2014 ANNUAL REPORT

Consolidated Financial Report |

DIRECTORS’ REPORT

2014 Annual Report

Prysmian Group

REVIEW OF TELECOM

OPERATING SEGMENT

What does it mean to be a global leader

in telecommunication cables, especially

optical fibre ones?

It means being at the forefront of a field, namely digitisa-

tion, which, along with electrification, is one of the two most

powerful drivers of the planet's industrial and economic

growth. The digital economy grows and spreads on optical

cables, and the Group is a global leader in the manufacture

of the core component of every type of optical cable: optical

fibre. We're a global leader because we own one of the

world's three optical fibre manufacturing technologies and

we're experts in the design of optical cables serving the

many needs of telecom networks. But I would add that,

if we are leader, it's also because we're convinced that

bringing fibre to every home and building in the world is an

important goal and a major driving force for communities.

Are we talking about connectivity and FTTx?

And about all the ramifications that allow fibre to be

brought to the end user: the home with FTTH, the antenna

with FTTA, the building with FTTB ... Increasing bandwidth

requirements, by both the business and residential sectors,

are having a profound effect upon the performance

required of the optical network, which in turn demands

high standards of fibre management. This is why we've

have developed the family of xsNet products for "last mile"

access networks, which is also very suited to optical fibre

deployment in sparsely populated rural areas. Most of the

cables used in FTTx/FTTH systems feature Prysmian's

bend-insensitive BendBrightxs optical fibre, which has been

specially developed for this application.

But there isn't just the last mile...

The Group operates with a range of solutions that respond

to the demand for wider bandwidth by major network

INTERVIEWWITH PHILIPPE VANHILLE,

Senior Vice President Telecom

operators and service providers. Our product

portfolio covers every area of the industry,

including long-distance and urban systems, and

solutions such as optical ground wire (OPGW),

Siroccoxs (fibres and cables for blown installation),

Flextube® (extremely flexible easy-to-handle

cables for indoor or outdoor installations), and

many more. A range of products that allows us to

undertake major projects, even on a continental

scale like the ambitious Fibre-to-the-Premises

programme launched by the Australian government;

a project that confirms the central role of Prysmian

in tackling a challenge of such enormous dimen-

sions, as Matteo Renzi, the Italian Premier, was able

to see during a recent visit to our Dee Why production

facility in Australia.

What are the prospects for the Telecom

Operating Segment?

The size of the global market for optical fibre cables is

predicted to growalthoughwith large regional differenc-

es. Demand in 2014 reported growth in fast-developing

markets, like China, and those with high communication

infrastructure needs, like India. This was accompanied

by a recovery in volumes in Europe. In Brazil we saw a

slight dip in volumes, while North America recorded a

recovery after the steep falloff in 2013 with the ending

of government incentives. In Europe, in particular, we

have won contracts for work on major projects to realise

backhauls and FTTH connections for leading operators,

such as British Telecom in the United Kingdom, Telefonica

and Jazztel in Spain, Orange in France and Telecom Italia

in Italy. The high value-added connectivity business has

remained generally positive in Europe and North America,

thanks to the development of new FTTx networks.