. 1 AT&T Best in France Case Study December 2003

Group ES2h 2 Business in France Companies having business in France have to make trade-offs between the attractivity of the country and some specific constraints. Since several months, the French government has launched some reflexions about attractivity of France which have come to the “Rapport Huyghe” released in November. But attractivity is not only a matter of tax rates. We have decided to ask a global American player in the sector of telecommunications to tell us about its view of business in France.

Group ES2h 3 Group AT&T AT&T is expanding global reach, enhancing reliability, increasing network performance, and improving management tools to support critical enterprise communications with customers, suppliers, channel partners and employees. Main service: Interconnect clients locations around the world regarding voice, data and video providing high performance and good prices AT&T aims to be the leading provider of managed data and communications services. AT&T is structured as a European wide company

Group ES2h 4 Group AT&T AT&T provides data services in over 140 countries, 38 within Europe, Middle East and Asia (EMEA). Employees : 57,000 employees worldwide EMEA: Over 3000 professionals Clients: 4 million customers worldwide EMEA: Over 15,000 clients Worldwide revenue 52 billions Number 15 in Fortune 100 Third Quarter 2003 Earnings (Oct 23rd 2003) Third quarter earnings per diluted share from continuing operations of $0.58 Consolidated revenue of $8.6 billion Operating income of $829 million

Group ES2h 5 Why AT&T is in France France is a key target location due to the industry of telecommunications – Need to be where the customer is. The main objectives in France are: o Deliver business services for corporate customers o Interconnect all locations around the world o Be present in every place where a customer relationship must be built

Group ES2h 6 AT&T in France Turnover: Europe represents around Euro 700 million per year France represents Euro 150 million per year France is one of the key markets in Europe, along with the United Kingdom and Germany (sizes of markets). European Headquarters are located in Paris for historical reasons. AT&T arrived in France around 20 years ago and chose Paris due to a historical relationship with IBM (IBM had its European headquarters located in Paris) La Defense is an attractive place to be due to business clustering for French and international companies (eg AXA, Societe Generale, and many international banks and consultancies such as Ernst & Young.) In France, AT&T has two main competitors: Equant (group France Telecom) and Infonet.

Group ES2h 7 Company values AT&T France employs 300 persons, 99% of them are French AT&T France adopted the American corporate values with no difficulties: Dedication to customers Team Work Respect for individuals Innovation

Group ES2h 8 HR Policy and management of expatriates AT&T hires only French people since they feel that it is necessary to have French staff due to : Cultural reasons: It is something that French customers expect (language and culture). Organizational reasons: there are local teams to develop functions such as Sales, MKT, etc Due to this policy of being local, the company does not move expatriates around the world. If the company needs to hire persons with skills that only can be gotten in the UK for example, the France office asks to UK office to hire them and after that they transfer the employees to Paris. One international policy is not to have an American person as Country Manager

Group ES2h 9 Adaptation of Products AT&T provides services to global companies, as such their products need to be compatible globally. Their clients in France are global companies and demand the same products and level of service. As such AT&T does not adapt their product to each specific market. Customers Expectations: interconnect their locations around the world with high performance services (voice, data and video) and good prices.

Group ES2h 10 Adaptation to France Due to its historical position in France AT&T has not needed to make any major changes to business practices. The values of the company were applied without any major disruption to the French culture. Each country has its own constraints and the ones of France (taxes, social policy...) did not prevent the company from conducting its business correctly. The implementation of the 35 hours week has been quite smooth.

Group ES2h 11 Adaptation to 35 hour week The change to the 35-hour week required a HR Manager to focus on its implementation but otherwise had no major effect. As AT&T in France has no manufacturing activities, the implementation of the 35 hours did not cause any major disruptions. As a service company it was possible for AT&T to implement the 35 hour week through the negotiation of holidays. Due to the two situations above AT&T did not consider delocalising any of its activities due to the 35 hour week.

Group ES2h 12 Company's clients  The company established its European HQ in Paris because it was strongly linked to IBM at that time The company’s clients are Corporate Customers AT&T must be present where the customer is, i.e. French customers want to deal with a French interface and not with a central office in New Jersey. AT&T, as a service company, believes that cultural match is important for clients and as such provides local sales and support. An example of a French client is Lafarge with whom AT&T has developed a long term partnership.

Group ES2h 13 Key Benefits for the Company Paris and France have a skilled workforce well suited to the industry. There is a good infrastructure in France and especially Paris with consideration to Transport and Technology. As previously mentioned proximity to clients in La Defense is a benefit. Cultural fit with clients and employees allows for the development of long term relationships like with Lafarge.

Group ES2h 14 Location attraction for Employees Paris and its facilities provide a good infrastructure Paris just as Paris is an attractive draw for expatriates and specialists who need to be posted for periods. As most employees are French therefore Paris provides a good cultural fit.

Group ES2h 15 In Conclusion AT&T located to Paris due to a historical relationship with IBM It has kept its European Headquarters in Paris as France is one of its 3 major European markets Due to the clustering in Paris and La Defense, Paris continues to be an attractive location. The labor is educated and skilled Have no problems with regulations Work with global companies and have established relationships in France with Global French companies. French and specifically Parisian life style is seen as one of the biggest selling points

Group ES2h 16 We Thank Mr Tam Pham, Business & Marketing Director AT&T Business EMEA 1 place Jean Baptiste Clement Noisy le Grand 33(0)

Group ES2h 17 Our Team Brachet, Stanislas Davies, Wynn Diaz Clarke, Karla López Iervasi, Fernando J.