RNS Number:2626P
Orange S.A.
01 September 2003


                        SIMPLIFIED PUBLIC EXCHANGE OFFER

                             RELATING TO SHARES OF

                                     ORANGE

                                       BY

                                 FRANCE TELECOM

                                  PRESENTED BY


                          GOLDMAN SACHS INTERNATIONAL


                      SG CORPORATE AND INVESTMENT BANKING


      Terms of the Offer filed with the Conseil des Marches Financiers:

    11 existing or to be issued France Telecom shares for 25 Orange shares


This press release relating to the public offer referred to herein, with respect
 to which a proposal was filed on 1 September 2003 with the Conseil des marches
financiers has been drafted and distributed in conformity with the provisions of
 Regulation ndegrees2002-04 of the Commission des operations de bourse ("COB")
          and the Instruction issued in respect of such regulation.

The offer and the distribution to the public of the information memorandum (note
    d'information) remain subject to the approval of the market authorities.

 This press release may not be published, distributed or diffused in the United
States of America, Canada or Japan. This press release is not an extension into
  the United States of America, Canada or Japan of the exchange offer mentioned
herein and is not an offer to sell securities or the solicitation of an offer to
     buy securities in the United States of America. Other restrictions are
  applicable. Please see the important notice at the end of this press release.

I- Presentation of the Public Exchange Offer

The Boards of Directors of France Telecom and Orange met on 31 August 2003 and
the France Telecom Board approved and the Orange Board recommended a proposal
for the acquisition of the Orange shares not already held by France Telecom by
way of a simplified public exchange offer (the "Offer"). This Offer was filed on
1 September 2003 with the French market authorities.

II- Opinions of the Board of Directors of France Telecom and Orange

Opinion of the Board of Directors of France Telecom

The Board of Directors of France Telecom met on 31 August 2003, with Thierry
Breton chairing the meeting and was informed of the proposed Offer and the
related draft joint information memorandum. All members were either present or
represented. The Board approved the proposed transaction, with five directors
abstaining.

Mr. Samuel-Lajeunesse announced to the Board that "the French State supports
this proposal and that, in consequence, the State, which holds directly and
indirectly 58.7% of the capital of France Telecom, will vote in the General
Shareholders Meeting on 6 October 2003 in favor of the resolutions approved at
the board meeting."

Opinion of the Board of Directors of Orange

The Board of Directors of Orange held a meeting on August 31, 2003, chaired by
Mr. Thierry Breton, to consider the Offer.

The Chairman of the Board reviewed the principal events that had led to this
meeting:


      * On August 19, 2003, the Chairman of the Board of Directors, to whom
        France Telecom had delivered its proposed Offer, requested Messrs.
        Cardoso, Henkel, and Hobley (the "Independent Directors"), to undertake
        preparations for the Board of Directors so as to enable it to take a
        position on the proposed transaction. For this purpose, the Independent
        Directors immediately (i) pre-selected independent legal and financial
        advisors to assist the Board of Directors in connection with the
        proposed transaction and (ii) through such advisors, began preliminary
        work to evaluate such transaction.

      * Between 19 and 22 August, all of Orange's Directors were informed by
        the Chairman of France Telecom's intentions, which provided them with
        complete information on the Offer and the France Telecom group (the
        "Group").

      * The evaluation of the proposal by the Independent Directors and their
        pre-selected financial advisors continued, and, between that time and
        August 28, 2003, France Telecom finalised the exchange ratio for the
        proposed Offer.

      * During its meeting held on 29 August, 2003, a draft information
        memorandum having been transmitted by the Chairman, the Board of
        Directors approved (i) the preliminary preparations of the Independent
        Directors on the proposed public exchange offer and (ii) the appointment
        of the investment banks, Deutsche Bank AG, London Office, and Merrill
        Lynch Capital Markets (FRANCE) SAS, and the law firms Bredin Prat and
        Slaughter and May, which had been selected by the Independent Directors,
        as advisors to Orange and its Board of Directors in connection with the
        proposed transaction.

The Board of Directors, after reviewing the information memorandum jointly
prepared with France Telecom, emphasized that the proposed transaction would
make it possible to pursue Orange's development as part of the Group.

The Board of Directors reviewed the fairness opinions, dated the date hereof,
delivered by Deutsche Bank AG, London Office, and Merrill Lynch Capital Markets
(France) SAS, which opined on the fairness of the exchange ratio offered to
Orange shareholders (except for France Telecom and its subsidiaries) in
connection with the proposed Offer.

The Board of Directors commented that such exchange ratio included a premium for
Orange shareholders of:


      * 22.9% on the basis of the average trading price over the ten trading
        days preceding the date of this announcement;

      * 23.1% on the basis of the average trading price over the month
        preceding the date of this announcement;

      * 21.3% on the basis of the average trading price over the three months
        preceding the date of this announcement.

On the basis of the foregoing considerations, the Board of Directors, after
deliberation, unanimously resolved that the proposed simplified public exchange
offer was in the interests of Orange, its shareholders, and its employees, and
recommended to Orange's shareholders that they tender their shares in the Offer.

Finally, the Board of Directors resolved to authorize and direct the company's
Chief Executive Officer, with the right to grant sub-delegations of authority,
to sign the information memorandum jointly prepared with France Telecom, which
will be submitted to the Commission des Operations de Bourse for its approval.

The members of the Board of Directors indicated that they intended to tender
their Orange shares in the Offer.

III - Reasons for the Offer

The Offer is consistent with the strategic vision of France Telecom and is based
among other things on:


      * The growing needs of the Group's customers for integrated services on
        fixed and mobile platforms;

      * A growth strategy based on the development of new innovative services;

      * A model of strong coordination between the different activities of the
        Group in key areas such as strategy, the development of new services,
        client development and centralization of purchasing.

Orange is a key asset of the France Telecom group, both strategically and
financially, and is a significant contributor to growth and the generation of
cash flow. The Offer today is a natural step for the Group in line with the
"Ambition FT 2005" plan.

On a financial level, the transaction will ensure improved flexibility for
France Telecom, including:


  * The purchase of Orange minority interests will ensure an optimal financial
    equilibrium in the future between the Group's sources of cash flow
    generation and the Group's interest expense.

  * The credit profile of the Group will benefit from the strengthening of
    shareholders' equity and an optimization of intra-group cash flow; this
    should enable France Telecom to obtain improved financing terms in the
    credit markets.

  * In the event France Telecom holds more than 95% of the capital and voting
    rights of Orange, France Telecom will be able to consolidate the results of
    Orange for tax purposes. This would permit an acceleration of the timetable
    regarding the use of deferred tax assets of France Telecom.

France Telecom shareholders and Orange shareholders who choose to tender their
shares in the Offer should benefit from the improved market profile of the
Group. France Telecom's shares will benefit from an enlarged float and increased
visibility and the transaction will reinforce France Telecom's status as the
leading telecommunications share on the Bourse de Paris. This transaction will
increase the weighting of France Telecom in the CAC 40 index and Eurostoxx 50
index and which should of itself generate additional demand for France Telecom
shares from the index funds.

The transaction will also enable Orange shareholders tendering their shares in
the Offer to maintain an interest in the economic and financial performance of
Orange, since the growth, commercial success and profitability of Orange and
France Telecom are closely linked. By becoming shareholders of France Telecom,
the Orange shareholders who tender their shares in the Offer will participate in
the new dynamism of the Group, thus gaining access, in particular, to all of the
effects of the TOP Program and the benefits of improved integration of the
Group's activities. Orange shareholders participating in the Offer will benefit,
in addition to the premium offered (see in particular below, VII "Key
information for an evaluation of the exchange ratio"), from the anticipated
considerably enhanced liquidity of France Telecom shares with average daily
trading volumes of 149 million euros for France Telecom shares against 37
million euros for Orange shares. These figures cover the period from 15 April to
29 August 2003 (source: Datastream).

IV- Organization of France Telecom Group after the Offer

Orange will remain a separate company with its own Board of Directors and will
conserve among other things its management independence, its operational
resources, its enterprise culture and its own trademark. The transaction will
entail no modification of the legal structures and management bodies of Orange.

The Offer will have no impact on the employees of Orange and France Telecom. No
change is planned in the composition of the corporate bodies of Orange as a
result of the Offer.

France Telecom has indicated that it does not envisage any merger of France
Telecom and Orange after the Offer.

France Telecom intends to return to a policy of making distributions to
shareholders from 2004.

In the event that France Telecom holds, alone or in concert, at least 95% of the
Orange voting rights following the Offer, France Telecom reserves the right to
subsequently file a public buy-out offer (offre publique de retrait) followed by
a compulsory buy-out (retrait obligatoire) with respect to any Orange shares
that it does not already hold.

France Telecom draws the attention of investors to the fact that the liquidity
of Orange shares could be significantly reduced after the Offer. It is expressly
noted, furthermore, that after the closing of the Offer France Telecom does not
intend to maintain such liquidity.

V - Summary of the Principal Terms of the Offer

France Telecom irrevocably offers to exchange Orange ordinary shares, with a
nominal value of 1 euro each, held by Orange shareholders for existing or to be
issued France Telecom ordinary shares, with a nominal value of 4 euros, at an
exchange rate of 11 France Telecom shares for 25 Orange shares.

The new France Telecom shares will rank pari passu in all respects with the
existing France Telecom shares.

Summary of the Principal Conditions for Tendering in the Offer

Each tender must cover a round lot of 25 Orange shares or a multiple thereof.
Holders of Orange shares shall be responsible for dealing with any balances.

The Offer covers all existing Orange shares not already held by France Telecom,
as well as any Orange shares that may be issued prior to the closing of the
Offer pursuant to the exercise of stock options, namely an aggregate of:


      * 660,765,197 issued Orange shares, representing 13.72% of the capital
        and voting rights of Orange at the date of this information memorandum;

      * 51,676,178 shares subject to issuance prior to the closing of the
        Offer upon exercise of 51,676,178 stock options, representing 1.07% of
        the capital and voting rights of Orange at the date of this information
        memorandum.

On this basis the aggregate number of Orange shares capable of being tendered in
the Offer is 712,441,375 shares.

France Telecom holds, directly or indirectly, at the date hereof 4,154,521,243
shares of Orange representing 86.28% of the capital and voting rights of Orange.
France Telecom has not acquired, directly or indirectly, any Orange shares
during the preceding twelve months.

Shares tendered in the Offer will be accepted regardless of the number of Orange
shares tendered.

Origin of the France Telecom Shares Remitted in Exchange

The France Telecom shares available for exchange for Orange shares in the Offer
comprise of:


      * new shares to be issued further to a decision of the Chairman and
        Chief Executive Officer of France Telecom in application of the powers
        granted him by the Board of Directors in its meeting of 31 August 2003
        pursuant to the authorization given to it by the general meeting of the
        shareholders of 25 February 2003.

      * 95,363,219 existing shares held by France Telecom. The combined
        general meeting of France Telecom shareholders of 27 May 2003
        authorized, by its second resolution, for a period of eighteen months,
        the Board of Directors of France Telecom to repurchase France Telecom
        S.A. shares representing up to 10% of France Telecom's share capital.
        According to the terms of the authorization given by the combined
        general meeting of the shareholders of the company in its sixth
        resolution, the selling price shall not be less than 25 euros per
        security, subject to adjustments related to the capital of the company.
        In order to enable France Telecom to remit the treasury shares it holds
        to shareholders of Orange who tender their shares in the Offer, the
        France Telecom shareholders will be asked at the ordinary general
        meeting to be held on 6 October 2003, to reduce the minimum selling
        price of the shares of the company to 14.50 euros. (See also above
        "Opinion of the Board of Directors of France Telecom").

The maximum number of France Telecom shares that may be remitted in exchange
under the Offer is as follows:

Number of treasury shares                                                                              95,363,219
Maximum number of new France Telecom shares that may be issued under the Offer                        218,110,986
Maximum total number of shares that may be remitted under the Offer                                   313,474,205

Orange shares tendered will be exchanged first for existing France Telecom
shares.

The new France Telecom shares will rank pari passu in all respects with the
existing France Telecom shares and will be fully fungible with them.

Hedging Transactions

In the context of the implementation of the Liquidity Agreement, France Telecom
may have to remit France Telecom shares to the Orange option holders (see VIII
below). Taking into account France Telecom's use of its treasury shares for the
purposes of the Offer, France Telecom plans to implement a strategy in order to
manage the Group's financial risk resulting from these options.

In addition, France Telecom issued on 29 November 2001, 3,492,000 notes
exchangeable for existing France Telecom shares maturing on 29 November 2005,
each note, with a nominal amount of 1000 euros, being exchangeable, as of the
date hereof, into 17.0800 France Telecom shares. (These exchange rights are
currently "out of the money".) As a consequence of using its treasury shares for
the purposes of the Offer, France Telecom may implement a strategy to obtain
existing shares in order to be able to cover possible exchanges of the
exchangeable notes through their maturity.

As part of these strategies, France Telecom may implement, during the period
starting with the announcement of the Offer, hedging arrangements for all or
part of the shares underlying the Liquidity Agreement and the exchangeable
notes, involving derivative transactions (particularly future purchases of, or
purchases of call options on, France Telecom shares from financial institutions,
which may be the sponsoring institutions for the Offer; which institutions in
turn may trade in the market during the Offer period to hedge their positions)
or the purchase of France Telecom shares.

As of the date hereof, the flow of purchases of France Telecom shares likely to
result, on a net basis, from these hedging transactions, should be in the order
of 10 million shares.

Any such intervention will be implemented within the scope of the France Telecom
corporate repurchase program and would be made in conformity with the exemptions
provided for by Articles 5-2-14 and 5-3-7 of the General Regulations of the CMF,
and comply with the conditions of Regulation 90-04 of the COB.

VI - Agreements that may have a significant effect on the Offer

To the knowledge of France Telecom and Orange, there are no agreements that are
likely to impact the evaluation of the Offer or the result of the Offer.

VII - Key information for an evaluation of the exchange ratio

The premia/(discounts) calculated below highlight the difference between the
proposed exchange ratio of 11 France Telecom shares for 25 Orange shares (either
0.44 France Telecom shares for 1 Orange share, or 2,27 Orange shares for 1
France Telecom share) and the implied exchange ratio on the basis of the
criteria analysed.

1     Share prices

The closing share prices as of 29 August 2003 of France Telecom and Orange, were
respectively Euro22.60 and Euro8.45 per share and are the latest quoted share prices
before the announcement of the Offer.

Consequently, the market data as presented to assess the proposed exchange ratio
is prior to the announcement of the Offer on 1 September 2003.

Moreover, given the 14.85 billion euro net capital increase, which closed on 15
April 2003, France Telecom share prices prior to this date cannot be used to
assess the exchange ratio. As a result, historical exchange ratios calculated
based on periods before 15 April have not been included.
                                                   
Period (*)                  France                  Ratio France  Ratio Orange  
                            Telecom       Orange      Telecom /     / France    Premium Offered          
                          (Euro / share)  (Euro / share)   Orange (x)    Telecom(x)         (%)
                            22.60Euro        8.45Euro         2.67x         0.37x          17.7%
Close of day 29 August
2003
Average 1 week              22.80Euro        8.31Euro         2.74x         0.36x          20.7%
Average 10 days             23.23Euro        8.31Euro         2.79x         0.36x          22.9%
Average 1 month             23.10Euro        8.26Euro         2.80x         0.36x          23.1%
Average 3 months            21.39Euro        7.76Euro         2.76x         0.36x          21.3%
Average from 15 April       21.11Euro        7.66Euro         2.75x         0.36x          21.2%
2003
to 29 August 2003
Highest ratio from 15                                   2.92x         0.38x          14.8%
April
2003 to 29 August 2003
Lowest ratio from 15                                    2.61x         0.34x          28.5%
April
2003 to 29 August 2003


                (*) Source: Datastream, volume weighted average share prices

This analysis indicates a premium of between 14.8% and 28.5%.

2     Analysis of premia offered in similar public exchange offers

Analysis of premia offered in simplified public exchange offers in France since
1999 has been completed for transactions above 200 million euros. Five
simplified public exchange offers have been taken into account1.

                                         Premium to Share Price (%)
                                Last Share    Avg. 1     Avg. 3     Avg. 6
                                   Price      month      month      month
                                   25.9%      27.6%      25.5%      23.7%
    Average of the Sample Used
                                   20.3%      20.5%      20.3%      17.0%
    Median of the Sample Used

                                   17.7%      23.1%      21.3%       NA.
    Premium Offered by France
    Telecom

The premium offered is consistent with premia observed for similar public
offers. In particular, the median of premia offered, calculated based on the
average 1 month, equals 20.5%, to be compared with a 23.1% premium offered on
the 1-month average, as indicated in the previous table.

3     Analysis of economic contribution

This methodology assesses the relative contribution of Orange and France Telecom
based on multiples widely employed by the financial community with respect to
the telecom industry:


      * EBITDA multiples

      * Free cash flow yields

      * Cash earnings multiples

The table beneath presents the exchange ratios implied by this methodology:

                         EBITDA               Free Cash Flow            Cash Earnings
                    2002    1/07/2002 -       2002    1/07/2002        2002    1/07/2002 -
                            30/06/2003                 - 30/06/                30/06/2003
                                                         2003
                    2.7x       2.5x           7.7x       3.2x          4.5x       4.1x
France Telecom /
Orange exchange
ratio (x)
                   0.37x       0.39x         0.13x      0.31x         0.22x       0.25x
Orange / France
Telecom exchange
ratio (x)
                   20.4%       12.0%         237.0%     40.4%         97.1%       78.5%
Premium offered
(%)

The magnitude of premia calculated for the year 2002 using free cash flow yield
and cash earnings multiple is due to the disparity in maturity between the two
companies as of that time. Exchange ratios derived from these metrics have been
excluded.

Based on the other remaining metrics, the median exchange ratio for the economic
contribution methodology is 0.34 France Telecom share for 1 Orange share. The
premium implied by the 0.44 France Telecom share for 1 Orange share exchange
ratio over the 0.34 exchange ratio derived from the above analysis of economic
contribution methodology is 29.6%.

4     Summary table of all exchange ratio assessment methodologies

                                    Exchange Ratio      Exchange Ratio      Premium Offered
                                   France Telecom /     Orange / France
                                        Orange              Telecom               (%)

Share Price
                                         2.67x               0.37x               17.7%
Spot
                                         2.74x               0.36x               20.7%
Average 1 week
                                         2.79x               0.36x               22.9%
Average 10 day
                                         2.80x               0.36x               23.1%
Average 1 Month
                                         2.76x               0.36x               21.3%
Average 3 Month
                                         2.75x               0.36x               21.2%
Average 15 April 2003 - 29 Aug
2003

                                         2.94x               0.34x               29.6%
Contribution Analysis

                                         2.27x               0.44x                 -
Exchange Offer

Moreover, the premium offered over the Orange share price is in line with premia
paid in comparable transactions in France since 1999, i.e. 20.3% premium over
spot price, 20.5% over the 1-month average and 20.3% over the 3-month average

VIII.      Other Items

Liquidity Contract

Upon completion of the Offer, and as a complement thereto, France Telecom
intends to offer a liquidity agreement (the "Liquidity Agreement") to the
holders of Orange stock options and to holders of Orange shares obtained upon
exercise of Orange stock options or acquired in the context of a share purchase
plan that are non-transferable for tax or social security reasons under the
relevant option plan, such agreement to be entered into no later than three (3)
months following the date of publication of the notice of result of the Offer.
The Orange shares covered by the Liquidity Agreement will be automatically
transferred to France Telecom either upon exercise by the holder of the relevant
options, or upon termination of the non-transferability period for the shares
already existing at the date of the Offer. The signatories will have to
undertake not to exercise their options prior to the end of any tax and social
security non-transferability period which may be applicable and more generally
not to transfer or convert into bearer shares the Orange shares obtained upon
exercise of their options under conditions liable to require the payment of
social security or tax contributions by Orange or one of its subsidiaries.

The shares will be exchanged at the exchange rate used in the Offer, adjusted,
where applicable, to take into account any changes in the capital or
shareholders' equity of Orange and/or France Telecom.

Contacts:

France Telecom:      Nilou du Castel           01 44 44 93 93

Orange:           Tarek Robbiati           44 (207) 984 1691

This press release may not be published, distributed, diffused or otherwise sent
into the United States of America (including its territories and possessions,
every State in the United States and the District of Columbia), Canada or Japan.
This press release does not constitute an extension into the United States,
Canada or Japan of the offer mentioned in this press release, nor does this
press release constitute nor form part of an offer to sell securities or the
solicitation of an offer to buy securities in the United States, Canada or
Japan. The securities mentioned in this press release have not been and will not
be registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold in the United States absent
registration or exemption from registration under the Securities Act. There will
not be any public offering in the United States, Canada or Japan.

This press release does not constitute an offer of shares of France Telecom, nor
a public offer for the shares of Orange, in Germany. No action has been, or will
be taken, in Germany that would permit a public offer for the shares of Orange.
The shares of France Telecom may only be offered and sold in Germany in
accordance with the restrictions set forth in the German Securities Selling
Prospectus Act (Verkaufsprospektgesetz).

This press release has not been prepared in the context of a public tender offer
in Italy within the meaning of Article 1, paragraph 1, letter (v) of Legislative
Decree No. 58 of February 24 1998 ("Decree 58/98"), and Article 33 paragraph 1
of Regulation No. 11971 of May 14, 1999, as amended, of the Commissione
Nazionale per le Societa e la Borsa ("CONSOB") and has therefore not been
submitted to CONSOB pursuant to Art. 102 of Decree 58/98. There will not be any
public tender offer in Italy.

The release, publication or distribution of this press release in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this press release is released, published or
distributed must inform themselves about and observe such restrictions. Receipt
of this press release will not constitute an offer in those jurisdictions in
which it would be illegal to make the offer or to offer securities and in such
circumstances it will be deemed to have been sent for information purposes only.

This press release has been approved in the UK, solely for the purposes of
Section 21 of the Financial Services and Markets Act 2000, by Goldman Sachs
International and SG Corporate and Investment Banking (a division of Societe
Generale). Goldman Sachs International and SG Corporate and Investment Banking
are acting exclusively for France Telecom in connection with the Offer and will
not be responsible to anyone other than France Telecom for providing the
protections afforded to clients of Goldman Sachs International or SG Corporate
and Investment Banking or for providing advice in relation to the Offer.

This press release does not constitute or form part of the Offer by France
Telecom for the shares of Orange, or an invitation to purchase securities. The
Offer will be made only when approved by the relevant authorities. The terms and
conditions of the Offer (including details of how the Offer may be accepted)
will be set out in the note d'information (the "Offer Document"). Holders of
Orange shares who accept the offer may only rely on the Offer Document for all
the terms and conditions of the Offer. In deciding whether or not to accept the
Offer in relation to their Orange shares, shareholders should rely only on the
information contained, and the procedures described, in the Offer Document. The
Offer may affect the particular financial and tax circumstances of private
customers. Such customers are therefore strongly advised to consult their
financial and tax advisors before accepting the Offer.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END
OFBEAXNFESKDEFE