2% of employee contributions. Stemming
  from the Sony Ericsson M2M acquisition in April 2006, the 401K retirement plan
  was amended to include an additional employer contribution plan. Contributions
  range from 3.5% to 10% of salary, based on employee age. This plan is a defined
  contribution plan, therefore the Companys only obligation is to pay a
  fixed amount to a separate entity and will have no obligation to pay further
  contributions if the fund does not hold sufficient asset to pay all employees
  benefits. The related actuarial and investment risk fall on the employee. All
  contributions were provided for in the relevant reporting period and the final
  contributions from the last fiscal years 2006 and 2007 payroll was made in December
  of each fiscal year. Such expenses were recorded as operating expenses.

Wavecom Northern Europe
  Ltd harmonized all employees on a single defined contribution scheme over 2007.
  With the support of external experts (actuaries and insurance brokers) a unique
  defined contribution scheme was designed under a Group Personal Pension status.
  As part of the implementation of this new scheme, all employees waived their
  rights to previous defined benefit schemes. Therefore, there is no pension liability
  to be accrued in the United Kingdom.

The only employee of Wavecom
  GmbH in Germany is provided with a defined monthly allowance in order to help
  him contribute to an individual Direktversicherung pension plan.

In Hong Kong, the Company
  operates a defined contribution Mandatory Provident Fund retirement benefits
  scheme (the scheme) under the Mandatory Provident Fund Schemes Ordinance,
  for all its employees. Contributions are made based on a percentage of the employees
  basic salaries and are charged to the income statement as they become payable
  in accordance with the rules of the Scheme. The assets of the Scheme are held
  separately from those of the Company in an independently administered fund.
  The Companys employer contributions vest fully with the employees when
  contributed into the Scheme. Such expenses were recorded as operating expenses.

|Note 9. | Convertible bonds
|------- | -----------------

On July 13, 2007, Wavecom
  issued on 80,499,969 principal amount of bonds convertible into and/or
  exchangeable for new or existing shares (OCEANE) due January 1, 2014, represented
  by 2,571,884 bonds.

At issuance each bond had
  a nominal value of 31.30. The bonds will bear interest at a rate of 1.75%
  per annum. Interest will be payable annually in arrears on January 1 of each
  year beginning January 1, 2008.

Holders may exercise their
  right to convert or exchange their bonds at their option at any time from July
  13, 2007, the issue date of the bonds, until the seventh business day preceding
  their redemption date. The initial conversion/exchange ratio will be one share
  of the Company for one bond.

The bonds will mature on
  January 1, 2014. At maturity, the Company will redeem the bonds then outstanding
  at their nominal value (i.e.,31.30 per bond). The Company may redeem the
  bonds at its sole option at any time from January 1, 2012, subject to 30 calendar
  days notice, so long as the product of (i) the applicable conversion/exchange
  ratio in effect on such date and (ii) the arithmetic average opening price of
  the Companys shares on Eurolist by Euronext Paris calculated over a period
  of 20 consecutive trading days during which the shares are traded, as selected
  by the Company from among the 45 consecutive trading days immediately preceding
  the date of publication of the notice relating to such early redemption, determined
  in the manner described herein, exceeds 130% of the nominal value of the bonds.

Based on the listed price
  at December 31, 2007, the fair value of each bond was 24. Consequently,
  the fair value of convertible bonds amounted to 61,725,216.

Borrowing costs amounted
  to 2,500,790 and have been recorded as Other assets and Interest in Associates.
  They have been capitalized and are being amortized using the straight-line method
  over the period from July 13, 2007 until January 1, 2012. Accumulated amortization
  of these borrowing costs totaled 257,000 for the year ended December 31,
  2007 and are recorded as interest expense in the consolidated statements of
  income.

Total interest expenses
  for the year ended December 31, 2007, related to the OCEANE amounted to 921,000
  (664,000 for interest at 1.75% and 257,000 for the amortization
  of the borrowing costs).

| | 
| | 

WAVECOM
  - Annual Report Form 20-F 2007F-23

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|Note 10. | Other liabilities
|-------- | -----------------

In July 2004, Wavecom received
  a notification from the Tax authorities related to fiscal years 1999 to 2001.
  The tax authorities contested a portion of Wavecoms research and development
  tax credits for the years 1999 to 2001 for a total of 3.6 million. At
  December 31, 2005 and 2006, no provisions were recorded for this later claim
  as Wavecom believes that the Company has strong support for its position and
  it is probable that it will not impact the net income The Company requested
  in December 2004 the opinion of another expert appointed by the French ministry
  of industry. The request for revaluation was granted and is still underway.
  However, in December 2007, the tax authorities requested the Company to pay
  beginning of 2008 the tax adjustment, therefore a tax liability of 3,5
  million was recorded at December 31, 2007. The Company will however continue
  to contest this tax adjustment. At December 31, 2007, the carry back receivable
  was revised accordingly and increased by 3,5 million compared to December
  31, 2006 (see Note 15).

|Note 11. | Shareholders
      equity
|-------- | --------------------------

At December 31, 2007, 15,796,591
  shares were issued, each with a nominal value of 1 per share. After taking
  into consideration the 544,322 shares repurchased during 2003 and 2007, and
  held in treasury, 15,252,269 shares were outstanding at December 31, 2007.

|General
|-------

On February 12, 2003, Wavecom
  initiated a share buyback program covering a maximum of 1,400,000 ordinary shares,
  representing 9.45% of the capital. At December 31, 2004, 2005 and 2006, Wavecom
  held 156,345 shares pursuant to this program purchased for a total amount of
  1,312,215.

On July 27, 2007, Wavecom
  initiated a new share buyback program, limited to 10% of the capital (i.e 1,555,415
  ordinary shares) which is the maximum that a company can hold of its own shares
  under French Law. Under this program, Wavecom purchased 387,977 shares for a
  total purchase price of 7,510,444.

Therefore, at December 31,
  2007, Wavecom held 544,322 of its own shares pursuant to these two programs.

|Preemptive
      subscription rights
|------------------------------------

Shareholders have preemptive
  rights to subscribe on a pro rata basis for additional shares issued
  by Wavecom for cash. Shareholders may waive such preemptive subscription rights
  at an extraordinary general meeting under certain circumstances. Preemptive
  subscription rights, if not previously waived, are transferable during the subscription
  period relating to a particular offering of shares.

|Dividend
      rights
|---------------------

Dividends may be distributed
  from the statutory retained earnings and additional paid in capital, subject
  to the requirements of French law and Wavecoms by-laws. There were no
  distributable retained earnings at December 31, 2007. Dividend distributions
  by Wavecom, if any, will be made in euro.

|Stock
      option, warrant plans and free shares
|-------------------------------------------------

The shareholders of Wavecom
  authorized the board of directors to grant founders warrants to employees
  of the French parent company, stock options to employees of subsidiaries, warrants
  to members of the board of directors and free shares to employees of the French
  parent company and its subsidiaries. Under the terms of the plans, the options
  and warrants give the right to purchase one share per option or warrant at an
  exercise price to be based on the stock market price of Wavecom shares on the
  grant date.

Options and founders
  warrants granted in 2005, 2006 and 2007 vest 25% per year over 4 years. The
  rights to exercise the warrants granted to Board members vest 331/3%
  per year over 3 years. Options expire 10 years after the grant date. Founders
  warrants, which were issued to employees of the French parent company, expire
  after five years, as required by law. Any founders warrants remaining
  unexercised at the expiration date automatically convert to stock options with
  a five-year term remaining. Founders warrants were issued to French employees
  due to the existence of certain tax advantages (for both the employee and Wavecom)
  available in connection with the issuance of founders warrants which are
  not available for stock option holders in France. Other than the expiration
  dates, the terms of the founders warrants are identical to the stock options.
  Warrants granted to Board members expire after five years. Any unvested or unexercised
  options and founders warrants are cancelled upon termination of employment.

During 2007, 56 employees
  were granted free shares. The total number of free shares so granted was 155,650.
  Under French Law, the shares vest after a two year period which means that they
  are only effectively acquired and owned by the beneficiaries after two years.
  This two year period shall expire on June 7, 2009. In addition, for a further
  two years, the beneficiary cannot transfer or sell the shares. This two year
  period expires on June 7, 2011.

F-24WAVECOM
  - Annual Report Form 20-F 2007

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A summary of the founders
  warrants, warrants to Board members and free shares is as follows :

|                                                                          |                                                                   
|------------------------------------------------------------------------- | ------------------------------------------------------------------
|                                                                          | Founders
      warrants to employees of the French parent company
|                                                                          |                                                                   
|Shareholders
      meeting date                                          | 06/17/02                                                          
|Total
      of warrants authorized                                        | 590,000                                                           
|Board
      of directors date                                             | 03/25/03                                                          
|Total
      of warrants granted                                           | 193,000                                                           
|Exercice
      price                                                      | 8,07                                                             
|Total
      of warrants exercised                                         | 71,678                                                            
|Accumulated
      warrants cancelled at December 31, 2007(2)              | 88,872                                                            
|Total
      of warrants cancelled during the year ended Dec 31, 2007(2)   | 25                                                                
|Total
      of warrants granted and not exercised at December 31, 2007(2) | 32,450                                                            
|Total
      of warrants exercisable at December 31, 2007(2)               | 32,450                                                            
|Expiration
      date(1)                                                  | 03/24/08                                                          
|                                                                          |                                                                   

|(1) | Founders warrants
      not exercised at the expiration date will be converted into stock options.
      Warrants expire in terms of five or four years. Free shares convert ownership
      after two years.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For the respective
      grant date.
|--- | ------------------------------------



WAVECOM
  - Annual Report Form 20-F 2007F-25

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A summary of the stock options
  is as follows

|                                                                               |                    
|------------------------------------------------------------------------------ | -------------------
|                                                                               | STOCK
      OPTIONS
|                                                                               |                    
|Shareholders
      meeting date                                               | 02/25/99           
|Total
      of stock options authorized                                        | 600,000            
|Board
      of directors date                                                  | 02/09/99           
|Total
      of stock options granted                                           | 530,800(1)         
|Exercice
      price                                                           | 4,57              
|Total
      of stock options exercised                                         | 18,925             
|Accumulated
      stock options cancelled at December
      31, 2007(2) (3)    | 510,183            
|Total
      of stock options granted and not exercised at December 31, 2007(3) | 1,692              
|Total
      of stock options exercisable at December
      31, 2007(3)         | 1,692              
|Expiration
      date(1)                                                       | 02/08/09           
|                                                                               |                    

|                                                                               |                    
|------------------------------------------------------------------------------ | -------------------
|                                                                               | STOCK
      OPTIONS
|                                                                               |                    
|Shareholders
      meeting date                                               | 06/17/02           
|Total
      of stock options authorized                                        | 840,000            
|Board
      of directors date                                                  | 07/09/02           
|Total
      of stock options granted                                           | 395,360(1)         
|Exercice
      price                                                           | 39,18             
|Total
      of stock options exercised                                         |                    
|Accumulated
      stock options cancelled at December
      31, 2007(2) (3)    | 296,105            
|Total
      of stock options granted and not exercised at December 31, 2007(3) | 99,255             
|Total
      of stock options exercisable at December
      31, 2007(3)         | 99,255             
|Expiration
      date(1)                                                       | 07/08/12           
|                                                                               |                    

|(1) | Options which will
      become exercisable after 5 years to the extent which the related founders
      warrants expire unexercisable
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(2) | Stock options cancelled,
      to be granted by future board of directors
|--- | -------------------------------------------------------------------------

|(3) | For the respective
      grant date
|--- | -----------------------------------

F-26WAVECOM
  - Annual Report Form 20-F 2007



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A summary of the activity
  in the warrants stock options and free shares is as follows:

|                                   |                       
|---------------------------------- | ----------------------
|                                   | Number
      of shares
|                                   |                       
|Balance
      at January 1, 2005   | 2,115,663             
|Granted                            | 579,700               
|Exercised                          | (25,523               
|Expired                            | (30,000               
|Cancelled                          | (771,406              
|                                   |                       
|Balance
      at December 31, 2005 | 1,868,434             
|Granted                            | 619,217               
|Exercised                          | (22,340               
|Expired                            | (50,000               
|Cancelled                          | (139,273              
|                                   |                       
|Balance
      at December 31, 2006 | 2,276,038             
|Granted                            | 568,300               
|Exercised                          | (242,438              
|Cancelled                          | (63,836               
|                                   |                       
|Balance
      at December 31, 2007 | 2,538,064             
|                                   |                       

Cancellations related to
  the year ended December 31, 2005 were mainly due to the headcount reductions
  following the restructuring plans.

At December 31, 2007, 1,448,128,
  founders warrants, stock options and warrants were exercisable (1,293,533
  and 1,137,361 at December 31, 2006 and 2005, respectively) at a weighted average
  exercise price of 26.88 (30.32 and 39.29 at December 31, 2006
  and 2005, respectively).

The weighted-average remaining
  contractual life of the warrants and stock options outstanding at December 31,
  2007 was approximately 6 years.

311,323 free shares have
  been granted to employees and members of the board. The final acquisition of
  the shares is subject to the completion of a two year service period by the
  employees.

The weighted-average fair
  value of options, warrants and free shares granted during 2005, 2006 and 2007
  was as follows:

|                                                                                                             |      
|------------------------------------------------------------------------------------------------------------ | -----
|                                                                                                             | 2005 
|                                                                                                             |      
|Options
      whose price equaled market price of the underlying shares on the grant date                    |     
|Options
      whose price was less than the market price of the underlying shares on the
      grant date    | 2.93
|Options
      whose price was greater than the market price of the underlying shares on
      the grant date |     
|                                                                                                             |      

WAVECOM- Annual Report Form 20-F 2007F-27

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|Note
      12. | Stock-based compensation
|-------------- | ------------------------

Stock-based compensation
  includes stock options, warrants and free shares and were estimated as follow:

|                        
|------------------------
|Equity
      instruments
|                        
|                        
|Stock
      options     
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|                        
|Founders               
|warrants                
|                        
|                        
|                        
|                        
|                        
|Warrants
      to       
|members
      of the    
|board
      of directors
|                        
|                        
|                        
|Free shares             
|                        
|                        
|Total                   
|                        

The total amount of 4,810,000
  was recording in the following line items of the Consolidated Statement of income:

|                                 |                                         
|-------------------------------- | ----------------------------------------
|(in
       thousands)           | Year
      ended December
      31, 2006
|                                 |                                         
|Research
      and development   | 0,268                                   
|Sales
      and marketing        | 0,510                                   
|General
      and administrative | 1,312                                   
|                                 |                                         
|                                 | 2,090                                   
|                                 |                                         

As of December 31, 2007,
  the total compensation cost related to non-vested awards not yet recognized,
  but issued was 8,126,000, which is expected to be amortized over the 4
  years ending December 31, 2011 (end of the vesting periods).

F-28WAVECOM- Annual Report Form 20-F 2007

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|Note
      13. | Impairment of intangible
      assets
|-------------- | -------------------------------------

In accordance with SFAS
  142 Goodwill and Other intangible Assets, the Company completed
  the annual impairment tests of the goodwill generated both by the acquisition
  of NexGen and the M2M activity from Sony Ericsson. These tests were performed
  at the reporting unit level using a two step, fair value based approach. The
  Company has determined that it has three reporting units, which are the three
  geographic segments. The goodwill has been allocated to these segments as follows:

|          |           
|--------- | ----------
|EMEA:     | 3,004,000
|Americas: | 3,459,000
|APAC:     | 1,569,000
|          |           
|Total     | 8,032,000
|          |           

The Company concluded that
  no impairment existed at December 31, 2006 and 2007.

|Note
      14. | Interest income
      (expenses)
|-------------- | --------------------------------

Interest expense and interest
  income include:

|                                       |                              
|-------------------------------------- | -----------------------------
|                                       | Year
      ended December 31,
|(in
       thousands)                 | 2005                         
|                                       |                              
|Interest
      expenses :              |                              
|Interest
      on convertible bonds    |                             
|Issue
      costs of convertible bonds |                             
|Loss from
      sales of securities    |                             
|Other
      interets                   | 214                          
|                                       |                              
|Total                                  | 214                         
|                                       |                              
|Interest
      income :                |                              
|Gain from
      sales of securities    | 1,225                        
|                                       |                              
|Total                                  | 1,225                       
|                                       |                              

|Note
      15. | Income taxes
|-------------- | ------------

Income before income taxes
  is as follows :

|                       |                              
|---------------------- | -----------------------------
|                       | Year
      ended December 31,
|(in
       thousands) | 2005                         
|                       |                              
|France                 | 7,781                       
|Others                 | 1,308                        
|                       |                              
|Total                  | 9,089                       
|                       |                              

The provision for income
  taxes consists of the following :

|                                                  |                              
|------------------------------------------------- | -----------------------------
|                                                  | Year
      ended December 31,
|(in
       thousands)                            | 2005                         
|                                                  |                              
|Local
      current income tax expense (benefit)  | 303                         
|Foreign
      current income tax expense          | 92                           
|Local
      deferred income tax expense (benefit) |                             
|                                                  |                              
|Total
      income tax expense (benefit)          | 395                         
|                                                  |                              




WAVECOM- Annual Report Form 20-F 2007F-29

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Taxes paid totaled approximately
  452,000, 110,000 and 265,000 in the years ended December 31,
  2005, 2006 and 2007, respectively.

The current tax expense
  in 2005 is the net of research tax credit (42,000), other tax credits
  (36,000), French current tax expense (381,000) and income tax expense
  of Wavecoms Asian subsidiary (92,000).

The current tax expense
  in 2006 is the net of tax credits (5,000), French current tax expense
  (33,000) and income tax expense of Wavecoms subsidiaries (97,000).

The current tax expense
  in 2007 is the net of tax credits (10,000), income tax expense of Wavecoms
  subsidiaries (214,000) and deferred income tax benefit (4,514,000).

In France, the system of
  carry back allows the allocation of tax losses of the year N on the previous
  taxable income of the 3 prior years (N-1, N-2 and N-3). This creates a tax asset
  which can be used to either offset future tax profit (carry forward) or be reimbursed
  by the tax administration at the end of a five-year period if not used (carry
  back). In 2002, we were tax profitable but in 2003 and 2004 we incurred tax
  losses. Therefore, applying the French carry back rules, we were eligible to
  a carry back amounted to 9,617,000. Consequently, an income tax receivable
  of 9,617,000 was recorded at December 31, 2004 and following years. As
  of December 2005 and 2006, this income tax asset was not used to offset tax
  profit due to the amount of remaining net loss carry forwards. An additional
  amount of 3,467,000 was added in 2007 as the Company filed a provisional
  election to carry back for fiscal year 2004 tax losses against any Research
  & Development credits that may ultimately fall due related to fiscal year
  2002. This filing took place in December 2007 following the request to pay the
  tax adjustment related to Credit Impot Recherche of 1999 to 2001.

The amount of the carry
  back is subject to further revision upon final outcome of the Research tax Credit
  audit and ongoing independent expertise (see Note 10).

|Effective
      tax rate
|------------------------

A reconciliation of income
  taxes computed at the French statutory rate (33.83% in 2005 and 33.33% in 2006
  and 2007) to the income tax expense (benefit) is as follows :

|                                                                  |                               
|----------------------------------------------------------------- | ------------------------------
|                                                                  | Years
      ended December 31,
|(in
       thousands)                                            | 2005                          
|                                                                  |                               
|Income
      tax expense computed at the French statutory rate    | 3,075                        
|Miscellaneous
      tax credits and tax expenses                  | (120                          
|Change
      in valuation allowance on deferred tax assets        | (4,589                        
|Effect
      of previously unrecognized deferred tax assets       | (211                          
|Other
      permanent differences                                 | 193                           
|Adjustment
      on tax loss carry-forwards                       |                              
|Non deductible
      tax penalties                                | 237                           
|Impact
      of differences in foreign income tax rates           | (238                          
|Variation
      impact of income tax rates on deferred tax assets | 1,575                         
|Withholding
      & annual minimum income taxes                   | 473                           
|                                                                  |                               
|Total
      income tax expense (benefit)                          | 395                          
|                                                                  |                               

F-30WAVECOM- Annual Report Form 20-F 2007

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|Deferred
      taxes and valuation allowance
|--------------------------------------------

Significant components of
  the Companys deferred tax assets and liabilities are as follows:

|                                                             |                               
|------------------------------------------------------------ | ------------------------------
|                                                             | Years
      ended December 31,
|(in
       thousands)                                       | 2005                          
|                                                             |                               
|Deferred
      tax assets:                                   |                               
|Royalty
      accruals not currently deductible              | 4,838                        
|Other
      provisions and accruals not currently deductible | (531                          
|Accruals
      not currently deductible                      | 2,636                         
|Research
      tax credit                                    | 1,529                         
|Net operating
      loss carry forwards from Parent Company  | 23,242                        
|Net operating
      loss carry forwards from subsidiaries    | 4,962                         
|                                                             |                               
|Total
      deferred tax assets                              | 36,676                        
|Valuation
      allowance                                    | (36,676                       
|                                                             |                               
|Net deferred
      tax asset                                 |                             
|Deferred
      tax liabilities :                             |                             

Change in valuation allowance
  for the year ended December 31, 2007 is essentially explained by the effect
  of the reversal of previously unrecognized net operating loss for an amount
  of 4,514,000 and the use of previously unrecognized deferred tax assets
  for an amount of 4,806,000.

Until December 31, 2006,
  due to its history of tax losses in foreign tax jurisdictions which account
  for Wavecoms deferred tax assets, the Company does not believe that sufficient
  objective, positive evidence exists to conclude that recoverability of its deferred
  tax assets is more likely than not. Consequently, the Company has provided valuation
  allowances covering 100% of its net deferred tax assets in these respective
  tax jurisdictions.

At December 31, 2007, based
  on the good performance the years before, in particular in 2007, and the perspective
  for the near future, Management has decided to reverse a part of the valuation
  allowance.

|Net
      operating loss carry forwards
|---------------------------------------

As of December 31, 2007,
  expiration dates of net operating loss carry forwards were as follows:

|                                              |       
|--------------------------------------------- | ------
|(in
       thousands)                        |       
|                                              |       
|Expiration
      date:                        |       
|2008                                          |      
|2009                                          |      
|2010                                          |      
|2011                                          |      
|Between
      2013 and 2022                   | 1,650 
|No expiration
      date                      | 44,433
|                                              |       
|Total
      net operating loss carry forwards | 46,083
|                                              |       

Wavecom S.A. (France) had
  total loss carry forwards of 36,140,000 at December 31, 2007 (60,249,000
  in 2006) with no expiration date.

Net operating loss carry
  forwards in the United States totaled approximately 1,650,000 at December
  31, 2007 (2,320,000 in 2006) and will expire from 2013 to 2022 if not
  utilized.

Net operating loss carry
  forwards in Asian Pacific totaled approximately 8,293,000 at December
  31, 2007 (9,938,000 in 2006) with no expiry date.

|Uncertainty
      in Income Taxes
|---------------------------------

Through the adoption of
  FIN No. 48, the Company reviewed the tax positions of each subsidiary. On December
  31, 2007 there is no uncertainty in the companys tax positions.

WAVECOM- Annual Report Form 20-F 2007F-31

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For Wavecom S.A., fiscal
  years 2006 and 2007 remain subject to tax examination.

|Note
      16. | Net income per share
|-------------- | --------------------

The following table sets
  forth the computation of basic and diluted net income per share:

|                                                                                  |                              
|--------------------------------------------------------------------------------- | -----------------------------
|                                                                                  | Year
      ended December 31,
|(in
       thousands, except per share amounts)                                  | 2005                         
|                                                                                  |                              
|Net income                                                                        | 8,694                       
|                                                                                  |                              
|Weighted
      average number of shares outstanding for basic EPS                 | 15,352,233                   
|Net effect
      of dilutive stock options, warrants awards and convertible bonds | 308,768                      
|                                                                                  |                              
|Weighted
      average number of shares outstanding for diluted EPS               | 15,661,001                   
|                                                                                  |                              
|Net income
      per basic share                                                  | 0.57                        
|                                                                                  |                              
|Net income
      per diluted share                                                | 0.56                        
|                                                                                  |                              

For the year ended December
  31, 2007, net income use to compute the diluted EPS was increased by the interest
  expense, amounting to 443,000, net of income tax effect, which related
  to the convertible debt issued on July 2007 (See Note 9 ).

|Note
      17. | Commitments and
      contingencies
|-------------- | -----------------------------------

|Contingencies
|-------------

Wavecom is currently involved
  in several legal proceedings. The Company believes that these legal and tax
  proceedings should not have a significant impact on our financial position or
  results of operations.

A law suit was launched
  at the European Patent Office by Wavecom against a French Company seeking to
  nullify their French and European Patents. This company filed a counterclaim
  based on alleged infringement of the same patents.

In addition, the French
  tax authorities have proposed revising research tax credits («Credit Impôt
  Recherche») granted to Wavecom for the years 2004 and 2005, for a total
  amount of 95,000. This amount has not been provided for at December 31,
  2007, as this tax adjustment was based on the same conclusion of the previous
  tax audit that we are currently contesting (see Note 10).

On 6 February 2008, Wavecom
  filed a civil proceeding in the Supreme Court of the State of New York (USA)
  against Siemens AG and two of its US subsidiaries. Wavecom alleges that the
  defendants improperly took Wavecoms confidential internal product information,
  distributed it internally and to customers of Wavecom, and utilized it to unfairly
  compete with Wavecom. The lawsuit claims the torts of conversion, unfair competition
  and misappropriation of trade secrets, and seeks damages in an amount to be
  proved at trial and a court order requiring the defendants to return the information.

|Bank
      guarantees
|---------------------

Bank guarantee of 13,110,000
  was issued in July 2002 in favor of the owners of leased office space, in order
  to secure annual lease payments. Following the release of three floors of current
  offices, the guarantee was reduced at the end of 2004 and during the first half
  of 2005. This guarantee was secured by the pledge of certificates of deposit
  and mutual funds. The total value of investments secured to cover these bank
  guarantees was 3,585,000, 3,639,000 and 3,731,000 at December
  31, 2005, 2006 and 2007, respectively.

|Operating
      leases
|----------------------

Wavecom leases its facilities
  under operating leases that expire through June 2014.

F-32WAVECOM- Annual Report Form 20-F 2007

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Future minimum lease payments
  under operating leases at December 31, 2007, due for the years ending December
  31, are as follows (in thousands):

|           |        
|---------- | -------
|2008       | 4,745 
|2009       | 4,584  
|2010       | 4,568  
|2011       | 2,732  
|2012       | 539    
|Thereafter | 798    
|           |        
|Total      | 17,966
|           |        

Rental expense for the years
  ended December 31, 2005, 2006, and 2007, was approximately 5,213,000,
  4,288,000 and 4,700,000, respectively.

|Other
      commitments
|-----------------------

At December 31, 2007, Wavecom
  had purchase commitments with its third-party manufacturers for future deliveries
  of products, principally during the first half of 2008. These non-cancelable
  purchase commitments totaled 18,605,000.

|Note
      18. | Employees
|-------------- | ---------

Information related to Wavecoms
  employees is as follows:

|                                                                   |                   
|------------------------------------------------------------------ | ------------------
|                                                                   | December
      31,
|(in
       thousands, except for employee data)                   | 2005              
|                                                                   |                   
|Salaries
      paid                                                | 25,659           
|Benefits                                                           | 8,891            
|Headcount
      (excluding subcontractors) at year end (unaudited) | 290               
|                                                                   |                   

Headcounts increase
  in 2006 is due to Sony Ericssons employees integrated with the 2006 acquisition.
  Salaries paid in 2005 included amounts such as termination and notice costs
  paid to employees who left the Company in 2005, following the 2004 restructuring
  plans. These amounts (approximately 6,700,000) were accrued as of December
  31, 2004.

In 2007, the salaries paid
  included an amount of 1,911,000 related to a retention bonus allocated
  to some of Wavecom executive committee members.

|Note
      19. | Compensation of
      executive officers
|-------------- | ----------------------------------------

The compensation to executive
  officers for the years ended December 31, 2005, 2006 and 2007, was 3,845,000,
  5,424,000 and 4,523,000, respectively. The Company has not entered
  into any retirement commitments with its executive officers.

In the event of a negotiated
  merger, acquisition of the Company, or hostile takeover bid on the shares of
  the Company, that results in Dr. Black being terminated within six months following
  this event and if Dr. Black is not offered an opportunity to perform functions
  of an equivalent level, Wavecom has undertaken to pay to Dr. Black a severance
  payment (except in case of gross or wrongful misconduct). The gross amount of
  this severance payment is equal to three times the annual fixed salary (i.e.
  three times 421,500), including the severance payment provided by the
  applicable collective bargaining agreement.

In October 2005, Wavecom
  signed a commitment with some of its executive committee members for the payment
  of a retention bonus, on condition they were still employed as of March 31,
  2007, the amount has been paid in April 2007. The total amount of these bonuses
  was 2,421,000 (including benefits) and was being recognized ratably as
  an expense from October 1, 2005 to March 31, 2007 (over the 18 months service
  period). Accordingly, Wavecom recorded compensation expense for this retention
  bonus in the years ended December 31, 2005, 2006 and 2007 in a respective amount
  of 428,000, 1,835,000 and 158,000.

|Note
      20. | Segments
|-------------- | --------

The Company has determined
  that the risks and the profitability are predominantly driven by the geographic
  areas. In addition, the Companys Chief Executive Officer is using such
  segment reporting to allocate resources.

WAVECOM- Annual Report Form 20-F 2007F-33

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This structure included
  the establishment of management by geographic segment: EMEA (Europe Middle-East
  and Africa), APAC (Asia-Pacific) and the Americas (North and South America).
  The regions are supported from a product standpoint by marketing, research and
  development, operations (manufacturing), strategy and planning departments.
  From an administrative standpoint, the Company is supported by finance, human
  resources and quality departments.

Each of these regions has
  responsibility for developing customer relations, for supporting the customer
  on the technical subjects, for applying locally the marketing strategy and for
  preparing sales forecasts.

Support functions are mainly
  based in the headquarters in France but some people are located in the APAC
  and Americas regions, in particular in the finance, information technology,
  human resources areas and a part of research and development teams. Management
  tools have been implemented to follow the performance and costs of the regions
  and of the support functions.

Sales and related balance
  sheet items (account receivables) are allocated to regions (EMEA, APAC and Americas)
  based on the clients address. Cost of goods sold and related balance sheet
  items (inventory, fixed assets, account payable, warranty and royalty accruals)
  are calculated based on the actual cost of products sold in each region.

The allocation of the operating
  expenses and related balance sheet items is performed as follows:

| | some functions has
      been defined as being corporate functions and therefore their costs have
      not been allocated to regions, these functions are including corporate management,
      quality departments, strategic marketing and long term research and development
      projects,
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | local marketing and
      sales costs are allocated to the regions based on the location of the headcount,
|- | ----------------------------------------------------------------------------------------------------------

| | other operating costs,
      including mainly maintenance and the validation part of research and development,
      general and administrative costs, are allocated to the regions based on
      their respective contribution to the sales performance,
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | restructuring costs
      are not allocated to the regions and remain at corporate level,
|- | -----------------------------------------------------------------------------------------

| | the goodwill and the
      fixed assets related to the acquisition of Sony Ericsson activity have been
      allocated based on the sales per region forecasted for 2006 in the acquisition
      plan.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The table below sets forth
  revenues, operating losses and other financial information for each of our segments
  for the years ended December 31, 2005, 2006 and 2007.

|                           |        
|-------------------------- | -------
|Fiscal
      year 2005     | EMEA   
|                           |        
|(in
       thousands)     |        
|                           |        
|Revenues                   | 74,840
|Operating
      loss       | 7,588  
|Long-lived
      assets    | 5,001  
|Interest
      income      |       
|Interest
      expense     |       
|Capital
      expenditures | 808    
|                           |        

|                              |       
|----------------------------- | ------
|Fiscal
      year 2006        | EMEA  
|                              |       
|(in
       thousands)        |       
|                              |       
|Revenues                      | 99,389
|Operating
      income (loss) | 9,730 
|Long-lived
      assets       | 13,467
|Interest
      income         |      
|Interest
      expense        |      
|Capital
      expenditures(1) | 2,349 
|                              |       

F-34WAVECOM- Annual Report Form 20-F 2007

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|                              |       
|----------------------------- | ------
|Fiscal
      year 2007        | EMEA  
|                              |       
|(in
       thousands)        |       
|                              |       
|Revenues                      | 96,576
|Operating
      income (loss) | 21,666
|Long-lived
      assets       | 10,842
|Interest
      income         | 5     
|Interest
      expense        | (1    
|Capital
      expenditures    | 1,631 
|                              |       

|(1) | Including 1,604,000
      related to acquired tangible assets from Sony Ericsson
|--- | --------------------------------------------------------------------------------

|Note
      21. | Subsequent events
      (unaudited)
|-------------- | -----------------------------------

Wavecom announced on February
  1, 2008 that it signed a definitive agreement to acquire 100% of Anyware Technologies.
  The transaction was finalized for a cash payment to Anyware Technologies shareholders
  of 9.1 million plus 1.5 million placed in an escrow account for
  customary warranty provisions. An additional payment for earn-out of up to 2
  million upon reaching certain milestones is to be made in 2009.

At its March 18, 2008 meeting,
  the board of directors decided to propose to the beneficiaries of the June 7,
  2007 stock option plan to cancel the grant. This stock option plan included
  38 beneficiaries including the CEO who were together granted a total of 372,650
  stock options at an exercise price of 24.21. The cancellation was agreed
  to by a large majority of the grantees, representing 96% of the total number
  of outstanding stock options.

Consequently, under SFAS123R,
  this cancellation will result in an expense of 3.8 million in the first
  quarter of 2008.

WAVECOM- Annual Report Form 20-F 2007F-35

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Wavecom S.A.
3, esplanade
    du Foncet 92442 Issy-les-Moulineaux
    (France) 
    Tel: +33 1 46 29 08 00 
    Fax: +33 1 46 29 08 08 Wavecom,
    Inc. 430 Davis
    Drive, Suite 300 
    P.O. Box 13920Research
    Triangle Part, North Carolina (USA) 
    Tel: +1 919 237 4000 
    Fax: +1 919 237 4140 Wavecom
    Asia-PacificUnit 201-207,
    Second Floor, Bio-Informatics Centre 
    No. 2 Science Park West AvenueHong Kong
    Science Part, Shatin - New Territories, Hong Kong (China) 
    Tel: +852 2824 0254 
    Fax: +852 2824 0255




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