France's fourth mobile player proves its competitive worth

Flamboyant French entrepreneur, Xavier Niel, founder of Free and its parent, Iliad, has good reason to feel more than slightly pleased with himself, having achieved in spades what he set out to achieve - to shake up the French mobile market.

As we reported in September last year, just six months after opening for business with some cut-price spectrum (less than was paid by the incumbent operators for equivalent allocations), a roaming agreement with France Telecom/Orange, and some imaginative and compelling offers, the upstart French mobile operator had amassed 3.6 million subscribers and a 5.4 per cent market share. At that time the Iliad group's Chief Financial Officer, Thomas Reynaud, commented, "We are benefiting from our new status as a fixed and mobile operator with synergies on costs and revenues. Now we can fight on an equal basis with our competitors."

As Free's success became palpable, instead of looking to compete head-to-head on price and features its competitors did, in the main, what was expected of them and reached for their lawyers: they alleged that the spectrum allocation was unfair, the roaming agreement with FT was unfair (please revoke it). And of course, they alleged that Free's build-out was undershooting its regulated target. All for nought though: the regulator, ARCEP, gently pointed out that each of the incumbents had also, at different times, undershot their build-outs.

Free's success continued. As Pyramid Research has shown with its recent report, 'France: 3G Entrant Free Disrupting Mobile Market, Pushing Competitors to Accelerate LTE Plans' Free Mobile has gone on to gain 8 per cent of the market within five quarters, forcing the other players to rethink their positioning.

Free Mobile, says Pyramid, had captured 5.2 million subscriptions by year-end 2012, or 7.3 percent of the market, at the expense of the rest of the players, including third-ranked Bouygues and, perhaps most importantly, the MVNOs, according to Ozgur Aytar, Research Director at Pyramid Research and author of the report.

It's approach? "Free's service blends HSPA+, Wi-Fi and an all-fiber backbone to offer unlimited voice, texting and data for a flat fee of $25 in a market where customers would have to pay two to three times that to get something similar.

"This prompted the incumbent MNOs to introduce simplified plans with SIM-only or handset options. Orange, for example, reduced the number of its plans from 14 to 8, cut pricing by 20-30 per cent and added new services, including customised statement, smartphone support, premium services with Internet volume and speed options for 4G access, music through Deezer, unlimited calls and cloud data storage."

By 2018, Free is expected to have a respectable 19.6 percent share of the French mobile market.

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