As filed with the Securities and Exchange Commission on June 27, 2003

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F

OR

for the fiscal year ended: December 31, 2002

OR

Commission file number: 0-27846

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ORANGE plc(Exact name of Registrant as specified in its charter)

Not Applicable(Translation of Registrant's name into English)

England and Wales(Jurisdiction of incorporation or organization)

St. James Court
Great Park Road
Almondsbury Park
Bradley Stoke
Bristol BS32 4QJ
United Kingdom(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:None

Securities registered or to be registered pursuant to Section 12(g) of the Act:None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

|Title of each class |  | Name of each exchange on which registered   
|------------------- |  | --------------------------------------------
|87/8%               |  | Senior Notes due 2009 (Sterling denominated)
|9%                  |  | Senior Notes due 2009 (Dollar denominated)  
|83/4%               |  | Senior Notes due 2006 (Dollar denominated)  
|85/8%               |  | Senior Notes due 2008 (Sterling denominated)
|8%                  |  | Senior Notes due 2008 (Dollar denominated)  
|75/8%               |  | Senior Notes due 2008 (Euro denominated)    

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Indicate
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 of 20p
each 1,460,116,947

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    ý        No    o

Indicate
by check mark which financial statement item the registrant has elected to follow:

Item
17    o        Item 18    ý

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TABLE OF CONTENTS

|Presentation of Financial and Other Information           |     | 4                                                    
|--------------------------------------------------------- | --- | -----------------------------------------------------
|Cautionary Statement Regarding Forward-Looking Statements |     | 5                                                    
|PART I                                                   
|Item 1                                                    |     | Identity of Directors, Senior Management and Advisers
|Item 2                                                    |     | Offer Statistics and Expected Timetable              
|Item 3                                                    |     | Key Information                                      
|                                                          | 3A. |                                                      
|                                                          | 3B. |                                                      
|                                                          | 3C. |                                                      
|                                                          | 3D. |                                                      
|Item 4                                                    |     | Information on the Company                           
|                                                          | 4A. |                                                      
|                                                          | 4B. |                                                      
|                                                          | 4C. |                                                      
|                                                          | 4D. |                                                      
|Item 5                                                    |     | Operating and Financial Review and Prospects         
|                                                          | 5A. |                                                      
|                                                          | 5B. |                                                      
|                                                          | 5C. |                                                      
|                                                          | 5D. |                                                      
|                                                          | 5E. |                                                      
|                                                          | 5F. |                                                      
|Item 6                                                    |     | Directors, Senior Management and Employees           
|                                                          | 6A. |                                                      
|                                                          | 6B. |                                                      
|                                                          | 6C. |                                                      
|                                                          | 6D. |                                                      
|                                                          | 6E. |                                                      
|Item 7                                                    |     | Major Shareholders and Related Party Transactions    
|                                                          | 7A. |                                                      
|                                                          | 7B. |                                                      
|                                                          | 7C. |                                                      
|Item 8                                                    |     | Financial Information                                
|                                                          | 8A. |                                                      
|                                                          | 8B. |                                                      
|Item 9                                                    |     | The Offer and Listing                                
|                                                          | 9A. |                                                      
|                                                          | 9B. |                                                      
|                                                          | 9C. |                                                      
|                                                          | 9D. |                                                      
|                                                          | 9E. |                                                      
|                                                          | 9F. |                                                      
|                                                          |     |                                                      

2

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|Item 10  |        | Additional Information                                                       |                                        | 84 
|-------- | ------ | ---------------------------------------------------------------------------- | -------------------------------------- | ---
|         | 10A.   |                                                                              | Share capital                          |    
|         | 10B.   |                                                                              | Memorandum and articles of association |    
|         | 10C.   |                                                                              | Material contracts                     |    
|         | 10D.   |                                                                              | Exchange controls                      |    
|         | 10E.   |                                                                              | Taxation                               |    
|         | 10F.   |                                                                              | Dividends and paying agents            |    
|         | 10G.   |                                                                              | Statement by experts                   |    
|         | 10H.   |                                                                              | Documents on display                   |    
|         | 10  I. |                                                                              | Subsidiary information                 |    
|Item 11  |        | Quantitative and Qualitative Disclosures About Market Risk                   |                                        | 96 
|Item 12  |        | Description of Securities Other than Equity Securities                       |                                        | 99 
|PART II 
|Item 13  |        | Defaults, Dividend Arrearages and Delinquencies                              |                                        | 100
|Item 14  |        | Material Modifications to the Rights of Security Holders and Use of Proceeds |                                        | 100
|Item 15  |        | Controls and Procedures                                                      |                                        | 100
|Item 16  |        | [Reserved]                                                                   |                                        | 100
|PART III
|Item 17  |        | Financial Statements                                                         |                                        | 101
|Item 18  |        | Financial Statements                                                         |                                        | 101
|Item 19  |        | Exhibits                                                                     |                                        | 101

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Presentation of Financial and Other Information

In this annual report, references to "we", "us" and "the Company" are to Orange plc together with its consolidated subsidiaries, references to "Orange UK" refer
to the businesses of Orange plc, Orange Personal Communications Services Limited and Orange Retail Limited in the United Kingdom, references to "Orange S.A." refer to Orange S.A. and its consolidated
subsidiaries, which include Orange plc, and its minority interests, references to "France Telecom" are to the public sector entity France Telecom up to December 31, 1996 and the
société anonyme France Telecom after such date. References to "Orange plc" refer to Orange plc together with its consolidated subsidiaries and are generally used when
referring to the history and development of these entities. References to "Orange PCS" refer to Orange Personal Communications Services Limited. References to "Orange" are to the brand Orange, or any
of the above entities as the context requires.

References
to "UK" are to the United Kingdom, references to "GBP", "pounds sterling", "sterling", "£", "pence" or "p" are to the UK currency, references to "EU" are to the
European Union, references to "€" and the "euro" are to the euro currency of the EU, references to the "United States" and "US" are to the United States of America and references to
"$" or to "US dollars" are to United States dollars.

We
publish our consolidated financial statements in euro. However, given the fluctuations in the exchange rate of the pound sterling compared to the euro over the periods presented, we
believe that it is also important to include certain information in pounds sterling as a more accurate indicator of the underlying growth of our wirefree business in the United Kingdom. Solely for
your convenience, in this Form 20-F we have translated certain euro amounts into US dollars at specified rates. These translations should not be construed as representations that
the euro amounts actually represent the stated US dollar amounts or could be converted into US dollars at the rate indicated or at any other rate. Unless we indicate otherwise, we have translated
euros into US dollars at €0.95 per $1.00, the noon buying rate in The City of New York for cable transfers in euro as certified for customs purposes by the Federal Reserve Bank of New
York, or the noon buying rate, on December 31, 2002. See "Item 3 Key InformationExchange Rates". On June 26, 2003, the day prior to the filing of this
form 20-F, the noon buying rate was €0.87 per $1.00.

We
prepare our consolidated financial statements on the basis of a financial year beginning on January 1, and ending on December 31. Our consolidated financial information
presented in this Form 20-F includes the financial information of Orange plc and its subsidiaries. Unless otherwise indicated, references to a year in this
Form 20-F are references to the financial
year ending on December 31 of such year. In this Form 20-F, unless otherwise indicated, we have stated financial results and operating statistics on the basis of such
financial years.

We
prepare our financial statements in accordance with accounting principles generally accepted in France, or French GAAP, which differ in certain significant respects from accounting
principles generally accepted in the US, or US GAAP. Orange plc changed its basis of presenting financial statements in 2000 from accounting principles generally accepted in the United Kingdom to
French GAAP. The change in accounting principles has been retroactively applied to all periods. We have summarized the principal differences between French GAAP and US GAAP in Note 23 to our
consolidated financial statements.

Unless
otherwise indicated, references in this annual report concerning the other markets in which we operate are taken from a study published by the Informa telecoms group entitled
"Mobile Communications". In certain cases, this annual report refers to projected data. In view of the rapidly evolving nature of the telecommunications industry, it is possible that this projected
data may prove to be incorrect.

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Cautionary Statement Regarding Forward-Looking Statements

Some of the statements contained in this annual report that are not historical facts, including without limitation, certain statements made in the sections hereof
entitled "Item 4 Information on the Company" and "Item 5 Operating and Financial Review and Prospects," are statements of future expectations and other forward-looking statements (within the meaning
of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Safe Harbor provisions of the U.S. Private Litigation
Reform Act of 1995) that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ
materially from those in such statements due to, among other factors:



Certain
such forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "are expected to", "will", "will continue",
"should", "would be", "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.
The forward-looking statements contained in this document speak only as of the date of this annual report and we do not intend, and do not assume any obligation, to update any industry information or
forward-looking statements set forth in this annual report to reflect subsequent events or circumstances.

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PART I

ITEM 1  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2  OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3  KEY INFORMATION

3A. Selected financial data

The table below sets out our selected consolidated financial data for each of the years in the five-year period ended and as at December 31,
2002 in accordance with French GAAP. The selected consolidated financial data set out below for each of the years in the five-year period ended and as at December 31, 2002 have been
extracted from, and are qualified by reference to, our consolidated financial statements and the notes thereto that are audited by PricewaterhouseCoopers LLP, independent public accountants. The
consolidated financial statements have been prepared in accordance with French GAAP, which differs in certain significant respects from
US GAAP. The principal differences between French GAAP and US GAAP are summarized in Note 23 to the consolidated financial statements. The following information should be read in conjunction
with "Item 5 Operating and Financial Review and Prospects" and the consolidated financial statements and the related notes thereto included in Item 18 of this Form 20-F.

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|                                         |                          | Year ended December 31, |      
|---------------------------------------- | ------------------------ | ----------------------- | -----
|
|
|
|French GAAP(2)                           |                          |                         |      
|Turnover                                 |                          |                         |      
|                                         | UK                       |                         | 1,446
|                                         | International operations |                         | 361  
|                                         |                          |                         |      
|Total turnover                           |                          | 1,807                   |      
|                                         |                          |                         |      
|Operating (loss) income                  |                          |                         |      
|                                         | UK                       |                         | (8   
|                                         | International operations |                         | (8   
|                                         |                          |                         |      
|Total operating (loss) income            |                          | (16                     | )    
|                                         |                          |                         |      
|Net (loss) income before income tax      |                          | (217                    | )    
|                                         |                          |                         |      
|Income tax                               |                          | 391                     |      
|Net (loss) income after income tax(3)    |                          | 174                     |      
|(Loss) earnings per share(4)             |                          | 0.15                    |      
|                                         |                          |                         |      
|US GAAP                                  |                          |                         |      
|Net (loss) income for the financial year |                          | 166                     |      
|                                         |                          |                         |      
|French GAAP(2)                           |                          |                         |      
|Total assets                             |                          | 2,792                   |      
|Total liabilities                        |                          | (3,098                  | )    
|Net (liabilities) assets                 |                          | (306                    | )    
|Shareholders' equity                     |                          | (306                    | )    
|                                         |                          |                         |      
|US GAAP                                  |                          |                         |      
|Shareholders' equity                     |                          | (336                    | )    
|                                         |                          |                         |      

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Exchange rate information

We present our financial information in euro. However, given the fluctuations in the exchange rate of the pound sterling compared to the euro over the periods
presented, we believe that it is also important to include certain information in pounds sterling as a more accurate indicator of the underlying growth of our wirefree business in the United Kingdom.
Under the provisions of the Treaty

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of
the European Union signed at Maastricht in early 1992, a European Monetary Union, or EMU, with a single European currency, the euro, was established. The introduction of the euro for certain
purposes began on January 1, 1999. Against currencies other than its constituent currencies, the euro has free-floating exchange rates.

The
following tables set forth, for the periods and dates indicated, certain information concerning the exchange rates for the euro and pounds sterling expressed in euro per US dollar
and pounds sterling per US dollar. The information concerning the US dollar exchange rate is based on the noon buying rate of the Federal Reserve Bank of New York. We provide the exchange rates below
solely for your convenience. We do not represent that euros or pounds sterling could have been converted into US dollars at these rates.

|                             |  | French franc per $1.00 |  | Euro per $1.00 |  | Pounds sterling per $1.00
|---------------------------- |  | ---------------------- |  | -------------- |  | -------------------------
|
|1998(2)                      |  | 5.62                   |  | 5.90           |  | 6.21                     
|1999(3)                      |  | 6.51                   |  | 6.20           |  | 6.55                     
|2000(3)                      |  | 6.99                   |  | 7.13           |  | 7.93                     
|2001                         |  | 7.37                   |  | 7.33           |  | 7.84                     
|2002                         |  | 6.23                   |  | 6.95           |  | 7.61                     
|
|
|December 2002                |  |                        |  |                |  |                          
|January 2003                 |  |                        |  |                |  |                          
|February 2003                |  |                        |  |                |  |                          
|March 2003                   |  |                        |  |                |  |                          
|April 2003                   |  |                        |  |                |  |                          
|May 2003                     |  |                        |  |                |  |                          
|June 1 through June 26, 2003 |  |                        |  |                |  |                          

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3B. Capitalization and indebtedness

Not applicable.

3C. Reasons for the offer and use of proceeds

Not applicable.

3D. Risk factors

We describe below certain factors which may materially affect our business and our operating results.

The interests of France Telecom S.A. and Orange S.A. may not always coincide with our interests.

We are a wholly owned subsidiary of Orange S.A., which is controlled by France Telecom S.A. Orange S.A. has the voting majority necessary to adopt all resolutions
of general shareholders' meetings, including those concerning the election of the members of our board of directors and

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distribution
of dividends. Orange S.A. is therefore able to exercise considerable influence on and control over our business and strategy.

Although
we currently enjoy a strong relationship with Orange S.A. which we anticipate will continue in the future, our business goals and those of Orange S.A. may not always coincide.
The business activities and strategies of Orange S.A. or future developments in the wireless communications industry may result in a conflict of interests or lead to competition between us.

The loss of our relationship with France Telecom S.A. and Orange S.A. would seriously harm our business and prospects.

Through our relationship with France Telecom and Orange S.A. we benefit from their financial strength in procurement of financing and expertise in research and
development. If our relationship with France Telecom or Orange S.A. was to be impaired, our business, financial condition and results of operations could be harmed, and we may not be able to achieve
our stated objectives.

France Telecom S.A., which is the majority shareholder of Orange S.A., has implemented a group wide program to accelerate profit and cash generation.
This program requires capital and operational expenditure reductions by us and may cause us to limit our investment in or divest some of our current operations.

As part of its debt restructuring program, France Telecom announced that for the period 2003-2005 it plans to generate €15 billion of net
cash provided by operating activities less net cash used in investing activities, approximately 30% to 40% of which will come from Orange S.A., which is a fully consolidated subsidiary of France
Telecom, Accordingly in December 2002, Orange S.A. announced its plan to accelerate cash and profit generation over the next three years. This plan, which covers the 2003 to 2005 period, aims
to generate an additional €5 to 7 billion of net cash provided by operating activities less net cash used in investing activities, approximately 10% to 18% of which will come from us
as a wholly owned subsidiary of Orange S.A., through a combination of more strict financial targets across the Orange S.A. group and more rigorous discipline on capital and operating expenditures.
Accordingly, we intend to achieve our target to generate an additional €0.7 to 0.9 billion of net cash provided by operating activities less net cash used in investing activities
through reductions in capital expenditures, operating costs margins and also through improved working capital requirements. As a part of this new plan we have reduced headcount and operating costs in
the United Kingdom and, in line with current market conditions, have deferred much of our expenditure on 3G technology, placing greater emphasis on the use of 2.5G technologies such as General Packet
Radio Service or, GPRS. For further information see "Item 5 Operating and Financial Review and Prospectus."

These
measures may limit our ability to build new networks or comply with the terms of our existing UMTS license. Any or all of the preceding, especially within the context of the highly
competitive mobile services industry, could have an adverse impact on our results of operations.

Increased competition from existing and new competitors, including the entry of mobile virtual network operators, could reduce our revenues.

Although there are many barriers to entry, competition in the wireless communications industry is intense. The UK mobile telephone industry is highly competitive.
Vodafone, for example, has a
significantly larger contract subscriber base than Orange UK. Hutchison 3G has launched services in the UK during 2003. We believe that competition for wireless services is based principally on:



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There
can be no assurances about how our competitors' future pricing policies may affect our operations. We will continue to review our service plans and introduce new or supplemental
price options as appropriate.

As
a result of current trends in the telecommunications industry in Europe, such as the rapid convergence of technologies, we expect competition to increase in the future. We currently
face, and expect in the future to face, direct competition from wireless communications services and from mobile virtual network operators, as well as indirect competition from traditional providers
of fixed line telephony. Any increased competition from new entrants or existing operators could:



Our debt agreements contain a number of restrictions and obligations that limit our operating and financial flexibility.

Orange Holdings (UK) Limited, or OHUK, one of our wholly owned subsidiaries, has entered into a senior debt facility that provides us with a total loan facility
of €1,885 million, including letters of credit of €16.4 million. The proceeds from the senior debt facility were used to finance investment in the Orange
UK network. At December 31, 2002 €1,454 million, including letters of credit of €16.4 million, had been drawn against the senior debt facility
(2001: €2,566 million).

The
senior debt facility contains a number of financial, operating and other obligations that limit our operating and financial flexibility. Our ability to comply with these obligations
depends on the future performance of our businesses. There can be no assurances that such obligations will not adversely affect our ability to finance our future operations, nor that they will not
prevent us from engaging in other business activities that may be in our best interest. Our ability to draw funds under the senior debt facility may be restricted by any non compliance with financial
covenants.

The
senior debt facility also requires repayment of our indebtedness when a change in control of our company occurs. We obtained waivers from this provision in December 1999,
March 2000 and September 2000, following changes in our ownership to Mannesmann AG, or Mannesmann, Vodafone AirTouch plc and France Telecom, respectively.

In
December 1995, Orange PCS, another wholly owned subsidiary, entered into a series of sale and lease back financing agreements with NatWest Leasing Industries Limited, or
NatWest. Under these finance lease agreements, Orange PCS agreed to sell to NatWest, and NatWest agreed to lease back to Orange PCS, most of Orange PCS's then-existing network equipment
and certain related licensed software, worth an estimated €712 million (£450 million). This arrangement was concluded in 1996.

In
December 1997, Orange PCS entered into a new series of lease agreements with certain lessors. In these agreements, Orange PCS agreed to purchase, as agent for the lessors,
network equipment and certain related licensed software with a value of up to €712 million
(£450 million). Drawdowns under these lease arrangements commenced in 1998 and continued throughout 1999, with a final drawdown in March 2000.

In
June 1999, we issued £461 million (equivalent) (€705 million) of senior notes due in 2006 and 2009. The notes were issued in three
tranches: £150 million (€229 million) 8.875% notes due 2009; $275 million (€262 million) 9% notes due 2009 and
$225 million (€214 million) 8.75% notes due 2006. The notes due to be redeemed in 2009 can be redeemed from 2004 although a premium is payable if they are redeemed prior
to 2007. In 1998 we issued £600 million (equivalent) (€887 million) of senior notes due in 2008. These can be redeemed from 2003, although a premium is
payable if redeemed prior to 2006. The proceeds were raised in three tranches of pound sterling, US dollar and euro. The

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coupon
payable on each tranche is 8.625%, 8% and 7.625%, respectively. We have decided to exercise our option to redeem our senior notes due in August 2008. The senior notes are scheduled to be
redeemed on August 1, 2003 at the redemption price of approximately £205.9 million, €97.6 million and $19.2 million for each of the respective
series of notes. At August 1, 2003, the principal outstanding amount for each of the respective series of notes being redeemed will be approximately £197.3 million,
€94.1 million and $18.5 million.

In
December 1999, February 2000 and September 2000, we made offers for all our senior notes at 101% following changes of ownership. In January 2000,
€512 million of the senior notes were repurchased at a cost of €544 million. In April 2000, €37 million of senior notes were
repurchased at a cost of €41 million. In October 2000, €27 million of senior notes were repurchased at a cost of
€28 million.

In
addition to our obligations under the senior debt facility, we are also subject to certain obligations of a similar nature under the finance lease arrangements and the terms of the
senior notes.

Our capital expenditures may require additional financing which could adversely affect our financial condition.

Expanding and enhancing a mobile telephone network requires substantial capital investment. During 2002 capital expenditure in the UK was
€1,162 million. We currently estimate that we will make additional tangible capital expenditure of approximately €2.5 to 3 billion between 2003 and 2005.
Our estimated liquidity and resource requirements in the coming years consist of the following:



Our
primary sources of liquidity and capital resources are:



For
further information on our sources of liquidity and capital resources please see "Item 5 Operating and Financial Review and ProspectsLiquidity and Capital
Resources"

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We
believe that our liquidity and capital resources should be sufficient to satisfy our requirements for the foreseeable future, in particular given that Orange S.A. has stated its
intention to continue to provide us with financial support. However, if we underestimate our capital requirements or overestimate our future cash flows, then we may be forced to incur additional debt
or eventually to issue equity. We cannot assure you that future conditions in the loan and debt and equity/capital markets will not adversely affect our financial condition or results of operations,
particularly if the cost of capital increases as we and other wireless operators continue to seek large amounts of debt and equity financing to develop our respective operations. Furthermore, if we
are forced to incur additional debt to fund these investments, such additional debt may increase the risk of a credit rating downgrade, which could have a material adverse effect on our ability to
finance necessary investments.

To
finance the establishment and operation of our businesses, we have incurred substantial indebtedness. At December 31, 2002 we had total indebtedness of
€2,659 million (2001: €3,693 million). We are expanding our operations in the UK. Accordingly, we may incur substantial additional indebtedness in the
future. Our substantial leverage could adversely affect our financial position.

Possible
negative consequences of our high level of indebtedness include:



The high cost of UMTS licenses, and investments and expenses necessary for the success of this technology, could adversely affect our business,
financial condition and results of operations.

On September 1, 2000, we paid £4.1 billion to acquire a UMTS license in the UK. Under the terms of this license we have agreed to make
significant investments in our network in order to offer new products and services. We remain fully committed to 3G and intend to develop and exploit the potential of 3G type services on enhanced 2nd
generation networks in order to improve our customer experience and offer a transition to the commercial launch of 3G, allowing for any issues surrounding 3G technology to be resolved.

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We
consider that 2G and 3G technologies are closely interrelated both from a technical and commercial perspective, in particular:



However,
technological innovations, the emergence of alternative services and an insufficient consumer demand for 3G type services, among other factors, could lead us to reassess our
commitments with respect to our UMTS license. If we cannot fulfill the conditions under our UMTS license or obtain its modification, the license may be revoked and we may be liable for damages to the
UK Government, as well as to our creditors or our suppliers. All of these risks could have a significant negative impact on our financial condition and results of operations. Once our 3G network has
been launched, we expect that we will also incur increased costs related to the development and marketing of additional 3G type services, in particular to promote demand and possibly to subsidize
UMTS-compatible handsets.

In
addition, we cannot be certain that the revenues generated from 3G type services will justify the related high costs. We will need to offset the high purchase costs of our UMTS
license, network capital expenditures and the related amortization costs with increased revenues from customers. The level of demand for 3G type services may be adversely affected by any failure of
prior preliminary launches by our competitors. Furthermore, any delay in the provision of 3G type services resulting from problems with suppliers of components of the 3G network, the roll out of the
network, the unavailability of products compatible with 3G type services, the inability to comply with the requirements of our UMTS license or any other factor may adversely affect revenues or the
date from which such revenues are generated. If in the future, our current estimates relating to future cash flow generated from 3G type services are not met, our results could be adversely affected,
and we could be required to significantly depreciate the value of our UMTS license and related assets recorded in our financial statements.

In
the event that we fail to generate sufficient revenues from our UMTS activities, we also may not be able to meet financial obligations incurred to fund our UMTS rollout or our other
activities, and our financial condition and results of operations may be adversely affected.

Our investments in networks, licenses and new products and services may not result in increased revenues per customer.

We anticipate that we will need to continue to invest in our networks in order to upgrade our networks, and develop and market new products and services. There
can be no assurance that there will be the necessary demand for these new services, the benefits that we expect to gain from such investments may not materialize, and we may not recoup our costs of
making such investments.

The telecommunications industry is subject to rapid and significant changes in technology that could reduce the appeal of our services, including future
UMTS services.

We face competition from communications technologies that are under development or that will be developed in the future, including cordless technologies and
private and shared radio networks.

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We cannot currently predict how emerging and future technological changes will affect our operations or the competitiveness of our services, nor can we predict that new technologies to
support our planned services will be available when expected or that customer demand will develop as expected. Similarly, technologies such as UMTS, that we employ may become obsolete or subject to
intense competition from new or alternative technologies in the future.

Further,
we may not be the first to exploit new opportunities for providing services to customers, including data and internet services receivable through mobile phones, or to deliver
these services in a timely manner. We also rely on third parties to generate content for some of these new services. Such content may not be available or sufficiently compelling to generate the
expected revenues.

Any inability to adequately manage our continuing development and growth could adversely affect our business.

The continuing development of the business has required significant management and operational resources and is likely to continue to do so. We believe this will
require us, among other things, to:



Our
financial condition, results of operations and growth and development could be adversely affected if we are unable to manage the items set out above successfully.

Any major failure of our information technology and network systems may have an adverse effect on our operations.

We are reliant on the effective operation of our information technology systems and network infrastructure. In the event of major information technology
system/network failure, we could suffer business interruption and loss of revenue.

Our business may be impacted by financial market risk, including exchange rate fluctuations and movements in interest rates.

In the normal course of our business, we are exposed to financial market risk, including movements in interest rates and foreign currency exchange rates. Where
appropriate, we enter into derivative instruments to hedge underlying exposures to interest rates and foreign currencies. The derivative instruments we enter into are set out in note 13 to the
consolidated financial statements. As a matter of policy, we do not enter into transactions of a speculative or trading nature.

We
are in the process of finalizing a centralized treasury process with France Telecom. The centralization process will build on our existing treasury management practices and aims to
further improve the efficiency of risk management, funding, cash management and overall risk control within the companies of the Orange S.A. group.

We
are exposed to fluctuations in foreign currencies because our accounts are denominated in euro while the majority of our revenues and certain assets and liabilities are denominated in
pounds sterling. Foreign exchange rate fluctuations between currencies, especially between the pound sterling and the euro, could have an effect on the value of our revenues and certain costs, assets
and liabilities which are denominated in currencies other than the euro. Consequently, variations in exchange rates could adversely affect our financial condition and results of operations. In
addition, such variations could affect our ability to make planned capital expenditure.

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Although
we use foreign exchange hedges to manage our foreign exchange risks, these may not be sufficient to protect us from significant fluctuations in international currency rates.

We depend on a limited number of suppliers for wireless network equipment and maintenance. The failure of these suppliers to provide necessary equipment
could have a material adverse effect on our results.

The construction and operation of our network and the provision and marketing of our services depend on our ability to obtain adequate supplies of a number of
items on a timely basis, such as handsets and transmission equipment and switching and other network equipment. Handsets in particular may be subject to supply constraints under certain circumstances.

Our
results of operations could be materially and adversely affected if suppliers fail to provide us with adequate equipment in a timely manner or if the price of such equipment rises
significantly. In our experience, suppliers from time to time extend delivery times, limit supplies and increase the price of their supplies due to their supply limitations. As a result of these
supply difficulties, we may fail to satisfy the requirements of our new licenses.

We operate in a highly regulated market which limits our flexibility to manage our business.

We must comply with an extensive range of requirements that regulate and supervise the licensing, construction and operation of our networks and services in the
UK. We must also cooperate with agencies or other governmental authorities that regulate and supervise the allocation of frequency spectrum and which oversee the general competitiveness of the
wireless market.

Our
business and results of operations could be materially adversely affected by changes in law, regulation or government policies directed at the wireless market in which we operate. In
particular, decisions by regulators and antitrust authorities concerning the granting, amendment or renewal of licenses, to us or third parties, or decisions relating to tariffs, or efforts to expand
in new markets, or the accessibility of our network to mobile virtual network operators, service providers or our access to third-party networks could materially adversely affect the results of our
operations. Recently, national regulators and the European Union have become increasingly concerned with the costs of calls terminating on mobile networks. A number of regulators have decided to
reduce these costs. International roaming, which is not currently regulated, may also become regulated following the transposition of the new European electronic commission regulatory framework.

In
addition, we are subject to legislation, including environmental regulations, covering the use and the development of land and buildings for telecommunications purposes. Certain
rights and obligations contained within legislation may be subject to change. Amendments to current legislation may affect our ability to upgrade or roll out essential network operations and as such
may adversely affect our results of operations. Lack of formal commitment to evolving environmental national or global initiatives may also adversely impact our reputation. Any such impact on our
reputation or material changes to any environmental legislation may adversely affect our cost of operations and could impact
our ability to offer the products and services demanded by our customers. For more information, see "Item 4B. Business overviewMobile telephony regulation."

We will be obligated to adopt new accounting standards in 2005 that may have a material impact on our accounts.

In June 2002, the European Union ("EU") adopted new regulations requiring all listed EU companies, including us, to apply International Financial Reporting
Standards ("IFRS") (previously known as International Accounting Standards or "IAS") in their financial statements from January 1, 2005.

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Because
IFRS emphasizes the fair value of a company's assets and liabilities, it may have a material impact on a number of important financial statement items, including, among others,
the timing of recognition of sales and other revenues, accounting for share-based compensation, goodwill and intangibles, employee benefit plans, marketable securities and hybrid derivative
instruments and the classification of certain balance sheet items as debt or equity. In addition, the treatment of our classification of business segments, financial instruments and pensions may be
significantly affected.

IFRS
will therefore affect the valuation methods that analysts use to measure and evaluate our performance. IFRS could also have an effect on our debt covenants and other contractual
obligations. In particular, our covenants linked to balance sheet ratios and income statement measures are likely to be significantly affected by the adoption of IFRS in ways that are difficult to
predict at this time.

Alleged health risks of wireless communications devices could lead to decreased wireless communications usage or increased difficulty in obtaining sites
for base stations.

In the United Kingdom, a study on mobile telecommunications health issues conducted by the Independent Expert Group on Mobile Phones, known as the Stewart Report,
reported that to date the balance of evidence does not suggest that wireless phone technologies pose a health risk for the general public. The Department of Health in the UK has nevertheless required
that information be made available to customers so that they can make their own informed choices about how to use mobile phones. In the United Kingdom, we and other mobile network operators are
promoting in-depth scientific research into mobile technology through joint financing of a program with the government of the United Kingdom. Compliance with the recommendations or
resulting legislation may result in significant costs for us.

While
to date we are not aware of any substantiation of health risks associated with mobile communication devices, actual or perceived health risks may adversely affect our revenues or
financial condition through a reduction in the number of customers, reduced usage per customer, exposure to potential litigation or other liability. In the event that future evidence is considered to
show that health risks exist, the use of wireless phones could be subject to regulations which, for example, could limit emission levels from handsets or transmitter sites. Such regulations could have
an adverse effect on our operations and results.

Legal Proceedings

We are involved in several court proceedings as part of the ordinary course of our business. Although we believe that none of these proceedings would individually
have a material effect on our results of operations and financial condition, in aggregate these proceedings could have such an effect.

As
is the case with many companies in the telecommunications industry, we have from time to time received claims alleging possible unfair competition and infringement of certain
intellectual property rights, as well as claims relating to our products or services. Regardless of the validity or the success of such claims, we could incur significant costs with respect to the
defense of such claims which could have a material adverse effect on our results of operations or financial condition.

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ITEM 4  INFORMATION ON THE COMPANY

4A. History and development of the company

We are a wholly owned subsidiary of Orange S.A., whose principal controlling shareholder is France Telecom, the incumbent telecommunications operator in France.
Including our operations, Orange S.A., operates in 20 different countries worldwide, including 9 controlled operations in Europe. Prior to a corporate reorganization in December 1995, Orange
Holdings (UK) Limited, or OHUK, was our principal holding company. OHUK was incorporated and commenced operations in 1989. On April 28, 1994, we commercially launched the Orange UK network in
the UK. Orange plc was incorporated on October 5, 1995 as a public limited company under the laws of England and Wales. Following the
acquisition of Orange plc by France Telecom on August 22, 2000, Orange S.A. was formed. Orange S.A. became our new holding company on December 29, 2000. Our principal office is located
at:



Our
agent for service of process in the United States is CT Corporation Systems, which is located at:



In
1991 Microtel Communications Ltd or Microtel was awarded a license to operate a GSM1800 digital network in the UK. Microtel had been formed by a consortium led and ultimately
wholly owned by British Aerospace. Microtel had commenced developing its network before it was purchased from British Aerospace by OHUK in July 1991, in exchange for 30% of the equity in OHUK,
then a subsidiary of Hutchison Whampoa. Microtel was renamed Orange Personal Communications Services Limited in 1994, prior to the launch of Orange. In 1995 Hutchison Whampoa and British Aerospace
purchased a 5% equity interest in OHUK held by Barclays Bank, together with the related shareholder bonds that were issued pursuant to the terms of an OHUK shareholders' agreement.

On
December 14, 1995, as a result of a corporate reorganization, Orange plc acquired all of the issued share capital of OHUK from its principal shareholders and their subsidiary
companies through a share exchange, maintaining the percentage interests of Hutchison Whampoa and British Aerospace at 68.42% and 31.58%, respectively.

In
connection with the initial public offering of Orange plc, ordinary shares in Orange plc were admitted for trading on the London Stock Exchange and American Depositary Shares, or
ADSs, representing five ordinary shares, were admitted for trading on the Nasdaq National Market on April 2, 1996. Following this initial public offering the interests of Hutchison Whampoa and
British Aerospace in Orange plc were 48.2% and 21.9%, respectively. British Aerospace reduced its interest in Orange plc to 5.0% on March 24, 1998.

On
November 23, 1999 Mannesmann announced that its offer, made on November 1, 1999, to acquire Orange plc had become unconditional. Prior to such offer Hutchison Whampoa
held a 44.8% interest in Orange plc. Orange plc's ordinary shares were delisted from the London Stock Exchange on February 10, 2000, and the ADSs were delisted from the Nasdaq National Market
on February 14, 2000.

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On
February 10, 2000 Vodafone AirTouch plc, or Vodafone, announced that its offer to acquire Mannesmann had become unconditional. Each Mannesmann share was exchanged for 58.9646
Vodafone shares. On the closing of the offer on March 27, 2000 Vodafone had acquired 98.62% of the shares of Mannesmann.

On
April 12, 2000 the European Commission approved the acquisition of Mannesmann by Vodafone, subject to certain commitments by Vodafone, including a commitment to divest Orange
plc and all of its subsidiaries. Vodafone appointed a trustee to exercise its voting rights in matters affecting Orange plc and to ensure that such rights were exercised on an independent, arms'
length basis. Vodafone also agreed not to dispose of any of Orange plc's licenses, customers, database, key personnel, intellectual property or other assets necessary to enable Orange plc to operate
as a going concern until divestment. During the time that Mannesmann and Vodafone owned Orange plc, neither company appointed any directors to Orange plc's board, was involved in the management of
Orange plc or had access to Orange plc's confidential information.

On
May 30, 2000 France Telecom announced that it had agreed to acquire Orange plc for £25.1 billion (€40.2 billion),
£13.8 billion (€22.1 billion) of which was in cash and £11.3 billion (€18.1 billion) of which was in newly issued
France Telecom shares. In addition, France Telecom agreed to assume £1.8 billion (€2.9 billion) of Orange plc's indebtedness, as well as the commitments of
£4.0 billion (€6.5 billion) incurred by Orange 3G Limited, a wholly owned subsidiary of Orange plc, in connection with its successful bid for a UMTS license
in the United Kingdom. On August 11, 2000 the European Commission delivered its decision approving the transaction subject to France Telecom's undertaking to divest Orange plc's 50% interest in
KPN Orange Belgium NV, or KPN Orange, and, pending the divestiture of this interest, the creation of procedures isolating KPN Orange from any potential interference by France Telecom. On
December 14, 2000, France Telecom and Orange plc announced that they had reached an agreement with KPN Mobile for the sale of its 50% shareholding in KPN Orange to KPN Mobile. The sale was
completed on February 7, 2001.

France
Telecom's acquisition of Orange plc, which was subject to a number of other conditions, including approval by the European Commission and confirmation that Orange 3G Limited would
be granted its UK UMTS license, was completed on August 22, 2000.

Following
its acquisition of Orange plc on August 22, 2000 France Telecom restructured its holdings in order to combine certain of its wireless operations with those of Orange
plc. On August 22, 2000 France Telecom transferred its domestic wireless operation to Orange France (formerly France Telecom Mobiles S.A.), its wholly owned subsidiary. At the same time, France
Telecom began the process of transferring, directly or indirectly, certain other subsidiaries and interests, including Orange plc, to Orange S.A., the holding company for the new group.

Pursuant
to an agreement dated December 21, 2000, as part of the Orange S.A. group restructuring, Orange plc transferred certain assets to a wholly owned subsidiary of Orange
S.A., Wirefree Services Belgium (formerly France Telecom Participations Belgium S.A.) for a total consideration of approximately €532 million. This transfer was concluded on an
arms' length basis and included, among others, Orange plc's holdings in Ananova Limited, Bangkok Inter Teletech Co. Ltd, NewsTakes, Inc., PocketThis, Inc. and Book2eat Holdings
Limited.

In
2002 and 2003, Orange S.A. initiated changes in its internal organizational structure in order to improve its operating efficiency in relation to three main areas, i.e. mass market
services, business services and technical development. As part of this strategic review, Orange S.A. began a reorganization project to align its corporate structure with its operating structure, which
is currently being effected by bringing Orange S.A.'s international operations outside of France and the UK, including its operations in the United States and Germany and its interests in Austria and
Switzerland, under a single management organization. In connection with this reorganization project, Orange S.A.'s

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operations
outside of France and the UK were regrouped under a UK holding company, Orange Global Limited, a wholly owned subsidiary of Orange S.A., in March 2003.

On
March 13, 2003, Orange Global Limited entered into a share purchase agreement with Orangedot Limited, a wholly owned subsidiary of Orange plc, to purchase the shares in Orange
Holdings Limited for a total consideration of £202,308,000 (approximately €302 million). As a result, our 100% shareholdings in Wildfire Communications, Inc.
and Hutchison Telecommunications GmbH and our 17.45% interest in Connect Austria GmbH and 50% interest in Orange Communications SA, all held through Orange Holdings Limited, have been transferred to
Orange Global Limited. Orange Holdings Limited and its subsidiaries are "Unrestricted Subsidiaries" as defined under the indentures to our senior notes. The total interests transferred from the
Company pursuant to the share purchase agreement with Orangedot Limited represent approximately (0.3)% of our total operating income before depreciation and amortization (or "EBITDA" as defined in the
senior note indentures) and 3.1% of our total long-term assets for the year ended December 31, 2002. This agreement has been negotiated on an arm's length basis.

For
a description of our principal capital expenditures and divestitures, see "Item 5B. Liquidity and Capital Resources."

4B. Business overview

We are one of the leading providers of wireless communications in the UK, offering a broad range of voice and data communications services. We have a very strong
vision of a wirefree future, supported by an aspirational brand and a philosophy focused on the customer and the provision of high quality, generating high value services. We believe we play a leading
role in the UK market in expanding mobile communications and introducing new services and features.

We
generated consolidated revenue of €6,623 million for the year ended December 31, 2002. During 2002 Orange UK, our operating company in the UK, attracted
22.8% of net growth in the UK contract market and 20.2% of net prepaid UK market growth resulting in a total active customer base of 13.3 million at December 31, 2002. Market share for
Orange UK grew during 2002 to 27.2%. During 2002 we had on average 12,728 employees, 90% of whom worked in our UK operations.

At
December 31, 2002, we also owned 17.45% of Connect Austria, which has launched "ONE', Austria's third digital mobile network, and 50% of Orange Communications SA, Switzerland's
third digital mobile network. On March 13, 2003, our interests in these operations were sold to Orange Global Limited, a wholly owned subsidiary of Orange S.A. Orange S.A., our parent, had a
total interest of 100% in Orange Communications SA at March 31, 2003. For further information please see "Item 7B. Related Party Transactions."

Historically,
we have been principally focused on providing voice transmission over digital Global System for Mobile Communications (GSM) networks. We are at the forefront of
developments in using technology to increase the speed and efficiency of our networks and in translating technologies into simple and effective services for customers. For example, the roll out of
GPRS, has allowed us to successfully launch our photo messaging service and, in conjunction with Microsoft, launch the first Windows® powered smartphone, the SPV (Sound Pictures Video). We
intend to remain among the leaders of the wireless communications market through continued innovation.

We
have been awarded a UMTS license in the United Kingdom. We will take a pragmatic approach in regard to our strategy towards our UMTS license. In the United Kingdom, where competitive
pressure is strong (and risks becoming stronger with the arrival of a fifth network operator, Hutchison 3G), UMTS will be launched in a limited area in 2003 as a technical and commercial trial.

In
December 2002 Orange S.A. announced its plan to accelerate cash and profit generation over the next three years. This plan, which covers the 2003 to 2005 period, aims to
generate an additional €5

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to
7 billion of net cash provided by operating activities less net cash used in investing activities, approximately 10% to 18% of which will come from us as a wholly owned subsidiary of Orange
S.A., through a combination of more strict financial targets across the Orange S.A. group and more rigorous discipline on capital and operating expenditures. Accordingly, we intend to achieve our
target to generate as a subsidiary of Orange S.A. an additional €0.7 to 0.9 billion euros of net cash provided by operating activities less net cash used in investing
activities.

As
a part of this strategy we have reduced headcount and operating costs in the UK, and deferred much of our expenditure on 3G technology, placing greater emphasis on the use of 2.5G
technologies such as GPRS. For further information see "Item 5 Operating and Financial Review and Prospects".

Market trends

Several trends have emerged that we expect will continue to affect the nature of the wireless communications market. These market trends include:



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Market opportunities

As a result of the trends in the wireless communications industry, we intend to exploit the following opportunities:



Our strengths

We believe that the expertise acquired in building our business, combined with the strengths listed below, serve to differentiate us from our competitors and will
be essential to our objective of being one of the leading providers of mobile communications services in our markets. We believe that these competitive strengths, including our strong brand identity,
highly effective marketing and the quality and capacity of our network, enable us to attract a loyal customer base generating high revenues per subscriber.



Orange believes in the future. Orange makes a difference to people's lives by creating simple and innovative services that help people communicate and interact
better.

Since
launching its services in the UK in 1994, Orange UK has made and continues to make considerable investment in the development of the Orange brand (the main elements of which are
the word mark "ORANGE," the "Orange" logo, the color orange, and the slogan "the future's bright, the

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future's
Orange") both in the UK and abroad through Orange S.A. This investment has resulted in an extensive portfolio of trademark applications and registrations which is complemented by a portfolio
of domain names including orange.com, orange.net, orange.co.uk and orange.fr.

We
believe that the Orange brand promises of being straightforward, dynamic, honest, friendly and refreshing have successfully transferred into all of the markets in which the Orange
brand currently operates and will help it become one of the most powerful brand names in the European wireless
communications market. The Orange brand articulates and expresses the philosophy, guiding principles and "spirit" of Orange throughout the international operations of Orange S.A., our parent company.
Before an operating company is rebranded "Orange" by Orange S.A., it must meet required standards in terms of network performance and in terms of quality of product and service offered. In 2002,
Orange S.A.'s operations in Romania, Slovakia, Ivory Coast and Cameroon were all re-branded Orange. Orange S.A.'s operations in The Netherlands and Botswana were rebranded Orange in
March 2003 and its operation in Madagascar was rebranded Orange in June 2003. Thirteen of Orange S.A.'s fifteen controlled operations now operate under the Orange brand. Orange S.A.
plans to introduce the Orange brand in all of its controlled operations.



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Strategies

Our principal objective is to be the leading mobile services operator in the UK. This objective is in line with the plan announced by Orange S.A. in 2002, which
covers the 2003 to 2005 period and aims to generate an additional €5 to 7 billion of net cash provided by operating activities less net cash used in investing activities,
approximately 10% to 18% of which will come from us as a wholly owned subsidiary of Orange S.A.. This plan provides for the implementation of a variety of measures consistent with the Orange vision
and philosophy, yet is mindful of current market conditions.

Over
the past year, we have introduced more stringent financial targets and more rigorous objectives relating to capital expenditures and planned operating expenditures. Accordingly, we
reduced headcount and operating cost margins in the UK, and have deferred much of our expenditure on 3G technology. For further information see "Item 5 Operating and Financial Review and
Prospects", placing greater emphasis on the use of 2.5G technologies such as GPRS. Our strategy will be commensurate with the relative position and potential of any given market, subject to strict
levels of financial control and discipline, and consistent with our vision and future growth potential. In line with this objective, our principal strategic initiatives include the following:



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Operations

United Kingdom

The number of wireless communications users in the United Kingdom has grown approximately 22% in two years from approximately 40.1 million customers at
December 31, 2000 to approximately 48.9 million customers at December 31, 2002, representing approximately 82% of the population. As at December 31, 2002, the United
Kingdom was Western Europe's third largest wireless communications market, based on number of users, behind Germany and Italy. The wireless communications market in the United Kingdom grew by
approximately 8% during 2002 even as market penetration rates have stabilized in the United Kingdom.

At
December 31, 2002, Orange UK had approximately 13.3 million active customers and an estimated market share of approximately 27.2% of active customers in the United
Kingdom. A GSM license was awarded to Orange UK for a term of 25 years from July 25, 1995, expiring in July 2020.

The
table below presents the principal characteristics of the mobile telecommunications market in the United Kingdom and the activities of Orange UK.

|                                                       |  | December 31,
|------------------------------------------------------ |  | ------------
|
|Total market penetration in the United Kingdom (%)(1)  |  | 82.0        
|Wireless customers in the United Kingdom (millions)(1) |  | 48.9        
|Contract (millions)                                    |  | 15.9        
|Prepaid (millions)                                     |  | 33.0        
|Orange UK active customers (millions)(1)               |  | 13.3        
|Contract (millions)                                    |  | 4.2         
|Prepaid (millions)                                     |  | 9.1         
|Market share of Orange UK (%)                          |  | 27.2        
|Network coverage of Orange UK (% of population)(1)     |  | 99.4        

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Service plans

Orange UK offers two types of service plans for personal customers and a service plan targeted at businesses.

Pay monthly plans.In September 2002 Orange UK launched "Your Plan," an all inclusive package that allows customers to
build their own service plan, choosing inclusive minutes of talk time, text messaging, a photo-messaging bundle, and the Orange Access Pack which offers multimedia services such as news updates,
games, and sports information. Customers receive a specified amount of talk time for a fixed monthly charge, which can be used to make calls to other operators' networks as well as for Orange to
Orange calls, fixed line calls and calls to the Orange Answer Phone. There are no

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peak
or off-peak rates and customers pay an additional set price for any excess talk time used. They may also rollover any unused minutes for use in the following month.

With
the "Talkshare Plan," customers can share their talk time and services with multiple users and receive one bill. For an extra monthly charge customers can also receive additional
off-peak minutes and discounted text and photo messages.

Orange
UK believes that it offers the best value for money in the United Kingdom and subsequently developed the "Orange Value Promise." This promise provides that if an Orange UK
customer or potential Orange UK customer believes that a digital package available from another UK network operator would better suit them than any of the Orange UK service plans, Orange UK undertakes
to provide them with the equivalent on the Orange UK network. Orange UK then bills that customer in substantially the same way as does the competitor.

Customers
that subscribe for Orange UK pay monthly service plans and "Orange Value Promise" service plans may normally terminate their service plan by providing one month's prior written
notice, subject to a minimum initial period, which is typically 12 months.

Pay monthly plans for businesses.Orange UK offers a full range of targeted flexible voice and data plans. The plans were
launched under the name "Your Plan for Business" and include a new tariff based on usage which rewards customers based on each employee's usage and the number of Orange terminals
held per business, as well as tariffs with from 2,000 to 10,000 inclusive minutes per month. In addition, a new tariff for company user groups was launched. Existing tariffs for national data,
international and roaming voice and data services, and telemetry complete the range. For smaller businesses, Orange UK offers voice and data plans from either the "Your Plan" or the "Your Plan for
Business" ranges.

Pay as you go plans.Orange "Pay as you go" allows customers to purchase a handset and buy talk time when and as they need
it. Orange currently offers its pay as you go service without a fixed service charge; talk time vouchers do not have expiry dates and customers do not enter into a minimum term contract for their
service.

Orange
UK now has three "Pay as you go" service plans, offering flexibility and choice. "Choose your own off peak," offers customers competitively priced peak and off-peak
rates and the opportunity to choose their own off-peak time band. "Talk and save," launched in 2001, is a sliding scale tariff designed for high users who prefer to pay as they go. "Fixed
rates all day," a new service plan launched in November 2002, is a flat rate tariff for people who want total clarity on their call charges. There are no minimum term contracts for any of the
"Pay as you go" service plans.

Service features

Orange UK offers a number of additional service features designed to enhance the satisfaction of existing customers and to attract potential customers. There are
three general types of additional service features for pay monthly customers:



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Orange
UK also offers its pay monthly customers a "Network Performance Promise." If the Orange UK network drops a call, and this number is re-dialed within five minutes, the
customer is credited with up to one minute of free talk time. In addition, Orange UK offers a 14-day money-back guarantee period.

Network

Orange UK's network is one of the largest digital networks in the United Kingdom and, based on its own estimates, provides coverage to approximately 99.4% of the
population. On September 1, 2000, Orange 3G Limited, a wholly owned subsidiary of Orange UK, was awarded, for approximately €6.3 billion
(£4.1 billion), one of the five UMTS licenses in the United Kingdom for a duration of 20 years. This license was for a 2 × 10MHz spectrum and a
1 × 5MHz spectrum. For operational reasons, the license has been revoked and reissued to Orange UK. Pursuant to the license, Orange UK should be able, among other things, to
provide telecommunications services to at least 80% of the population of the United Kingdom by December 2007. The UMTS license may be revoked following a material breach of one of its terms. If
a UMTS license is revoked, modified or surrendered, no reimbursement will be made except in exceptional circumstances.

We
continue to believe that there are significant opportunities to capitalize on our high quality UK network to further enhance network coverage, quality and capacity. To date we have
invested approximately £3,377m (€5,192 million) in the expansion of our UK network. At December 31, 2002 our UK network had over 10,000 base stations.

The
"first generation" of wireless communications, based on analog technology, provided simple voice telephony. The "second generation" of wireless communications, based on the digital
Global System for Mobiles communications standard, or GSM, provides additional data facilities ranging from short messaging services to narrow band data. This is sufficient for the data services
currently offered by the network operators, and basic video and multimedia applications.

"Third
generation" wireless communications, which are expected to offer full interactive multimedia capabilities at data rates of up to 384 kilobits per second, are expected to bring
wireless networks significantly closer to the capabilities of fixed line networks. Improvements in coding and data compression technology will provide better speech quality and more reliable data
transmission. Universal Mobile Telecommunications System, or UMTS, is the standard adopted in Europe for implementation of third generation wireless telecommunications.

Before
the launch of UMTS, wireless data services will be made possible by the rollout of technological developments that will increase the speed and efficiency of existing GSM networks.
HSCSD and GPRS
collectively known as "2.5G," create an evolutionary path to "3G" UMTS services. These technologies further enable multimedia and other data services before third generation services are introduced.

Ultimately,
the range of services offered over third generation networks will be determined by the needs of consumers over time. However, we anticipate that key new product offerings
will be facilitated as a result of greater capacity and enhanced network capability.

Due
to the rapid growth of the wireless and Internet markets, the technologies underlying the two markets are converging as opportunities arise to exploit technology from one market in
the other. Convergence is taking place between voice and data transmission. With the rapid growth of data communications compared to voice traffic, conventional voice telecommunications networks are
evolving to high speed data networks based on Internet Protocol technology. While convergence creates new opportunities for network operators and service providers, new challenges must also be
addressed, such as redefining tariff structures, developing new network and systems management capabilities and expanding customer services.

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Customer service

Orange UK has focused its customer service activities on building direct relationships with customers and on offering a wide range of direct customer services.
Orange UK's customer service representatives have access to customer registration, billing and handset provisioning systems, coverage maps and customer management facilities through its information
technology systems. These systems also provide data to management and marketing personnel who monitor customer satisfaction, identify trends in calling patterns, target network expansion and support
sales and marketing functions.

The
sixth annual J.D. Power and Associates UK Mobile Customer Satisfaction Study published on June 2, 2003 (www.jdpower.com) showed
that, as in the fifth study published on May 22, 2002, Orange UK ranks as the number one telephone service for customer satisfaction in the contract sector. Orange has ranked number one for
customer satisfaction for both contract and prepay customers in every other J.D. Power and Associates UK Mobile Customer Satisfaction Study since they began in 1998. The 2003 J.D. Power and Associates
UK Mobile Customer Satisfaction Study is based on detailed interviews held with a cross section of the UK mobile market between February and March 2003.

In
addition, at the Mobile Choice Consumer Awards in September 2002, Orange UK was voted the Best Mobile Network by the readers of Mobile Choice. Over 90% of those surveyed were
more than satisfied with the coverage, reliability, customer service and tariffs provided by Orange UK. In
October 2002 Orange UK was also the Winner of the Best Brand in technology and telecommunication at the Marketing Week Effectiveness Awards.

Innovations

Orange UK has consistently sought to develop and market innovative products and services. Orange UK was the first United Kingdom operator to offer the following
innovations to its customers:



Orange UK Multimedia

In August 2002, Orange UK launched a new multimedia mobile portal and a range of services optimized for color handsets including the Windows®
powered SPV. Orange UK transformed its charging approach for consumer data services by introducing flat monthly fees for unlimited WAP

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access
over CSD (Circuit Switched Data) and GPRS. Orange UK customers can now use and enjoy a large range of content and services, including:



At
December 31, 2002, there were approximately 1.1 million active users of the new multimedia mobile portal, and an additional 800,000 customers using Orange branded
interactive text products.

Orange Business Solutions

At the beginning of 2002, Orange UK launched Orange Business Solutions as a fully integrated business unit dedicated to meeting the wirefree needs of medium sized
businesses, companies and public sector organizations. Orange Business Solutions is responsible for full end-to-end management of its customers and employs a Customer
Development team of approximately 230 people and a dedicated Customer Service team of over 500 people. Orange Business Solutions is committed to further developing the business market and extending
its sales reach through its direct sales and account management and by working with a range of partners.

Orange
Business Solutions offers an extensive portfolio of business specific products and services including a flexible range of voice options, Orange Business Text Messaging, Wirefree
email and a series of other innovative Wirefree services. Orange Business Solutions has also launched Machine-to-Machine services, the Orange Sales Accelerator and Orange
Service Accelerator, which allow businesses to remotely access their sales support and service management system. The activities of Orange Business Solutions and the dedicated small business team
enable Orange to increase the value of its brand in the market.

Marketing

Market research commissioned by Orange UK and completed in February 2003, showed that Orange continues to be the first choice for personal customers when
they are considering buying a mobile phone. In addition, Orange UK is increasingly becoming a first choice for business customers. The research indicated that Orange continues to be favorably
perceived by consumers and is strongly associated with being a name that people can trust. The Orange brand was associated with being helpful, friendly, and providing fair and reasonable prices. Since
its launch Orange has always been seen as having very distinctive advertising, a trend which continues. In the business market the market research commissioned by Orange indicated that the Orange
brand is associated with offering fair and

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reasonable
prices, leading the way with new ideas and being helpful and friendly. Orange research also showed that Orange has the highest levels of advertising awareness in the market.

Orange
UK's main marketing objectives are:



Sales and distribution

Orange UK sells its products and services in the United Kingdom through a wide range of distribution channels.



Roaming

Roaming allows wireless customers while abroad to make and receive calls while in the coverage area of a network of which they are not customers and to be billed
for such service by their home network. Wireless customers who are roaming can expect to enjoy substantially the same services, features and security while traveling as they do within their home
network.

Our
roaming services were created entirely within the framework of the GSM technical standard and the policies and procedures of the GSM Association. A bilateral relationship is created
between two GSM operators by signing a roaming agreement based upon the GSM Association's standard agreement, amended as appropriate for particular circumstances. Generally, these agreements are for
an unlimited period, each party being able to terminate the agreement on serving notice. At present, roaming agreements are generally concluded between one or more network operators in different
countries, although they can also be negotiated between operators in the same country. After technical and billing tests are successfully concluded, the connection is opened commercially and each
party's customers may use the other party's network. Our and Orange S.A.'s roaming policies are set in accordance with local market conditions by the individual operating companies. Customer roaming

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charges
reflect the wholesale charges between operators and the pricing policy applied by each operator for its customers.

Orange
UK offers a simple fixed-rate roaming tariff based on five different regions of the world. Orange UK contract customers, who meet certain credit requirements, can roam
in more than 125 countries pursuant to the roaming agreements that Orange UK has concluded with approximately 280 different network operators. The coverage for Orange UK's pre-paid
customers is less widespread due to the slower industry rollout of prepay roaming solutions. However, the majority of demand is concentrated in a smaller number of countries. Where this demand is not
met, an aggressive rollout plan is being implemented to add major uncovered countries.

We
intend to take advantage of Orange S.A.'s footprint to reduce roaming charges. The objective is to allow our customers to use the products and services of each of Orange S.A.'s
international subsidiaries in each market in which they operate without using the networks of other operators.

Handsets

Orange UK offers a range of different handsets supplied by a number of manufacturers, including Sony Ericsson, Motorola, Nokia, Samsung, Philips and Siemens,
together with a new entrant, HTC, the device manufacturer of the Windows® powered SPV. Orange UK offers a wide product range running from entry-level to feature-rich products
in order to meet the needs of the customers in terms of price, ease of use, enjoyment and functionality. Orange UK offers high-speed GPRS handsets and intends to offer handsets adapted to
wireless communication with other appliances such as computers, cameras and personal organizers. In the UK, mobile operators and service providers generally offer handsets to subscribers at less than
their cost to the operators.

Network equipment

We use standard equipment which is available from a number of suppliers. Most of the equipment for the GSM network is purchased from Nokia and Ericsson.

For
future UMTS services Orange S.A., our parent, has framework agreements with Alcatel, Ericsson and Nokia available until the end of 2003. These agreements are currently being
renegotiated.

Technology

Orange UK depends upon a wide range of information technology systems to support network management, subscriber registration and billing, customer service,
marketing and management functions.

We
believe that the information technology systems that Orange UK has developed and integrated into its network have been an important factor in the Orange UK achievements since its
launch in 1994. As the Orange UK customer base has grown, we have devoted significant resources to the development and expansion of information technology systems and the adoption and implementation
of new systems.

To
enable customer queries to be addressed at the first point of contact, customer service representatives have access to a wide range of information technology systems, including
registration, billing and handset provisioning systems, coverage maps and customer management facilities. The systems also provide data to management and marketing personnel who monitor customer
satisfaction, identify trends in calling patterns, target network expansion and support sales and marketing functions.

Our
principal systems have been developed in-house and use Informix and Oracle relational database management software operating on industry standard hardware platforms.

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Competition

Orange UK's principal competitors in the United Kingdom are the three other existing operators of wireless communications networks, Vodafone, O2 (wholly owned by
mmO2) and T-Mobile (wholly owned by Deutsche Telekom). All of them commenced their operations before Orange UK. At December 31, 2002, Vodafone, O2 and T-Mobile accounted
for approximately 25.4%, 24.3% and 18.2%, respectively, of all wireless customers in the United Kingdom, while Orange UK estimates it had approximately 27.2% of all wireless customers. In addition to
the current mobile network operators in the United Kingdom, Orange UK will face competition from the new UMTS entrant, Hutchison 3G UK Ltd, which is marketing services under the brand name "3."
Hutchison 3G UK Ltd is owned by a consortium that is majority-controlled by Hutchison Whampoa and also includes NTT DoCoMo and KPN Mobile as shareholders.

In
November 1999, a joint venture between the Virgin group and Deutsche Telekom became the first virtual wireless network operator in the United Kingdom when it launched its
service, purchasing airtime from One2One (currently T-Mobile). Its market share was approximately 4.9% at December 31, 2002.

To
the extent that wireless devices are substituted for fixed line telephones in the United Kingdom, Orange UK competes also with providers of fixed line telecommunications services,
including British Telecom, and operators of cable telephony systems.

International operations

In
2002 and 2003, Orange S.A. initiated changes in its internal organizational structure in order to improve its operating efficiency in relation to three main areas, mass market
services, business services and technical development. As part of this strategic review, Orange S.A. began a reorganization project to align its corporate structure with its operating structure, which
is currently being effected by bringing Orange S.A.'s international operations outside of France and the UK, including its operations in the United States and Germany and its interests in Austria and
Switzerland, under a single management organization. In connection with this reorganization project, Orange S.A.'s operations outside of France and the UK were regrouped under a UK holding company,
Orange Global Limited, a wholly owned subsidiary of Orange S.A., in March 2003. For further information please see "Item 7B. Related Party Transactions."

The
following is a description of our international operations as of December 31, 2002.

Connect Austria (Austria)

In 1997, the Connect Austria consortium was awarded the third Austrian wireless license. Other members of the consortium include the German conglomerate E.On, the
Norwegian wireless telecommunications operator Telenor, and TeleDanmark. On March 13, 2003 our 17.45% interest in Connect Austria was sold to Orange Global Limited, a wholly owned subsidiary of
Orange S.A. For further information please see "Item 7B. Related Party Transactions."

Connect
Austria launched its digital GSM1800 service on October 26, 1998 under the brand name "ONE". At December 31, 2002, Connect Austria covered, according to its own
estimates, 98% of the Austrian population. At December 31, 2002, Connect Austria had 1.3 million active mobile customers and a total market share of 20.1% compared to 45.1% for Mobilkom
Austria, 30.3% for T-Mobile and 4.5% for Telering. At December 31, 2002, there were approximately 6.7 million wireless customers in Austria, with a penetration rate of
approximately 82.2%.

On
November 3, 2000, Connect Austria was awarded, for €120 million, a UMTS license for a period of 20 years. This license covers a
2 × 5MHz spectrum. Five other licenses were also awarded

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using
an auction procedure. The terms and conditions of the license provide that Connect Austria should be able to cover 25% of the population before the end of 2003. Connect Austria may have to pay a
fine if this level of coverage of the population is not met. The fine is calculated on the basis of the amount of coverage actually achieved but is limited to €20 million.

Switzerland

Orange Communications SA, which was formed in January 1998 and awarded its GSM1800 license in May 1998, provides wireless services in Switzerland.
At December 31, 2002, Orange Communications SA estimated that its GSM network covered over 97.8% of Switzerland's population and had a market share of 17% with 963,000 active customers. On
March 13, 2003 our 50% interest in Orange Communications SA was sold to Orange Global Limited, a wholly owned subsidiary of Orange S.A. For further information please see "Item 7B.
Related Party Transactions." Orange S.A. has a total interest of 100% of the share capital and voting rights of Orange Communications SA.

The
following table shows the main characteristics of the mobile telecommunications market in Switzerland and the business activities of Orange Communications SA.

|                                                                 |  | December 31,
|---------------------------------------------------------------- |  | ------------
|
|Total market penetration in Switzerland (%)(1)                   |  | 78.9        
|Wireless customers in Switzerland (millions)(1)                  |  | 5.7         
|Orange Communications SA active customers (millions)(2)          |  | 0.96        
|Market share of Orange Communications SA (%)(1)                  |  | 17.0        
|Orange Communications SA's Network coverage (% of population)(2) |  | 97.8        

---

The market penetration rate has stabilized in Switzerland at approximately 78.9% as at December 31, 2002. Orange Communications SA was the
third wireless communications provider to launch in Switzerland and at December 31, 2002 was third in terms of market share.

Orange
Communications SA successfully launched operations in June 1999 under the Orange brand. According to research carried out by NFO-Incom concluded on January 31, 2002,
the Orange brand had a spontaneous recognition rate of 92% in Switzerland. In 2002 Orange Communications SA was awarded the Dialogmarketing Award for one of its business marketing campaigns. In
addition the "Greenland" marketing campaign was among the finalists at the International Advertising Cannes Festival (Cannes Lions) in June 2002.

Orange
Communications SA introduced WAP services in June 2000, Orange Fast Data (HSCSD) in August 2000 and its mobile Internet portal in November 2000. In 2001,
Orange Communications SA introduced specific tariffs for high SMS users and the first family tariff plan in Switzerland. Orange Communications SA launched its MMS services on October 24, 2002
and the Windows® powered SPV phone in November 2002.

On
December 6, 2000 Orange Communications SA was awarded, for 55 million Swiss francs, or approximately €35 million, a UMTS license for a duration of
15 years. This license was for 2 × 15MHz spectrums. Three other licenses were also awarded to Swisscom Mobile AG, TDC Schweiz AG and 3G Mobile AG. The terms and
conditions of the license provide that Orange Communications SA should, among other things, reach a coverage of 50% of the population by the end of 2004. The license may be withdrawn if the licensee
fails to meet its obligations. Fines may be imposed in an amount up to three times the amount that the licensee has gained by its failure to comply, or if that gain cannot be calculated, up to 10% of
the revenues for the financial year prior to the awarding of the license.

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Orange Communications SA had approximately 1,600 full-time equivalent employees at December 31, 2002.

In
line with Orange S.A.'s plan to further accelerate cash and profit generation, Orange Communications SA is restructuring its operations to reduce its headcount, operating costs and
expenditures.

Orange
Communications SA acquired 100% of VIAG EuroPlatform AG on July 29, 2002 which was renamed Orange (Liechtenstein) AG on April 10, 2003. Orange (Liechtenstein) AG
owns a license to operate a GSM1800 network in Liechtenstein and operates under the brand name of Look. Market penetration in Liechtenstein is approximately 67.5%. Orange (Liechtenstein) AG's GSM
enables roaming synergies with Orange Communications SA. Orange (Liechtenstein) AG also holds a UMTS license in Liechtenstein.

Orange
(Liechtenstein) AG had 144 customers and approximately five full-time equivalent employees at December 31, 2002.

Orange
Communications SA competes with other wireless network operators in Switzerland, including Swisscom Mobile, which is owned by Swisscom and Vodafone, and Sunrise, controlled by
TeleDanmark. At December 31, 2002, Orange Communications SA's market share in Switzerland was approximately 17%, compared to approximately 63% for Swisscom Mobile and 20% for Sunrise.

Belgium

Approval from the European Commission of France Telecom's acquisition and subsequent transfer of Orange plc into the Orange S.A. group was contingent on France
Telecom divesting our 50% interest in KPN Orange. On December 14, 2000 we, along with France Telecom, announced that an agreement had been reached with KPN Mobile, our partner in KPN Orange, to
sell our 50% interest to KPN Mobile. On February 7, 2001 the sale was completed pursuant to the agreement of December 14, 2000. KPN Orange operated under the Orange brand and retained
the right to use the Orange brand in Belgium until October 1, 2002. In the spring of 2002, KPN Orange was rebranded as BASE.

Hutchison Telecommunications (Germany) GmbH

Hutchison Telecommunications GmbH, or HT Germany, resells services of all three of the digital cellular telephone networks who offer their services via service
providers in Germany through national retail stores, independent dealers and direct sales offices and outlets as well as indirect sales channels. On March 13, 2003 our 100% interest in HT
Germany was sold to Orange Global Limited, a wholly owned subsidiary of Orange S.A. For further information please see "Item 7B. Related Party Transactions." On June 3, 2003, an
agreement was entered into with The Phone House Deutschland GmbH for the sale of this 100% interest in HT Germany. This transaction remains contingent upon the satisfaction of certain conditions
precedent contained therein, including the receipt of required regulatory and authority approval. At December 31, 2002 HT Germany had 710,515 subscribers.

Hutchison Telecommunications (France) S.A.

Hutchison Telecommunications (France) S.A., or HT France, our wholly owned subsidiary, was a service provider in France reselling services on the GSM network
operated by Société Française Radiotéléphone (SFR), distributing its services primarily through national retail stores.

HT
France entered into revised arrangements with France Telecom during 1998. However, as a result of our acquisition by Mannesmann, France Telecom terminated these arrangements, with
effect from March 31, 2000. HT France continued to manage subscribers for France Telecom until September 2000. Following a strategic review of the business, HT France was transferred to

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OrangeServices
(formerly France Telecom Mobile Services) and subsequently dissolved by legal merger on May 23, 2001.

Other activities

On March 13, 2003 our 100% interest in Wildfire Communications Inc. was sold to Orange Global Limited, a wholly owned subsidiary of Orange S.A. For
further information please see "Item 7B. Related Party Transactions." Wildfire Communications Inc. is a pioneer in the field of voice recognition technology. We purchased Wildfire in
April 2000 for €148 million (US$142 million) paid immediately and €10 million (US$10 million) paid subsequently. Wildfire
Communications Inc. develops and markets Wildfire, a voice activated digital personal assistant, as an enhanced service offered to subscribers by public telephone network carriers and to
personnel by companies. By responding to voice commands, Wildfire can take messages, place calls and store
information. Wildfire becomes familiar with users' personal requirements the more they use it and will also sort and prioritize incoming messages, allowing users to listen to messages and return calls
without having to be connected or redial.

Our
parent, Orange S.A., has announced its intention to reorganize the business of Wildfire, which is primarily located in Massachusetts, USA, to become profitable as soon as possible.
This is likely to result in a reduction of headcount in Wildfire.

Licensing agreements

The Orange brand was first launched in the UK in 1994, and since then has been licensed to members of the Orange S.A. Group in Botswana, Denmark, the Dominican
Republic, France, Madagascar, The Netherlands, Romania, Slovakia, Switzerland, Cameroon, and the Ivory Coast for a period of 10 years and in Thailand for a period of 20 years. The
trademark license was granted to Orange France on December 17, 2001 and expires on December 17, 2011. Under these brand license agreements, we assist the licensees in developing the
brand in local markets by way of access to material and support services. The license agreements provide that the intellectual property rights to the brand are retained by Orange PCS which receives a
percentage of the licensees' revenue. The licensee in Thailand paid a one time initial fee and is paying an additional fixed fee over ten years. The other licensees are charged a percentage of their
revenue. The brand licensing agreement with Orange S.A.'s operation in Madagascar is scheduled to be executed on June 25, 2003.

Additionally,
prior to our acquisition by France Telecom the Orange brand has been licensed to various companies in the Hutchison group (a previous majority shareholder of Orange plc)
for their operations in Australia, Hong Kong and India and to Partner Communications for its operations in Israel. These licenses are exclusive and royalty-free. They are of indefinite
duration, though, with the exception of the agreement pertaining to Australia, which expires in 2013. However, all of these agreements may be terminated for various reasons, including misuse of the
brand or in the event of a change in control. A brand license agreement, which terminated in October 2002, was also entered into with KPN for its operations in Belgium (KPN Orange).

Seasonality

Generally, the number of subscriber connections to mobile telephone networks in the UK and other markets where we are present has been greater during the second
half of the calendar year than during the first half, primarily due to increased sales during the Christmas season. Therefore, our revenues from equipment sales and connection charges, and the
aggregate cost of subscriber equipment and dealer commissions, have been greater during the second half of the calendar year than during the first half. However, it is difficult to predict the
seasonality of subscriber connections in the future.

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Mobile telephony regulation

EU regulation

Legislative measures adopted by the EU in the telecommunications sector are applicable in each of the Member States of the European Union, either with immediate
effect in the case of Regulations or in the case of EU directives after the Member States have adopted national implementing legislation. The national regulatory regimes of each Member State
accordingly reflect in large part the EU framework.

On
June 28, 1990, the European Commission adopted two directives (No. 90/387 and No. 90/388) which launched the process of liberalization of the European
telecommunications market. Directive No. 90/387 lays down the conditions for access and use of the public telecommunications networks within and between the Member States, the open network
provision, and relates to the harmonization of technical interfaces, conditions of utilization and billing principles in order to guarantee access to the telecommunications networks and services which
is objective, transparent and non-discriminatory. Directive No. 90/388 relates to the liberalization of certain telecommunications services. These two directives have been
progressively supplemented and extended resulting on January 1, 1998 in the liberalization and introduction of competition in the provision of all types of telecommunications services across
the EU, subject to derogations granted to certain Member States (Greece, Ireland, Portugal, Luxembourg and Spain). Thus, directive No. 90/388 was amended by directive No. 96/2 of
January 16, 1996 in order to free up wireless telecommunications services prior to January 1, 1998.

On
April 10, 1997, the European Parliament and the Council adopted directive No. 97/13, which provides a framework for the attribution of general authorizations or
individual licenses to network
operators and telecommunications services providers on the basis of a system which is objective, transparent, and non-discriminatory. This directive provides that the number of licenses
which can be awarded to mobile network operators may be limited due to the scarcity of available frequency spectrum.

On
June 30, 1997, the European Parliament and the Council adopted directive No. 97/33 relating to interconnection which aims to ensure a universal service and
interoperability by application of principles for provision of an open network. This directive provides for a "right" to interconnection and therefore imposes an obligation on network operators and
service providers to negotiate interconnection with each other.

Certain
mobile or fixed line network operators who have been designated by the national regulatory authorities as having significant market power, or "SMP," must offer interconnection to
other operators on a non-discriminatory basis when presented with a "reasonable" request. Operators are presumed to have significant market power in one of the national telecommunications
markets defined by the ONP interconnect directive when they have a share of more than 25% in such market. National regulatory authorities may, however, determine that an operator with a market share
of less than 25% in the relevant market has SMP, or that an operator with a market share of more than 25% does not. In both cases, the decision takes into account the operator's capacity to influence
market conditions, its turnover compared to the size of the market, the control it has over means of access for the end user, facilities of access to financial resources, and its experience in the
provision of products and services on this market.

Operators
designated as having SMP in their domestic interconnection market (in other words the fixed line and wireless interconnection markets taken together) must:



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The
European Commission has undertaken a wide-ranging review of the European telecommunications regulatory regime. On February 14, 2002, the European Community adopted
four directives which will replace the existing EU telecommunications harmonization directives. The stated intention for the changes is to provide an updated flexible regulatory framework for a
liberalized market in order to stimulate competition and, in particular, the provision of high-speed Internet access, and to provide a "light touch" regulatory regime for operators and
service providers by rolling back regulation in competitive markets. Legislation has to be transposed at the level of EU Member States by July 2003. In the interim, however, national regulatory
authorities are likely to be influenced by the proposals when setting national telecommunications policy. In respect of the assessment of SMP, determination that a single operator has SMP will be,
among other criteria, by reference to the 40% benchmark for a dominant position, as generally adopted in EC competition law. Regulatory authorities will also be able to determine operators to have
"joint" SMP with one or more other operators. This will not be based upon market share, but rather on a regulatory authority's analysis of the relevant market and assessment of the competitive nature
of the market in accordance with the concept of joint dominance. Legislation from the European Commission later this year is expected to further clarify the concept of joint dominance. Under the new
Framework, once a regulatory authority determines an operator to hold SMP either singly or jointly, then the regulatory authority may impose regulatory obligations it deems to be appropriate and
proportionate to the competitive state of the relevant market. Under certain circumstances the regulatory authorities' decisions may be subject to a review by the European Commission.

We
are also subject to general EC competition law, in particular, Articles 81 and 82 of the EC Treaty. These Articles prohibit agreements and concerted practices restricting
competition and the abuse of a dominant position, respectively. On July 27, 1999, pursuant to both of these articles, the Competition Directorate of the European Commission launched a
sector-specific inquiry into international mobile roaming services, particularly to investigate whether charges are unfairly high. This followed receipt by the Commission of a number of complaints as
to the apparently high level of roaming charges, the apparent lack of competition in international roaming offerings and allegations of various anti-competitive practices. On
January 13, 2000, the Commission sent formal information requests to approximately 200 mobile operators, service providers and national competition and telecommunications regulatory
authorities. On December 13, 2000, the Commission published its first conclusions after having analyzed the data obtained. The Commission found that there were competition issues within the
international roaming markets, and they continue to investigate, in co-operation with the competent national authorities, the level of competition. Pursuant to Articles 81 and 82 of
the Treaty the Commission may take further action, including the imposition of a penalty of up to 10% of the overall turnover of any undertakings involved.

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UK regulation



The operation of mobile telecommunications networks and the provision of mobile telephony services in the United Kingdom is regulated under the Telecommunications
Act 1984, or TA, and the Wireless Telegraphy Acts 1949 and 1998, or WTA. The Director General of Telecommunications, or DGT, is responsible for the regulation of telecommunications under the TA and
heads the Office of Telecommunications, or Oftel, the UK telecommunications regulatory authority. The Radiocommunications Agency is responsible for licensing and regulating the use of frequency
spectrums under the WTA. The running of a wireless telecommunications network requires two licenses, a TA license and a WTA license. Orange UK has been granted licenses under each Act. The operation
of GSM and UMTS licenses requires different licenses, issued under the WTA 1949 as amended by the 1998 WTA.

In
addition to applicable UK legislation and the terms and conditions of the licenses granted to operators, UK telecommunications policy is also contained in a number of UK government
announcements and White Papers, Oftel consultative documents and statements, and is subject to EU legislation. The United Kingdom has implemented, or is in the process of implementing, all relevant EU
telecommunications legislation.



On September 19, 2000, Oftel announced that it had begun a review of the wireless telecommunications market in the United Kingdom, to examine how
competition has developed since its last review in 1998-1999. This review considered the extent of competitive development in the broad market for mobile retail services. In parallel Oftel
also conducted a review of mobile call termination rates.

Following
its competition review of the broad market for retail mobile services Oftel concluded that Vodafone and O2 UK (formerly BT Cellnet) possessed Significant Market Power in the
Mobile market and because of this position they were required to provide mobile airtime to independent service providers. Orange UK has been found not to possess Significant Market Power. However,
Oftel, following an in-depth survey and questions to the marketplace, concluded that it was no longer necessary to mandate Vodafone and O2 UK to provide mobile airtime to independent
service providers. As a result, no mobile operator in the UK is subject to regulatory obligations to provide airtime to independent service providers.

On
September 26, 2001, Oftel commenced the regulatory process to introduce mobile call termination price control obligations into the Telecommunications Act Licenses of Orange, O2
UK, T-Mobile (formerly One2One) and Vodafone. We believe that Oftel's analysis is flawed in many respects and as such did not give our consent to the proposed License modification. The
other mobile operators also objected to the modification.

On
December 18, 2001, Oftel announced its intention to refer the matter to the UK Competition Commission. The Competition Commission began its Inquiry on January 7, 2002.
The Competition Commission was requested by Oftel to consider whether the current mobile call termination charges act against the public interest. The Inquiry has concluded and Oftel published the
Competition Commission's public interest conclusions and recommendations on January 22, 2003. The Competition Commission has recommended to Oftel that the GSM voice termination charges of the
four UK mobile operators should be reduced by 15% before July 25, 2003. Thereafter the termination charges of Vodafone and O2 should fall by Retail Price Index minus 15% per annum for the next
three years to March 31, 2006 and in the case of Orange and T-Mobile should fall by Retail Price Index -14% per annum over the same period.

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On
January 22, 2003, Oftel announced its intention to commence, in the near future, the process to modify the TA licenses of each mobile operator to effect a 15% reduction before
July 25, 2003. The second part of the Competition Commission's recommendation annual Retail Price Index reductions cannot be implemented by way of TA license modifications. On July 25,
2003, the UK is expected to implement the new European regulatory framework (Directives adopted by the European Community on March 7, 2002). As a result, on July 25, 2003, all TA
licenses issued to telecommunications operators will be revoked and replaced by general conditions of entitlement in accordance with the requirements of the new European framework. In order to impose
a price control on each of the mobile operators after July 25, 2003, Oftel must first conduct a market review and issue determinations that the individual operators possess significant market
power in the relevant market. On January 22, 2003, the Director General of Telecommunications stated his intention to review the termination market afresh for the purpose of introducing the new
European Telecoms framework with effect from July 25, this year.

Consequently
it is expected that Oftel will seek to implement the Competition Commission's recommendations in full. On January 22, 2003, Vodafone announced that it intends to seek
a Judicial Review of the Competition Commission's decisions. Orange UK considers the Competition Commission's recommended remedy to be disproportionate. Orange UK has therefore also begun Judicial
Review proceedings seeking a reversal of this decision, as has T-Mobile. The Judicial Review proceedings are due to begin on 9 June 2003.



The UK Government published on December 12, 2000 a Communications White Paper which included measures to change the regulatory framework of the
telecommunications industry. In response to the converging nature of telecommunications, broadcasting and Internet services the UK Government proposes that the five sector specific regulatory bodies
(Oftel, Radiocommunications Agency, Independent Television Commission, Broadcasting Standards Commission, and the Radio Authority) covering these markets be consolidated into one regulatory body for
the communications sector: OFCOM. The main objectives are: to make the United Kingdom the most dynamic and competitive communications and media market in the world; to ensure universal access to a
choice of diverse and high quality services; and to ensure that the rights of citizens and consumers are safeguarded. OFCOM would have a primary aim to protect the consumer and would have sector
specific powers to promote effective competition in the communications market for the benefit of consumers. Spectrum management will also be included in OFCOM's new responsibilities. The UK Government
published a draft bill in May 2002 for consultation. On November 20, 2002, the Government laid the Communications Bill before Parliament. The Bill is now progressing through the
Parliamentary process. It is the Government's intention to complete the Parliamentary process so that the Bill is enacted as an Act of Parliament by July 25, 2003 as a means to establish OFCOM
and to implement the new European framework. If the Communications Act is not enacted by July 25, the Government will implement the new European framework by Statutory Instrument and would
expect to complete the enactment of the Bill no later than the autumn of 2003. Upon enactment of the Communications Bill, OFCOM will become the national regulatory authority for the communications
sector and Oftel will be dissolved with its functions being wound into OFCOM.



TA licenses permit licensees to install and operate a telecommunications system over which telecommunications services may be provided. TA licenses may be granted
to individual operators or apply to a class of persons. There are various types of both individual and class licenses. Certain individual licenses for both fixed and mobile networks are designated as
public telecommunications operator, or PTO, licenses.

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PTOs
are generally required to satisfy certain service obligations and other obligations. Holders of PTO licenses are granted certain rights and obligations relating to the installation
and maintenance of equipment, such as cables and equipment on private or public land, and are permitted to undertake civil construction and public works in the same manner as other public utilities
and to undertake certain permitted developments without having to obtain express planning permission. Pursuant to the Telecommunications (Interconnection) Regulations 1997, certain
operatorsincluding
substantially all PTOshave a right to request interconnection from, and are subject to a reciprocal obligation to provide interconnection when requested to, another operator.

Some
of the obligations contained in TA licenses are effective only when the Director General of Telecommunications has determined that the operator in question has SMP or "market
influence" for the purposes of the license. No such determination has been made in respect of Orange UK.

Orange
UK holds a mobile PTO license under the TA, which permits it to operate a mobile telecommunications network and a fixed network. Orange UK also has full interconnection rights
under the Telecommunications (Interconnection) Regulations 1997. TA licenses were granted for an initial duration of 25 years and are terminable by the Secretary of State for Trade and Industry
on 10 years notice given at any time after the end of the fifteenth year. Orange UK's current TA license is stated not to expire until 2020 at the earliest. However, upon implementation of the
new European framework on July 25, 2003, Orange's TA license will be revoked and replaced with a general condition of entitlement of unlimited duration.

The
DGT may modify the conditions of TA licenses with the licensee's consent, subject to a limited power of veto by the Secretary of State for Trade and Industry. The DGT may also in
certain circumstances modify the terms of an individual license where he does not receive objections from the licensee whose licenses are to be modified or if he considers the modification to be
"deregulatory." If objections are received, the DGT may decide not to revise the proposal or to refer the matter to the Competition Commission, which will consider whether the proposed modification
would be in the public interest.

The
DGT must impose modifications if, following a reference by it to the Competition Commission, the Competition Commission considers that the matter referred operates or may be expected
to operate against the public interest and the Competition Commission recommends a license modification to prevent or remedy any adverse effects that are identified. Before any license modifications
are made, notice must be given to licensees and to all persons likely to be affected by the modifications.

The
Secretary of State for Trade and Industry also has power, under the European Communities Act 1972, to modify TA licenses to reflect the provisions of EU Directives.

Orange
Paging, formerly Hutchison Paging, ceased its activities on June 30, 2001. In November 2002, its license for the provision of telecommunication services and
messaging was returned to the Department of Trade and Industry.



Orange UK and the other mobile network operators in the United Kingdom have been granted WTA licenses that permit such operators to establish and use sending and
receiving stations for wireless transmissions in the operation of their mobile networks. WTA licenses allocate portions of the radio frequency spectrum to each mobile network operator.

T-Mobile
(formerly One2One) and Orange UK have each been allocated 2 × 30 MHz of the 1800 MHz spectrum for the running of a second
generation network (GSM). Vodafone and O2 UK (formerly BT Cellnet) each have 2 × 17.5 MHz of the 900 MHz spectrum digital GSM networks and

39

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have
been awarded an additional 2 × 5.75 MHz each of the 1800 MHz spectrum. Vodafone and O2 UK relinquished 2 × 4 MHz of
900 MHz spectrum upon switching off their analog networks.

The
UK Government has enacted legislation, the Wireless Telegraphy Act 1998, which enables it to set spectrum fees at a rate above the administrative cost of managing that spectrum and
to allow for auctions of spectrum for future services, including UMTS. The Government has confirmed that the existing four mobile operators will not be subject to auctions for the continued use of
their current second generation spectrum allocations.

Orange
UK is one of five mobile operators licensed to provide third generation mobile services in the UK using the UMTS spectrum. The other licensees are Vodafone, O2 UK,
T-Mobile and Hutchison 3G. The licenses were allocated by competitive auction in 2000. Orange UK, O2 UK and T-Mobile have each been allocated
2 × 10 MHz paired and 1 × 5 MHz unpaired of the UMTS spectrum. Vodafone has been allocated 2 × 15 MHz
paired and Hutchison 3G has been allocated 2 × 15 MHz paired and 1 × 5 MHz unpaired of the UMTS spectrum. Hutchison 3G has launched
commercial third generation services in March 2003.

Orange
UK's WTA licenses specify the principal technical requirements that Orange UK must comply with including, among other things, the management of the sites from which radio
frequencies are emitted and the use of approved equipment. Inspection obligations are also included. The operation of wireless telegraphy stations can be restricted or the stations can be closed down
on a temporary or permanent basis by the Secretary of State for Trade and Industry if Orange UK is in breach of its license or if undue interference is being created. Orange UK may also be required to
modify or restrict its use or permanently close down radio equipment in the interests of long-term spectrum planning or in the event of a state of emergency being declared. Orange UK's
1800MHz
WTA license continues in force until surrendered by it, subject to variation or revocation by the Secretary of State for Trade and Industry.

Pursuant
to a consultation by the Radiocommunications Agency on the policy issues surrounding the use of license exempt spectrum for public telecommunications services, the UK Government
adopted the Wireless Telegraphy (Exemption) Act of 2003, which came into force on February 12, 2003. The regulation establishes a license exempt spectrum of frequencies for commercial public
access services such as Bluetooth and WLANs and providing supplementary spectrums for broad spectrum mobiles and nomads.



Mobile systems must connect with the telecommunications systems of other PTOs, both fixed and mobile, in order to complete calls that do not originate or
terminate on their system. Operators' rights and obligations to interconnection are governed by the Telecommunications (Interconnection) Regulations 1997 (see above), which implement the EC
Interconnection Directive. If, after negotiation between the parties, certain interconnection terms cannot be agreed between operators, the DGT can be asked to determine such terms. In addition, the
DGT has the power to investigate the terms of an interconnection agreement on his own initiative.

Pursuant
to the EU Interconnection Directive, Oftel has determined that British Telecom and Kingston Communications (Hull) Limited have SMP in the fixed line and rented-line
markets in which they operate. Oftel has also held that British Telecom has SMP on the national interconnection market. British Telecom and Kingston Communications (Hull) Limited are also subject to
certain additional obligations. No mobile operators have been determined to have SMP in the national market for interconnection and so the principles of transparency and cost orientation for
interconnection charges do not apply to the four mobile operators in the UK market. However, as highlighted above Oftel has proposed that a cost oriented price control be imposed on the mobile
interconnect termination rates of the four operators.

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Orange UK first entered into an Interconnection Agreement with British Telecom in July 1993. Under the Interconnection Agreement, Orange UK was required,
along with British Telecom, subject to the terms of the agreement, to interconnect, and to keep interconnected, their respective
telecommunications systems. Orange UK was also required to order, and British Telecom was required to provide, sufficient interconnection circuits to meet the forecast or actual traffic. Each of
British Telecom and Orange UK is required to use reasonable endeavors to provide sufficient switching capacity to meet traffic volumes on each interconnection route and to ensure that
busy-hour call completion rates are no less than those normally encountered within Orange UK's system. The Interconnection Agreement also provides for the leasing of fixed links from
British Telecom.

In
1996, Orange UK migrated to British Telecom's Revised Standard Interconnection Agreement, the RSIA. This provided Orange UK with the benefits of element-based interconnect charges of
the network and cost-sharing on interconnect links. In 1998, Orange UK migrated to British Telecom's "Network Charge Control Interconnect Agreement." This allowed Orange UK to benefit from
the lower interconnection charges offered by British Telecom. British Telecom's interconnection charges are set on the basis of long run average incremental costs plus appropriate
mark-ups.

Orange
UK currently has, or is negotiating with other PTOs for, direct interconnection if and when justified by call traffic. Such connections reduce the need to route calls through
British Telecom.



Mobile telecommunications tariffs in the United Kingdom are not generally subject to the prior approval or review by regulatory authorities. Only British Telecom,
as the dominant ex-monopoly fixed operator, is limited by retail price restrictions imposed by Oftel. Other TA licenses have no retail price restrictions. As noted above, TA licenses do,
however, require operators designated as having SMP in the relevant markets to publish the terms and conditions on which they offer certain telecommunications services. Oftel has not designated Orange
UK as having SMP for this purpose.



Telephone number portability permits subscribers to retain their telephone numbers when changing telecommunications operators. Since January 1, 1999, all
holders of wireless public telecommunications operator licenses have been obliged to provide and have offered portability of mobile telephone numbers on request, subject to certain conditions. During
October 2001 a new industry number transfer process was introduced reducing the standard transfer timescale from 28 calendar days to seven calendar days.



The UK Government has enacted the Competition Act which came into force on March 1, 2000. It grants powers to the industry-specific regulators and to the
Director General of Fair Trading for the prohibition of anti-competitive agreements, concerted practices and abuses of a dominant position. The Competition Act introduces third party
rights, stronger investigative powers, interim measures and effective enforcement powers, and in particular the power to impose substantial fines and injunctions.

The
Competition Act gives the Director General of Telecommunications powers, exercisable concurrently with the Director General of Fair Trading, in relation to "commercial activities
connected with telecommunications." One effect of the Competition Act is that third parties can bring enforcement actions before the United Kingdom courts directly against telecommunications operators
who are in breach of prohibitions, and seek damages, rather than having to wait for the DGT to make a final order to enforce the conditions of the operators' license, as is the case under the TA.

41

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The Enterprise Act came into force on November 7, 2002. The Act introduces a number of changes to the competition law regime regarding merger decisions. In addition, the Act
allows a number of designated consumer bodies to make "super-complaints" to the OFT requiring the OFT to investigate any feature or combination of features of a UK market that appears to be
significantly harming the interests of consumers. To date no consumer bodies have been designated for this purpose. The DTI is expected to establish the designation criteria and to commence
designation during 2003.

E-money regulations

The UK Government (Treasury) and Financial Services Authority (FSA) have consulted on the transposition of the EU Directive 2000/46/EC of the European Parliament
and of the Council of September 18, 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions (the E-Money directive) into UK
law. The UK Government implemented the relevant Regulation on April 27, 2002. The provision of e-money services will be subject to the regulatory oversight of the FSA.

The
E-Money directive defines "electronic money" as monetary value as represented by a claim on the issuer which is:



There
is currently some uncertainty as to whether existing pre-payment methods for the purchase of mobile telephony will be captured by the UK Regulations. Discussions are
ongoing with Treasury and FSA. Consequently Orange UK in common with other UK mobile operators may be required to obtain the necessary FSA authorizations under the E-Money Regulations in
order to continue to offer prepaid mobile payment mechanisms. In any event it is also anticipated that this FSA authorization would be required for any stored value proposition that would facilitate
the purchase of a broader range of goods and services.

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4C. Organizational structure

We are a wholly owned subsidiary of Orange S.A. France Telecom owns approximately 86% of Orange S.A. The following was our organizational structure as of
December 31, 2002:

CHART

After
taking into account the internal reorganization of our parent, Orange S.A., (described in "Item 7B. Related Party Transactions"), the following was our organizational
structure as of March 31, 2003.

CHART

---

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4D. Property, plants and equipment

We lease land and space on buildings for the installation of transmitters and antenna towers throughout the UK. Almost all transmitter sites are leased, the
majority for initial minimum terms of five to ten years. We share a substantial number of sites with other operators. We also own or lease land and buildings for offices, administrative and customer
service centers and technical facilities in several locations throughout the UK. We believe our properties are well maintained and suitable for their intended use.

Orange
S.A. is currently re-evaluating its new headquarters at the Point, Paddington Basin in London. In 2001, we entered into an agreement for a lease for the building
subsequent to which we are legally bound, once construction of the building is completed, to enter into a 21 year lease. We are working on a disposal program for the building either by way of
sub-letting or assignment of the lease.

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ITEM 5  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

We offer a broad range of voice and data communications services in the United Kingdom and in selected markets in continental Europe. Our principal operations are
in the United Kingdom, where the GSM 1800 network and the Orange brand were launched in 1994.

We
currently have two segments, identified on the basis of geographical criteria:



As
part of its debt restructuring program, France Telecom announced that for the period 2003-2005 it plans to generate €15 billion of net cash provided by
operating activities less net cash used in investing activities, approximately 30% to 40% of which will come from Orange S.A., which is a fully consolidated subsidiary of France Telecom. Accordingly
in December 2002, Orange S.A. announced its plan to accelerate cash and profit generation over the next three years. This plan, which covers the 2003 to 2005 period, aims to generate an
additional €5 to 7 billion of net cash provided by operating activities less net cash used in investing activities, approximately 10% to 18% of which will come from us as a
wholly owned subsidiary of Orange S.A., through a combination of more strict financial targets across the Orange S.A. group and more rigorous discipline on capital and operating expenditures.
Accordingly, we intend to achieve our target to generate an additional €0.7 to 0.9 billion of net cash provided by operating activities less net cash used in investing
activities through reductions in capital expenditures, operating costs margins and also through improved working capital requirements. As a part of this new plan, we have reduced headcount and
operating costs in the United Kingdom and, in line with current market conditions, have deferred much of our expenditure on 3G technology, placing greater emphasis on the use of 2.5G technologies such
as GPRS.

Basis of preparation

This discussion and analysis is based on our consolidated financial statements for the years ended December 31, 2000, 2001 and 2002, which have been
prepared in accordance with French generally accepted accounting principles. These consolidated financial statements have been prepared from our audited financial statements of those of our
subsidiaries in the United Kingdom and Switzerland and have been translated from sterling to euro, the reporting currency of Orange S.A.

Scope and consolidation methods

Our majority owned operations in the United Kingdom, Germany and the United States are fully consolidated. Our 50% owned operation in Switzerland, where we had
management influence prior to their transfer to Orange Global Limited, a wholly owned subsidiary of Orange S.A. on March 13, 2003, and for which the remaining 50% of share capital is held by
Wirefree Services Belgium, a wholly owned subsidiary of Orange S.A., has been accounted for under the equity method, while our minority owned investment in Austria has not been consolidated.

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In
July 2000, as part of the acquisition of Orange S.A. by France Telecom, and given the commitments with respect to the European Union, a trustee was appointed by France Telecom
to manage our 50% shareholding in KPN Orange. Consequently from this date, our 50% interest in the Belgian operator was reflected in the consolidated balance sheet at its equity method carrying value
as at July 31, 2000 under the heading "Non consolidated investments". On February 7, 2001, Orange International Limited sold our interest in KPN Orange to KPN Mobile and the related cash
proceeds were transferred to the Company. For further information see "Item 5 Operating and Financial Review and ProspectsLiquidity and Capital Resources".

Critical accounting policies under French GAAP

The operating and financial review and prospects of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in France. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those
related to customer programs and incentives, bad debts, inventories, investments, intangible assets, income taxes, financing operations, warranty obligations, restructuring, long-term
service contracts, pensions and other post-retirement benefits, and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our
management believes that the following critical accounting policies, among others, involve the most significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue recognition and credit risk on trade accounts receivable

Turnover includes airtime revenue (including fixed monthly access charges), roaming revenue, revenue from sales of telecommunication equipment and other revenues
and services. Revenues from airtime, roaming and other services are recognized when the service is rendered. Revenues from sales of telecommunication equipment and connection charges are recognized
upon delivery to the customer or activation by the customer, as appropriate.

In
assessing credit risk on trade accounts receivable, estimates and assumptions are required in determining the expected conversion of the revenue streams to cash collected. The reserve
estimation process requires that management make assumptions based on historical results, future expectations, the economic and competitive environment, and changes in the credit worthiness of our
customers, and other relevant factors.

Impairment of long-lived assets

Plant, property and equipment and intangible assets (excluding goodwill) are written down when, as a result of events or changes in circumstances, which include
evidence of obsolescence or physical damage or economic performance below initial expectations or other internal or external indicators, their fair value appears to be permanently less than their
carrying value. Fair value is defined as the higher of the market value and value in use.

Impairment
is determined for each group of assets by comparing their carrying value with their fair value. Should the above comparison indicate that an asset is permanently impaired, the
write-down recognized is equivalent to the difference between carrying value and fair value. For assets to be held

46

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and
used, fair value is principally determined based on the estimated value in use, which is represented by the future economic benefits expected to arise from the continuing use of an asset and from
its disposal at the end of its useful life. Fair value is determined on the basis of discounted cash flows, which are based on reasonable and supportable assumptions that represent management's best
estimate of the set of economic conditions that will exist over the remaining useful life of the asset, or by reference to replacement cost for used equipment or cost of alternative technologies.

For
assets to be disposed of, fair value is determined based on the estimated net selling price, with reference to market prices.

The
identification of impairment indicators, the determination of the relevant group of assets to be tested for impairment and of their expected useful life, the estimation of future
cash flows and appropriate discount rates require management to make significant judgments and the results of the valuation process may vary significantly depending upon the assumptions used.

Our
total long-lived assets (excluding goodwill) at December 31, 2002 amount to €10,022 million of which the contribution of Orange UK amounts
to €10,006 million, including the UMTS license of €6,298 million issued to Orange PCS.

In
December 2002, the management of Orange S.A. announced its decision to review the launch plans of the 3rd generation technology and adopt a more prudent
timetable. We remain fully committed to 3G and intend to develop and exploit the potential of 3G type services on enhanced 2nd generation networks in order to improve our customer
experience and offer a transition to the commercial launch of 3G, until all issues surrounding 3G technology have been resolved.

We
consider that the 2G and 3G technologies are closely interrelated both from a technical and commercial perspective, in particular:



Consequent
to this decision and considering the close interrelation between 2G and 3G technologies as described above, we conducted a specific impairment review in the United Kingdom by
comparing:



Factors
considered in this review included the demand for and speed of take up of 3G type services, the availability and functionality of network infrastructure and mobile devices,
operating costs and capital expenditure requirements and the behaviour of competitors and regulatory authorities, all of which are, by their nature, subject to uncertainty which consequently affects
estimations of future profits and cash flows.

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Based
on this analysis, no impairment was recorded at December 31, 2002. The conclusion of this analysis would remain unchanged in the event of an uncontrolled one percentage
point increase in the post-tax discount rate used.

Impairment of goodwill

The fair value of goodwill is subject to impairment review at each closing date, when events and circumstances occur indicating that impairment might exist. Such
events or circumstances include significant adverse changes, other than temporary changes, in the assumptions or expectations considered at the time of the acquisition.

We
assess the fair value of goodwill for all our controlled operations and affiliates on a country by country basis.

The
need to recognize impairment is assessed by reference to the estimated fair value of each entity, which is compared with its carrying value in our consolidated financial statements.
The fair value is defined as the higher of the market value and value in use.

The
market value is the estimated selling price less the costs of disposal, which could be obtained by us through the divestiture of an operation in an arm's length transaction. Such
estimate is based on the best information available at the closing date, taking into account specific circumstances. Due to the volatility of the market capitalization in the telecommunication
industry, the value in use of goodwill is preferably assessed with reference to the discounted cash flow methodology. Discounted cash flows are assessed for each operation based on reasonable and
supportable assumptions that represent management's best estimate of the set of economic assumptions that will exist over future years, and are determined as follows:



For
operations to be divested, the fair value of goodwill is determined based on the operation's estimated net selling price.

Significant
management judgment is involved in the valuation process and the results of such valuations can vary significantly depending on the assumptions used by management in
assessing future cash flows and determining appropriate perpetual growth rates and discount rates. Cash flows represent management's best estimate of the set of economic assumptions that will exist
over future years.

At
December 31, 2002, the net book value of goodwill reflected in our consolidated financial statements amounted to €76 million and related exclusively to
our 50% equity accounted investment in Orange Communications SA. In assessing the fair value of goodwill, a perpetuity growth rate of 3.0% and a discount rate of 8.9% were applied to the expected cash
flows of our operations in Switzerland.

The
sensitivity of our share in the estimated fair value of our operation in Switzerland at December 31, 2002 to an uncontrolled change of 1 point in the perpetuity growth rate or
in the discount rate compared to the assumptions highlighted above is as follows:

|                         |  |      |  | Impact of a 1 point change in the assumptions used decrease/increase
|------------------------ |  | ---- |  | --------------------------------------------------------------------
|
|
|Orange Communications SA |  | 0.87 |  | (0.15)/0.21                                                         
|                         |  |      |  |                                                                     

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Non consolidated investments

We hold a 17.45% minority interest in Connect Austria. This company is not a listed company and therefore its fair value is difficult to estimate and management
is required to make significant assumptions in the valuation process. As part of the strategic review of Orange S.A.'s investment portfolio undertaken at the end of 2002 and in connection with the
decision to improve our financial performance, we reassessed the fair value of this investment at December 31, 2002 based on a multi criteria approach, which included the review of indicators
such as market prices for comparable companies, potential commercial developments, return on investment and revalued net shareholders' equity, taking into consideration the specific nature of this
minority owned shareholding. Consequently, an impairment charge of €73 million was recorded by us for the year ended December 31, 2002 in order to bring down the carrying
value of our investment in Connect Austria to a zero amount.

Deferred income taxes

As at December 31, 2002, we had recorded deferred tax assets amounting to €140 million net of valuation allowance and deferred tax
liabilities. This balance primarily consists of losses carried forward and other temporary differences relating to Orange PCS in the United Kingdom. The realization of deferred tax assets is reviewed
by the management using each entity's tax results forecast based on budgets and strategic plans. Deferred tax assets are provided for to the extent that the recovery of these taxes is not considered
probable. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine
that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was
made. Likewise, should we determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax assets would increase
income in the period such determination was made.

Provisions for risks and liabilities

As at December 31, 2002, we had recorded provisions for risks and liabilities amounting to €100 million. Provisions for identified
risks and liabilities of uncertain timing or amount are recorded when we have a present obligation (legal or constructive) to a third party as a
result of a past event and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. The amount of such provisions is determined based on
management's reasonable judgment, taking into consideration all of the available information at closing date to reasonably assess the probability and the exposure for each risk and liability. Because
of the inherent uncertainties in the foregoing evaluation process, actual losses may be different from the original estimated amount of provisions recorded at closing date.

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5A. Operating Results

|                                                                                     |                          | Years ended December 31, |      
|------------------------------------------------------------------------------------ | ------------------------ | ------------------------ | -----
|
|
|Profit and loss account data                                                         |                          |                          |      
|Turnover                                                                             |                          |                          |      
|                                                                                     | UK                       |                          | 6,102
|                                                                                     | International operations |                          | 521  
|                                                                                     |                          |                          |      
|Total                                                                                |                          | 6,623                    |      
|                                                                                     |                          |                          |      
|Cost of sales                                                                        |                          | (2,610                   | )    
|Selling, general and administrative expenses                                         |                          | (2,233                   | )    
|Research and development expenses                                                    |                          | (18                      | )    
|                                                                                     |                          |                          |      
|Depreciation and amortization (excluding goodwill)                                   |                          | (812                     | )    
|                                                                                     |                          |                          |      
|Operating income/(loss)                                                              |                          |                          |      
|                                                                                     | UK                       |                          | 1,103
|                                                                                     | International operations |                          | (153 
|                                                                                     |                          |                          |      
|Total                                                                                |                          | 950                      |      
|                                                                                     |                          |                          |      
|Interest expenses, net                                                               |                          | (214                     | )    
|Other non-operating income, net                                                      |                          | 9                        |      
|Equity in net loss of affiliates (excluding goodwill amortization)                   |                          | (90                      | )    
|                                                                                     |                          |                          |      
|Income/(loss) before tax, goodwill amortization and exceptional items                |                          | 655                      |      
|Income taxes before exceptional items                                                |                          | (252                     | )    
|Goodwill amortization                                                                |                          | (4                       | )    
|                                                                                     |                          |                          |      
|Net income/(loss) before exceptional items, net of tax                               |                          | 399                      |      
|Exceptional items, net of tax                                                        |                          | (180                     | )    
|                                                                                     |                          |                          |      
|Net income/(loss)                                                                    |                          | 219                      |      
|                                                                                     |                          |                          |      
|Net income/(loss) before exceptional items, net of tax per share (basic and diluted) |                          | 0.27                     |      
|Net income/(loss) per share (basic and diluted)                                      |                          | 0.15                     |      
|                                                                                     |                          |                          |      

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|                                                                                                               |  | Years ended December 31, |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------------ | -
|
|
|Selected cash flow data                                                                                        |  |                          |  
|Funds generated from operations                                                                                |  | 1,534                    |  
|Purchase of property, plant, equipment and intangible assets (net of movements on fixed asset
creditors(1))(2) |  | (1,308                   | )
|Changes in other operating assets and liabilities                                                              |  | 294                      |  
|Securitization of receivables                                                                                  |  | 293                      |  
|                                                                                                               |  |                          |  
|Net cash provided by operating activities less net cash used in investing activities                           |  | 813                      |  
|Cash paid for non consolidated investments and acquired business, net of cash acquired                         |  |                         |  
|Investments in affiliates                                                                                      |  | (8                       | )
|Proceeds from the sale of investments and other assets                                                         |  | 41                       |  
|Issue of share capital                                                                                         |  |                         |  
|                                                                                                               |  |                          |  
|Cash movement in net debt                                                                                      |  | 846                      |  
|                                                                                                               |  |                          |  
|Non cash movement in net debt                                                                                  |  | 188                      |  
|                                                                                                               |  |                          |  
|Total reduction/(increase) in net debt                                                                         |  | 1,034                    |  
|                                                                                                               |  |                          |  
|Selected balance sheet data (at year end)                                                                      |  |                          |  
|Long-term assets                                                                                               |  | 10,353                   |  
|Shareholders' equity                                                                                           |  | 6,873                    |  
|Net debt                                                                                                       |  | 2,659                    |  
|                                                                                                               |  |                          |  

|                                                         |                        | Years ended December 31,
|-------------------------------------------------------- | ---------------------- | ------------------------
|
|Operating data Orange UK                                 |                        |                         
|Customers (in millions) (period end)(7)                  |                        | 13.3                    
|                                                         | Contract               |                         
|                                                         | Prepay                 |                         
|GSM network revenues (euro in millions)                  |                        | 5,345                   
|Annual average revenue per user (euro)(3)(8)(10)         |                        | 415                     
|                                                         | Contract (euro)(8)(11) |                         
|                                                         | Prepay (euro)(8)       |                         
|Overall (euro)(8)                                        |                        | 415                     
|                                                         | Contract (£)           |                         
|                                                         | Prepay (£)             |                         
|Overall (£)                                              |                        | 259                     
|Monthly average usage per user (minutes)(4)              |                        | 140                     
|                                                         | Contract               |                         
|                                                         | Prepay                 |                         
|Churn (%)(5)                                             |                        | 17.5                    
|                                                         | Contract (%)(9)        |                         
|                                                         | Prepay (%)             |                         
|Overall (%)                                              |                        | 17.5                    
|Subscriber acquisition costs per connection (euro)(6)(8) |                        | 193                     

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Turnover

We derive network revenues from:



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We also receive turnover from:



While
our turnover has historically been dominated by voice traffic on our networks, data revenues are becoming more important. The increase in data revenues currently reflects the
increasing acceptance of SMS as a means of communication. The impact on revenues of the introduction of new services, such as photo-messaging, web browsing and services to assist customers to manage
data such as address books and diaries, is currently not significant but is expected to grow in the future. Revenues from indirect sources related to both voice and data are also expected to increase.
The increased capacity needed for data transport will necessitate further network build-out and investment.

Our
turnover is impacted by the increase in our customer base, increased usage by our existing customers, market trends towards lower call tariffs, and the proportion of prepay customers
in our total customer base. Our key business indicators with respect to turnover are average revenue per user, or ARPU, average usage per user, or AUPU, total customer numbers and churn.

Our
total turnover increased by 13% for the year ended December 31, 2002 to €6,623 million from €5,875 million in 2001 and by 27% in
2001 from €4,621 million in 2000. The growth seen in our turnover in 2002 and 2001 was driven mainly by the performance of Orange UK.

Turnover: United Kingdom

Historically, turnover for the Orange UK businesses included turnover from network operations as well as turnover from Orange Cellular Services, a service
provider in the United Kingdom, and Orange Paging, which operated a United Kingdom paging network. Orange Paging ceased operations during 2001 and the customer base of Orange Cellular Services was
sold in March 2001. In the United Kingdom, Orange UK receives revenues from calls terminating on its network that originate on other UK networks and Orange UK incurs charges (included in "Cost
of sales") for its calls that terminate on other UK networks.

Orange
UK's turnover increased by 13% to €6,102 million in 2002 from €5,398 million in 2001 and by 28% in 2001 from
€4,211 million in 2000. The increase in 2002 was primarily the result of the 7% increase in Orange UK's customer base from 12.4 million customers at December 31,
2001 to 13.3 million customers at December 31, 2002, an increase in the use of data services and emphasis on acquisition and retention of high-value (contract) customers.
This trend also resulted from the increase in the Orange brand license fee invoiced by Orange UK to the operating subsidiaries of Orange S.A., which are using the Orange brand name, to
€141 million in 2002, from €61 million in 2001 and zero in 2000.

The
UK mobile market experienced a reported net growth of 4.3 million customers in 2002 compared to a net growth of 4.6 million customers in 2001, bringing the total to
48.9 million customers at the end of 2002. Net growth increased by 8% over the year compared to 17% growth in 2001, with market penetration rising to an estimated 82% in 2002 compared with
77.6% at the end of 2001. Growth continued to be driven mostly by prepay services although to a lesser extent than in 2001.

Orange
UK reports active customers, using Orange S.A.'s definition of activity: "customers who have generated one or more outbound chargeable events or received more than three inbound
chargeable events within a three month period" (a chargeable event includes voice calls and SMS). Hence, in terms of this definition, an inactive customer is defined as a customer who has not
generated any outbound chargeable events and has received less than four inbound chargeable events within a three month period.

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During
2002, Orange UK saw a small decrease in its market share of active customers to 27.2% from 27.7% at December 31, 2001. The decrease is attributed to Orange UK's focus on
high-value contract customers while other operators may be gaining low-value customers. Orange UK's market share of active customers increased in 2001 from 25% at
December 31, 2000. Strong performance in both the contract and prepay market sectors in 2002 enabled Orange UK to remain the leading operator in the UK market in terms of active
customers. In 2002, Orange UK achieved a 23% share of the net growth in the UK contract market due to, for example, the success of new service plans (e.g. "Your Plan"). In the same period, Orange UK
gained a 20% share of the net growth in the UK prepay market. Orange UK's net additional customers in 2002 were 0.9 million compared with 2.6 million in 2001, when it achieved a 33%
share of the net growth in the UK contract market and a 53% share of the net growth in the UK prepay market.

The
proportion of contract customers in Orange UK's total customer base increased during 2002 to 31.8% at December 31, 2002 from 30.4% at December 31, 2001. In 2001, the
proportion of contract customers in the total customer base declined from 31.3% at December 31, 2000.

Financial
results and key business indicators are presented in euro. However, given the fluctuations in the exchange rate of the pound sterling compared to the euro over the periods
presented, we believe that it is also important to include certain information in pounds sterling as a more accurate indicator of the underlying growth of our wireless business in the United Kingdom.

Total
Orange UK turnover can be analyzed as follows:

|                         |  | Years ended December 31,
|------------------------ |  | ------------------------
|
|
|GSM network revenues     |  | 5,345                   
|Equipment revenues       |  | 611                     
|Orange brand license fee |  | 141                     
|Other network revenues   |  | 5                       
|                         |  |                         
|Total Orange UK turnover |  | 6,102                   
|                         |  |                         

GSM network revenues

Orange UK experienced a 16% increase in its network revenues to €5,345 million in 2002 from €4,590 million in 2001
and a 39% increase in 2001 from €3,300 million in 2000. The increase in network revenues was largely attributable to significant increases in Orange UK's average customer base
in 2001 and 2002, and from 2002, an increase in the level of average revenue per user through a successful focus on higher value customers and increased data revenues.

Data revenues

Data revenues include revenues generated from SMS, WAP, GPRS and HSCSD. Data revenues generated 14% of network revenues in 2002 compared to 11% in 2001 and 6% in
2000. SMS revenues represented the largest percentage of data revenues. Orange UK saw a continued high growth rate in the use of SMS in 2002 with more than half the customer base utilizing this
service. At the end of 2002, the proportion of prepay network revenues generated from SMS was significantly higher than that of contract network revenues. By the end of 2002, almost 1.1 million
of Orange UK's customers were accessing data services through WAP handsets, with games and sports continuing to be the most popular WAP services, more than doubling from 490 thousand customers
at December 31, 2001 (181 thousand customers at December 31, 2000). The impact on revenues of new services such as

54

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photo-messaging
is currently not significant, but is expected to grow in the future as usage increases across the customer base and new offers and further new technologies are introduced.

Annual average revenue per user (ARPU)

Overall ARPU increased to €415 (£259) for 2002 from €394 (£245) for 2001 due to a higher proportion of
contract customers in the total customer base, and higher levels of data revenues. In 2001, overall ARPU
decreased from €459 (£280) in 2000 as a result of the dilution caused by an increased proportion of prepay customers in the total customer base.

Overall
ARPU reached inflection point in the first quarter of 2002 and since then has shown a continued quarter on quarter increase. Overall voice ARPU has stabilized and data ARPU has
continued to increase. Prepay ARPU also reached inflection point in the first quarter of 2002.

Contract
ARPU increased to €893 (£557) in 2002 from €875 (£544) in 2001 and €861 (£525) in 2000. This
was the result of a marked increase in revenues from SMS.

Prepay
ARPU increased to €200 (£125) in 2002 from €194 (£121) in 2001. This was the result of a marked increase in revenues from
data services. In 2001, prepay ARPU decreased from €207 (£126) in 2000. This was the result of lower average usage.

Monthly average usage per user (AUPU)

Due to a higher proportion of contract customers in the total customer base, overall usage increased by 1.4% to 140 minutes per user at December 31, 2002
from 138 minutes in 2001. In 2001 a higher proportion of prepay customers in the total customer base caused a decline in AUPU from 159 minutes in 2000.

Contract
AUPU decreased by 2.7% to 326 minutes in 2002 from 335 minutes in 2001 and 303 minutes in 2000 primarily due to the withdrawal of a high off peak usage tariff.

Prepay
AUPU decreased by 1.8% to 56 minutes in 2002 from 57 minutes in 2001 and from 68 minutes in 2000. While annual rolling prepay AUPU continued to decrease in 2002, the rate of
decrease slowed considerably towards the end of the year.

Churn

Orange UK customers migrating between contract and prepay products are included in individual product churn but are not included in overall churn as they remain
on the Orange UK network. Customer disconnections that occur either during the money-back guaranteed 14-day trial period or due to attempted fraudulent connections are not
included in
churn. We also exclude from churn those connections which, in our view, do not result in active customers, including those as a result of prepay handset upgrades or the removal of handsets from the UK
market. Prepay customers are treated as having churned if they have not made any outgoing calls and have received less than four incoming calls in the last three months.

Overall
churn declined to 17.5% in 2002 from 18.4% in 2001. Overall churn increased from 9.2% in 2000.

Contract
churn decreased to 23.1% in 2002 from 26.3% in 2001, due to ongoing focus on retention of high-value contract customers. In 2001 contract churn increased from 23.8%
in 2000. From 2001 onwards contract churn included migrations from contract to prepay products. If migrations were excluded, contract churn would have increased by 0.3% to 15.5% at December 31,
2002 from 15.2% in 2001 (15.5% in 2000).

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Prepay
churn decreased to 18.8% in 2002 from 19.7% in 2001 due to reduced levels of inactivity. In 2001 prepay churn increased from 5.3% in 2000 due to the removal of a large number of
inactive prepay customers from the customer base.

Equipment revenues

Orange UK equipment revenues decreased by 17% to €611 million in 2002 from €736 million in 2001 and by 12% in 2001
from €839 million in 2000. The decrease in 2002 was primarily due to a 32% decrease in the volume of connections. The decrease in 2001 was due to a 22% decrease in the volume of
connections.

Orange brand license fee

The brand license fee invoiced by Orange UK to operating subsidiaries of Orange S.A. using the Orange name, increased by 131% in 2002 to
€141 million, from €61 million in 2001 and zero in 2000, as a result of the roll out of the Orange brand in the following markets:



Other network revenues

This is non talkplan revenue such as telemetry. In previous years, this included the revenues of Orange Paging and Orange Cellular Services, both of which ceased
trading in 2001.

Seasonality

Historically the number of subscriber connections to the Orange UK mobile telephone network has been greater during the second half of the calendar year than
during the first half, primarily due to increased sales during the Christmas season. Therefore, Orange UK's revenues from equipment sales and connection charges, and the aggregate costs of equipment
and dealer commissions, have been greater during the second half of the calendar year than during the first half. However, it is difficult to predict the seasonality of subscriber connections in the
future. The usage patterns of Orange UK's customers have not exhibited significant seasonal variations, although usage is often lower in the months with fewer working days.

Turnover: International Operations

Turnover from our international operations increased by 9% to €521 million in 2002, from €477 million in 2001 and by
16% in 2001 from €410 million in 2000.

Hutchison
Telecommunications GmbH, our wholly owned service provider in Germany, contributed revenues of €327 million in 2002, a decrease of 4% from
€340 million in 2001, compared to an increase

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of
15% in 2001 from €295 million in 2000. The customer base of Hutchison Telecommunications GmbH decreased by 11% in 2002 to 710,515 at December 31, 2002 from 799,505 at
December 31, 2001, compared to an increase of 11% in 2001, from 720,000 at December 31, 2000. In 2002, the decrease of 11% in the customer base has resulted from the maturity of the
German market, which showed limited growth during the year, and the increased commercial focus of Hutchison Telecommunications GmbH on high value customers (residential, business), rather than
increasing customers numbers in the less attractive prepay market. The quality of the customer base has improved considerably during 2002. In 2001, the increase of 11% in the customer base resulted
from significant market growth and a competitor's insolvency. Hutchison Telecommunications GmbH's ARPU remained stable in 2002 at €546 from €544 in 2001, in line with
the greater commercial focus on high value customers and despite the lack of market growth, compared to a decrease of 5% in 2001, from €570 in 2000.

Hutchison
Telecommunications (France) S.A., a French service provider, was disposed of at the beginning of 2001 and therefore did not contribute any revenue in 2002 and 2001, from
€103 million in 2000.

Additionally,
turnover from our international operations include management and research & development services of €187 million in 2002, from
€121 million in 2001 and zero in 2000, which were invoiced primarily to Orange S.A. and also some of its subsidiaries.

Operating expenses

The table below sets out information relating to our operating expenses and those expenses as a percentage of total turnover:

|                                             |                          | Year ended December 31,             |      
|-------------------------------------------- | ------------------------ | ----------------------------------- | -----
|
|Cost of sales                                |                          |                                     |      
|                                             | UK                       |                                     | 2,348
|                                             | International operations |                                     | 262  
|Total                                        |                          | 2,610                               |      
|Selling, general and administrative expenses |                          |                                     |      
|                                             | UK                       |                                     | 1,847
|                                             | Of which:                |                                     |      
|                                             |                          | Selling expenses                    |      
|                                             |                          | General and administrative expenses |      
|                                             | International operations |                                     | 386  
|                                             | Of which:                |                                     |      
|                                             |                          | Selling expenses                    |      
|                                             |                          | General and administrative expenses |      
|Total                                        |                          | 2,233                               |      
|Research and development                     |                          | 18                                  |      
|                                             |                          |                                     |      
|Total operating expenses                     |                          | 4,861                               |      
|                                             |                          |                                     |      

Cost of sales

Our principal cost of sales includes the cost of handsets and accessories, costs associated with operating and maintaining the Orange UK network, interconnect
costs, which are the costs of connecting to other operators' networks and the cost of leased lines.

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Total
cost of sales grew by 9% during 2002 to €2,610 million from €2,401 million in 2001 and by 14% during 2001 from
€2,097 million in 2000. Total cost of sales as a percentage of turnover decreased to 39% in 2002, from 41% in 2001 and 45% in 2000.

United Kingdom

Cost of sales in 2002 for Orange UK increased by 10% to €2,348 million from €2,130 million in 2001 and by 19% from
€1,790 million in 2000.

The
increase in 2002 was driven by an increase in interconnect costs. Interconnect costs increased more rapidly than network revenues due to increased mobile to mobile usage, higher
levels of roaming and the first full year of interconnect SMS charging.

The
increase in 2001 was mainly driven by:



Orange
UK's cost of sales in 2002 were 35% of total turnover, compared to 36% in 2001 and 39% in 2000.

International Operations

Cost of sales in 2002 for our international operations decreased by 3% to €262 million from €271 million in 2001 and
by 12% from €307 million in 2000. In 2002, the decrease mainly relates to Hutchison Telecommunications GmbH and is in line with this subsidiary's revenue trend (see
"Turnover: International Operations"). In 2001, the decrease was due mainly to the disposal of Hutchison Telecommunications (France) S.A. at the beginning of 2001. Cost of sales as a
percentage of total turnover decreased to 4% in 2002 from 5% in 2001 and 6% in 2000.

Selling, general and administrative expenses

Selling expenses comprise commissions paid to distributors for customer connections, the costs of advertising and marketing, loyalty programs, direct sales,
distributing handsets and accessories, customer care, billing and doubtful debt charges. Administrative expenses include the cost of functions such as finance, planning, regulatory and legal. Also
included are overhead costs for property, facilities, personnel and training and information technology support.

Total
selling, general and administrative expenses increased by 1% in 2002 to €2,233 million from €2,210 million in 2001 and increased by
18% in 2001 from €1,875 million in 2000. Selling, general and administrative expenses as a percentage of total turnover decreased to 34% in 2002, from 38% in 2001 and 41% in
2000.

United Kingdom

In 2002, Orange UK's selling expenses decreased by 8% to €1,490 million from €1,625 million in 2001 due to a
reduction in prepay voucher commissions and reduced subscriber acquisition costs due to a lower volume of connections in 2002.

In
2001, Orange UK's selling expenses increased by 9% to €1,625 million from €1,487 million in 2000. This was mainly due to a 38% increase
in customer care costs as a result of a significant increase in the number of customer care staff required to service the larger customer base, an 11% increase in

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commissions
paid to distribution channels for new customers and handset upgrades and a 15% increase in marketing expenses reflecting the additional expenditure required to grow the customer base in a
highly competitive market, together with continued commitment to brand development.

Orange
UK's selling expenses decreased to 23% of total turnover, compared to 28% in 2001 and 32% in 2000.

General
and administrative expenses in Orange UK increased by 30% during 2002 to €357 million from €274 million in 2001 and by 21% during
2001 from €227 million in 2000. Orange UK's general and administrative expenses as a percentage of total turnover remained stable at 5% in 2002, 2001 and 2000. These expenses
have increased in line with the growth of the business.

International Operations

Total selling, general and administrative costs for our international operations increased by 24% in 2002 to €386 million from
€311 million in 2001 and by 93% in 2001 from €161 million in 2000. Total selling, general and administrative costs as a percentage of total turnover
increased to 6% in 2002 from 5% in 2001 and 4% in 2000.

Subscriber acquisition costs (SACs)

SACs are included partly in "Cost of sales" and the balance in "Selling, general and administrative expenses." SACs are analyzed separately by subtracting the
revenue received from handset sales from the total cost of handsets included in "Cost of sales." This amount is added to the commissions paid to distributors, which are included in "Selling, general
and administrative expenses". Subscriber acquisition costs tend to be impacted by seasonal factors such as increased sales (connections) during the Christmas period. This results in a higher
proportion of connections and SACs in the second half of the year. Also see "Inflation".

The
table below sets out information relating to SACs for Orange UK.

|                                                      |          | Years ended December 31,
|----------------------------------------------------- | -------- | ------------------------
|
|Total subscriber acquisition costs (euro in millions) |          | 582                     
|Subscriber acquisition cost per connection (euro)     |          | 193                     
|Of which:                                             |          |                         
|                                                      | Contract |                         
|                                                      | Prepay   |                         
|Subscriber acquisition cost per connection (£)        |          | 120                     
|Of which:                                             |          |                         
|                                                      | Contract |                         
|                                                      | Prepay   |                         

Total Orange UK's SACs decreased by 17% in 2002 to €582 million from €699 million in 2001, due to a
32% reduction in the volume of connections. In 2001, total SACs decreased by 12% from €794 million in 2000, driven by a reduction of 22% in the volume of connections. Overall
SACs per connection increased to €193 (£120) in 2002 compared with €161 (£100) in 2001. The increase in 2002 was driven by the mix of
connections, with a greater proportion of contract connections. In 2001, overall SACs per connection increased to €161 (£100) compared with €136
(£83) in 2000. The increase in 2001 was driven by increased contract SACs.

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SACs as a percentage of Orange UK's turnover were 10% in 2002, down from 13% in 2001 due to a fall in prepay subsidies following a move to focus on customer retention rather than volume
growth (also see discussion in "Retention Costs"). This led to a fall in the volume of prepay connections in 2002.

Orange
UK's contract SACs per connection increased to €408 (£254) in 2002 from €344 (£214) in 2001. This was mainly due to strong
competition in the market with the emphasis on attracting high income generating customers. In 2001, contract SACs per connection increased to €344 (£214) from
€321 (£196) in 2000. This was mainly due to increased commissions to certain distribution channels and increased subsidies to target high-value customers.

Orange
UK's prepay SACs per connection decreased from €66 (£41) in 2001 to €23 (£14) in 2002. This was due to reduced prepay
subsidies and a greater mix of SIM card only connections. In 2001, prepay SACs per connection decreased from €81 (£49) in 2000 to €66 (£41).
From April 2001, prepay handset selling prices were increased. The reduced prepay subsidy led to reduced prepay SACs per connection in 2001.

Retention costs

Retention costs relate to costs associated with the retention of existing customers where incentives are offered to high value customers to remain on the Orange
network. Retention costs are included partly in "Cost of sales" and the balance in "Selling, general and administrative expenses."

Retention
costs in the United Kingdom increased by 32% to €435 million in 2002, representing 7% of Orange UK's turnover, from €330 million
and 6% of turnover in 2001 and €167 million and 4% of turnover in 2000, as Orange UK moved towards focusing on retention of high value customers rather than volume growth. In
turn, we have seen a corresponding decrease in subscriber acquisition costs as a percentage of turnover.

Staff costs

Our staff costs are divided between Cost of sales, Selling, general and administrative expenses and Research and Development, Patents and Licenses. In 2002, total
staff costs increased by 11% to €662 million from €594 million during 2001 and by 43% from €416 million during 2000, which was
mainly due to expansion in customer services in the United Kingdom. Our average (full time equivalent) number of employees decreased in 2002 to 12,728 employees from 13,836 in 2001 and 11,239 in 2000.

We
have seen efficiencies across the group with headcount reductions in UK operations of 10% in 2002.

Depreciation and amortization (excluding goodwill amortization)

Depreciation and amortization (excluding goodwill amortization) increased by 16% in 2002 to €812 million from
€702 million in 2001 and by 54% in 2001 from €455 million in 2000. Depreciation and amortization mainly relates to the depreciation of our network
infrastructure in the United Kingdom and varies as a function of Orange UK's level of infrastructure investment. To a lesser degree, the depreciation of our information systems also affects
depreciation and amortization costs.

To
date amortization of intangible assets has not been a significant cost. In the future, however, the cost of the UK UMTS license will be amortized once these services are commercially
launched, on a straight-line basis over the remaining life of the license.

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Operating income

Our operating income varies as a function of relative changes in revenues, operating costs and capital expenditure. As we invest in our networks and expand our
services and products, depreciation and amortization charges increase accordingly, which has a negative impact on our operating margin.

Our
operating income increased significantly in 2002, to €950 million, from €539 million in 2001 and €189 million in
2000.

The
table below shows the evolution of operating income.

|                                          |  | Years ended December 31, |  
|----------------------------------------- |  | ------------------------ | -
|
|
|UK                                        |  |                          |  
|Operating income                          |  | 1,103                    |  
|Operating income/GSM network revenues (%) |  | 20.6                     |  
|International Operations                  |  |                          |  
|Operating loss                            |  | (153                     | )
|                                          |  |                          |  
|Total Operating income                    |  | 950                      |  
|                                          |  |                          |  

Interest expenses, net and net debt

Interest expenses, net, decreased by 27% in 2002 to €214 million from 293 million in 2001, compared to a decrease of 42% in 2001
from €504 million in 2000.

The
underlying net debt decreased by 28% in 2002 to €2,659 million from €3,693 million in 2001, which compares to a decrease of 34% in 2001
from
€5,631 million in 2000. Our net debt comprises long-term and short-term borrowings and is presented net of cash and cash equivalents.

In
2002, the decrease in net interest expenses was primarily due to the reduced level of debt for a total amount of €1,034 million, of which
€846 million decrease is a cash movement and €188 million decrease is a non cash movement. The cash movement in the level of net debt during 2002 was
mainly a consequence of the following:



The
non cash movement in net debt, i.e. a €188 million decrease in 2002, mainly arises from changes in the sterling to euro translation rate, which resulted in a
significant decrease in all pound sterling denominated borrowings.

In
2001, the decrease in net interest expenses was primarily due to the reduced level of net debt by an amount of €1,938 million and falling rates of interest in
the pound sterling. The reduction in the

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level
of net debt during 2001, of which a €2,081 million decrease was a cash movement, was mainly a consequence of the following events:



For
long-term borrowings, the weighted average fixed interest rate amounted to 7.5% at December 31, 2002 (compared to 7.4% at December 31, 2001 and 7.6% at
December 31, 2000) and the weighted average variable rate amounted to 6.1% at December 31, 2002 (compared to 6.3% at December 31, 2001 and 7.0% at December 31, 2000). In
2002, the interest expense charge was not significantly impacted by movements in interest rates due to our high proportion of fixed rate borrowings.

Other non-operating income, net

In 2002, other non-operating income, net totaled €9 million compared to €388 million in 2001 and zero in
2000.

In
2002, other non-operating income, net includes losses on disposal of securitized receivables in the United Kingdom amounting to €4 million (see
"Liquidity and Capital Resources") and miscellaneous non-operating items amounting to a positive €13 million.

In
2001, other non-operating income, net primarily included the gain before tax arising from the disposal of our 50% interest in KPN Orange amounting to
€391 million (see "Liquidity and Capital Resources") and miscellaneous non-operating items amounting to a negative €3 million.

Equity in net loss of affiliates (excluding goodwill amortization)

Equity in net loss of affiliates primarily consists of our share of net loss of Orange Communications SA amounting to €90 million in 2002,
€92 million in 2001 and €194 million in 2000. The equity in net loss of Orange Communications SA reflects our 42.5% shareholding until September 3,
2001 and an increased shareholding of 45% as from that date, arising from the purchase of an additional stake from a co-shareholder. At the end of 2001, Orange Communications SA proceeded
to an equity restructuring to allow the continuing expansion of its operations, which led to a further increase of our shareholding to 49.88%. Lastly, we acquired an additional 0.12% stake in Orange
Communications SA at the beginning of 2002, bringing its total shareholding to 50%. The remaining 50% of the Orange Communications SA's share capital is held by Wirefree Services Belgium, a wholly
owned subsidiary of Orange S.A. In 2000, this line also included our share of net loss of KPN Orange until July 31, 2000 for an amount of €70 million.

Orange
Communications SA was formed in January 1998 and awarded a GSM 1800 license in May 1998. It commenced its operations in June 1999. On December 6, 2000,
Orange Communications SA was awarded for CHF 55 million (approximately €35 million), a UMTS license (2 × 15 MHz spectrum) for a duration of
15 years. At December 31, 2002, Orange Communications SA estimated that its GSM network covered over 97.8% of Switzerland's population and had a market share of 17% with 963,000 active
customers.

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Orange
Communications SA's main financial and operating highlights are as follows:

|                                             |  | Years ended December 31,
|-------------------------------------------- |  | ------------------------
|
|
|Turnover                                     |  | 694                     
|Network revenues                             |  | 633                     
|Active customers (in thousands)              |  | 963                     
|Annual average revenue per user (in euro)(1) |  | 721                     
|                                             |  |                         

---

Orange Communications SA's turnover increased by 18% to €694 million in 2002 from €587 million in
2001 and by 23% in 2001 from €479 million in 2000. In 2002, the increase was due to a 21% increase in network revenues due to an increase in overall ARPU. Orange Communications
SA moved to reporting customers on an active basis during 2002 (customers were reported on a registered basis at the end of 2001). In 2001, the increase in turnover was mainly due to a 29% increase in
network revenues as a result of an 18% growth in the total customer base. This growth was offset by a 15% decrease in equipment and other revenues due to a reduction in the level of gross connections
in 2001.

Income taxes

We incurred a total income tax charge of €238 million in 2002, from €113 million in 2001 and
€18 million in 2000. The €238 million income tax charge comprises an income tax charge, before exceptional items of €252 million
and a tax credit on exceptional items (see "Exceptional Items, net of tax") of €14 million. Our effective tax rate calculated based on the income/(loss) before
equity in net loss of affiliates, goodwill amortization and exceptional items was 34% for 2002, compared to 18% for 2001 and a negative 6% for 2000.

Our
tax charge increased by €125 million during 2002, from €113 million in 2001 to €238 million, and by
€95 million in 2001, from €18 million in 2000, mainly due to higher levels of taxable profits earned in the United Kingdom.

Our
deferred tax assets, net of valuation allowance, were €140 million as at December 31, 2002, compared to €396 million as at
December 31, 2001 and €497 million as at December 31, 2000 and relate mainly to Orange Personal Communications Services Limited. The decrease in deferred tax
assets, net in 2002 and 2001 resulted mainly from the utilization of tax loss carried forward in the United Kingdom.

Goodwill amortization

Goodwill amortization relates to fully consolidated subsidiaries and equity affiliates. Goodwill is amortized over a period ranging from five to twenty years,
depending on the nature of the business acquired and the strategic value of each acquisition.

Goodwill
amortization amounted to €4 million in 2002, compared to €25 million in 2001 and €51 million in 2000. In
2002, it relates exclusively to Orange Communications SA. In 2001, it related to amortization of goodwill recognized on the acquisition of Wildfire Communications, Inc, which was fully written down to
zero at December 31, 2001 (see "Exceptional Items, net of tax"). In 2000, it related principally to amortization of goodwill recognized on the acquisition of Hutchison

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Telecommunications
(France) S.A., Hutchison Telecommunications GmbH, Ananova Limited and Wildfire Communications, Inc. Hutchison Telecommunications (France) S.A. and Ananova Limited were
transferred to wholly owned subsidiaries of Orange S.A. at the beginning of 2001 and at the end of 2000 respectively. The goodwill arising from the acquisition of Hutchison Telecommunications GmbH was
fully depreciated at the end of 2000.

Exceptional items, net of tax

Exceptional losses before tax amounted to €194 million in 2002, from €98 million in 2001 and
€61 million in 2000. A deferred tax credit of €14 million on exceptional items was recorded in 2002, bringing the total exceptional loss, net of tax to
€180 million.

In
2002, the €194 million exceptional losses before tax comprise the following elements:



In
2001, goodwill (€83 million) and other intangible assets (€15 million) arising from the acquisition of Wildfire Communications, Inc and
totaling €98 million at December 31, 2001 were fully written down to zero as at that date.

In
2000, professional advisory fees of €45 million were incurred in respect of the re-flotation of Orange plc, which was cancelled due to the
acquisition of Orange plc by France Telecom. The acquisition triggered a change of control clause in the senior notes and as a result, we made an offer to bondholders to repurchase the senior notes
(€5 million). Arrangements and other fees of €18 million relating to these notes were also expensed. A gain of €7 million was
recognized on the disposal of a number of investments to Wirefree Services Belgium, a wholly owned subsidiary of Orange S.A.

Net income/(Loss)

We generated a net income of €219 million in 2002, from €306 million in 2001 and a loss of
€717 million in 2000.

Inflation

Inflation has not had a significant effect on our results of operations and financial condition during the three years ended December 31, 2002.

Foreign currency risk management

Foreign currency risk arises as a result of transactional exposures such as foreign currency denominated purchases of equipment and services (network equipment
and handsets), inter-company payables and roaming fees. Our treasury policies stipulate that such risks must be hedged, when identified and as and when appropriate, by using forward foreign exchange
contracts and currency options.

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The aim of this approach is to achieve hedge accounting qualification and minimize volatility in earnings as a result of movements in exchange rates. The major transaction risk
identified as of December 31, 2002 was with respect to the euro and pound sterling.

Where
appropriate, we will match assets and liabilities in the same currency.

As
of December 31, 2002 we were in compliance with our treasury policies, in respect of foreign currency risk management. As of that date, we had outstanding a total notional
amount of foreign currency swaps and forward exchange contracts of €645 million, compared to €632 million as at December 31, 2001. The fair value
of foreign exchange derivatives, valued at December 31, 2002 by discounting cash flows, was an unrealized gain of €41 million.

With
respect to the consolidated income statement and consolidated cash flow statement for the years ended 2002, 2001 and 2000, all amounts in pounds sterling were converted into euro at
the average rates of €1.5909, €1.6084 and €1.6413 respectively. All pound sterling denominated balance sheet amounts were converted into euro at the
applicable period end rates consistent with the consolidated financial statements. Individual transactions that are disclosed and denominated in pounds sterling were translated at the applicable spot
rate.

In
order to permit a more meaningful comparison of our 2002 performance against 2001, the following selected 2001 financial information has been recalculated to exclude the impact of
fluctuations in foreign exchange rates, using the 2002 rates in 2001 on a like for like basis:

|                 |  | Years ended December 31, | 
|---------------- |  | ------------------------ | 
|
|Turnover         |  | 6,623                    | 
|Operating income |  | 950                      | 

We are not exposed to any foreign currency risk on non-hedged foreign currency borrowings.

The
United Kingdom has not yet adopted the euro as its legal tender. Were the United Kingdom to join the single currency at a later date, the euro would replace sterling and would result
in the redenomination of all sterling assets and liabilities into euro. Systems are currently under development in the United Kingdom to pay and receive amounts in euro where commercially required.
For further information see "Item 11 Quantitative and Qualitative Disclosures about Market Risk".

5B. Liquidity and capital resources

Liquidity and capital resource requirements

We expect our principal liquidity and capital resource requirements to consist of the following:



In
December 2002, Orange S.A. announced its plan to accelerate cash and profit generation over the next three years. This plan, which covers the 2003 to 2005 period, aims to
generate an additional €5 to 7 billion of net cash provided by operating activities less net cash used in investing activities, approximately 10% to 18% of which will come from
us as a wholly owned subsidiary of Orange S.A., through a combination of more strict financial targets across the Orange S.A. group and more rigorous discipline on capital and operating expenditures.
Accordingly, we intend to achieve our target to

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generate
an additional €0.7 to 0.9 billion of net cash provided by operating activities less net cash used in investing activities through reductions in capital expenditures,
operating costs margins and also through improved working capital requirements. As a part of this new plan, we have reduced headcount and operating costs in the United Kingdom and, in line with
current market conditions, have deferred much of our expenditure on 3G technology, placing greater emphasis on the use of 2.5G technologies such as GPRS.

Capital expenditure for tangible assets

The wireless communications industry is highly capital intensive, requiring significant capital to construct mobile telecommunications networks.

Our
total capital expenditure for tangible assets, i.e. additions to tangible assets, decreased by 9% in 2002 to €1,171 million from
€1,288 million in 2001, which compares to an increase of 14% in 2001, from €1,133 million in 2000.

In
the UK, tangible capital expenditure decreased by 8% to €1,162 million in 2002, from €1,266 million in 2001, reflecting the slowdown in
2G capital expenditure and lower than anticipated 3G capital expenditure. This compares to an increase of 12% in 2001 from €1,127 million in 2000, as Orange UK continued to
invest for capacity and coverage and started to prepare and acquire 3G sites.

Our
tangible capital expenditure includes investments in information technology. In 2002, €145 million of tangible capital expenditure related to information
technology, including computer systems and software, compared to €160 million for the year ended December 31, 2001.

Based
on the plan announced by Orange S.A. in December 2002 to further improve cash generation, our targeted capital expenditure is now estimated at between
€2.5 billion to €3 billion for the three years from 2003 to 2005. Thereafter, we intend to reduce our capital expenditure and target a decrease of our
ratio of capital expenditure to turnover from 18% in 2002.

In
order to achieve the capital expenditure savings expected over the 2003 to 2005 period, we plan to undertake the following initiatives:



Investments and proceeds from the sale of investments

Our total cash paid for investment securities and acquired business (net of cash acquired) was zero in 2002 and 2001 compared to
€330 million in 2000. The large outflow in 2000 was caused by the acquisition of Ananova Limited and Wildfire Communications, Inc.

Proceeds
from the sale of investments and other assets amounted to €41 million in 2002 compared to €533 million in 2001 and zero in 2000. In
2002, it primarily related to the full repayment on all loans advanced to Connect Austria GmbH in an amount of €34 million. In 2001, it primarily related to the sale of our 50%
interest in KPN Orange to KPN Mobile for which we received a total cash consideration of €500 million, including €102 million in respect of repayment of a
shareholder loan.

We
do not expect to acquire shareholdings or investments in new subsidiaries over the next three years.

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On
March 13, 2003, we disposed of our shareholding in Orange Holdings Limited for a total consideration of £202,308,000 (approximately
€302 million) (see "Item 7B. Related Party Transactions").

Sources of liquidity and capital resources

We expect to have substantial liquidity and capital resource requirements as we continue to develop our wireless business and in connection with our existing
contractual obligations (see "Item 5F. Tabular Disclosure of Contractual Obligations").

Our
primary sources of financing consist of the following:



We
expect to continue to rely upon these sources of liquidity and capital resources in the future. Our financial and capital structure will be reviewed regularly to ensure optimal tax
efficiency within the applicable tax laws and regulations.

We
believe that our liquidity and capital resources should be sufficient to satisfy our requirements for the foreseeable future, in particular given that Orange S.A. has stated its
intention to continue to provide us with financial support. However, if we underestimate our capital requirements or overestimate our future cash flows, then we may be forced to incur additional debt
or to issue equity. We cannot assure you that future conditions in the loan and debt and equity/capital markets will not adversely affect our financial condition or results of operations, particularly
if the cost of capital increases as we and other wireless operators continue to seek large amounts of debt and equity financing to develop our respective operations.

Funds generated from operations

Our funds generated from operations increased by 69% to €1,534 million in 2002 from €908 million in 2001, compared
to an increase of €836 million in 2001 from €72 million in 2000. Any decrease in the demand for our services due to, among other things, increased
competition or rapid and significant changes in technology would reduce our availability of funds.

Based
on our plan to generate an additional €0.7 to 0.9 billion of net cash provided by operating activities less net cash used in investing activities, between
2003 and 2005, we plan to reduce operating expenses by implementing the following plan:



Securitization of receivables and changes in other operating assets and liabilities

We entered into a securitization program in December 2002, whereby trade receivables generated by the mobile telecommunication business of Orange PCS in
the United Kingdom were transferred without recourse to a trust set up in Jersey under UK law. This program covers existing receivables as

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of
the date the securitization transaction was entered into and receivables, which will come into existence during the expected five-year lifetime of the program as and when mobile
telecommunication services are rendered and related revenues are earned. Orange PCS remains in charge of the servicing of these receivables on behalf of the trust.

The
trust raised funds from third party investors through rated securitization conduits to finance the purchase price of the securitized receivables less deferred purchase prices.
Deferred purchase prices are subordinated to cover the risk of non-recovery of the securitized receivables and allowances are recorded to provide for such non-recovery,
consistent with the risk profile of securitized receivables and our collection and customers' credit policies.

In
2002, the impact of the transaction was as follows:



The
securitization agreement is subject to standard financial and operating covenants, which, in the event of a breach, would lead to the cessation of the purchase of new trade
receivables from us. For further information see Note 17 to our consolidated financial statements.

The
expected lifetime of the securitization programs is a period of five years starting from December 2002. However we have the option to terminate the securitization programs at
any time at our sole discretion.

In
line with our announcement to accelerate cash generation, enhancement of working capital should be achieved over the period 2003 to 2005 through working capital savings across
receivables, payables and inventories.

Financing from banks and bond issues

Orange Holdings (UK) Limited has a €1,869 million (£1,215 million) senior debt facility from a syndicate of banks used
to finance the ongoing investments in our UK network. This facility has been amortizing since 2001. In addition to the scheduled repayments in 2002 an additional €165 million
equivalent was prepaid and cancelled. As result of strong cash generation in the UK business a further €24 million equivalent was prepaid. At December 31, 2002,
€1,438 million (£935 million) had been drawn under this senior debt facility, compared to €2,545 million
(£1,549 million) at December 31, 2001.

In
July 1998 and June 1999, we issued senior notes totaling €1,592 million (equivalent). A series of offers to repurchase these notes by us were made
as a result of changes of control in 2000. This resulted in a total of €576 million equivalent being repurchased in 2000. No further repurchases were made during 2001 and 2002.
The remaining outstanding senior notes, totaling €1,089 million as at December 31, 2002 (compared to €1,164 million as at December 31,
2001), mature between 2006 and 2009. Our senior notes are redeemable on maturity and we have not granted any specific guarantee to the bondholders. However, some of the notes are subject to an early
repayment clause, which can be exercised only by us as the issuer. We have decided to exercise our option to redeem our senior notes due in August 2008. The senior notes are scheduled to be
redeemed on August 1, 2003 at the redemption price of approximately £205.9 million, €97.6 million and $18.5 million for each of the respective
series of notes. At August 1, 2003, the principal outstanding amount for each of the

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respective
series of notes being redeemed will be approximately £197.3 million, €94.1 million and $19.2 million.

Those
financing arrangements are subject to standard covenants, which, in the event of default or unfavorable change, might lead to the early repayment by us of the amounts outstanding
under the facilities. For further information see note 17 to our financial statements.

Financing from France Telecom and Orange S.A.

At December 31, 2000, we had a short-term facility negotiated on an arm's length basis of €1,818 million with France
Telecom which bore interest at one month LIBOR plus a margin of 42.5 basis points. On October 5, 2001, we increased our share capital and additional paid-in capital and part of the
proceeds of this capitalization were used to repay outstanding drawings of €463 million on the credit facility with France Telecom.

Orange
S.A. provided to us a credit facility for €500 million negotiated on an arm's length basis which commenced on January 31, 2001 to cover general
financing requirements. On October 5, 2001 the outstanding drawings of €481 million under this facility were repaid with part of the proceeds from our capitalization.

We
have a facility of USD 130 million (€124 million), of which €8 million have been drawn down at December 31, 2002, from
Castle Worldwide Finance CV, a wholly owned subsidiary of Orange S.A. formed in 2002. The facility bears interest at a rate equal to LIBOR plus 300 basis points and matures on December 31,
2003.

We
have a facility of £16 million (€25 million), of which €15 million had been drawn down at December 31, 2002,
compared to £14 million (€23 million) at December 31, 2001, from Ananova Limited, a wholly owned subsidiary of Orange S.A. It bears interest at a rate
equal to LIBOR less 10 basis points.

The
purpose of the facilities outstanding at December 31, 2002 is to cover our general financing requirements. They were negotiated on an arm's length basis and can be repaid at
any time without penalty.

Interest rate risk management

We are not materially exposed to interest rate movements due to our high proportion of fixed rate borrowings: fixed rate long-term borrowings amounted
to €2,311 million at December 31, 2002 (from €2,743 million at
December 31, 2001) and variable rate long-term borrowings amounted to €216 million at December 31, 2002 (from €989 million at
December 31, 2001).

Our
consolidated interest rate exposure is managed against a pre-established minimum fixed/floating rate mix. At any point in time, the total debt portfolio must be hedged
into fixed rate according to the following rule: minimum of 60% / 50% / 40% fixed rate in years 1, 2 and 3 on a 3 year rolling basis. As of December 31, 2002, we were in compliance with
our treasury policies, in respect of interest rate risk management.

The
fixed/floating rate limits are reviewed periodically by our Treasury Committee, on the basis of changes in the underlying debt portfolio and forecast changes in debt, as well as
expected movements in interest rates.

In
order to hedge our floating interest rate exposure, we enter into fixed/floating rate swaps and are a purchaser of interest rate derivative products. Our internal guidelines prohibit
us from being a net seller of interest rate options (net receiver of premium).

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As
of December 31, 2002, we had outstanding a total notional amount of interest rate swaps and interest rate caps of €2,213 million, compared to
€4,125 million at December 31, 2001. The fair value of interest rate derivative instruments, valued at December 31, 2002 by discounting future cash flows, was an
unrealized loss of €39 million.

The
following table analyses our total credit facilities by currency, interest rate, maturity and status of hedging:

Total amount available under lines of creditCurrency

Fixed or
variable rate

Local Currency

Euro equivalent

Maturity

Existence of hedging(millions of euro)GBP

Floating

1,215

1,689

November 2005

Interest rate swapGBP

Floating

16

25

No maturity date

USD

Floating

130

124

December 2003

Total





2,018


The table below shows the maturity of our underlying debt before and after the impact of derivative instruments(1):

|                                          |  | Less than one year |   | Between one and five years |   | More than five years
|----------------------------------------- |  | ------------------ | - | -------------------------- | - | --------------------
|
|Bonds                                     |  |                   |   | 189                        |   | 900                 
|Long term bank loans                      |  | 532                |   | 906                        |   |                    
|Other long term loans and capital leases  |  | 51                 |   | 12                         |   |                    
|Other short term debt and bank overdrafts |  | 185                |   |                           |   |                    
|                                          |  |                    |   |                            |   |                     
|Gross financial debt                      |  | 768                |   | 1107                       |   | 900                 
|Cash and cash equivalents                 |  | (116               | ) |                           |   |                    
|                                          |  |                    |   |                            |   |                     
|Net debt before management(1)             |  | 652                |   | 1,107                      |   | 900                 
|Off balance sheet management(1)           |  | (907               | ) | (1,307                     | ) |                    
|                                          |  |                    |   |                            |   |                     
|Net debt after management(1)              |  | (255               | ) | (200                       | ) | 900                 
|                                          |  |                    |   |                            |   |                     

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5C. Research and development, patents and licenses, etc.

Total research and development costs decreased by 22% in 2002 to €18 million from €23 million in 2001 and increased
by 360% in 2001 from €5 million in 2000.

Research
and development costs incurred in 2002 and 2001 mainly related to the development of new services and technologies. In 2001, they also included one off research costs undertaken
on the videophone in the United Kingdom.

Additionally,
we incur development costs in relation to the roll out of our networks and the development of network or non-network related software, which are eligible for
capitalization and included in the capital expenditure for tangible assets discussed in "Item 5B. Liquidity and Capital Resources."

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5D. Trend information

In 2003 we are expecting further growth in turnover, in light of the strategic review in December 2002. In December 2002, Orange S.A. announced its
plan to accelerate cash and profit generation over the next three years. This plan, which covers the 2003 to 2005 period, aims to generate an additional €5 to 7 billion of net
cash provided by operating activities less net cash used in investing activities, approximately 10% to 18% of which will come from us as a wholly owned subsidiary of Orange S.A., through a combination
of more strict financial targets across the Orange S.A. group and more rigorous discipline on capital and operating expenditures. Accordingly, we intend to achieve our target to generate an additional
€0.7 to 0.9 billion of net cash provided by operating activities less net cash used in investing activities through reductions in capital expenditures, operating costs margins
and also through improved working capital requirements. As a part of this new plan, we have reduced headcount and operating costs in the United Kingdom and, in line with current market conditions,
have deferred much of our expenditure on 3G technology, placing greater emphasis on the use of 2.5G technologies such as GPRS.

5E. Off-balance sheet arrangements

As described in Note 18 of the consolidated financial statements, our main off balance-sheet commitments are as follows:

Off balance sheet commitments related to network equipment and inventories

In the ordinary course of our activities, we enter into purchase contracts with network equipment manufacturers and into supply contracts with handset suppliers
some of which contain price protection clauses. Our committed expenditures under such contracts at December 31, 2002 are disclosed in the table on contractual obligations (see
"Tabular Disclosure of Contractual Obligations").

Off balance sheet commitments related to network construction and operation

Under our UMTS license agreement, we are committed to, among other things, provide telecommunications services to at least 80% of the population of the United
Kingdom by December 2007. Consequently, we will incur significant capital expenditures over future years in order to build out our network and meet the license obligations in the United
Kingdom. Management believes that we have the ability to meet these obligations.

Lease commitments

Our obligations under the 1995 and 1997 Orange PCS's defeased leases are not reflected in the total contractual obligations shown in "Item 5F. Tabular Disclosure
of Contractual Obligations" because of the early extinguishment of these commitments.

As
part of its lease agreements concluded in 1995 and 1997, Orange PCS has deposited amounts equal to the net present value of its rental obligations with UK financial institutions to
secure letters of credit issued by these institutions to the lessors in connection with Orange PCS's rental obligations. These funds, which totaled €1,157 million at
December 31, 2002 (compared to €1,247 million at December 31, 2001) together with the interest earned thereon, will be used to settle Orange PCS's rental
obligations under the leases. This in-substance early extinguishment of each drawdown under the finance leases resulted in the offset of the deposit amount and the capital lease
obligation, and a net credit that has been reflected in our consolidated balance sheet as deferred income that will be amortized to the consolidated income statement over the lease term on a
straight-line basis. This net credit, which amounted to €142 million at December 31, 2002 (compared to €160 million at
December 31, 2001), includes a provision, based on management's assessment of likely outcomes, for possible future costs arising from variations in interest rates or tax rates.

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In
the ordinary course of our business, we give certain guarantees of which the more significant at December 31, 2002 are as follows:



The
assets pledged at December 31, 2002 can be analyzed as follows:

|                                            |  | Amount of assets |  | Total balance sheet assets |  | % of assets |  
|------------------------------------------- |  | ---------------- |  | -------------------------- |  | ----------- | -
|
|Intangible assets, net (excluding goodwill) |  | 6,298            |  | 6,298                      |  | 100         | %
|Property, plant and equipment, net          |  | 3,708            |  | 3,724                      |  | 100         | %
|Non consolidated investments                |  |                 |  |                           |  | n/a         |  
|                                            |  |                  |  |                            |  |             |  
|Total                                       |  | 10,006           |  | 10,022                     |  | 100         | %

The pledges were put in place in the form of fixed and floating charges in December 1997 and will mature in December 2005.



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5F. Tabular disclosure of contractual obligations

Our contractual obligations and other commitments as at December 31, 2002 are summarized below:

|                                            |  | Payments due
|------------------------------------------- |  | ------------
|
|
|On balance sheet                            |  |             
|Long-term borrowings                        |  | 2,590       
|Short-term borrowings                       |  | 185         
|Off-balance sheet                           |  |             
|Operating leases                            |  | 1,215       
|Capital lease                               |  | 65          
|Purchase of fixed assets and other services |  | 547         
|                                            |  |             
|Total contractual obligations               |  | 4,602       
|                                            |  |             

|                        |  | Commitments maturing during each period
|----------------------- |  | ---------------------------------------
|
|
|Credit facilities       |  | 2,018                                  
|                        |  |                                        
|Total other commitments |  | 2,018                                  
|                        |  |                                        

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ITEM 6  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6A. Directors and senior management

Directors

The following are our directors at March 31, 2003:

John Allwood

Joined Orange UK in December 2000 and is the Chief Executive Officer of Orange plc and UK Executive Vice President of Orange S.A. He is responsible for all
existing operations and future expansion in the United Kingdom. John Allwood came to Orange from the Trinity Mirror Group, where he was Deputy Chief Executive and Chief Operating Officer. He joined
the Mirror Group in 1992 as Finance Director, becoming Chief Executive in 1999 before its merger with Trinity plc. Prior to that, he was Finance Director at Microtel Communications, later to become
Orange. He began his career in regional newspapers, moving to News International in 1980 as Chief Accountant for "the Sun" and "News of the World", rising to Finance Director of Sky Television in
1989. John holds a BA (Hons) in Economics and Statistics from Exeter University, as well as being a fellow of the Institute of Chartered Accountants of England and Wales. Age: 51.

Philippe McAllister

Director of Orange plc since August 22, 2000. He is also Head of Legal Services and Company Secretary of Orange S.A. Philippe joined France Telecom in 1997
as International General Counsel and held this position prior to joining Orange S.A. Previously he worked in both industry and private practice in the United Kingdom before moving to Paris in 1989 to
work as in-house counsel for THOMSON multimedia S.A., latterly as General CounselEurope. Philippe is on the Board of a number of other Orange S.A. Group companies the
principal ones of which are Ananova Limited, Mobistar S.A. in Belgium, and Orange A/S in Denmark. Philippe is a solicitor and holds an honors degree from the University of Glasgow where he majored in
EU law. Age: 44.

Mike Newnham

Joined Orange UK in March 2001 and is the Chief Financial Officer of Orange plc and the UK Vice President of Finance and Purchasing. Formerly, Mike was a
Director at PricewaterhouseCoopers. Mike is also a director of Mainline Communications plc and Midland Communications Distribution Limited. Mike holds a BA (Hons) in Management Science, as well as
being an associate of the Institute of Chartered Accountants of England and Wales. Age 36.

Senior management

The following are our senior management responsible for the operations of Orange UK:

Jeremy Dale

Joined Orange in August 2002 as Vice President of the newly creative Brand Marketing Directorate. Jeremy is responsible for brand communications,
development and strategy within the UK. Prior to joining Orange, Jeremy was Sales & Marketing Director for ONdigital, overseeing it's high-profile rebrand to ITV Digital. He
previously worked for Nintendo's UK operation, where he launched Pokemon. Age: 38

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Amanda Doyle

Joined Orange UK in May 1991 as a legal adviser and is responsible for the provision and management of legal services to the UK operational businesses.
Prior to that, Amanda worked as a solicitor in private practice. Amanda holds a LLB (Hons) in Law from the University of Warwick and is admitted as a Solicitor in England and Wales. Age 39.

Paul Franklin

Joined Orange UK in September 1994 and is responsible for regulatory affairs for Orange S.A. and for regulation and carrier services for the UK business.
Prior to this, Paul was responsible for regulatory affairs at Energis in the UK. Before that, he was responsible for regulatory affairs at Microtel Communications, later to become Orange. Paul holds
an MA from Cambridge University. Age 46.

Ian Fraser

Joined Orange UK in October 2000 as Head of Retail Activities and later became Sales and Distribution Director. In 2002 Ian accepted the position of Vice
President of Customer Delivery and is responsible for sales, retail, customer services, devices and the supply chain. Prior to that, he was Trading Director at Safeway Stores plc. Ian holds a B.Acc
from the University of Glasgow and is a member of the Institute of Chartered Accountants of Scotland as well as a Fellow of the Royal Society of Arts, Commerce and Manufacturies. Age: 46.

Richard Hanscott

Joined Orange UK in November 1997 and is responsible for the medium and large corporate business markets in the UK. Prior to joining Orange, Richard worked
in the Information Technology sector for over 14 years, having latterly held senior positions at Hewlett Packard. Richard holds a B.Tech (Hons) in Mechanical Engineering from Loughborough
University. Age 42.

Didier Lebrat

Joined Orange UK in June 1999 and is Vice President, Technical, responsible for technical functions covering design, implementation and operations of the
IT and Network systems. Didier is also Chief Information Officer for Orange S.A. Prior to joining Orange, Didier was Director of Network at
Bouygues Telecom in France. Didier, a French citizen, graduated from the Ecole Supérieure en Génie Electrique. Age: 42.

Steve Olive

Joined Orange UK in February 2001 and is Vice President Business Support. Formerly Steve was Group HR Director for Scapa Group plc. Prior to that he was
Personnel Director for the William Hill Organisation Limited from 1990 through to 1996. Steve holds a BA (Hons) in Business Studies from Trent Polytechnic. Age: 49.

Mark Paterson

Joined Orange UK in August 1990 as Legal Services Manager and was Company Secretary and General Counsel for the Orange Group from 1995 until 2001. Mark is
now Vice President, Operational and Corporate Development for Orange UK. Mark is a Barrister. Age: 42.

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David Taylor

Joined Orange UK in May 2000 and is responsible for marketing and new product development for the UK consumer and small business markets. Prior to joining
Orange UK, he was Group Product Director at Mondex International, a subsidiary of MasterCard International. David holds a PhD from Nottingham University and an MBA from Cranfield University.
Age 41.

Orange S.A. Group executives

The following are Orange S.A. Group executives with responsibility for overseeing the Orange UK operations:

Solomon Trujillo

Joined Orange S.A. in March 2003 as Chief Executive Officer, having served as a non-executive Director of Orange S.A. since
January 2001. He has been on the Chairman's Council at Alcatel SA since 2000. Following his MBA from the University of Wyoming in 1974, he began his professional career at Mountain Bell
Telephone. Solomon was appointed President and CEO of USWest in 1995 and Chairman in 1999. He stepped down from this position in June 2000 when USWest was purchased by Qwest Communications.
From January 2001 to early March 2003, Solomon was Chairman and CEO of Graviton Inc. Age: 51.

Wilfried Verstraete

Joined Orange S.A. on March 3, 2003 as Chief Financial Officer. He was Chief Financial Officer and General Counsel of Wanadoo since September 1,
2000, and also served as Chief Financial Officer and Counsel for the Consumer Internet Division of France Telecom. After holding several management positions in Belgium and abroad with the Recticel
group, the European leader in polyurethane foam, in 1996 Wilfried joined Mobistar, then a subsidiary of France Telecom in Belgium, where he participated in its launching of Wanadoo. Wilfried holds a
master's degree in Finance from the VLEKHO. He also earned a degree in economic sciences from the VUB (Vrije Universiteit Brussel) in 1981. In 1993, he trained with INSEAD's International Executive
Programme in Fontainebleau. Age: 45

6B. Compensation

Compensation of the directors and executive officers comprises salaries, benefits, bonuses and share scheme compensation payments

The
annual bonus scheme is based on agreed financial and personal targets linked to our performance. A bonus of 50% of the basic salary applies where these targets are achieved and the
maximum possible bonus is 62.5% of basic salary.

The
total compensation of the directors and senior management who provided services relating to Orange plc for the year ended December 31, 2002 was
€10.02 million (£6.3 million) of which €0.68 million (£0.43 million) was in pension contributions. Our highest paid
director received €1.59 million (£1.0 million) as compensation for the year ended December 31, 2002.

6C. Board practices

All three of our directors retired and were re-elected at the Annual General Meeting of the Company on July 31, 2002 and are required to retire
again at the Annual General Meeting in the third calendar year from their re-election.

None
of our directors have service agreements. We do not currently maintain an audit or a remuneration committee.

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6D. Employees

For the year ended December 31, 2002 we employed 12,728 average full time equivalent employees. The average number of people employed by us, including
directors, for each of the past three financial years by category was:

At December 31,2000

2001

2002Customer services

6,067

7,520

6,344Technical and engineering

2,075

2,519

2,551Finance and Administration

1,171

1,408

1,455Marketing, Sales and Distribution

1,926

2,389

2,378Total

11,239

13,836

12,728


For
the years ended December 31, 2000, 2001 and 2002 the weighted average number of people we employed, including directors, by segment, was:

At December 31,2000

2001

2002UK

10,132

12,734

11,437International Operations

1,107

1,102

1,291Total

11,239

13,836

12,728


Orange
UK employed 819 full time equivalent temporary employees at December 31, 2002.

6E. Share ownership

None.

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ITEM 7  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7A. Major shareholders

99.99% of our issued share capital is held by Orange S.A. The remainder is held by other subsidiary companies of France Telecom S.A.

7B. Related party transactions

Financings

In January 2000, we borrowed £336 million (€531 million) from Mannesmann. This loan was negotiated on an arm's
length basis and bore interest at one week LIBOR plus a margin of 150 basis points. These funds were used to fund the repurchase of the senior notes in January 2000. The loan was repaid in
September 2000 by France Telecom.

At
December 31, 2000, we had a short-term facility negotiated on an arm's length basis of €1,818 million with France Telecom which bore interest
at one month LIBOR plus a margin of 42.5 basis points. On October 5, 2001, we increased our share capital and additional paid-in-capital and part of the proceeds of this
recapitalization were used to repay the outstanding drawings of €463 million on the credit facility with France Telecom.

Orange
S.A. provided to us a credit facility for €500 million negotiated on an arm's length basis which commenced on January 31, 2001 to cover general
financing requirements. On October 5, 2001 the outstanding drawings of €481 million under this facility were repaid with part of the proceeds from the issue of 28,578,000
shares at £20.58.

We
have a facility of USD 130 million (€124 million), of which €8 million has been drawn down at December 31, 2002, from
Castle Worldwide Finance CV, a wholly owned subsidiary of Orange S.A. formed in 2002. The facility bears interest at a rate equal to LIBOR plus 300 basis points and matures on December 31,
2003.

At
the year end 2002, we also had a loan of £16 million (€25 million) of which €16 million had been drawn down at
December 31, 2002, compared to £14 million (€23 million) at December 31, 2001, from Ananova Limited, a wholly owned subsidiary of Orange S.A.,
to cover general financing requirements. The loan was negotiated on an arms' length basis and bears interest at a rate equal to overnight LIBOR less 10 basis points and can be repaid at any time
without penalty.

The
purpose of the facilities outstanding at December 31, 2002 is to cover our general financing requirements. They were negotiated on an arm's length basis and can be repaid at
any time without penalty.

We
have granted a facility of £25 million (€39 million), which has been fully drawn down at December 31, 2002 and 2001, to Orange S.A. in
order to cover their general financing requirements. This facility bears interest at a rate equal to LIBOR less 10 basis points and can be repaid at any time without penalty.

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Other transactions

Our turnover includes an Orange Brand license fee of €141 million in 2002 (€61 million in 2001 and zero in 2000),
invoiced to the operating subsidiaries of Orange S.A., which are using the Orange brand name. In addition, management and research & development services of €187 million
(€121 million in 2001) were invoiced primarily to Orange S.A. and also to some of its subsidiaries.

We
also incurred management fees of €26 million from Orange S.A. in 2002 (zero in 2001 and 2000).

Pursuant
to an agreement dated December 21, 2000, as part of the Orange S.A. group restructuring, Orange plc transferred certain assets to a wholly owned subsidiary of Orange
S.A., Wirefree Services Belgium (formerly France Telecom Participations Belgium S.A.) for a total consideration of approximately €532 million. This transfer was concluded on an
arms length basis and included, among others, Orange plc's holdings in Ananova Limited, Bangkok Inter Teletech Co. Ltd, NewsTakes, Incl, PocketThis, Inc. and Book2eat Holdings Limited.

In
2002 and 2003, Orange S.A. initiated changes in its internal organizational structure in order to improve its operating efficiency in relation to three main areas, mass market
services, business services and technical development. As part of this strategic review, Orange S.A. began a reorganization project to align its corporate structure with its operating structure, which
is currently being effected by bringing Orange S.A.'s international operations outside of France and the UK, including its operations in the United States and Germany and its interests in Austria and
Switzerland, under a single management organization. In connection with this reorganization project, Orange S.A.'s operations outside of France and the UK were regrouped under a UK holding company,
Orange Global Limited, a wholly owned subsidiary of Orange S.A., in March 2003.

On
March 13, 2003, Orange Global Limited entered into a share purchase agreement with Orangedot Limited, a wholly owned subsidiary of Orange plc, to purchase the shares in Orange
Holdings Limited for a total consideration of £202,308,000 (approximately €302 million). As a result, our 100% shareholdings in Wildfire Communications, Inc and
Hutchison Telecommunications GmbH and our 17.45% interest in Connect Austria GmbH and 50% interest in Orange Communications SA, all held through Orange Holdings Limited, have been transferred to
Orange Global Limited. Orange Holdings Limited and its subsidiaries are "Unrestricted Subsidiaries"
as defined under the indentures to our senior notes. The total interests transferred from us pursuant to the share purchase agreement with OrangedotLimited represent approximately (0.3)% of our total
EBITDA (as defined in the senior note indentures) and 3.1% of our total long-term assets for the year ended December 31, 2002. This agreement has been negotiated on an arm's length
basis.

The
main other transactions with related parties in the normal course of business relate to interconnection between networks.

7C. Interests of experts and counsel

Not applicable.

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ITEM 8  FINANCIAL INFORMATION

8A. Consolidated statements and other financial information

Audited financial statements for the year ended December 31, 2002 are included in Item 18.

Legal and arbitration proceedings

We are involved in several court proceedings as part of the ordinary course of our business. Currently, there are no legal or arbitration proceedings, including
any such proceedings which are active, pending or threatened against, or being brought by us or any of our network operators, of which we are aware, which are likely to have a material effect on our
financial condition, results of operations or liquidity.

As
is the case with many companies in the telecommunications industry, we have from time to time received claims alleging possible unfair competition and infringement of certain
intellectual property rights, as well as claims relating to our products or services. Regardless of the validity or the success of such claims, we could incur significant costs with respect to the
defense of such claims which could have a material adverse effect on our results of operations or financial condition.

8B. Significant changes

In
2002 and 2003, Orange S.A. initiated changes in its internal organizational structure in order to improve its operating efficiency in relation to three main areas, i.e. mass market
services, business services and technical development. As part of this strategic review, Orange S.A. began a reorganization project to align its corporate structure with its operating structure, which
is currently being effected by bringing Orange S.A.'s international operations outside of France and the UK, including its operations in the United States and Germany and its interests in Austria and
Switzerland, under a single management organization. In connection with this reorganization project, Orange S.A.'s operations outside of France and the UK were regrouped under a UK holding company,
Orange Global Limited, a wholly owned subsidiary of Orange S.A., in March 2003.

On
March 13, 2003, Orange Global Limited entered into a share purchase agreement with Orangedot Limited, our wholly owned subsidiary, to purchase the shares in Orange Holdings
Limited for a total consideration of £202,308,000 (approximately €302 million). As a result, our 100% shareholdings in Wildfire Communications, Inc and Hutchison
Telecommunications GmbH and our 17.45% interest in Connect Austria GmbH and 50% interest in Orange Communications SA, all held through Orange Holdings Limited, have been transferred to Orange Global
Limited. Orange Holdings Limited and its subsidiaries are "Unrestricted Subsidiaries" as defined under the indentures to our senior notes. The total interests transferred from us pursuant to the share
purchase agreement with Orangedot Limited represent approximately (0.3)% of our total EBITDA (as defined in the senior note indentures) and 3.1% of our total long-term assets for the year
ended December 31, 2002. This agreement has been negotiated on an arm's length basis.

On
January 22, 2003, Oftel announced, as per the Competition Commission's recommendation, its intention to commence, in the near future, the process to modify the
Telecommunications Act licenses of each mobile operator to effect a 15% reduction in the termination charges of the four UK mobile operators before July 25, 2003. The second part of the
Competition Commission's recommendation annual Retail Price Index reductions cannot be implemented by way of Telecommunications Act license modifications. On July 25, 2003, the UK is expected
to implement the new European regulatory framework (Directives adopted by the European Community on March 7, 2002). As a result, on July 25, 2003, all Telecommunications Act licenses
issued to telecommunications operators will be revoked and replaced by general conditions of entitlement in accordance with the requirements of the new European framework. In order to impose a price
control on each of the mobile operators after

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July 25,
2003, Oftel must first conduct a market review and issue determinations that the individual operators possess significant market power in the relevant market. On January 22,
2003, the Director General of Telecommunications stated his intention to review the termination market afresh for the purpose of introducing the new European Telecoms framework with effect from
July 25, this year.

Consequently
it is expected that Oftel will seek to implement the Competition Commission's recommendations in full. On January 22, 2003, Vodafone announced that it intends to seek
a Judicial Review of the Competition Commission's decisions. Orange UK considers the Competition Commission's recommended remedy to be disproportionate. Orange UK has therefore also begun Judicial
Review proceedings seeking a reversal of this decision, as has T-Mobile. The Judicial Review proceedings began on 9 June 2003.

We
have decided to exercise our option to redeem our senior notes due in August 2008. The senior notes are scheduled to be redeemed on August 1, 2003 at the redemption
price of approximately £205.9 million, €97.6 million and $19.2 million for each of the respective series of notes. At August 1, 2003, the
principal outstanding amount for each of the respective series of notes being redeemed will be approximately £197.3 million, €94.1 million and
$18.5 million.

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ITEM 9  THE OFFER AND LISTING

9A. Offer and listing details

Our ADSs were traded on the Nasdaq National Market between April 2, 1996 and February 14, 2000 under the symbol "ORNGF". Our ordinary shares were
traded on the London Stock Exchange between April 2, 1996 and February 10, 2000 under the symbol "ORA".

The
following table sets forth, for the periods indicated, the high and low closing bid prices per ordinary share in pounds sterling and the high and low bid prices per ADS in dollars:

Ordinary shares

ADSsHigh

Low

High

Low(£ per share)

($ per share)Annual information for the past five years(1)2000

26.500

19.500

220.750

162.2201999

21.110

7.750

174.125

62.1251998

7.990

2.485

65.750

19.7501997

2.690

1.855

22.250

15.6251996

2.530

1.690

16.000

16.000Quarterly information for the past two years(2)2000

26.500

19.500

220.750

162.250First Quarter







Second Quarter







Third Quarter







Fourth Quarter







1999First Quarter

10.715

7.945

72.000

70.750Second Quarter

9.695

7.750

79.125

62.500Third Quarter

11.940

8.810

99.750

71.250Fourth Quarter

21.110

11.760

174.125

97.250Monthly information for most recent six monthsJanuary 2003







February 2003







March 2003







April 2003







May 2003







June 2003










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9B. Plan of distribution

Not applicable.

9C. Markets

Our £150,000,000 87/8% Senior Notes due 2009, our $275,000,000 9% Senior Notes due 2009, our $225,000,000 83/4% Senior
Notes due 2006, our £200,000,000 85/8% Senior Notes due 2008, our $545,000,000 8% Senior Notes due 2008 and our €100,000,000 75/8% Senior
Notes due 2009 are all listed on the official list of the London Stock Exchange. Currently, our senior notes are not listed on

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any
United States securities exchange or quoted on any automated inter-dealer quotation system in the United States.

9D. Selling shareholders

Not applicable.

9E. Dilution

Not applicable.

9F. Expenses of the issue

Not applicable.

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ITEM 10  ADDITIONAL INFORMATION

10A. Share capital

Not applicable.

10B. Memorandum and articles of association

General

We are incorporated under the laws of England and Wales and are registered under the Companies Act, registration number 3110666. Our principal objects can be
found in Section 4 of our Memorandum of Association and include the following: (i) to carry on the business of a holding company, (ii) to carry on any trade or business which in
the opinion of our Board of Directors can be advantageously carried on in connection with or ancillary to any of our businesses and (iii) to do all such other things as may be deemed incidental
or conducive to the attainment of any of our objects.

The
summary of certain provisions of our Articles of Association set forth below does not purport to be complete and is qualified in its entirety by reference to the Articles of
Association and relevant English corporate law.

Directors

Responsibility for our management lies with our Board of Directors. Our directors may exercise all the powers that are not required to be exercised in general
meeting by The Companies Act 1985 (as amended), by CREST Regulations, by every other Statute for the time being in force concerning companies and affecting us, or the Statutes, or by the Articles of
Association.

Our
directors shall not be required to hold any of our shares in order to qualify as a director. Our directors are appointed for three-year terms at our annual general
shareholders' meetings. At each annual general shareholders meeting, all those directors who were elected or re-elected at or before the annual general shareholders meeting held in the
third calendar year before the current year shall retire from office by rotation.

Any
director may summon a meeting of the Board of Directors. The quorum necessary for a meeting of the Board of Directors may be fixed from time to time by the Board of Directors. Unless
fixed, the quorum shall be three. Every director who is present at a Board meeting shall have one vote. Our Articles of Association require the vote of a majority of the directors (or alternates)
present at a duly convened meeting for the approval of all Board actions.

Subject
to the Statutes and provided that a director has disclosed to the other directors the nature and extent of any interest, a director may be party to or otherwise interested in any
contract or transaction with us or in which we are otherwise interested and he may be a director or other officer of or employed by a party to any contract, transaction or arrangement with or
otherwise interested in any body corporate promoted by us or in which we are in any way interested and he (or any firm of which he is a partner, employee or member) may act in a professional capacity
for the company (other than as auditor) or any such other company and be remunerated therefore and shall not (save as otherwise agreed by him) be accountable to us for any benefit which he derives
from any such contract, transaction or arrangement or from any such office or employment or from any interest in any such body corporate or for such remuneration and no such contract, transaction or
arrangement shall be liable to be avoided on the grounds of any such interest or benefit.

Except
as otherwise provided in the Articles of Association, a director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any
material interest other than by virtue of interests in shares, debentures or other securities, in or through us. A director shall not be counted in the quorum of a meeting in relation to any
resolution on which he is not

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entitled
to vote. Subject to the provisions of the Statutes, a director shall (in the absence of some other material interest than is indicated below) be entitled to vote (and be counted in the
quorum) in respect of any resolution concerning any of the following matters:



A
director shall not vote in respect of any proposal relating to the payment of compensation to himself but may vote on any proposal relating to the payment of compensation to any other
director.

Subject
to the Articles of Association and to the provisions of the Statutes, the directors may exercise all of our powers to borrow money, and to mortgage or charge our undertaking,
property and uncalled capital or any part or parts thereof, and to issue debentures and other securities, whether outright or as collateral security for any of our debt, liability or obligation of or
of any third parties.

The
directors shall restrict our borrowings and exercise all voting and other rights, powers of control or rights of influence exercisable in relation to our subsidiary undertakings so
that the aggregate amount of all moneys outstanding borrowed by the Orange plc group and for the time being owing to persons outside the Orange plc group, with the exception of France Telecom, shall
not at any time, without the previous sanction of an ordinary resolution taken by us, exceed the sum of £5,000 million.

Description of share capital

Our authorized share capital is £292,628,005.60, consisting of 1,463,140,028 ordinary shares with a nominal value of £0.20 per share. As
of March 31, 2003 1,460,116,947 ordinary shares were issued and outstanding, of these ordinary shares 1,460,116,945 were owned by our parent Orange S.A. and the remainder were held by other
subsidiary companies of France Telecom S.A. We may issue shares with preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital,
voting or otherwise, as an ordinary resolution of a general meeting of shareholders may from time to time determine (or, in the absence of any such determination, as our Board of Directors may
determine). Subject to the provisions of the Statutes, we may issue redeemable shares.

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Dividends

Subject to the Companies Act 1985 (as amended), we may by ordinary resolution declare dividends not exceeding the amount recommended by our Board of Directors.
Our Board may also pay interim dividends whenever in its opinion, our profits justify such payments.

In
most cases dividends shall be apportioned and paid proportionately to the amounts paid up at the time that the dividend is paid. Any dividend unclaimed after a period of twelve years
from the date on which such dividend was declared or became due for payment shall be forfeited and shall revert to us.

Dividends
shall be paid out of profits available for distribution, under the provisions of the Companies Act and the Statutes, unpaid dividends shall not bear interest against us.

Voting rights

Unless otherwise required by law or the Articles of Association, voting in a general meeting is by ordinary resolution. An ordinary resolution (e.g., a resolution
for the election of directors, the approval of financial statements, the declaration of a final dividend, the appointment of auditors, the increase of authorized share capital or the grant of
authority to allot shares) requires the affirmative vote of a majority of the shareholders present in person, in the case of a vote by show of hands, or present in person or by proxy and holding
shares conferring in the aggregate a majority of the votes actually cast on the ordinary resolution, in the case of a vote by poll. A special resolution (e.g., a resolution amending the Memorandum of
Association or Articles of Association, changing our name or waiving
the statutory pre-emption rights) or an extraordinary resolution (e.g., modifying the rights of any class of shares at a meeting of the holders of such class or relating to certain matters
concerning our liquidation) requires the affirmative vote of not less than three-fourths of the shareholders present in person, in the case of a vote by show of hands, or present in person or by proxy
and holding shares conferring in the aggregate at least three-fourths of the votes actually cast on the resolution, in the case of a vote by poll. In the case of a tied vote, whether on a show of
hands or on a poll, the chairman of the meeting is entitled to cast a deciding vote. No member shall, unless the directors otherwise determine, be entitled to vote in respect of any share held by him
either personally or as a proxy if any call or other sum payable by him to us in respect of that share remains unpaid. At each Annual General Meeting all those directors who were elected or last
re-elected at or before the Annual General Meeting held in the third calendar year before the current year shall retire from office by rotation and are eligible for
re-election.

Capitalization of profits and reserves

The directors may, with the sanction of an ordinary resolution, capitalize any sum standing to the credit of any of our reserve accounts or to the credit of our
profit and loss account. Such capitalization shall be effected by appropriating such sum to the holders of ordinary shares on the date of the resolution (or such other date as may be specified therein
or determined as therein provided) in proportion to their holdings at such time and applying such sum in paying up on such holder's behalf fully paid unissued ordinary shares as bonus shares. The
directors may do all acts and all things considered necessary for the purposes of such capitalization, and have full power to make such provisions as they think fit in respect of fractional
entitlements that would arise. The directors may authorize any person to enter into, on behalf of all the members interested, an agreement with us in relation to any such capitalization and matters
incidental thereto and such agreement shall be effective and binding on all concerned.

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Winding up and liquidation rights

If we shall be wound up, the liquidator may, with the authority of a special resolution which we would provide:



Pre-emptive rights

The Companies Act 1985 (as amended) confers on shareholders, to the extent not disapplied, rights of pre-emption in respect of the issue of equity
securities that are, or are to be, paid up wholly in cash. The term "equity securities" means:



Transfer of shares

Any holder of shares may transfer in writing all or any of his shares in any common form or in any other form which the directors may approve. The instrument of
transfer of a share shall be signed by or on behalf of the transferor and (except in the case of fully paid shares) by or on behalf of the transferee. The directors may in their absolute discretion
and without assigning any reason therefore refuse to register any transfer of shares (not being fully paid shares), provided that where any such shares are admitted to the Official List of the London
Stock Exchange, such discretion may not be exercised to prevent dealings in such shares from taking place on an open and proper basis. The directors may also refuse to register an allotment or
transfer of shares (whether fully paid or not) to more than four persons jointly. The directors may also refuse to register a transfer or shares unless the instrument of transfer is both:



The
registration of transfers may be suspended at such times and for such periods (not exceeding 30 days in any year) as the directors may from time to time determine and either
generally or in respect of any class of shares.

Foreign shareholders

There are currently no limitations imposed by English law or by the Articles of Association on the right of non-resident holders to hold or vote the
shares.

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Shareholder meetings

Each registered shareholder has the right to attend general meetings of shareholders, either in person or represented by a person holding a written proxy, subject
to the provisions of the Articles of Association.

Our
annual general shareholders' meetings are held annually (within a period of not more than 15 months after the holding of the last preceding annual general shareholders'
meeting). An annual general shareholders' meeting shall be convened on at least 21 days' written notice to shareholders entitled to receive notices. Our Board of Directors may convene an
extraordinary general meeting of shareholders whenever they think fit. Most extraordinary general meetings must be convened on at least 14 days' written notice but extraordinary general
meetings at which it is proposed to pass certain types of special resolutions must be convened on at least 21 days written notice.

General
meetings may be held at such time and place as may be determined by our Board of Directors. Subject to any special rights or restrictions as to voting attached by or in
accordance with the Articles of Association to any class of shares, every member present in person at a general meeting shall have one vote on a show of hands and on a poll every member present in
person or by proxy shall have one vote for each share held. Voting at any general meeting is by a show of hands unless a poll is demanded in accordance with the conditions set out by the Articles.

Alteration of share capital

We may from time to time by ordinary resolution:



Subject
to the provisions of the Statutes, we may purchase or enter into contracts under which we may purchase any of our own shares. However, if there shall be in issue any shares
convertible into equity share capital of the class proposed to be purchased, then we shall not purchase or enter into a contract under which we may purchase such equity shares unless either
(i) the terms of the issue of such convertible shares include provisions permitting us to purchase its own equity shares or (ii) the purchase, or contract, has first been approved by an
extraordinary resolution passed at a separate meeting of the holders of such convertible shares.

Furthermore,
subject to the provisions of the Companies Act, we may by special resolution reduce our share capital or any capital redemption reserve, share premium account or other
undistributable reserve in any way.

Calls on shares

Our directors may make calls upon the holders of shares in respect of any moneys unpaid on their shares but subject always to the terms of allotment of such
shares. A call shall be deemed to have been made at the time when the resolution of the directors authorizing the call was passed and may be made payable by installments.

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Each
member shall (subject to receiving at least 14 days' notice specifying the time or times and place of payment) pay to the Company the amount called on his shares. The joint
holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be wholly or partly revoked or postponed as the directors may determine.

If
a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day
appointed for payment thereof to the time of actual payment at such rate (not exceeding 15% per annum) as the directors determine but the directors shall be at liberty in any case or cases to waive
payment of such interest wholly or in part.

Any
sum which by the terms of allotment of a share becomes payable upon allotment or any fixed date shall for all the purposes of these Articles of Association be deemed to be a call
duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non-payment all the relevant provisions of the Articles of Association as to
payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

The
directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment.

Disclosure of interests

Section 198 of the Companies Act provides that a person (including a company and other legal entities) that acquires an interest of 3% or more of any class
of shares that comprise part of a company's "relevant share capital" (i.e., a company's issued share capital carrying the right to vote in all circumstances at a general meeting of the company) is
required to notify us of its interest within two
business days following the day on which the notification obligation arises. After the 3% level is exceeded, similar notifications must be made in respect of increases or decreases of 1% or more.

10C. Material contracts

We are not a party to any material contracts other than those entered into in the ordinary course of business.

10D. Exchange controls

There are no UK government laws, decrees or regulations that restrict or affect the export or import of capital, including but not limited to foreign exchange
controls on remittance of dividends on the ordinary shares or on the conduct of our operations, except as set out under "Item 10E. Taxation", below.

Under
English law (and our Memorandum and Articles of Association), persons who are neither residents nor nationals of the UK may freely hold vote and transfer ordinary shares in the
same manner as UK residents or nationals.

10E. Taxation

Certain US federal income tax considerations

The following summary of certain United States federal income tax consequences of the ownership and disposition of a senior note (solely for purposes of this
summary, senior notes shall mean book-entry interests in the global senior notes) is based on the United States Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations
(including proposed and temporary Regulations) promulgated thereunder, administrative rulings, official pronouncements and judicial decisions, all as in

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effect
on the date of this annual report and all of which are subject to change, or to different interpretations, possibly with retroactive effect. This summary provides general information only and
does not purport to address all of the US federal income tax consequences that may be applicable to a holder of a senior note. It does not address all of the tax consequences that may be relevant to
certain types of holders subject to special treatment under US federal income tax law, such as individual retirement and other tax-deferred accounts, dealers in securities or currencies,
traders in securities that elect to mark to market, banks, life insurance companies, tax-exempt organizations, persons holding senior notes as a hedge or hedged against currency risk,
persons holding senior notes as part of a straddle, "synthetic security" or other integrated investment, including a "conversion transaction", or persons whose functional currency is not the US
dollar.

For
purposes of the following discussion, the term United States person means:



The
following discussion pertains only to US holders. The term "US holder" means a beneficial owner of a senior note who:



Payments of interest

Payments of interest on a senior note will be taxable to a US holder as ordinary interest income at the time such payments are accrued or received in accordance
with such holder's method of tax accounting. Such interest will constitute foreign source income for US federal income tax purposes but, with certain exceptions, will be treated separately, together
with other items of passive income or, in the case of certain holders, financial services income for purposes of computing the foreign tax credit allowable under United States federal income tax laws.
The amount required to be included in income by a cash-basis US holder upon receipt of a payment of interest on a sterling senior note or euro senior note (including any payment on sale or
retirement of a sterling senior note or euro senior note that is attributable to accrued but unpaid interest) will be the US dollar value of the amount of the payment (determined on the basis of the
spot rate on the date such payment is received) regardless of whether the payment is in fact converted into US dollars. No exchange gain or loss will be recognized with respect to the receipt of such
payment.

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Except in the case of a spot rate convention election (as described below), a US holder of a sterling senior note or euro senior note who is required to accrue interest income on such
sterling senior note or euro senior note prior to receipt will be required to include in income for each taxable year the US dollar value of the interest that has accrued during such year, determined
by translating such interest at the average rate of exchange for the period (or partial period if the period spans two taxable years) during which such interest has accrued. The average rate of
exchange for an interest accrual period is the simple average of the spot exchange rates for each business day of such period (or such other average that is reasonably derived and consistently applied
by the holder). Upon receipt of an interest payment in foreign currency, such US holder will recognize ordinary gain or loss in an amount equal to the difference between the US dollar value of the
foreign currency received (determined on the basis of the spot rate on the date such payment is received) and the US dollar value of the interest income that such US holder has previously included in
income with respect to such payment. Any such gain or loss generally will be taxable as ordinary income or loss, but generally will not be treated as interest income or expense, except to the extent
provided by future administrative pronouncements of the Internal Revenue Service or the IRS.

An
accrual basis US holder may make a spot rate convention election, to translate accrued interest into US dollars at the spot rate on the last day of an accrual period for the interest,
or, in the case of an accrual period that spans two taxable years, at the spot rate on the last day of the taxable year. Additionally, if a payment of interest is received within five business days of
the last day of the accrual period or taxable year, an electing US holder may translate accrued interest at the exchange rate in effect on the day of actual receipt. A US holder that makes the spot
rate convention election must apply it consistently to all debt instruments held at the beginning of the first taxable year, or acquired thereafter in which the election applies and cannot change the
election without the consent of the IRS.

For
the purposes of this discussion, the spot rate generally means a rate that reflects a fair market rate of exchange available to the public for currency under a spot contract in a
free market and involving representative amounts. A spot contract is a contract to buy or sell a currency on or before two business days following the date of the execution of the contract. If such a
spot rate cannot be demonstrated, the service has the authority to determine the spot rate.

Sale, exchange, redemption or retirement of the senior notes

Upon the sale, exchange, redemption, retirement or other disposition of a senior note, a US holder will recognize gain or loss equal to the difference between the
amount realized and the US holder's adjusted tax basis in the senior note.

The
amount realized on a sterling senior note or euro senior note will be based on:



A
US holder's initial tax basis for a senior note generally will be the US holder's purchase price (in US dollars) for the senior note. In determining the purchase price (in US dollars)
of a sterling senior note or euro senior note, a US holder generally will be treated as though the pounds sterling or euros, as the case may be, used to purchase such senior note were instead
exchanged for US dollars at the spot rate in effect on the date of acquisition of such senior note, and the US dollars received in such exchange were used to purchase such senior note.

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The
gain or loss recognized upon the disposition of a sterling senior note or euro senior note by a US holder, as described above, will constitute foreign currency gain or loss to the
extent provided under the rules described below. This foreign currency gain or loss will be taxable as ordinary income or loss, but generally will not be treated as interest income or expense. The US
holder will recognize foreign currency gain or loss on the principal amount of the sterling senior note or euro senior note to which prior receipts of payments on such senior note have not been
attributed equal to the difference between:



However,
a US holder will recognize foreign currency gain or loss only to the extent of the total gain or loss realized on the transaction.

Except
with respect to any foreign currency gains or losses, gain or loss recognized upon the disposition of a senior note by a US holder will be capital gain or loss and will be
long-term capital gain or loss if the US holder's holding period in the senior note is more than one year at the time of the disposition. An individual US holder will generally be subject
to preferential rates of tax on capital gains if certain prescribed minimum holding periods are met. The deductibility of capital losses is subject to significant limitations.

Receipt of pounds sterling

It is possible that a US holder of a sterling senior note or euro senior note may receive pounds sterling or euros, as the case may be, from us in payment for
interest or principal. The tax basis of any pounds sterling or euros received by a US holder generally will equal the US dollar equivalent of such pounds sterling or euros at the spot rate on the date
the pounds sterling or euros are received. Upon any subsequent exchange of such pounds sterling or euros for US dollars, a US holder will generally recognize foreign currency gain or loss equal to the
difference between the amount of US dollars received and the US holder's tax basis in the pounds sterling or euros. Upon any subsequent exchange of such pounds sterling or euros for property
(including non-US currency), a US holder will generally recognize foreign currency gain or loss equal to the difference between the US dollar value of the pounds sterling or euros
exchanged for such property (including non-US currency) based on the US dollar spot rate for pounds sterling or euros on the date of the exchange and the US holder's tax basis in the
pounds sterling or euros so exchanged. Any such foreign currency gain or loss will generally be treated as ordinary income or loss.

US information reporting and backup withholding

Payments of principal and interest with respect to the senior notes and proceeds from the sale, exchange or redemption of the senior notes may be subject to
information reporting to the IRS and possible US backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a holder who furnishes a correct taxpayer identification
number or sufficient documentary evidence of foreign status and makes any other required certification or who is otherwise exempt from backup withholding. US persons who are required to establish
their exempt status generally must file IRS Form W-9 (Request for Taxpayer Identification Number and Certification). Non-US holders generally will not be subject to US
information reporting or backup withholding. However, such holders may be required to provide certification of non-US status in connection with payments received in the United States or
through certain US-related financial intermediaries.

92

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Amounts
withheld as backup withholding may be credited against a holder's US federal income tax liability, and a holder may obtain a refund of any excess amounts withheld under the
backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information.

The
US federal income tax discussion set forth above is included for general information only and may not be applicable depending upon a holder's particular situation. Holders should
consult their tax advisors with respect to the tax consequences to them of the ownership and disposition of the senior notes, including the tax consequences under state, local, foreign and other tax
laws and the possible effects of changes in US federal or other tax laws.

Certain UK tax considerations

The following is a general summary of certain of the material UK tax consequences of the ownership and disposal of the senior notes. It does not purport to be a
comprehensive description of all the tax considerations that may be relevant to a holder of the senior notes.

The
statements regarding UK tax laws and practices set out below, including the statements regarding the UK/US double taxation conventions relating to income and capital gains as it has
been amended by protocols (the "Tax Treaties"), are based on those laws in force and as applied in practice as at the date of this annual report and are subject to changes therein (possibly with
retroactive effect). US holders should be aware that a new United KingdomUnited States Income Tax Convention entered into force on March 31, 2003 (the "New Treaty"). The New Treaty
allows a US
holder entitled to benefits under the previous 1980 United KingdomUnited States Income Tax Convention (the "Old Treaty") to elect to have the provisions of the Old Treaty continue for an
additional twelve months if the election to apply the Old Treaty would result in greater benefits to the holder. US holders should note that certain provisions of the New Treaty limit or restrict the
ability of a US holder to claim benefits under the New Treaty and that similar provisions were not contained in the Old Treaty. US holders should consult their own tax advisors concerning the
applicability of both Tax Treaties.

This
summary relates only to the position of persons who are the absolute beneficial owners of senior notes and does not necessarily apply where the income is deemed for tax purposes to
be the income of any other person. This summary does not address the tax consequences to investors that do not hold senior notes as capital assets or special classes of investors such as dealers in
securities.

References
below to Qualifying Companies are to companies within the charge to UK corporation tax (other than authorized unit trusts), and references to Relevant Noteholders are to
holders of senior notes who are individuals, trustees or companies not within the charge to UK corporation tax.

For
the purposes of the following discussion, a US holder means a person who is the beneficial owner of senior notes who is resident in the US and not resident in the UK for the purposes
of the Tax Treaties and does not hold the senior notes in connection with a fixed base or permanent establishment in the UK and is eligible for the benefit of the "interest" article of the Tax
Treaties.

Payments of interest

So long as the senior notes continue to be listed on a "recognised stock exchange" within the meaning of Section 841 of the Income and Corporation Taxes
Act 1988 (the London Stock Exchange is a "recognised stock exchange" for these purposes), payments of interest on the senior notes may be made without withholding or deduction for or on the account of
UK income tax.

Interest
on the senior notes may also be paid without withholding or deduction for or on account of UK income tax where the issuer of the senior notes (or any person by or through whom
interest on the senior notes is paid) reasonably believes that the person beneficially entitled to the interest is: a Qualifying Company, or a partnership of which all partners are Qualifying
Companies, or a branch of

93

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an
overseas company, that is within the charge to UK corporation tax as regards the interest, provided the Inland Revenue has not given a direction to the contrary.

In
all other cases interest will be paid under deduction of UK income tax at the lower rate (currently 20%) subject to any direction to the contrary from the Inland Revenue in respect of
such relief as may be available pursuant to the provisions of any applicable double taxation treaty.

Persons
in the UK paying interest to or receiving interest on behalf of another person may be required to provide certain information to the UK Inland Revenue regarding the identity of
the payee or person entitled to the interest and, in certain circumstances, such information may be exchanged with tax authorities in other countries. In this regard, the ECOFIN Council of the
European Union has agreed to adopt a Directive regarding the taxation of savings income, which Directive is intended to be effective from January 1, 2005. In general, it is proposed that Member
States will, under the Directive, be requested to provide to the tax or other relevant authorities of another Member State details of payments of interest or other similar income paid by a person
within its jurisdiction to an individual resident in that other Member State. Certain Member States (Luxembourg, Belgium and Austria) have alternatively decided to opt instead for a withholding tax
system for a transitional period in relation to such payments, with applicable withholding tax rates under the Directive of 15%, 20% and 35% with likely effect from January 1, 2005,
January 1, 2008 and January 1, 2011 respectively, although this is yet to be confirmed. The Directive should not be required to be applied during the transitional period to senior notes
issued before March 1, 2001. Although the Directive is not intended to affect the withholding tax treatment of payments to US holders, the Directive has not yet been finally satisfied and may
be subject to further amendment and/or clarification.

Interest
on the senior notes has a UK source and accordingly may be chargeable to UK tax by direct assessment. Where the interest is paid without withholding or deduction, the interest
will not be assessed to UK tax in the hands of senior noteholders who are not resident in the UK for tax purposes, except where such persons carry on a trade, profession or vocation in the UK through
a UK branch or agency in connection with which the interest is received or to which the senior notes are attributable, in which case (subject to exemptions for interest received by certain categories
of agent) tax may be levied on the UK branch or agency.

Where
interest has been paid under deduction of UK income tax, senior noteholders who are not resident in the UK may be able to recover all or part of the tax deducted if there is an
appropriate provision in an applicable double taxation treaty. A US holder may be eligible to recover in full any UK tax withheld from payments of interest to which such US holder is beneficially
entitled by making a claim under the New Treaty on the appropriate form. Claims for repayment must be made within five years of January 31, following the year of assessment (from April 6
to April 5 of the following year) to which the interest relates.

Senior
noteholders should note that the provisions of the indentures relating to the payment of Additional Amounts would not apply if the Inland Revenue sought to assess directly the
person entitled to the relevant interest to UK tax.

Taxation of returns

Qualifying Companies will be subject to tax as income on all interest and any other profits and gains in respect of the senior notes (including in respect of
foreign exchange movements), broadly, in accordance with their authorized accounting treatment (which should generally correspond with their statutory accounting treatment).

94

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Relevant Noteholder

Payments of interest

Relevant Noteholders who are resident for tax purposes in the UK or who carries on a trade in the UK through a branch or agency to which the senior notes are
attributable will generally be liable to UK tax on the amount of any interest received in respect of the senior notes.

Capital gains

A disposal (including redemption) of a senior sterling note will generally not give rise to a chargeable gain or an allowable loss for the purposes of UK capital
gains tax.

A
disposal (including redemption) of a senior note that is not denominated in sterling may give rise to a chargeable gain or loss for the purposes of UK capital gains tax if the Relevant
Noteholder is resident or ordinarily resident for tax purposes in the UK, or carries on a trade, profession or vocation in the UK through a branch or agency to which the senior notes are attributable.

Relevant
Noteholders should be aware that in calculating the amount of any gain arising on a disposal of a senior dollar or euro note for tax purposes, sterling values are compared at
acquisition and disposal. Accordingly, a taxable gain may arise on disposal even where the US dollar proceeds are less than, or equal to, the amount in US dollars paid to acquire the senior dollar
note.

Accrued income scheme

A transfer of a senior note by a Relevant Noteholder resident or ordinarily resident for tax purposes in the UK, or who carried on a trade in the UK, through a
branch or agency to which the senior note is attributable may give rise to a charge to tax on income in respect of an amount representing interest on the senior note which has accrued since the
preceding interest payment date.

Stamp duty

No UK stamp duty or stamp duty reserve tax will be payable on the transfer of the senior notes or on their redemption.

10F. Dividends and paying agents

Not applicable.

10G. Statement by experts

Not applicable.

10H. Documents on display

This Form 20-F and the exhibits thereto and any periodic reports or other information filed pursuant to the Exchange Act may be inspected
without charge and copies are available at prescribed rates at the Public Reference Room of the Commission 450 Fifth Street, NW, Washington, D.C. 20549.

The
documents concerning us which are referred to in this Form 20-F may also be inspected at our offices located at 50 George Street, London W1U 7DZ,
England.

10I. Subsidiary information

Not applicable.

95

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ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Overview

We are exposed to market risk, including movements in interest rates and foreign currency exchange rates for our functional currency, pounds sterling. Where
appropriate we enter into derivative instruments to hedge underlying exposures to interest rates and foreign currencies. The authorized interest rate hedging instruments are swaps, options, FRAs and
swaptions and the authorized foreign exchange hedging instruments are forward FX, currency options, swaps, currency borrowings and investments. As a matter of policy we do not enter into transactions
of a speculative or trading nature. Interest rate and foreign exchange exposures are monitored by tracking actual and projected commitments, and through the use of sensitivity analysis. Also see
Note 13 to the consolidated financial statements

Interest rates

Our borrowings consist primarily of a syndicated senior debt facility, that includes a European Investment Bank Facility, referred to as the EIB facility and two
senior notes issues. Our senior debt facility is subject to floating interest rates. The drawings on the EIB facility and the senior notes issues are at fixed interest rates. On a rolling three year
basis, current policy requires forecast net borrowings to be fixed or capped to a minimum of 60% in year 1, 50% in year 2 and 40% in year 3 unless amended by the Treasury
Committee. At December 31, 2002, €2,311 million (91%) was subject to a fixed interest rate.

Throughout
the following three years there is a minimum of €826.1 million of borrowings subject to a fixed interest rate.

The
mark to market value of derivative instruments, valued at December 31, 2002 by discounting the future cash flows, was a total loss of €6.9million (2001: gain
of €64.8 million) of which a gain of €1.1 million was unrealized (2001: unrealized gain of €22.9 million). See Note 13 to
the consolidated financial statements. In the case of interest rate swaps, interest is the only cash flow. For the cross currency swaps, in addition to interest cash flows, the principal sum is
exchanged by counterparties at commencement and returned at the expiry of the swap. The market risk associated with the currency element of the cross currency swaps is addressed in the foreign
exchange section.

96

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The
following table provides information about our derivative instruments. The notional amount does not necessarily represent amounts exchanged by the parties and, therefore, is not a
direct measure of our exposure.

|Derivative instruments
(Interest rate risk)
Euro equivalent |  |         |   | Maturing Period |   |      
|----------------------------------------------------------- |  | ------- | - | --------------- | - | -----
|
|
|
|Interest rate swaps pay fixed swaps:                        |  |         |   |                 |   |      
|Notional amountswaps in pound sterling                     |  | 1,829.4 |   | 768.6           |   | 307.5
|Fair value                                                  |  | (44.1   | ) |                 |   |      
|Weighted average:                                           |  |         |   |                 |   |      
|Receive rate(1)                                             |  |        |   | 3.96            | % | 4.25 
|Pay rate                                                    |  |        |   | 5.90            | % | 5.49 
|                                                            |  |         |   |                 |   |      
|Purchased Interest rate caps                                |  |         |   |                 |   |      
|Notional amountswaps in pound sterling                     |  | 384.3   |   | 138.3           |   | 246.0
|Fair value                                                  |  | 0.0     |   |                 |   |      
|Capped rate                                                 |  |        |   | 7.00            | % | 7.00 
|                                                            |  |         |   |                 |   |      
|Cross currency swaps                                        |  |         |   |                 |   |      
|US dollars(2)                                               |  | 457.9   |   | 17.3            |   | 251.6
|Fair value                                                  |  | 39.7    |   |                 |   |      
|Pay floating rate                                           |  |         |   |                 |   |      
|Pounds sterling on Notional £297.8m(3)                      |  |        |   | 6.63            | % | 7.03 
|Receive fixed rateUS dollars                               |  |        |   | 8.87            | % | 8.84 
|Euro(2)                                                     |  | 97.3    |   | 97.3            |   |     
|Fair value                                                  |  | (2.5    | ) |                 |   |      
|Pay floating rate                                           |  |         |   |                 |   |      
|Sterling on Notional £63.3m(3)                              |  |        |   | 7.34            | % |     
|Receive fixed rate euros                                    |  |        |   | 7.63            | % |     

Net payments and receipts made under interest rate swap contracts are accrued over the period to which they relate and applied against or added to
interest expense. On maturity of the swap, the net interest payment or receipt is settled to cash. On the termination of an interest rate derivative prior to maturity, where the underlying debt has
been terminated, any resulting gain or loss will be taken to the profit and loss account at that time. No accounting entries are required for the principal amount of interest rate swaps, since it is
purely a notional figure and does not represent an asset, a liability or a contingency. Where there are interest rate swaps with forward start dates, no accounting entries are made until the start of
the contract, at which point the interest payable or receivable will be accrued as stated above.

Net
receipts made under interest rate cap contracts are accrued over the period to which they relate and added to interest expense. Premium paid for interest rate cap contracts is
amortized over the period from the start date until the option expires. No accounting entries are required for the principal amount of interest caps as it is purely a notional figure and does not
represent an asset, liability or contingency.

Principal
amounts exchanged under a cross currency swap contract are recorded as a net asset or liability for the term of the contract. Interest payments under such contracts are accrued
over the period to which they relate. Interest receipts and payments under cross currency interest rate swaps adjust the interest expense on the foreign currency denominated loan to which the swap
contracts have been applied. Were cross currency swaps to be terminated prior to the agreed expiry date, where the underlying debt had been terminated, any gain or loss on termination would be taken
to the profit and loss account and allocated against the total interest charge on the borrowing to which the swap relates.

97

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The
following table provides information about our non derivative instruments, including our senior debt facility, senior notes in issue and the France Telecom facility.

|Non-derivative instruments
(interest rate risk)
Euro equivalent                |  |         |  | Maturing Period |   |       |   |      
|------------------------------------------------------------------------------ |  | ------- |  | --------------- | - | ----- | - | -----
|
|
|
|Short termfloating                                                            |  | 458.2   |  | 458.2           |   |      |   |     
|Long termfloating                                                             |  | 694.0   |  |                |   | 509.5 |   | 673.5
|Weighted average interest rate payable on floating rate debt(4)                |  |         |  | 3.93            | % | 4.27  | % | 4.66 
|Short termfixed                                                               |  | 73.8    |  | 73.8            |   |       |   |      
|Long termfixed                                                                |  | 746.1   |  |                |   | 101.5 |   | 110.7
|Weighted average interest rate payable on fixed rate debt(4)                   |  |         |  | 8.1             | % | 8.26  |   | 8.52 
|                                                                               |  |         |  |                 |   |       |   |      
|US dollar borrowings                                                           |  |         |  |                 |   |       |   |      
|Long termfixed(2)(5)                                                          |  | 457.6   |  |                |   |      |   |     
|Fixed interest rate payable                                                    |  |        |  | 8.86            | % | 8.86  | % | 8.86 
|                                                                               |  |         |  |                 |   |       |   |      
|Euro borrowings                                                                |  |         |  |                 |   |       |   |      
|Long termfixed(2)(5)                                                          |  | 97.3    |  |                |   |      |   |     
|Fixed interest rate payable                                                    |  |         |  | 7.63            | % | 7.63  | % | 7.63 
|Short termfloating                                                            |  |        |  |                |   |      |   |     
|Weighted average interest rate payable on floating rate debt                   |  |        |  |                |   |      |   |     
|                                                                               |  |         |  |                 |   |       |   |      
|Total                                                                          |  | 2,526.9 |  | 532.0           |   | 611.0 |   | 295.2
|                                                                               |  |         |  |                 |   |       |   |      
|Assets and short term investments                                              |  |         |  |                 |   |       |   |      
|Pounds sterling(5)                                                             |  | 93.3    |  | 93.3            |   |      |   |     
|Euro(5)                                                                        |  | 21.8    |  | 21.8            |   |      |   |     
|US dollars(5)                                                                  |  | 0.8     |  | 0.8             |   |      |   |     
|Weighted average interest rate receivable on assets and short term investments |  |        |  | 0.0             | % |      |   |     
|                                                                               |  |         |  |                 |   |       |   |      
|Total                                                                          |  | 115.9   |  | 115.9           |   |       |   |      
|                                                                               |  |         |  |                 |   |       |   |      

Included in long term floating debt is a €538.0 million fully drawn revolving credit facility. This is rolled on a one,
three or six month basis, as determined by us, and will be repaid, in full, in accordance with the terms of the senior debt facility, on expiration on December 31, 2005.

Foreign exchange

We have a policy on currency exposure to protect us against volatility and adverse movements in exchange rates against our functional currency, pound sterling. In
line with this policy, all material transactional exposures which can be estimated with reasonable certainty are hedged by executing a transaction in the external market or through the use of
pre-existing natural hedges. We primarily use cross currency swaps and forward exchange contracts with a term of less than 12 months.

At
December 31, 2002 there were foreign exchange contracts in place to hedge exposure relating to a procurement contract and foreign exchange exposure on charges between group
companies. Any premium or discount arising from forward cover is taken to the profit and loss account to match the income or expense of the hedged contract. Exchange gains or losses that arise as a
result of moving foreign exchange cover forwards or backwards are carried in the balance sheet as foreign exchange debtors or creditors as appropriate, until eliminated by the cash settlements on the
maturing deals. The

98

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following
table provides information about our outstanding foreign exchange instruments, and presents principal cash flows for the instruments by expected maturity dates.

|                                                        |  |       |  | Maturing Period |  |       |  |   | 
|------------------------------------------------------- |  | ----- |  | --------------- |  | ----- |  | - | 
|
|
|
|Euro borrowings                                         |  |       |  |                 |  |       |  |   | 
|Long termfixed                                         |  | 97.3  |  |                |  |      |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 
|Related derivative                                      |  |       |  |                 |  |       |  |   | 
|Cross currency swap (receive euro; pay pounds sterling) |  | 97.3  |  | 97.3            |  |      |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 
|US dollar borrowings                                    |  |       |  |                 |  |       |  |   | 
|Long termfixed(2)(6)                                   |  | 457.6 |  |                |  |      |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 
|Related derivative                                      |  |       |  |                 |  |       |  |   | 
|Cross currency swap                                     |  |       |  |                 |  |       |  |   | 
|Receive dollars pay pounds sterling(2)                  |  | 457.9 |  | 17.3            |  | 251.5 |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 
|Forward exchange agreements                             |  |       |  |                 |  |       |  |   | 
|Pay currency, Receive sterling(7)                       |  | 38.6  |  | 38.6            |  |      |  |  | 
|Receive currency, Pay sterling(7)                       |  | 51.5  |  | 51.5            |  |      |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 
|Total of foreign currency borrowings                    |  | 554.9 |  |                |  |      |  |  | 
|Total of derivative instruments                         |  | 645.2 |  | 188.9           |  | 251.5 |  |  | 
|                                                        |  |       |  |                 |  |       |  |   | 

---

ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

99

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PART II

ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15 CONTROLS AND PROCEDURES

Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in US
Exchange Act Rules 13a-14(c)) within 90 days of the date of this Form 20-F, have concluded that, as of such date, our disclosure controls and procedures
were effective to ensure that material information relating to us was made known to them by others within the Company particularly during the period in which this Form 20-F was
being prepared.

There
were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date our Chief Executive Officer and our
Chief Financial Officer completed their evaluation, nor were there any significant deficiencies or material weaknesses in our internal controls requiring corrective actions.

ITEM 16 [Reserved]

100

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PART III

ITEM 17 FINANCIAL STATEMENTS

Not applicable.

ITEM 18 FINANCIAL STATEMENTS

The following financial statements are filed as part of this annual report on Form 20-F.

Index to consolidated financial statements

F-1Report of PricewaterhouseCoopers LLP

F-2Consolidated statements of income

F-3Consolidated balance sheets

F-4Consolidated statements of changes in shareholders' equity

F-5Consolidated statements of cash-flows

F-6Notes to the consolidated financial statements

F-7


ITEM 19 EXHIBITS

Exhibit
Number

Description1.1

Amended Memorandum of Association of Orange plc8.1

For a list of subsidiaries, see Note 22 to our consolidated financial statements.10.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

| |  | ORANGE PLC
| |  | ----------
| |  | By:       

Date:
June 27, 2003

102

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CERTIFICATIONS

I, John Allwood, certify that:

1.     I
have reviewed this annual report on Form 20-F of Orange plc;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 27, 2003

| |  | /s/JOHN ALLWOODChief Executive Officer
| |  | --------------------------------------

103

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I,Mike Newnham, certify that:

1.     I
have reviewed this annual report on Form 20-F of Orange plc;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 27, 2003

| |  | /s/MIKE NEWNHAMChief Financial Officer
| |  | --------------------------------------

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Orange plc        Index to Consolidated Financial Statements

|Report of PricewaterhouseCoopers LLP                       |  | F-2
|---------------------------------------------------------- |  | ---
|Consolidated statements of income                          |  | F-3
|Consolidated balance sheets                                |  | F-4
|Consolidated statements of changes in shareholders' equity |  | F-5
|Consolidated statements of cash-flows                      |  | F-6
|Notes to the consolidated financial statements             |  | F-7

F-1

---



ORANGE PLC        Report of Independent Accountants

To the Board of Directors and Shareholders of Orange plc:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in shareholders'
equity present fairly, in all material respects, the financial position of Orange plc and its subsidiaries at December 31, 2002, 2001 and 2000, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in France. These financial statements are the
responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Accounting
principles generally accepted in France vary in certain important respects from accounting principles generally accepted in the United States of America. The application of
the latter would have affected the determination of consolidated net income for each of the three years in the period ended December 31, 2002 and the determination of consolidated shareholders'
equity at December 31, 2002, 2001 and 2000 to the extent summarized in Note 23 to the consolidated financial statements.

PricewaterhouseCoopers
LLP
London
United Kingdom

Date
June 24, 2003

F-2

---



CONSOLIDATED STATEMENTS OF INCOME

|                                                                                          |  |     |  | Year ended 31 December |  
|----------------------------------------------------------------------------------------- |  | --- |  | ---------------------- | -
|
|
|Turnover                                                                                  |  | 3   |  | 6,623                  |  
|Cost of sales                                                                             |  |     |  | (2,610                 | )
|Selling, general and administrative expenses                                              |  |     |  | (2,233                 | )
|Research and development expenses                                                         |  |     |  | (18                    | )
|Depreciation and amortization (excluding goodwill)                                        |  | 8,9 |  | (812                   | )
|                                                                                          |  |     |  |                        |  
|Operating income                                                                          |  |     |  | 950                    |  
|                                                                                          |  |     |  |                        |  
|Interest expenses, net                                                                    |  |     |  | (214                   | )
|Other non-operating income, net                                                           |  | 5   |  | 9                      |  
|Equity in net loss of affiliates (excluding goodwill amortization)                        |  | 10  |  | (90                    | )
|                                                                                          |  |     |  |                        |  
|Income/(loss) before tax, goodwill amortization and exceptional items                     |  |     |  | 655                    |  
|                                                                                          |  |     |  |                        |  
|Income taxes before exceptional items                                                     |  | 6   |  | (252                   | )
|Goodwill amortization                                                                     |  | 8   |  | (4                     | )
|                                                                                          |  |     |  |                        |  
|Net income/ (loss) before exceptional items, net of tax                                   |  |     |  | 399                    |  
|                                                                                          |  |     |  |                        |  
|Exceptional items, net of tax                                                             |  | 7   |  | (180                   | )
|                                                                                          |  |     |  |                        |  
|Net income/(loss)                                                                         |  |     |  | 219                    |  
|                                                                                          |  |     |  |                        |  
|Basic and diluted net income/(loss) before exceptional items, net of tax per share (euro) |  |     |  | 0.27                   |  
|                                                                                          |  |     |  |                        |  
|Net income/(loss) per share (euro)                                                        |  |     |  | 0.15                   |  
|Fully diluted net income/(loss) per share (euro)                                          |  |     |  | 0.15                   |  
|                                                                                          |  |     |  |                        |  

The
accompanying notes are an integral part of these financial statements.

F-3

---

CONSOLIDATED BALANCE SHEETS

|                                                  |  |       |  | At 31 December
|------------------------------------------------- |  | ----- |  | --------------
|
|
|ASSETS                                            |  |       |  |               
|Goodwill, net                                     |  | 8     |  |              
|Intangible assets, net (excluding goodwill)       |  | 8     |  | 6,298         
|Property, plant and equipment, net                |  | 9     |  | 3,724         
|Investments accounted for under the equity method |  | 10    |  | 304           
|Non consolidated investments                      |  | 11,5  |  |              
|Deferred income taxes                             |  | 6     |  | 27            
|Other long-term assets                            |  | 17    |  |              
|                                                  |  |       |  |               
|Total long-term assets                            |  |       |  | 10,353        
|                                                  |  |       |  |               
|Inventories                                       |  | 16    |  | 139           
|Trade accounts receivable, less allowances        |  | 16,17 |  | 606           
|Deferred income taxes                             |  | 6     |  | 113           
|Prepaid expenses and other current assets         |  | 17    |  | 181           
|Cash and cash equivalents                         |  | 12    |  | 116           
|                                                  |  |       |  |               
|Total current assets                              |  |       |  | 1,155         
|                                                  |  |       |  |               
|TOTAL ASSETS                                      |  |       |  | 11,508        
|                                                  |  |       |  |               
|LIABILITIES AND SHAREHOLDERS' EQUITY              |  |       |  |               
|Shareholders' equity                              |  | 15    |  | 6,873         
|                                                  |  |       |  |               
|Long-term borrowings, less current portion        |  | 12    |  | 2,007         
|Other long-term liabilities                       |  | 14    |  | 215           
|                                                  |  |       |  |               
|Total long-term liabilities                       |  |       |  | 2,222         
|                                                  |  |       |  |               
|Current portion of long-term borrowings           |  | 12    |  | 583           
|Bank overdrafts and other short-term borrowings   |  | 12    |  | 185           
|Trade accounts payable                            |  |       |  | 1,025         
|Accrued expenses and other current liabilities    |  |       |  | 508           
|Deferred income                                   |  |       |  | 112           
|                                                  |  |       |  |               
|Total current liabilities                         |  |       |  | 2,413         
|                                                  |  |       |  |               
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        |  |       |  | 11,508        
|                                                  |  |       |  |               

The
accompanying notes are an integral part of these financial statements.

F-4

---



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

|                                               |  | Number of
shares |  | Share
capital |  | Additional
paid-in
capital |  | Merger
reserve(1) |   | Retained
earnings |   | Foreign
currency
translation
adjustment |   | Total
Shareholders'
equity |  
|---------------------------------------------- |  | ---------------- |  | ------------- |  | -------------------------- |  | ----------------- | - | ----------------- | - | --------------------------------------- | - | -------------------------- | -
|
|Balance at 1 January 2000                      |  | 1,209,254,254    |  | 328           |  | 935                        |  | (166              | ) | (1,779            | ) | (105                                    | ) | (787                       | )
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Net loss for the year ended 31 December 2000   |  |                 |  |              |  |                           |  |                  |   | (717              | ) |                                        |   | (717                       | )
|Increase in capital                            |  | 215,017,154      |  | 71            |  | 7,071                      |  |                  |   |                  |   |                                        |   | 7,142                      |  
|Translation adjustment                         |  |                 |  |              |  |                           |  |                  |   |                  |   | (180                                    | ) | (180                       | )
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Balance at 31 December 2000                    |  | 1,424,271,408    |  | 399           |  | 8,006                      |  | (166              | ) | (2,496            | ) | (285                                    | ) | 5,458                      |  
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Net income for the year ended 31 December 2001 |  |                 |  |              |  |                           |  |                  |   | 306               |   |                                        |   | 306                        |  
|Increase in capital                            |  | 35,845,539       |  | 12            |  | 1,171                      |  |                  |   |                  |   |                                        |   | 1,183                      |  
|Translation adjustment                         |  |                 |  |              |  |                           |  |                  |   |                  |   | 161                                     |   | 161                        |  
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Balance at 31 December 2001                    |  | 1,460,116,947    |  | 411           |  | 9,177                      |  | (166              | ) | (2,190            | ) | (124                                    | ) | 7,108                      |  
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Net income for the year ended 31 December 2002 |  |                 |  |              |  |                           |  |                  |   | 219               |   |                                        |   | 219                        |  
|Increase in capital                            |  |                 |  |              |  |                           |  |                  |   |                  |   |                                        |   |                           |  
|Translation adjustment                         |  |                 |  |              |  |                           |  |                  |   |                  |   | (454                                    | ) | (454                       | )
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  
|Balance at 31 December 2002                    |  | 1,460,116,947    |  | 411           |  | 9,177                      |  | (166              | ) | (1,971            | ) | (578                                    | ) | 6,873                      |  
|                                               |  |                  |  |               |  |                            |  |                   |   |                   |   |                                         |   |                            |  

---

The
accompanying notes are an integral part of these financial statements. Also see Note 15.

F-5

---

CONSOLIDATED STATEMENTS OF CASH-FLOWS

|                                                                                                                |  |       |  | Year ended 31 December |  
|--------------------------------------------------------------------------------------------------------------- |  | ----- |  | ---------------------- | -
|
|
|OPERATING ACTIVITIES                                                                                            |  |       |  |                        |  
|Net income/(loss)                                                                                               |  |       |  | 219                    |  
|Depreciation and amortization of property, plant, equipment, intangible assets and goodwill                     |  | 8,9   |  | 816                    |  
|Exceptional items before tax                                                                                    |  | 7     |  | 194                    |  
|Loss/(gain) on disposal of assets                                                                               |  | 5     |  | 4                      |  
|Equity in net loss of affiliates (excluding goodwill amortization)                                              |  | 10    |  | 90                     |  
|Deferred income taxes                                                                                           |  | 6     |  | 238                    |  
|Other items                                                                                                     |  |       |  | (27                    | )
|                                                                                                                |  |       |  |                        |  
|Funds generated from operations                                                                                 |  |       |  | 1,534                  |  
|                                                                                                                |  |       |  |                        |  
|Change in other operating assets and liabilities                                                                |  |       |  | 294                    |  
|Securitisation of receivables/sale of receivables                                                               |  | 17    |  | 293                    |  
|                                                                                                                |  |       |  |                        |  
|Net cash provided by (used in) operating activities                                                             |  |       |  | 2,121                  |  
|                                                                                                                |  |       |  |                        |  
|INVESTING ACTIVITIES                                                                                            |  |       |  |                        |  
|Purchase of property, plant and equipment and intangible assets (net of movements on fixed assets creditors(1)) |  | 9     |  | (1,308                 | )
|Cash paid for non consolidated investments and acquired businesses, net of cash acquired                        |  |       |  |                       |  
|Investments in affiliates                                                                                       |  | 10    |  | (8                     | )
|Proceeds from sale of investments and other assets                                                              |  | 5, 11 |  | 41                     |  
|                                                                                                                |  |       |  |                        |  
|Net cash used in investing activities                                                                           |  |       |  | (1,275                 | )
|                                                                                                                |  |       |  |                        |  
|FINANCING ACTIVITIES                                                                                            |  |       |  |                        |  
|Increase in long-term borrowings                                                                                |  |       |  |                       |  
|Repayment of long-term borrowings                                                                               |  |       |  | (976                   | )
|Increase (decrease) in bank overdrafts and short-term borrowings                                                |  |       |  | 145                    |  
|Issue of share capital                                                                                          |  |       |  |                       |  
|Amounts placed on deposit with deposit banks                                                                    |  |       |  |                       |  
|Reimbursement of amounts paid as lessors' agent under finance leases                                            |  |       |  |                       |  
|                                                                                                                |  |       |  |                        |  
|Net cash provided by (used in) financing activities                                                             |  |       |  | (831                   | )
|                                                                                                                |  |       |  |                        |  
|(Decrease) increase in cash equivalents                                                                         |  |       |  | 15                     |  
|Effects of changes in exchange rates on cash and cash equivalents                                               |  |       |  | (7                     | )
|Cash and cash equivalents at beginning of period                                                                |  | 12    |  | 108                    |  
|                                                                                                                |  |       |  |                        |  
|Cash and cash equivalents at end of period                                                                      |  | 12    |  | 116                    |  
|                                                                                                                |  |       |  |                        |  

---

The
accompanying notes are an integral part of these financial statements.

F-6

---



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.    PRESENTATION OF ORANGE PLC

Orange plc, its subsidiaries, associates and investments (together the "Group") offer a broad range of voice and data communications services in the United
Kingdom and in selected markets in continental Europe. The Group's principal operations are in the United Kingdom, where the GSM 1800 network and the Orange brand were launched in 1994. Orange plc
(the "Company") was listed in London and New York in April 1996, with Hutchison Whampoa holding a 48.2% stake. In November 1999, Mannesmann A.G. ("Mannesmann") made an offer to acquire
the Company; this offer was completed in February 2000 and the Company was delisted. In December 1999, Vodafone made an offer to acquire Mannesmann; this offer went unconditional in
February 2000 and was approved in April 2000 by the European Commission, subject to Vodafone's divestment of the Company. In May 2000, Vodafone accepted an offer from France
Telecom S.A. ("France Telecom") to acquire the Company; this was approved by the European Commission in August 2000.

In
connection with the acquisition of the Company on 22 August 2000, and prior to a public offer of Orange S.A., France Telecom decided to pool its mobile operations in France and
in selected European and international markets together with those of the Company's into an enlarged Orange group ("Orange") under a new parent company Orange S.A. As part of the restructuring to
establish Orange S.A., a number of investments held by the Company were sold to Wirefree Services Belgium, a wholly owned subsidiary of Orange S.A.

Orange
S.A. was listed on Premier Marché of Euronext Paris and the London Stock Exchange on 13 February 2001. The Company is a wholly owned subsidiary of Orange
S.A., whose principal controlling shareholder is France Telecom.

2.    ACCOUNTING POLICIES

The Group's consolidated financial statements are prepared in accordance with French generally accepted accounting principles under rule 99-02
of the Comité de la Réglementation Comptable ("CRC"). These consolidated financial statements have been prepared from the audited financial statements of the Company and
its subsidiaries in the United Kingdom, and have been translated from sterling to euro, the reporting currency of Orange.

FIRST APPLICATION OF NEW ACCOUNTING RULES





F-7

---



PRESENTATION OF THE FINANCIAL STATEMENTS



CONSOLIDATION PRINCIPLES

The consolidation principles are as follows:



F-8

---



All
material inter-company balances and transactions have been eliminated.

FOREIGN CURRENCY TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN SUBSIDIARIES

The financial statements of foreign subsidiaries presented in local currency are translated as follows:



TRANSACTIONS IN FOREIGN CURRENCIES

At year-end, monetary balances denominated in foreign currencies are translated using closing exchange rates. Unrealised gains and losses on balances
denominated in foreign currencies which are not hedged are recognised in the consolidated income statement of the corresponding period.

REVENUE RECOGNITION

Turnover includes airtime revenue (including fixed monthly access charges), roaming revenue, revenue from sales of telecommunication equipment and other revenues
and services.

Revenues
from airtime, roaming and other services are recognised when the service is rendered.

Revenues
from sales of telecommunication equipment and connection charges are recognised upon delivery to the customer or activation by the customer, as appropriate.

SUBSCRIBER ACQUISITION COSTS AND RETENTION COSTS

Subscriber acquisition and retention costs are expensed as incurred. Subscriber acquisition costs ("SACs") are analysed separately (see Note 3) by:



ADVERTISING COSTS

Advertising costs are expensed as incurred.

F-9

---

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

WEBSITE DEVELOPMENT COSTS

Costs relating to the development of websites are capitalised or expensed depending on the phase of development of the sites: costs relating to the planning and
operating stages are expenses as incurred, costs related to development and creation of the design are capitalised.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and highly liquid investments with no capital risk, with maturities generally of three months or less at the time of
purchase and are stated at cost which approximates realisable value.

CREDIT RISK ON TRADE ACCOUNTS RECEIVABLE AND SECURITISATION OF RECEIVABLES

Allowances are set up against the estimated cost of non-recovery of receivables. Allowances are based on an individual or statistical evaluation of
the risk of non-recovery.

In
view of its diverse customer base (residential, professional and large business customers) operating in numerous industries and located in many regions, the Group does not consider
itself exposed to a concentration of credit risk.

Securitised
receivables are derecognised from "Trade accounts receivable, less allowances" when the rights and obligations attached to such receivables are transferred to third parties
and the resulting loss is included in "Other non-operating income/(expenses), net". Interests retained by the Group (i.e. through deferred purchase prices, which are subordinated for risk
of non-recovery of the underlying securitised receivables) are recorded in "Other long-term assets" in the balance sheet (see Note 17). Depreciation of such retained
interests is determined based on the risk of non-recovery of the receivables sold and related income statement movements are included in "Selling, general and administrative expenses".

INVENTORIES

Inventories principally comprise of handsets. Inventories are stated at the lower of cost or probable net realisable value, taking into account future revenues
expected from subscriptions. Cost is determined on a first in first out basis or using weighted average cost formulae.

PURCHASE ACCOUNTING

Upon acquisition of a business, its cost of acquisition is allocated on a fair value basis to the identifiable assets and liabilities of the business acquired.

The
excess of the purchase price over the fair value of the share of identifiable assets and liabilities of the business acquired is recorded under the heading "Goodwill, net" for the
consolidated entities and included in the heading "Investments accounted for under the equity method" for entities over which the Group has significant influence.

F-10

---

Goodwill
is amortised over a period ranging from 5 to 20 years depending on the specific nature of the business acquired and on the strategic value of each acquisition.

The
value in use of goodwill is subject to impairment review when events or circumstances occur indicating that impairment might exist. Such events or circumstances include significant
adverse changes, other than temporary, in the assumptions or expectations considered at the time of the acquisition.

The
Group assesses the fair value of goodwill for all its operations and affiliates on a country-by-country basis.

The
need to recognise impairment is assessed by reference to the estimated fair value of each entity, which is compared with its carrying value in the Group's consolidated financial
statements. The fair value is defined as the higher of the market value and value in use.

The
market value is the estimated selling price less the costs of disposal, which could be obtained by the Group through the divestiture of an operation in an arm's length transaction.
Such estimate is based on the best information available at the closing date, taking into account specific circumstances. Due to the volatility of the market capitalisation in the telecommunication
industry, the value in use of goodwill is preferably assessed with reference to the discounted cash flow methodology. Discounted cash flows are assessed for each operation based on reasonable and
supportable assumptions, that represent management's best estimate of the set of economic assumptions that will exist over future years, and are determined as follows:



For
operations to be divested, the fair value of goodwill is determined based on the operation's estimated net selling price.

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

Licences to operate mobile networks are recorded within intangible assets. They are recorded at cost of acquisition (i.e. up front payment or present value of
future payments if they can be reasonably estimated, as appropriate) excluding interest arising from debt incurred to finance the licences, and are amortised on a straight-line basis over
the period over which the Group expects to benefit from the use of the licence, taking into account the likelihood of licence renewal as appropriate. They are amortised from the date of
commercialisation of services.

Property,
plant and equipment are recorded at cost of acquisition or at construction cost, including, for the cost of networks, planning and construction costs, site installation and
equipment upgrade costs.

Interest
arising from debt incurred to finance construction and development of tangible assets is capitalised as part of the cost of the assets during the construction period.

Repairs
and maintenance and removal costs are expensed when incurred.

F-11

---

Depreciation
of property, plant and equipment is calculated on a straight-line basis over their estimated useful lives. Main estimated useful lives are as follows:

|GSM network                                                 |  | 5 to 8 years  
|----------------------------------------------------------- |  | --------------
|Buildings and fittings                                      |  | 10 to 30 years
|Computer equipment and software excluding network equipment |  | 3 to 5 years  
|Other                                                       |  | 3 to 10 years 

Leased
assets are recorded both as a fixed asset and a related liability when the terms of the lease effectively transfer the risks and rewards of ownership of the asset to the Group.

IMPAIRMENT OF LONG-LIVED ASSETS

Property, plant and equipment and intangible assets (excluding goodwill) are written down when, as a result of events or changes in circumstances, which include
evidence of obsolescence or physical damage or economic performance below initial expectations or other internal or external indicators, their fair value appears to be permanently less than their
carrying value. Fair value is defined as the higher of the market value and value in use.

Impairment
is determined for each group of assets by comparing their carrying value with their fair value. Should the above comparison indicate that an asset is permanently impaired, the
write down recognised is equivalent to the difference between carrying value and fair value. For assets to be held and used, fair value is principally determined based on the estimated value in use,
which is represented by the future economic benefits expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Fair value is determined on the basis of
discounted cash flows, which are based on reasonable and supportable assumptions that represent management's best estimate of the set of economic conditions that will exist over the remaining useful
life of the asset, or by reference to replacement cost for used equipment or cost of alternative technologies.

For
assets to be disposed of, fair value is determined based on the estimated net selling price, with reference to market prices.

NON CONSOLIDATED INVESTMENTS

Non consolidated investments are stated at cost. An allowance is recorded when the fair value, as estimated by management based on a multi-criteria analysis,
which includes the review of indicators such as market prices, potential commercial developments, return on investment and revalued net shareholders'equity, and taking into consideration the specific
nature of each investment, is permanently less than carrying value.

DEFERRED INCOME TAXES

Deferred income taxes are accounted for on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for
tax purposes, as well as those arising from
tax loss carry forwards. Deferred tax assets are provided for to the extent that the recovery of these taxes is not considered probable.

Deferred
taxes are calculated using the liability method, applying the enacted tax rates applicable at the time the temporary difference is expected to reverse.

F-12

---

DEBT ISSUE COSTS

Debt issue costs are deferred and expensed through income over the term of the facility.

PENSION SCHEMES

In the United Kingdom, the Group operates two defined contribution pension schemes for eligible employees. Contributions to these two plans are expensed as
incurred (see Note 4).

FINANCIAL INSTRUMENTS

Interest rate and foreign currency risks are managed using derivative financial instruments, primarily interest rate swaps, forward exchange contracts, currency
swaps and exchange rate options. All such instruments are entered into for hedging purposes.

Income
and costs resulting from the use of these instruments are recorded in the consolidated income statement in the same manner as compared with the underlying transaction being
hedged:



EARNINGS PER SHARE

Basic earnings per share are calculated based on the weighted average number of shares outstanding during the year.

Diluted
earnings per share take account of conversion into ordinary shares of existing potentially dilutive instruments. Diluted earnings are calculated as net income adjusted for the
financial charges of dilutive instruments, net of their effect on taxation. At 31 December 2002, there were no potentially dilutive instruments in existence.

SHARE BASED COMPENSATION

Shares issued upon exercise of subscription options granted to employees are reflected as a share capital increase on the exercise date at the exercise price of
the option.

Treasury
shares acquired by the Group in connection with purchase options granted to employees are presented within "Marketable securities". An allowance is recorded whenever their cost
is higher than the exercise price of the options.

Social
charges relating to the share option plans are provided for when it is probable that the options will be exercised.

F-13

---

3.    SEGMENT REPORTING

The main changes in the Group's consolidation scope, which occurred in 2002 and 2001, are presented in note 22.

The
Group operates within the mobile telecommunication sector comprising the operation of telecommunications networks and the supply of a range of mobile voice and data communications
services and products in two segments identified on the basis of geographical criteria, being UK and international operations.

The
main operating indicators by segment for the periods presented are as follows:

|                                                             |  | Year ended 31 December |  
|------------------------------------------------------------ |  | ---------------------- | -
|
|
|UK                                                           |  |                        |  
|Turnover(1)                                                  |  | 6,102                  |  
|Depreciation and amortization(3)                             |  | (803                   | )
|Operating income(2)                                          |  | 1,103                  |  
|Total plant, property and equipment and intangible assets(4) |  | 10,006                 |  
|Average number of employees(5)                               |  | 11,437                 |  
|                                                             |  |                        |  
|International operations                                     |  |                        |  
|Turnover                                                     |  | 521                    |  
|Depreciation and amortization(3)                             |  | (9                     | )
|Operating loss                                               |  | (153                   | )
|Equity in net loss of affiliates                             |  | (90                    | )
|Total plant, property and equipment and intangible assets(4) |  | 16                     |  
|Investments accounted for under the equity method(4)         |  | 304                    |  
|Average number of employees(5)                               |  | 1,291                  |  
|                                                             |  |                        |  
|Total                                                        |  |                        |  
|Turnover                                                     |  | 6,623                  |  
|Depreciation and amortization(3)                             |  | (812                   | )
|Operating income                                             |  | 950                    |  
|Equity in net loss of affiliates                             |  | (90                    | )
|Total plant, property and equipment and intangible assets(4) |  | 10,022                 |  
|Investments accounted for under the equity method(4)         |  | 304                    |  
|Average number of employees(5)                               |  | 12,728                 |  
|                                                             |  |                        |  

---

F-14

---



4.    PERSONNEL COSTS

|                                                 |  | Year ended 31 December
|------------------------------------------------ |  | ----------------------
|
|
|Average number of employees(1)                   |  | 12,728                
|                                                 |  |                       
|Personnel costs                                  |  |                       
|Wages and salaries                               |  | 606                   
|Social charges and other pension related charges |  | 56                    
|                                                 |  |                       
|Total                                            |  | 662                   
|                                                 |  |                       

---

PENSION SCHEMES

In the United Kingdom, contributions under defined contribution pension schemes (see Note 2) amounted to €22 million in 2002,
compared to €19 million in 2001 and €13 million in 2000.

INCENTIVE PLANS

As part of the formation of the Orange S.A. group, various incentive plans, such as share option schemes, have been put in place for the employees and management
of the Group (see Note 23).

5.    OTHER NON-OPERATING INCOME, NET

In 2002, other non-operating income, net includes losses on disposal of securitised receivables amounting to €4 million (see
Note 17) and miscellaneous non-operating items amounting to a positive €13 million.

In
2001, other non-operating income, net primarily included the gain before tax arising from the disposal of the Group's 50% interest in KPNO amounting to
€391 million (see below) and miscellaneous non-operating items amounting to a negative €3 million.

In
July 2000, as part of the acquisition of the Company by France Telecom, and given the commitments with respect to the European Union, a trustee was appointed by France Telecom
to manage the Group's 50% shareholding in KPN Orange. Consequently from this date, the interest in the Belgian operator was reflected in the consolidated balance sheet at its equity method carrying
value as at 31 July 2000 under the heading "Non consolidated investments". On February 7, 2001, Orange International Limited sold the Group's interest in KPN Orange to KPN Mobile and the
related cash proceeds were transferred to the Company. Total consideration was €500 million including €102 million

F-15

---

in
respect of repayment of a shareholder loan which was reflected under the heading "Proceeds from sale of investments and other assets" in the 2001 statement of cash flow. The gain before tax arising
from the disposal of the Group's 50% interest in KPNO amounted to €391 million and was reflected under the heading "Other non operating income, net" in the 2001 consolidated
statement of income and under the heading"Loss/(gain) on disposal of assets" in the 2001 consolidated statement of cash-flows. The related deferred tax charge amounted to
€81 million and was shown in "Income taxes".

6.    INCOME TAXES

The income tax charge is analysed as follows:

|                                                        |  | Year ended 31 December
|------------------------------------------------------- |  | ----------------------
|
|
|Current income taxes before exceptional items           |  |                      
|Deferred income taxes before exceptional items          |  | 252                   
|                                                        |  |                       
|Income taxes before exceptional items                   |  | 252                   
|Deferred income taxes on exceptional items (see Note 7) |  | (14                   
|                                                        |  |                       
|Total                                                   |  | 238                   
|                                                        |  |                       

Movements
in deferred income tax charges are mainly attributable to Orange Personal Communications Services Ltd ("OPCS"), the UK mobile network operating company.

The
reconciliation between the income tax expense computed at the UK statutory tax rate and the effective income tax expense is as follows:

|                                                                                  |  | Year ended 31 December |  
|--------------------------------------------------------------------------------- |  | ---------------------- | -
|
|
|Income tax calculated at the enacted tax rate(1)                                  |  | 137                    |  
|Impact of equity in net losses from affiliates                                    |  | 27                     |  
|Impact of unused tax losses carried forward and other temporary differences(2)    |  | (2                     | )
|Impact of non UK tax rates, permanent differences, and changes in income tax rate |  | 76                     |  
|                                                                                  |  |                        |  
|Effective income tax                                                              |  | 238                    |  
|                                                                                  |  |                        |  

---

F-16

---



The
analysis of deferred tax assets net of valuation allowance, by nature of temporary difference, is as follows:

|                                               |  | At 31 December |  
|---------------------------------------------- |  | -------------- | -
|
|
|Losses carried forward                         |  | 220            |  
|Non deductible provisions and other tax assets |  | 11             |  
|                                               |  |                |  
|Total deferred tax assets, gross               |  | 231            |  
|                                               |  |                |  
|Valuation allowance                            |  | (91            | )
|                                               |  |                |  
|Deferred tax assets, net                       |  | 140            |  
|                                               |  |                |  

The
analysis of deferred tax assets by maturity is as follows:

|                         |  | At 31 December
|------------------------ |  | --------------
|
|
|Current portion          |  | 113           
|Long-term portion        |  | 27            
|                         |  |               
|Deferred tax assets, net |  | 140           
|                         |  |               

The
deferred tax assets net of valuation allowance relate mainly to OPCS. The decrease in deferred tax assets, net in 2002 resulted mainly from the utilisation of tax losses carried
forward in the United Kingdom.

7.    EXCEPTIONAL ITEMS, NET OF TAX

For the year ended 31 December 2002, exceptional items amount to a negative €194 million before a tax credit of
€14 million. They comprise the following elements:



For
the year ended 31 December 2001, goodwill (€83 million) and other intangible assets (€15 million) arising from the acquisition of
Wildfire Communications and totalling €98 million at 31 December 2001 were written down to zero as at that date (see Note 8).

F-17

---

For
the year ended 31 December 2000, professional advisory fees of €45 million were incurred in respect of the re-flotation of the Company,
which was cancelled due to the acquisition of the Company by France Telecom. The acquisition triggered a change of control clause in the senior notes and as a result, the Company made an offer to
bondholders to repurchase the senior notes (€5 million). Arrangement and other fees of €18 million relating to these notes were also expensed. A gain of
€7 million was recognised on the disposal of a number of investments to Wirefree Services Belgium, a wholly owned subsidiary of Orange S.A.

8.    INTANGIBLE ASSETS

|                  |  | At 31 December
|----------------- |  | --------------
|
|
|UMTS Licence      |  | 6,298         
|Goodwill          |  |              
|Other intangibles |  |              
|                  |  |               
|Total             |  | 6,298         
|                  |  |               

UMTS LICENCE

The UMTS licence was awarded to Orange 3G Limited, a wholly owned subsidiary of Orange plc, in September 2000 at a cost of
£4,095 million (€6,298 million at 31 December 2002, compared to €6,732 million at 31 December 2001) including acquisition
costs. In 2002, for operational reasons, the UMTS licence held by Orange 3G Limited was revoked and reissued to OPCS. The duration of the licence is 20 years commencing 1 January 2002.
As described in note 2, this UMTS licence will be amortised as from the date of commercialisation of services.

In
December 2002, the management of Orange S.A. announced its decision to review the launch plans of the 3rd generation technology ("3G") and adopt a more prudent
timetable. The management of the Group remains fully committed to 3G and intends to develop and exploit the potential of 3G type services on enhanced 2nd generation networks in order to
improve the customer experience and offer a transition to the commercial launch of 3G, until all issues surrounding 3G technology have been resolved.

The
management of the Group considers that the 2nd ("2G") and 3rd generation technologies are closely interrelated both from a technical and commercial
perspective:



F-18

---



Consequent
to this decision and considering the close interrelation between 2G and 3G technologies as described above, the management of the Group conducted a specific impairment review
in the United Kingdom by comparing:



Factors
considered in this review included the demand for and speed of take up of 3G type services, the availability and functionality of network infrastructure and mobile devices,
operating costs and capital expenditure requirements and the behaviour of competitors and regulatory authorities, all of which are, by their nature, subject to uncertainty which consequently affects
estimations of future profits and cash flows. Based on this analysis, no impairment was recorded at 31 December 2002.

GOODWILL

The net book value of goodwill was nil at 31 December 2002 and 2001.

Goodwill
(€83 million) and other intangible assets (€15 million) arising from the acquisition of Wildfire Communications and totalling
€98 million at 31 December 2001 were written down to a nil amount as at that date. This wholly owned subsidiary was acquired in 2000 as a trading business. Since
acquisition, Wildfire Communications, whilst retaining its corporate identity, had been successfully integrated into Orange and was primarily focused on supporting the delivery of the Orange vision
for wirefree multimedia services. The goodwill write down was a prudent reflection of the decrease in value of comparable high technology companies at the same stage of development as Wildfire. This
write-down of €98 million was reflected in the line "exceptional items, net of tax" in the 2001 income statement (see Note 7).

Goodwill
is amortised over a period ranging from 5 to 20 years depending on the specific nature of the business acquired. In the consolidated income statement, amortization of
goodwillrelating to fully consolidated companiesamounted to nil in 2002, compared to €25 million in 2001 and €51 million in
2000.

OTHER INTANGIBLE ASSETS

No intangible assets were acquired in 2002 and 2001. Intangible assets are amortised over a period of three to five years. Amortization of other intangible assets
amounted to nil in 2002, compared to €5 million in 2001 and €12 million in 2000.

F-19

---

9.    PROPERTY, PLANT AND EQUIPMENT

|                                |  | At 31 December 2002 |  |       
|------------------------------- |  | ------------------- |  | ------
|
|
|Land and buildings              |  | 2,190               |  | (654  
|Network equipment               |  | 3,142               |  | (1,543
|Computer and terminal equipment |  | 593                 |  | (292  
|Other                           |  | 588                 |  | (300  
|                                |  |                     |  |       
|Total                           |  | 6,513               |  | (2,789
|                                |  |                     |  |       

The
change in the net book value of property, plant and equipment comprises:

|                                              |  | At 31 December |  
|--------------------------------------------- |  | -------------- | -
|
|
|Balance at beginning of period (net)          |  | 3,627          |  
|Acquisitions of property, plant and equipment |  | 1,171          |  
|Effects of acquisitions and divestures        |  | (5             | )
|Depreciation expenses                         |  | (812           | )
|Translation adjustment                        |  | (246           | )
|Other movements(1)                            |  | (11            | )
|                                              |  |                |  
|Balance at end of period (net)                |  | 3,724          |  
|                                              |  |                |  

---

Acquisitions
of property, plant and equipment are inclusive of a €17 million increase in assets held under capital leases in 2002, compared to nil in 2001.

Land
and buildings include network infrastructure totalling €1,358 million at 31 December 2002, compared to €1,390 million at 31
December 2001.

Network
assets include capitalised interest with a net book amount of €3 million at 31 December 2002 compared to €9 million at
31 December 2001.

The
net book value of assets held under capital leases amounts to €760 million at 31 December 2002, compared to €993 million
at 31 December 2001.

F-20

---



10.    INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

Investments accounted for under the equity method:

|                           |  |       |  | At 31 December
|-------------------------- |  | ----- |  | --------------
|
|
|
|Orange Communications S.A. |  | 50.00 |  | 304           
|                           |  |       |  |               
|Total                      |  |       |  | 304           
|                           |  |       |  |               

At
31 December 2002, the net book value of goodwill relating to Orange Communications S.A. amounted to €76 million compared to
€73 million at 31 December 2001.

Change
in investments accounted for under the equity method:

At 31 December2002

2001(in millions of euro)Balance at beginning of period

385

Effect of acquisitions

8

22Capital increase



672Movements in loans to affiliates



(166
)Equity in net loss of affiliates

(90
)
(92
)Goodwill amortization

(4
)
Transfer (from) to other long-term liabilities



(40
)Translation adjustment

5

(11
)Balance at end of period

304

385


The
Group's share of Orange Communications S.A.'s net liabilities was recognised in other long-term liabilities at 31 December 2000. In 2001, the Group increased its
shareholding in Orange Communications S.A. from 42.5% to 49.88% (see Note 22). At the end of 2001, the Group's shareholder loan in Orange Communications S.A. was converted into equity. In 2002,
the Group acquired an additional 0.12% stake in Orange Communications S.A. bringing its total shareholding to 50.00% (see Note 22).

F-21

---

11.    NON CONSOLIDATED INVESTMENTS

Non consolidated investments comprise:

At December 31% Ownership
interest at
31 December
2002Cost

2002
Valuation
allowance

Net book
value

2001
Net book
value(in millions of euro except % interest)Connect Austria GmbH (Austria)

17.45

71

(71
)


112Other









4Total



71

(71
)


116


As
a consequence of the Orange S.A. group being confirmed as a valid shareholder of Connect Austria Gmbh by the ICC International Court of Arbitration on 4 July 2001, without any
limitation to its rights as a 17.45% stake shareholder, a rebalancing of shareholder loans with the other Connect Austria shareholders was completed in July 2002. It resulted in the Group
receiving full repayment on all loans advanced to Connect Austria in an amount of €34 million and Orange S.A. granting an additional shareholder loan of
€133 million to Connect Austria in July 2002. The repayment of €34 million is reflected under the heading "Proceeds from sale of investments and
other assets" in the 2002 consolidated statement of cash-flows.

As
part of the strategic review of the Orange S.A.'s group investment portfolio undertaken at the end of 2002 and in connection with the decision to improve the Group's financial
performance, the Group reassessed the fair value of its non consolidated investment in Connect Austria based on a multi criteria approach (see Note 2) at 31 December 2002. Consequently,
an impairment charge totalling €73 million (see Notes 7 and 16) was recorded against the Group's non consolidated investment in Connect Austria, bringing down its net
carrying value at 31 December 2002 to a nil amount.

12.    BORROWINGS NET OF AVAILABLE CASH

Borrowings net of available cash can be detailed as follows:

At December 312002

2001(in millions of euro)Long-term borrowings, less current portion

2,007

3,297Current portion of long-term borrowings

583

484Short-term borrowings and bank overdrafts

185

20Cash and cash equivalent

(116
)
(108
)Total

2,659

3,693


F-22

---

LONG-TERM BORROWINGS

The table below presents an analysis of long-term borrowings after the effects of currency swaps:

At December 312002

2001(in millions of euro)Bonds

1,089

1,164Bank loans

1,438

2,545Capital leases

63

49Other non bank loans



23Total long-term borrowings

2,590

3,781Including current portion

583

484Including long-term portion

2,007

3,297


The
maturity of outstanding long-term borrowings at 31 December 2002 is as follows:

December 2003

583December 2004

623December 2005

295December 2006

189December 2007

2008 and thereafter

900Total

2,590


The
table below presents details of bonds not matured at 31 December 2002 and 2001:

Euro equivalent
At 31 DecemberCurrency of denomination

Amount
in currency of
denomination



Interest
rate
(%)Maturity

2002

2001(in millions)USD

197

2006

8.75

188

224GBP

197

2008

8.63

303

324USD

18

2008

8.00

18

21EUR

94

2008

7.63

94

94GBP

150

2009

8.88

231

247USD

263

2009

9.00

251

298Impact of interest or currency rate swaps







4

(44
)Total bonds







1,089

1,164


Orange
plc's senior notes are redeemable on maturity and the Group has not granted any specific guarantee to the bondholders. However, some of the notes are subject to early repayment
clauses, which can be exercised only by Orange plc as the issuer.

F-23

---

The
table below presents an analysis of long-term borrowings by interest rate, after taking into account the impact of interest rate and currency swaps:

At 31 December2002

2001(in millions of euro)Less than 5%



Between 5 and 7%

1,362

Between 7 and 10%

949

2,743More than 10%



Total fixed rate

2,311

2,743Total variable rate

216

989Capital leases

63

49Total long-term borrowings

2,590

3,781


The
weighted average fixed interest rate amounted to 7.5% at 31 December 2002 (compared to 7.4% at 31 December 2001).

The
weighted average variable interest rate amounted to 6.1% at 31 December 2002 (compared to 6.3% at 31 December 2001).

The
Group is not materially exposed to interest rate movements due to its high proportion of fixed rate borrowings.

The
analysis of long-term borrowings by currency after taking into account the impact of currency swaps is as follows:

At 31 December2002

2001(in millions of euro)Euro Zone



Sterling

2,527

3,732US Dollar



Capital leases

63

49Total long-term borrowings

2,590

3,781


Debt
instruments may in some cases be initially contracted in foreign currencies. Subsequently, they are generally converted into the currencies of the countries where subsidiaries are
operating through the use of cross currency swap agreements in order to reduce the Group's exposure to foreign currency risk. The Group is not exposed to any foreign currency risk on non hedged
foreign currency borrowings.

At
31 December 2002, the Group held currency swaps converting US$ 478 million and euro 94 million into GBP 358 million, with maturities between 2006 and 2009.

F-24

---

SHORT-TERM BORROWINGS

The table below presents an analysis of short-term borrowings by type, after the effects of currency swaps:

At December 312002

2001(in millions of euro)Orange S.A. current account

24

Bank overdrafts

112

20Other non bank loans

49

Total short-term borrowings

185

20


Current
accounts with Orange S.A. bear interest at rates linked to market interest rates of the countries where the Group's subsidiaries are operating.

CREDIT FACILITIES

At 31 December 2002, the Group had the following credit facilities:

Currency of
denomination

Amounts in
local & legal
currency

Euro
equivalent at
31 December 2002

Used
portion(in millions of euro)Syndicated credit linesLong-term

GBP

1,215

1,869

1,438Bilateral credit linesShort-term

GBP

16

25

15USD

130

124

8Total credit facilities





2,018

1,461


COVENANTS

These financing arrangements are subject to standard covenants, which in the event of default or unfavourable change, might lead to the early repayment by the
Group of the amounts outstanding under the facilities. The main financial covenants the Group is subjected to, in relation with the bonds and the facilities described above, are as follows:





F-25

---



13.    FINANCIAL INSTRUMENTS

Through its operations, the Group is exposed to price risks with relation to investment of surplus cash and debt financing.

MANAGEMENT OF RISK OF LONG-TERM DEBT RATES

As part of its financing policy, the Group enters into long-term borrowings from credit institutions. These borrowings are generally contracted at a
variable interest rate. In order to reduce the cost of borrowings, interest rate swaps and interest rate options are used within limits fixed by management.

NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS

The contract or notional amounts presented below do not represent amounts payable or receivable and as such do not represent the risk to the Group of using
derivative financial instruments:

At 31 December2002

2001(in millions of euro)Interest rate swaps

1,829

3,517Interest rate caps

384

608Currency swaps

555

594Forward exchange contracts(1)

90

38


---

FAIR VALUE OF FINANCIAL INSTRUMENTS

With regard to cash, customer receivables, bank overdrafts and other short-term borrowings as well as trade payables, the Group considers that the
balance sheet value is the most representative of their fair value in view of the high degree of liquidity of these items.

The
fair value of long-term borrowings has been estimated based on the discounted value of future cash flows for non quoted instruments using the interest rates obtained by
the Group for instruments with similar conditions and maturities.

F-26

---

The
table below presents the fair value of financial instruments:

At 31 December2002

2001Carrying
value

Fair
value

Carrying
value

Fair
value(in millions of euro)Balance sheet financial instrumentsLong-term borrowings including current portion(1)

2,590

2,634

3,781

3,910Off Balance sheet financial instruments(2)Unrealised gain/(loss) on interest rate swaps



(38
)


(7
)Unrealised gain/(loss) on cross currency swaps



41



33Unrealised gain on interest rate caps



(1
)


(3
)


---

14.    OTHER LONG-TERM LIABILITIES

The table below presents an analysis of other long-term liabilities:

At
December 312002

2001(in millions of euro)Provisions for liabilities and charges

73

3Deferred income

142

160Total other long-term liabilities

215

163


Provisions
for liabilities and charges primarily relate to leased property that is vacant or sublet to third parties and for which rental received from the subleases is lower than that
paid under the head leases for the same properties. The future obligation under the lease contracts, being the difference between rentals paid and the sublease rentals received, has been provided for
at its net present value. The increase in long term provisions for liabilities and charges mainly arises from the Group's decision to improve its financial performance (see Notes 7 and 16).

Deferred
income relates to the net credits arising from the in-substance early extinguishments of drawdowns under OPCS's defeased leases. As part of its lease agreements
concluded in 1995 and 1997, OPCS has deposited amounts equal to the net present value of its rental obligations with UK financial institutions to secure letters of credit issued by these institutions
to the lessors in connection with OPCS's rental obligations. These funds, which totalled €1,157 million at 31 December 2002 (€1,247 million at 31
December 2001) together with the interest earned thereon, will be used to settle OPCS's rental obligations under the leases. This in-substance early extinguishment of each drawdown
under the finance leases resulted in the offset of the deposit amount and the capital lease obligation,

F-27

---

and
a net credit that has been reflected in the consolidated balance sheet as deferred income that will be amortised to the consolidated income statement over the lease term on a
straight-line basis. This includes a provision, based on management's assessment of likely outcomes, for possible future costs arising from variations in interest rates or tax rates.

15.    SHAREHOLDERS' EQUITY

At 1 January 2000, the Company was a wholly owned subsidiary of Mannesmann. On 12 April 2000, Vodafone completed its acquisition of
Mannesmann. On 30 May 2000, France Telecom, a company incorporated in France, made an offer to acquire the Company from Vodafone. This offer was accepted and the acquisition was completed on 22
August 2000 after regulatory approval was obtained.

On
14 January 2000, options over ordinary shares in the Company were exercised, which resulted in 49,335 new shares being issued. On 13 December 2000, a loan from France
Telecom of €7,142 million, relating to the acquisition of the UMTS licence by Orange 3G limited and to the repayment of a £336 million
(€531 million) loan from Mannesmann, was capitalised by the issuance to France Telecom of 214,967,819 ordinary shares of £0.20 (€0.32) each in the
Company. In December 2000, the issued share capital of the Company was transferred to Orange S.A., a wholly owned subsidiary of France Telecom (see Note 1).

On
5 October 2001, 28,578,000 of the Company's shares were issued at £20.58 per share. Part of the proceeds of this capitalisation was used to repay the outstanding
drawings on the credit facilities with France Telecom and Orange S.A. (see Note 20). On 20 December 2001, 7,267,539 of the Company's shares were issued at £20.00 per share.
Both issues were to Orange S.A., the immediate parent undertaking, for cash.

The
Company's share capital comprises 1,460,116,947 issued ordinary shares at a par value of £0.20 each (€0.31), representing total issued share capital of
€411 million as at 31 December 2002. The immediate parent undertaking of the Company is Orange S.A., the ultimate parent undertaking and controlling party at 31
December 2002 is France Telecom S.A.

16.    PROVISIONS

PROVISIONS FOR ALLOWANCES AGAINST ASSETS

Provisions for allowances against assets other than plant, property and equipment and intangible assets are as follows at 31 December 2002:

At
beginning
of period

Net
charge/
(release)

Other
movement(1)

At end
of period(in millions of euro)Customer receivables(2)

84

5

(5
)
84Inventories and work in progress

78

(23
)
(4
)
51Non consolidated investments (see Note 11)



73

(2
)
71


---

F-28

---



Allowances
are set up against the estimated cost of non-recovery of receivables. They are based on an individual or statistical evaluation of the risk of
non-recovery of receivables from individuals, professionals, operators and distributors.

PROVISIONS FOR RISKS AND LIABILITIES

Provisions for risks and liabilities are as follows at 31 December 2002:

At
beginning
of period

Net
charge/
(release)

Other
movement(1)

At end
of period(in millions of euro)Decision to improve financial performance (see Note 7): Property provisions



61

(1
)
60 Other restructuring and exit costs



33



33Other provisions for risks and liabilities

14

(4
)
(3
)
7Total

14

90

(4
)
100Including:Current portion

11

17

(1
)
27Long-term portion (see Note 14)

3

73

(3
)
73


---

Property
provisions relate to leased property that is vacant or sublet to third parties and for which rental received from the subleases is lower than that paid under the head leases for
the same properties. The future obligation under the lease contracts, being the difference between rentals paid and the sublease rentals received, has been provided for at its net present value.

The
related income statement impact are as follows for the year ended 31 December 2002:

Increase

Utilisation

Write-back

Total(in millions of euro)Operating income

(1
)
5



4Exceptional items, net of tax

(94
)




(94
)Total

(95
)
5



(90
)


17.    TRADE AND OTHER RECEIVABLES

The Group does not consider itself exposed to a concentration of credit risk with respect to trade accounts receivable due to its diverse customer base
(residential, professional and large business customers).

Other
debtors mainly comprise VAT receivables and prepayments.

The
maturity of trade and other receivable is primarily less than one year.

The
Group entered into a securitisation program in December 2002, whereby trade receivables generated by the mobile telecommunication business of OPCS in the United Kingdom were
transferred without recourse to a trust set up in Jersey ("trust") under UK law. This program covers existing

F-29

---

receivables
as of the date the securitisation transaction was entered into and receivables, which will come into existence during the expected five-year lifetime of the program as and when
mobile telecommunication services are rendered and related revenues are earned. OPCS remains in charge of the servicing of the transferred receivables on behalf of the trust.

The
trust raised funds from third party investors through rated securitisation conduits to finance the purchase price of the securitised receivables less deferred purchase prices.
Deferred purchase prices are subordinated to cover the risk of non-recovery of the securitised receivables and allowances are recorded to provide for such non-recovery,
consistent with the risk profile of securitised receivables and Group's collection and customers'credit policies.

The
accounting treatment for securitised trade receivables is described in Note 2. The impact of the securitisation program in 2002 is as follows:

(in millions of euros)Face value of the receivables sold

346Loss on disposal (see Note 5)

(4
)Net selling price

342Foreign currency translation adjustment

(2
)Cash raised through securitisation conduits(1)

(293
)Interests retained in securitised trade accounts receivables, gross (deferred purchase prices, gross)

47


---

Interests
retained in securitised trade accounts receivables, after depreciation of euro 47 million, amount to nil at 31 December 2002 and are presented under the
heading "Other long term assets" in the balance sheet.

The
securitisation agreement is subject to financial and operating covenants, which, in the event of a breach, would lead to the cessation of the purchase of new trade receivables from
the Group. Under the terms of the financial covenants, the following ratios must be met at Orange S.A.'s level: the consolidated net debt to annualised EBITDA(1) ratio must not exceed
6 to 1 and the annualised EBITDA(1) to annualised net interest expense must not fall below 3 to 1. These ratios are tested on a quarterly basis.

These
ratios were met at 31 December 2002.

---

18.    COMMITMENTS AND CONTINGENCIES

OFF BALANCE SHEET COMMITMENTS RELATED TO NETWORK EQUIPMENT AND INVENTORIES

In the ordinary course of its activities, the Group enters into purchase contracts with network equipment manufacturers and into supply contracts with handset
suppliers some of which contain price

F-30

---

protection
clauses. The Group's committed expenditures under such contracts at 31 December 2002 are disclosed in Note 19.

OFF BALANCE SHEET COMMITMENTS RELATED TO NETWORK EQUIPMENT AND INVENTORIES

Under
its UMTS licence agreement (see Note 8), the Group is committed to certain obligations, not reflected in Note 19, and should be able, amongst other things, to provide
telecommunication services to at least 80% of the population of the United Kingdom by December 2007. Consequently, the Group will incur significant capital expenditures over future years in
order to build out its network and meet the licence obligations in the United Kingdom. Management believes that the Group has the ability to meet these obligations.

LEASE COMMITMENTS

The table below shows future minimum lease commitments due under non-cancellable operating and capital leases at 31 December 2002:

Operating
leases

Capital
leases(in millions of euro)2003

184

532004

165

122005

144

2006

123

2007

100

2008 and thereafter

499

Total minimum lease payments

1,215

65Less amounts representing interest



(3
)Present value of net minimum lease commitments

1,215

62


Rental
expense under operating leases amounted to €230 million at 31 December 2002 (compared to €204 million at 31 December
2001 and €187 million at 31 December 2000).

The
obligations under the 1995 and 1997 OPCS's defeased leases (refer to note 14) are not reflected in the above tables because of the early extinguishment of these commitments.

GUARANTEES AND ENDORSEMENTS

In the ordinary course of its business, the Group gives and receives certain guarantees of which the more significant at 31 December 2002 are as follows:

F-31

---



LITIGATION AND CLAIMS

The Group is involved in a number of legal proceedings and has various claims pending as part of the ordinary course of its business. Associated costs are accrued
when it is probable that a liability has been incurred, and the amount of that liability can be estimated within a reasonable range.

Although
no assurance can be given as to the outcome of open claims, the management of the Group estimates that it is not likely that such open claims could have a significant adverse
impact on the Group's financial condition, results of operations or liquidity as at 31 December 2002.

***

The
management of the Group considers, to the best of its current knowledge, that, except for the commitments and contingencies disclosed above, there are no other commitments or
contingencies, which could potentially impact the Group's financial statements at 31 December 2002 or in future years.

F-32

---

19.    CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Group's contractual obligations and other commitments at 31 December 2002 are as follows:

|                                            |  | Payment due
|------------------------------------------- |  | -----------
|
|
|On balance sheet                            |  |            
|Long-term borrowings (see Note 12)          |  | 2,590      
|Short-term borrowings (see Note 12)         |  | 185        
|Off-balance sheet                           |  |            
|Operating leases (see Note 18)              |  | 1,215      
|Capital leases (see Note 18)                |  | 65         
|Purchase of fixed assets and other services |  | 547        
|                                            |  |            
|Total contractual obligations               |  | 4,602      
|                                            |  |            
|
|
|
|Credit facilities (see Note 12)             |  | 2,018      
|                                            |  |            
|Total other commitments                     |  | 2,018      
|                                            |  |            

20.    RELATED PARTY TRANSACTIONS

Financing

In January 2000, the Group borrowed £336 million (€531 million) from Mannesmann. This loan was negotiated and
bore interest at one week LIBOR plus a margin of 150 basis points. These funds were used to fund the repurchase of the senior notes in January 2000. The loan was repaid in September 2000
by France Telecom.

At
31 December 2000, the Company had a short-term facility negotiated on an arm's length basis of €1,818 million with France Telecom which bore
interest at one month LIBOR plus a margin of 42.5 basis points. On 5 October 2001, the Company increased its share capital (see Note 15) and additional paid-in capital and
part of the proceeds of this capitalisation were used to repay outstanding drawings of €463 million on the credit facility with France Telecom.

Orange
S.A. provided to the Company a credit facility for €500 million negotiated on an arm's length basis which commenced on 31 January 2001 to cover
general financing requirements. On 5 October 2001 the outstanding drawings of €481 million under this facility were repaid with part of the proceeds from the
capitalisation of the Company (see Note 15).

The
Group has a facility of USD$130 million (€124 million), of which €8 million have been drawn down at 31 December 2002, from
Castle Worldwide
Finance CV, a wholly owned subsidiary of Orange S.A. formed in 2002. The facility bears interest at a rate equal to LIBOR plus 300 basis points and matures on 31 December 2003.

The
Group has a facility of £16 million (€25 million), of which €16 million had been drawn down at 31 December
2002, compared to £14 million (€23 million) at 31 December 2001, from Ananova

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---

Limited,
a wholly owned subsidiary of Orange S.A. It bears interest at a rate equal to LIBOR less 10 basis points.

The
purpose of the facilities outstanding at 31 December 2002 is to cover the Group's general financing requirements. They were negotiated on an arm's length basis and can be
repaid at any time without penalty.

The
Company has granted a facility of £25 million (€39 million), which had been fully drawn down at 31 December 2002 and 2001, to Orange
S.A. in order to cover this company's general financing requirements. This facility bears interest at a rate equal to LIBOR less 10 basis points and can be repaid at any time without penalty.

OTHER TRANSACTIONS

The main other transactions with related parties in the normal course of business relate to interconnection between networks.

The
Group's turnover includes an Orange brand licence fee of €141 million in 2002 (€61 million in 2001, nil in 2000), invoiced to the
operating subsidiaries of Orange S.A., which are using the Orange brand name. In addition, management and research & development services of €187 million
(€121 million in 2001) were invoiced primarily to Orange S.A. and also to some of its subsidiaries.

The
Group incurred management fees of €26 million from Orange S.A. in 2002 (nil in 2001 and 2000).

Pursuant
to an agreement dated 21 December 2000, as part of the Orange S.A. group restructuring, the Company transferred certain assets to a wholly owned subsidiary of Orange
S.A., Wirefree Services Belgium, for a total consideration of approximately €532 million. This transfer included, amongst others, Orange plc's holdings in Ananova Limited,
Bangkok Inter Teletech Co. Ltd, NewsTakes, Inc, PocketThis, Inc and Book2eat Holdings Limited.

The
Group entered in a transaction with a related party on 13 March 2003, as part of an Orange S.A. overall reorganisation project (see Note 21).

All
these transactions were negotiated on an arm's length basis.

21.    POST BALANCE SHEET EVENTS

In 2002 and 2003, Orange S.A. initiated changes in its internal organisational structure, in order to improve its operating efficiency in relation to three main
areas, i.e. mass market services, business services and technical development. As part of this strategic review, Orange S.A. began a reorganisation project to align its corporate structure with its
operating structure, which is currently being effected by bringing Orange S.A.'s international operations outside of France and the United Kingdom, including the Group's operations in the United
States and Germany and the Group's interests in Austria and Switzerland, under a single management organisation. In connection with this reorganisation project, Orange S.A.'s operations outside of
France and the United Kingdom were regrouped under a UK holding company, Orange Global Limited, a wholly owned subsidiary of Orange S.A., in March 2003.

On
13 March 2003, Orange Global Limited entered into a share purchase agreement with Orangedot Limited, a wholly owned subsidiary of the Company, to purchase the shares in Orange
Holdings Limited for a total consideration of £202,308,000 (around €302 million). As a result, the

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Group's
100% shareholdings in Wildfire Communications, Inc and Hutchison Telecommunications GmbH and the Group's 17.45% interest in Connect Austria and 50% interest in Orange Communications S.A., all
held through Orange Holdings Limited, have been transferred to Orange Global Limited. Orange Holdings Limited and its subsidiaries are "Unrestricted Subsidiaries" as defined under the indentures to
the Group's senior notes. The total interests transferred from the Company pursuant to the share purchase agreement with Orangedot Limited represent approximately (0.3)% of the Group's total operating
income before depreciation and amortization (or "EBITDA" as defined in the senior note indentures) and 3.1% of the Group's total long-term assets for the year ended 31 December
2002. This agreement has been negotiated on an arm's length basis.

On
January 22, 2003, Oftel announced, as per the Competition Commission's recommendation, its intention to commence, in the near future, the process to modify the
Telecommunications Act licenses of each mobile operator to effect a 15% reduction in the termination charges of the four UK mobile operators before July 25, 2003. The second part of the
Competition Commission's recommendation annual Retail Price Index reductions cannot be implemented by way of Telecommunications Act license modifications. On July 25, 2003, the UK is expected
to implement the new European regulatory framework (Directives adopted by the European Community on March 7, 2002). As a result, on July 25, 2003, all Telecommunications Act licenses
issued to telecommunications operators will be revoked and replaced by general conditions of entitlement in accordance with the requirements of the new European framework. In order to impose a price
control on each of the mobile operators after July 25, 2003, Oftel must first conduct a market review and issue determinations that the individual operators possess significant market power in
the relevant market. On January 22, 2003, the Director General of Telecommunications stated his intention to review the termination market afresh for the purpose of introducing the new European
Telecoms framework with effect from July 25, this year.

Consequently
it is expected that Oftel will seek to implement the Competition Commission's recommendations in full. On January 22, 2003, Vodafone announced that it intends to seek
a Judicial Review of the Competition Commission's decisions. Orange UK considers the Competition Commission's recommended remedy to be disproportionate. Orange UK has therefore also begun Judicial
Review proceedings seeking a reversal of this decision, as has T-Mobile. The Judicial Review proceedings began on 9 June 2003.

Orange
plc has decided to exercise its option to redeem its senior notes due in August 2008. The senior notes are scheduled to be redeemed on August 1, 2003 at the
redemption price of approximately £205.9 million, €97.6 million and $19.2 million for each of the respective series of notes. At August 1, 2003,
the principal outstanding amount for each of the respective series of notes being redeemed will be approximately £197.3 million, €94.1 million and
$18.5 million.

22.    LIST OF CONSOLIDATED COMPANIES AND AFFILIATES

In 2001, the changes in the consolidation scope were as follows:



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---



In
2002, the changes in the consolidation scope are as follows:



UNITED KINGDOM
FULLY CONSOLIDATED COMPANIES

|                                            |  |         |  | at 31 December
2002 |   | at 31 December |  
|------------------------------------------- |  | ------- |  | ------------------- | - | -------------- | -
|
|
|
|Orange Cellular Services Ltd                |  | England |  | 100.00              | % | 100.00         | %
|Orange Holdings (UK) Ltd                    |  | England |  | 100.00              | % | 100.00         | %
|Orange Mobile Data (UK) Ltd                 |  | England |  | 100.00              | % | 100.00         | %
|Orange Paging (UK) Ltd                      |  | England |  | 100.00              | % | 100.00         | %
|Orange Personal Communications Services Ltd |  | England |  | 100.00              | % | 100.00         | %
|Orange Retail Ltd                           |  | England |  | 100.00              | % | 100.00         | %
|Orange 3G Ltd                               |  | England |  | 100.00              | % | 100.00         | %
|The Point Telecommunications Ltd            |  | England |  | 100.00              | % | 100.00         | %

F-36

---

INTERNATIONAL ACTIVITY
FULLY CONSOLIDATED COMPANIES

|                                           |  |                 |  | at 31 December
2002 |   | at 31 December |  
|------------------------------------------ |  | --------------- |  | ------------------- | - | -------------- | -
|
|
|
|Hutchison Telecommunications GmbH          |  | Germany         |  | 100.00              | % | 100.00         | %
|Hutchison Telecommunications (France) S.A. |  | France          |  |                    |   |               |  
|Orange International Developments Ltd      |  | Bahamas         |  | 100.00              | % | 100.00         | %
|Orange International B.V.                  |  | The Netherlands |  | 100.00              | % | 100.00         | %
|Orange Services US, Inc.                   |  | United States   |  | 100.00              | % | 100.00         | %
|Orange World, Inc.                         |  | United States   |  | 100.00              | % | 100.00         | %
|Wildfire Communications, Inc.              |  | United States   |  | 100.00              | % | 100.00         | %
|Orange Holdings Ltd                        |  | England         |  | 100.00              | % | 100.00         | %
|Orange International Ltd                   |  | England         |  | 100.00              | % | 100.00         | %
|Orange Overseas Holdings No.2 Ltd          |  | England         |  | 100.00              | % | 100.00         | %
|Orange Ocean Ltd                           |  | England         |  | 100.00              | % | 100.00         | %
|Orange Overseas Holdings Ltd               |  | England         |  | 100.00              | % | 100.00         | %
|Orange Austria Ltd                         |  | England         |  | 100.00              | % | 100.00         | %

EQUITY ACCOUNTED INVESTMENTS

|                                   |  |             |  | at 31 December
2002 |   | at 31 December |  
|---------------------------------- |  | ----------- |  | ------------------- | - | -------------- | -
|
|
|
|Orange Communications S.A. ("OCH") |  | Switzerland |  | 50.00               | % | 50.00          | %

23.    SUMMARY OF DIFFERENCES BETWEEN FRENCH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

The consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles in France ("French
GAAP") which differ in certain material respects from those generally accepted in the United States ("US GAAP"). The principal differences between French GAAP and US GAAP as they relate to the Group
are set out below.

SHARE OPTION AWARDS (A)

Information relating to share option awards granted to the Group's employees over the periods presented is as follows:

Orange plc share option awards

In connection with the flotation in 1996, the Company established the Orange plc Savings Related Share Option Scheme, the Orange plc International Savings Related
Share Option Scheme 1996, the Orange plc Inland Revenue Approved Executive Share Option Scheme 1996, the Orange plc Executive Share Option Scheme 1996, the Orange plc Long Term Incentive Plan 1996 and
the Discretionary

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---

Share
Bonus Plan 1996. Following the change in ownership of the Company in November 1999, all these schemes were terminated. On 14 January 2000, outstanding options over 82,553 ordinary
shares were exercised, which resulted in 49,335 new shares of the Company being issued (see Note 15) at this date as the total number of options exercised was offset by 33,218 ordinary shares
issued at the end of 1999 and held outside the Group which were made available to meet the options being exercised.

In
May 2000, the Orange plc Executive Share Plan was established. On 22 August 2000 the Orange plc Executive Share Plan was terminated due to the change of ownership of the
Company (see Note 15). Following an offer made by France Telecom to participants under the plan, the share options outstanding as at this date were cancelled.

Executive schemesOrange plc share schemes

Number of
shares

Average
exercise
price of
option (€)At 1 January 2000

82,553

4.63Granted/purchased

2,513,890

0.33Exercised/vested

(82,533
)
4.73Lapsed

(1,953
)
0.33Cancelled

(2,511,937
)
0.33At 31 December 2000






Orange SA share option awards

The following share option plans, which received the approval of the Board of Directors of Orange S.A., the parent company of the Company, were in existence in
2002 and 2001. They were designed for employees and executives of the Company and some of its subsidiaries, primarily in the United Kingdom and also in the rest of the world.

Orange International Sharesave Plan

The International Sharesave Plan is designed for employees and executive directors of subsidiaries of Orange S.A. The options, which may be options to subscribe
for new shares or to acquire existing shares, can be exercised after an eligible employee has agreed to save a fixed monthly amount for three
or five years, the maximum monthly saving being £250. The exercise price cannot be less than 80% of the market value at the date of the grant.

Orange International Share Option Plan

The International Share Option Plan is designed for employees and executive directors of any subsidiary of Orange S.A., who are not residents of France,
principally in relation to employees of the Company in the United Kingdom. Five tranches exist, depending on the employees, each having different vesting periods.

Orange US Share Option Plan

The Orange US Share Option Plan is a qualifying share option plan designed for employees of Wildfire Communications, Inc, the Group's subsidiary in the United
States. Two tranches exist, each having different vesting periods.

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---



Details
of the Orange S.A. share options granted in 2002 and 2001 and outstanding at 31 December 2002 and 2001 is as follows:

|                    |  | Savings related schemes |   | Executive schemes
|------------------- |  | ----------------------- | - | -----------------
|
|At 1 January 2001   |  |                        |   |                 
|                    |  |                         |   |                  
|Granted/purchased   |  | 6,880,640               |   | 7.52             
|Exercised           |  | (326                    | ) | 7.58             
|Forfeited/lapsed    |  | (456,791                | ) | 7.50             
|                    |  |                         |   |                  
|At 31 December 2001 |  | 6,423,523               |   | 7.52             
|                    |  |                         |   |                  
|Granted/purchased   |  | 2,601,892               |   | 5.60             
|Exercised           |  | (350                    | ) | 7.00             
|Forfeited/lapsed    |  | (2,873,755              | ) | 7.23             
|                    |  |                         |   |                  
|At 31 December 2002 |  | 6,151,310               |   | 6.71             
|                    |  |                         |   |                  

In
accordance with French GAAP and as noted in Note 2 to these consolidated financial statements, the Group does not record any compensation charges when share options are granted
to its employees. Shares issued upon exercise of subscription options granted to employees are reflected as a share capital increase on the exercise date at the exercise price of the option. No
expense is recorded, except where the Company acquires treasury shares to satisfy the exercise of purchase options and in such case the expense is measured as the excess of the cost of acquired
treasury shares over the exercise price of the options. Social charges relating to the share option plans are provided for when it is probable that the options will be exercised.

Under
US GAAP, prior to 1 January 2002, the Group accounted for share option awards under the recognition and measurement provisions of Accounting Principles Board Opinion
No. 25 (APB 25) "Accounting for Stock Issued to Employees". Accordingly, compensation expense recorded prior to 2002 and resulting from awards under fixed plans was based on the
intrinsic value, being the excess, if any, of the fair value of the share underlying the option at the date of grant over the exercise price of the option, and recognised over the vesting period.
Effective 1 January 2002, the Group adopted the fair value recognition provisions of SFAS No. 123 "Accounting for Stock- Based Compensation". Under the modified prospective method of
adoption selected by the Group under the provisions of SFAS No. 148 "Accounting for Stock- Based CompensationTransition and Disclosure", compensation expense recognised in 2002 is
the same as that which would have been recognised had the recognition provisions of Statement 123 been applied from its original effective date. Results for prior years have

F-39

---

not
been restated. The following table illustrates the effect on net income (loss) if the fair value method had been applied to all outstanding and unvested awards in each period.

|                                                                                                                                                     |  | Year ended 31 December | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | 
|
|
|Net profit (loss), as reported under US GAAP                                                                                                         |  | 260                    | 
|Add: Share option awards compensation expense included in reported net income (loss), net of related tax effects                                     |  |                       | 
|Deduct: Total share based employee compensation expense determined under fair value based method for share option awards, net of related tax effects |  |                       | 
|                                                                                                                                                     |  |                        | 
|Pro forma net profit (loss) under US GAAP                                                                                                            |  | 260                    | 
|                                                                                                                                                     |  |                        | 

The
fair value for the share option awards was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions in respect of
Orange plc share option awards in 2000 and in respect of Orange S.A. share option awards in 2002 and 2001:

|                                                  |  | Savings related schemes |   | Executive schemes |  
|------------------------------------------------- |  | ----------------------- | - | ----------------- | -
|
|Weighted risk-free rate                           |  | 3.0                     | % | 4.4               | %
|Dividend yield                                    |  | 0.0                     | % | 0.0               | %
|Volatility                                        |  | 38.2                    | % | 34.4              | %
|Weighted average expected life (years)            |  | 3.5                     |   | 4.4               |  
|Weighted average fair values at date of grant (€) |  | 2.6                     |   | 3.6               |  

The
compensation expense under US GAAP does not include social charges until such time that those charges are payable upon exercise of the options.

SHARE OWNERSHIP PLANS (B)

The following Orange S.A. share ownership plans, which received the approval of the Board of Directors of Orange S.A., the parent company of the Company, were in
existence in 2002 and 2001. They were designed for employees and executives of the Company and its subsidiaries, primarily in the United Kingdom.

Sharepurchase Plan

The Sharepurchase Plan was designed and is administered by the Board of Directors of the Company and has been established under a trust. It was put in place for
eligible employees in the United Kingdom. Voting rights attributable to the shares may not be directly exercisable while shares are held in the trust. However, the participants may be allowed to
direct the trustees as to how to exercise those voting rights.

Partnership Shares

Eligible employees can acquire Orange S.A. "partnership shares", via the trust, up to £1,500 or to 10% of annual pre-tax salary each year.

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---

Matching Shares

One Orange S.A. free share ("matching share") is offered for every two partnership shares purchased by the employees, up to an annual limit of £750
worth of matching shares.

Free Shares

In addition, the Company may grant "free shares" up to £3,000 per employee, per year.

Matching
and free shares must be held in the trust for three years (if an employee withdraws partnership shares before this time, the matching and free shares are forfeited).

Restricted Share Plan

The Restricted Share Plan was established on 1 September 2000 shortly after the acquisition of the Company by France Telecom and was designed for certain
key employees of the Company, principally in the United Kingdom. Participants were allocated a number of shares, which will vest in three equal tranches for most of the participants, as long as the
participant is an employee of the Orange S.A. Group at the relevant vesting date. During the restricted period, shares are held offshore by the Orange Employee Benefit Trust. Employees are not
required to contribute to the cost of these shares. The Trust is funded directly by France Telecom; the Company and/or Orange S.A., the Company's parent, are not required to contribute to the cost of
these shares.

Senior Discretionary Share Plan

The Orange S.A. Senior Discretionary Share Plan is designed for certain key employees. Participants are allocated a number of shares, which will vest over a
period of time as allocated in their vesting schedule, as long as the participant is an employee of the Orange S.A. Group at the relevant vesting date. During the restricted period, shares are held
offshore by the Orange Employee Benefit Trust. Employees are not required to contribute to the cost of these shares.

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---

Details
of the shares issued to the Trusts in 2002 and 2001 and outstanding at 31 December 2002 and 2001 is as follows:

|(Number of shares)                          |  | Orange
Share
Purchase
Plan(1) |   | Restricted
Share
Plan |   | Senior
Discretionary
Share
Plan |   | Total      |  
|------------------------------------------- |  | ----------------------------- | - | --------------------- | - | ------------------------------- | - | ---------- | -
|At 1 January 2000                           |  |                              |   |                      |   |                                |   |           |  
|Issued                                      |  | 108,467                       |   | 10,448,249            |   | 585,135                         |   | 11,141,851 |  
|Allocated to employees                      |  |                              |   | (2,544,115            | ) |                                |   | (2,544,115 | )
|At 31 December 2001                         |  | 108,467                       |   | 7,904,134             |   | 585,135                         |   | 8,597,736  |  
|Issued                                      |  | 337,535                       |   |                      |   |                                |   | 337,535    |  
|Allocated to employees                      |  | (7,060                        | ) | (4,537,559            | ) | (55,095                         | ) | (4,599,714 | )
|Transferred                                 |  |                              |   | (360,051              | ) | 360,051                         |   |           |  
|At 31 December 2002                         |  | 438,942                       |   | 3,006,524             |   | 890,091                         |   | 4,335,557  |  
|Fair value of shares (in millions of euro): |  |                               |   |                       |   |                                 |   |            |  
|At 31 December 2001                        |  | 1                             |   | 80                    |   | 6                               |   | 87         |  
|At 31 December 2002                        |  | 3                             |   | 20                    |   | 6                               |   | 29         |  
|Issued in 2001                             |  | 1                             |   | 104                   |   | 6                               |   | 111        |  
|Issued in 2002                             |  | 2                             |   |                      |   |                                |   | 2          |  
|Allocated to employees in 2001             |  |                              |   | 24                    |   |                                |   | 24         |  
|Allocated to employees in 2002             |  |                              |   | 29                    |   |                                |   | 29         |  

---

Under
French GAAP, matching or free shares granted to employees are recognized as an expense when the shares are granted. This expense is measured only to the extent that the excess of
the cost of any treasury shares acquired to satisfy the grant exceeds the employee purchase price of the related shares, if any. Social charges relating to the share ownership plans are provided for
when it is probable that the shares will be granted. The loss for the Group arising from the grant of free (or matching) shares to the employees under the Orange Share Purchase Plan amounted to
€3 million under French GAAP in 2002 (€1 million in 2001).

Under
US GAAP, compensation expense resulting from free or matching shares granted to employees is measured as the difference between the fair value of the share when granted and the
employee purchase price, if any. This expense is recognized over the vesting period, if any, after which the granted shares become unrestricted. The compensation expense under US GAAP does not include
social charges until such time that those charges are payable.

CASH BONUS PLAN (C)

The Group granted eligible employees a cash bonus in lieu of the employees eligibility to participate in the Mannesmann share option plans after the
take-over of Mannesmann by Vodafone in May 2000. Eligible employees were granted bonuses equivalent to the increase in the Mannesmann share price between 1 January 2000 and
10 April 2000. The payments were funded by Mannesmann

F-42

---

and
recorded net of this funding under French GAAP. Under US GAAP, the compensation costs related to the bonuses were recorded on a gross basis by the Group, with the cash funding recognised as an
expense over the related vesting period and recorded as a capital contribution from Mannesmann.

DERIVATIVE INSTRUMENTS (D)

Where appropriate the Group enters into derivative instruments to hedge underlying exposure to interest rates and foreign currencies. The authorised interest rate
hedging instruments are swaps, options, FRAs and swaptions and the authorised foreign exchange hedging instruments are forward FX, options, swaps, currency borrowings and investments and cross
currency swaps. The Group does not enter into transactions of a speculative or trading nature.

The
accounting treatment of derivative instruments under French GAAP is described in Note 2 to the consolidated financial statements.

Under
US GAAP, all derivatives, including derivatives embedded in other financial instruments, are measured at fair value and recognised as either assets or liabilities on the Group's
balance sheet. Accounting for the changes in the fair value of the derivative instrument depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are
based on the exposures hedged. Hedge relationships can be designated as a cash flow hedge, fair value hedge or a hedge of a net investment.

A
hedge relationship can be designated as a fair value hedge, if at inception and on an on-going basis, it is highly effective in achieving offsetting changes in the fair
value attributable to the hedged risk during the period that the hedge is designated.

A
hedge relationship can be designated as a cash flow hedge, if at inception and on an on-going basis it is highly effective in achieving offsetting cash flows attributable
to the hedged item during the term of the hedge. Changes in the fair value of the effective portions of cash flow hedges are reported in other comprehensive income, and recognised in earnings when the
hedged item is recognised in earnings. Changes in the fair values of derivative instruments designated as fair value hedges are recognised in earnings, along with changes in the fair value of the
hedged risk. Changes in the fair values of derivative instruments not qualifying as hedges under SFAS No. 133 or any ineffective portion of hedges are recognised in earnings in the current
period.

The
Group entered into interest rate swaps to hedge the exposure to variability in expected cash flows attributable to actual debt requirements to December 2005 and forecast
floating rate debt to April 2007, due to changes in the benchmark interest rates. The interest rate swaps eliminate the exposure to changes in the benchmark rate by effectively converting the
Group's floating rate debt into fixed rate debt.

There
was a decrease in Other Comprehensive Income of €7.7 million relating to the hedge effectiveness of interest rate swaps hedging the cash flows attributable
to actual floating rate debt. The amount recognized in earnings representing the amount of ineffectiveness of existing cash flow hedges, maturing cashflow hedges and the re-classification
of interest rate swaps from cash flow hedges to trading is a profit of €10.8 million. It is expected that €3.9 million will be reclassified from Other
Comprehensive Income to earnings within the next twelve months.

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---

The
interest rate swaps hedging cashflows attributable to forecast floating rate debt were closed out or re-classified from cash flow hedges to trading, because it was
unlikely that the original forecasted debt would occur. The amount released from Other Comprehensive Income as a result of
the closeout or de-designation of interest rate swaps is €20.4 million, and the amount recognized in earnings, is a loss of €15.2 million.

At
31 December 2002 there were foreign exchange contracts designated as cash flow hedges, to hedge transaction exposures relating to a procurement contract payable in Euro, a
procurement contract payable in US dollars and Euro inter-group payables. The amount of ineffectiveness of the cash flow hedges is €0.1 million. The amount of hedge
effectiveness of the cash flow hedges was reported as a decrease in other comprehensive income in the amount of €0.2 million. It is expected that it will all be reclassified
from Other Comprehensive Income into earnings within the next twelve months.

The
Group has entered into cross currency swaps to manage the exposure to currency and interest exposure attributable to the issue of Senior Notes. Cross currency swaps with a notional
value of USD 197.3 million were designated as fair value hedges. During the period the amount of ineffectiveness of the fair value hedge was €0.1 million. There was no
component of the derivative instruments' gain or loss that was excluded from the assessment of hedge effectiveness.

CAPITALISATION OF INTEREST (E)

Under French GAAP, interest costs incurred in connection with mobile telecommunication licences such as UMTS licences are expensed as incurred by the Group.

Under
US GAAP, these interest costs are capitalised along with the interest costs related to other capital expenditures incurred in order for telecom networks to be ready for their
intended use. As at 31 December 2002 interest incurred in connection with the UMTS licence held by the Group (see Note 8), had been capitalised for an amount of
€552 million before tax (€349 million at 31 December 2001). The UMTS licence (including capitalised interest) will be amortised from the date of
commercialisation of services.

GOODWILL AND OTHER INTANGIBLE ASSETS (F)

Effective 1 January 2002, the Group adopted Financial Accounting Standards, No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
SFAS 142 requires that goodwill, intangible assets with indefinite useful lives and goodwill included in the carrying value of equity method investments no longer be amortised. Intangible
assets with finite useful lives continue to be amortised over their estimated useful lives. However, the forty-year limitation on the amortization period of intangible assets that have
finite lives has been removed.

SFAS 142
requires that the goodwill and intangible assets of consolidated entities with indefinite useful lives be tested for impairment at least annually using a
two-step process. The first step is to identify a potential impairment while the second step measures the amount of the impairment loss. Intangible assets deemed to have an indefinite life
are tested for impairment using a one-step process, which compares the fair value to the carrying amount of the asset as of the beginning of the fiscal year. Intangible assets with
definite useful lives such as UMTS licences and equity method investments

F-44

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(including
goodwill) continue to be reviewed for impairment in accordance with APB 17 and APB 18 respectively.

At
31 December 2001 and 2002, the Group had no unamortised goodwill relating to fully consolidated subsidiaries and no intangible assets with indefinite useful lives. As of 1
January 2002, the Group discontinued amortization of goodwill included in the carrying value of its equity method 50% investment in Orange Communications S.A.

ACQUISITION OF HT FRANCE AND HT GERMANY GOODWILL (G)

Under French GAAP, the acquisition of HT France and HT Germany on 2 April 1996 has been accounted for under the principles of acquisition accounting and
the excess of purchase price over net liabilities, representing goodwill, was capitalised in the balance sheet and amortised on a straight line basis over 5 years.

Under
US GAAP, this acquisition was treated as a 'pooling', as it represented a transfer of entities under common control. Consequently the trading results and assets and liabilities of
HT France and HT Germany were included retrospectively in each reporting period effective with the acquisition. The excess of purchase price over net liabilities acquired was reflected as a capital
distribution.

RESTRUCTURING COSTS (H)

As permitted under French GAAP at that time, a restructuring provision was established at the end of 2000.

This
provision, which did not conform with the more prescriptive requirements of US GAAP, was recognised as an expense when incurred in 2001.

GAIN ON TRANSFER OF ENTITIES TO PARENT (I)

Under French GAAP, the Group recorded a net gain of €7 million upon transfer of various legal entities to Wirefree Services Belgium, a
wholly owned subsidiary of Orange S.A., in 2000.

Under
US GAAP, this was considered to be a transfer between entities under common control, where the transfer occurs at the historical book value amount. As such, the excess of the
consideration received over the net book value of the entities transferred was recorded as a capital contribution.

F-45

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APPROXIMATE EFFECT ON THE NET PROFIT (LOSS) OF DIFFERENCES BETWEEN FRENCH GAAP AND US GAAP

|                                                       |  |   |  | Year ended 31 December |  
|------------------------------------------------------ |  | - |  | ---------------------- | -
|
|
|Net profit (loss) of the Group under French GAAP       |  |   |  | 219                    |  
|                                                       |  |   |  |                        |  
|Adjustments to conform to US GAAP:                     |  |   |  |                        |  
|Share option awards                                    |  | A |  | (64                    | )
|Social charges on share option awards                  |  | A |  | (7                     | )
|Share ownership plans                                  |  | B |  | (33                    | )
|Cash bonus plans                                       |  | C |  |                       |  
|Derivative contracts and hedged underlying instruments |  | D |  | (17                    | )
|Capitalised interest on UMTS licence                   |  | E |  | 226                    |  
|Reversal of goodwill amortization charge               |  | F |  | 4                      |  
|Amortization of Goodwill (HT France and HT Germany)    |  | G |  |                       |  
|Restructuring costs                                    |  | H |  |                       |  
|Gain on transfer of entities to WSB                    |  | I |  |                       |  
|Deferred tax on US GAAP adjustments                    |  | E |  | (68                    | )
|                                                       |  |   |  |                        |  
|Approximate net profit (loss) under US GAAP            |  |   |  | 260                    |  
|                                                       |  |   |  |                        |  

APPROXIMATE EFFECT ON SHAREHOLDERS' EQUITY OF DIFFERENCES BETWEEN FRENCH GAAP AND US GAAP

|                                                       |  |   |  | Year ended 31 December |  
|------------------------------------------------------ |  | - |  | ---------------------- | -
|
|
|Equity shareholders' funds under French GAAP           |  |   |  | 6,873                  |  
|                                                       |  |   |  |                        |  
|Adjustments:                                           |  |   |  |                        |  
|Social charges contribution on share option awards     |  | A |  | 7                      |  
|Derivative contracts and hedged underlying instruments |  | D |  | (27                    | )
|Capitalised interest                                   |  | E |  | 552                    |  
|Reversal of goodwill amortization charge               |  | F |  | 4                      |  
|Goodwill at cost (HT France and HT Germany)            |  | G |  |                       |  
|Amortization of goodwill (HT France and HT Germany)    |  | G |  |                       |  
|Restructuring costs                                    |  | H |  |                       |  
|Deferred tax on US GAAP adjustments                    |  | E |  | (166                   | )
|                                                       |  |   |  |                        |  
|Approximate shareholders' funds under US GAAP          |  |   |  | 7,243                  |  
|                                                       |  |   |  |                        |  

F-46

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DEFEASANCE OF FINANCE LEASES

The Group incurred gains in 1995, 1996, 1999 and 2000 in respect of the defeasance of lease obligations for its digital network. Under French GAAP, the gains have
been deferred and recorded on the balance sheet as "Deferred Income". The defeasance arrangements do not qualify as an "in-substance defeasance" of the lease obligations under US GAAP
which requires defeasance deposits to be held under a formal trust arrangement for the benefit of the lessor. Under US GAAP therefore, the deposit and lease obligations are shown gross in the balance
sheet. The gross deposit and lease obligations at 31 December 2002, 2001 and 2000 were €1,157 million, €1,247 million and
€1,221 million, respectively. The adoption of SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" does not affect
this accounting treatment.

TURNOVER

Under French GAAP, turnover includes an Orange brand licence fee of €141 million in 2002 (€61 million in 2001, nil
in 2000), invoiced to the operating subsidiaries of Orange S.A., which use the Orange brand name, and additionally, management and research & development services of
€187 million in 2002 (€121 million in 2001, nil in 2000), which have been invoiced primarily to Orange S.A. and also to some of its subsidiaries, in
relation to services performed by the Group's employees for those companies outside the Orange plc group.

Under
US GAAP, the brand licence, management and research & development service fees invoiced to the Company's parent and commonly controlled entities to recover costs incurred
would be reflected as a reduction of the related selling, general and administrative expenses incurred by the Group. As a result, both turnover and selling, general and administrative expenses under
US GAAP would have been reduced by €328 million (€182 million in 2001), respectively. Consequently, the Group's turnover under US GAAP would have amounted
to
€6,295 million, €5,693 million and €4,621 million in 2002, 2001 and 2000 respectively.

OPERATING INCOME (LOSS) UNDER US GAAP

Under French GAAP, goodwill amortization, exceptional items, net of tax and specific non operating items are classified and shown separately in the consolidated
income statement below operating income (loss). Under US GAAP, they would have principally been considered as operating expenses and would have reduced the Group's operating income (loss).
Additionally, certain US GAAP adjustments such as the accounting for share option awards, share ownership plans and cash bonus plans would have impacted operating income (loss) under US GAAP.

F-47

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Reclassifications
and adjustments to conform operating income (loss) to US GAAP are summarised as follows:

|                                                                                       |  | Year ended
31 December |  
|-------------------------------------------------------------------------------------- |  | ---------------------- | -
|
|
|Operating income as reported in the consolidated statement of income under French GAAP |  | 950                    |  
|Exceptional items before tax (see Note 7)                                              |  | (194                   | )
|Goodwill amortization                                                                  |  |                       |  
|Other non-operating items (see Note 5)                                                 |  | 9                      |  
|Share option awards                                                                    |  | (64                    | )
|Social charges on share option awards                                                  |  | (7                     | )
|Share ownership plans                                                                  |  | (33                    | )
|Cash bonus plans                                                                       |  |                       |  
|Restructuring costs                                                                    |  |                       |  
|                                                                                       |  |                        |  
|Operating income (loss) under US GAAP                                                  |  | 661                    |  
|                                                                                       |  |                        |  

COMPREHENSIVE INCOME

Under U.S. GAAP, comprehensive income is the term used to define all non-owner changes in shareholders' equity. The Group accounts for comprehensive
income in accordance with SFAS No. 130 "Reporting Comprehensive Income". The Group's comprehensive income includes net income and foreign currency translation adjustments. Comprehensive income
is a concept not addressed by French GAAP.

|                                                                         |  | Year ended
31 December |  
|------------------------------------------------------------------------ |  | ---------------------- | -
|
|
|Net income/(loss) based on U.S. GAAP                                     |  | 260                    |  
|Total cumulative effect of adoption of SFAS No. 133                      |  |                       |  
|Reclassification into earnings as per SFAS No. 133 transition adjustment |  | 9                      |  
|Change in fair value of the cash flow hedges                             |  | (28                    | )
|Exchange rate differences based on U.S. GAAP                             |  | (470                   | )
|                                                                         |  |                        |  
|Comprehensive Income/(loss) based on US GAAP                             |  | (229                   | )
|                                                                         |  |                        |  

CONSOLIDATED STATEMENT OF CASH FLOWS

Under French GAAP, the Consolidated Cash Flow Statements are presented in accordance with the Règlement 99-02. The Statements prepared
in accordance with French GAAP present substantially the same information as that required under US GAAP as interpreted by SFAS No. 95.

Cash
flows under French GAAP in respect of amounts placed on deposit with deposit banks are included within financing activities. Debt issuance costs are included within operating
activities under French GAAP.

F-48

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Under
US GAAP, cash flows in respect of amounts placed on deposit with deposit banks would be included within investing activities. Cash flows related to debt issuance costs would be
included within financing activities under US GAAP.

A
summary of the Group's operating, investing and financing activities, classified in accordance with US GAAP, follows:

|                                                                     |  | Year ended 31 December |  
|-------------------------------------------------------------------- |  | ---------------------- | -
|
|
|Cash provided/(used) by operating activities                         |  | 2,114                  |  
|Cash used by investing activities                                    |  | (1,275                 | )
|Cash provided/(used) by financing activities                         |  | (824                   | )
|                                                                     |  |                        |  
|Net increase/(decrease) in cash and cash equivalents                 |  | 15                     |  
|Effect of exchange rate on cash and cash equivalents                 |  | (7                     | )
|Cash and cash equivalents under US GAAP at the beginning of the year |  | 108                    |  
|                                                                     |  |                        |  
|Cash and cash equivalents under US GAAP at the end of the year       |  | 116                    |  
|                                                                     |  |                        |  

FIN 45 disclosure

As part of its customer care program, Orange UK grants a warranty to its customers when they purchase new equipment (depending on which Talkplan they connect to),
by which Orange UK undertakes to replace or repair the equipment, if lost, stolen or damaged. The Group records a liability for warranty corresponding to the estimated amount of future repair and/or
replacement costs for equipment still under warranty at each balance sheet date. This liability is included in "other creditors" in the French GAAP financial statements and is calculated based on
historical experience concerning the cost and frequency of repairs and/or replacements of equipment.

Change
in the warranty liability during 2002 is as follows (in millions of euros):

|As at 1 January 2002                    |  |  |  | 31 |  
|--------------------------------------- |  |  |  | -- | -
|Net increase                            |  |  |  | 12 |  
|Foreign currency translation adjustment |  |  |  | (3 | )
|As at 31 December 2002                  |  |  |  | 40 |  

RECENT ACCOUNTING PRONOUNCEMENTS



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