Bloomberg News

Iliad to Put Cash Into French Network as Competitors Prepare 4G

November 15, 2012

Iliad SA (ILD), the mobile operator that drove prices down in France with a 2-euro-a-month offering, will focus on building its network and winning customers as competitors move to faster, fourth-generation services.

Iliad is committed to covering 75 percent of the French population by 2015 and 90 percent by 2018, Chief Financial Officer Thomas Reynaud said yesterday in an interview in Barcelona during a conference organized by Morgan Stanley.

In the midst of price wars, competitors SFR and France Telecom SA (FTE) are planning to use 4G service to differentiate their services and increase prices. Paris-based Iliad, which relies on roaming agreements to offer much of its 3G service, is willing to sacrifice profit to complete the project and ensure that it continues to take market share, Reynaud said.

“The priority of the group is not roaming, the priority of the group is to roll out its own network,” Reynaud said. The company’s network covers about 31 percent of France, the country’s national frequency agency said in May.

France Telecom reached an agreement in March 2011 to let customers of Iliad’s Free brand roam on its 3G network. Iliad estimated that it had 6.4 percent of the mobile market at the end of September this year. France Telecom Chief Executive Officer Stephane Richard said last month that he wasn’t considering extending the offer to 4G.

The top three operators in France -- Vivendi SA (VIV)’s SFR, France Telecom’s Orange, and Bouygues Telecom -- have reduced rates in response to Free’s plans.

SFR predicts revenue per user won’t decline as much next year as in 2012 as it persuades consumers to spend on faster mobile Internet services as a strategy to exit a price war, Chief Executive Officer Stephane Roussel said yesterday.

To contact the reporters on this story: Amy Thomson in Barcelona at athomson6@bloomberg.net; Marie Mawad in Montpellier, France at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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