France Telecom to claw back profits with LTE price hike
France Telecom (FT) will announce a price increase by April for its LTE service following the launch of the high speed technology in 15 French cities.
FT CFO Gervais Pellissier told Les Echos that LTE subscriptions will probably cost "€5 or €10" more than current 3G packages. "We are convinced that customers are willing to pay a small premium as long as coverage and quality are a given."
The price increase will apply starting April when FT makes LTE available to non-business users. The company already offers LTE in Marseille, Lyon, Nantes, Lille and now parts of Paris to enterprise customers.
This surcharge, Pellissier said, is "reasonable, because when you stay at an hotel, you are already paying €10 per day for Wi-Fi." He noted that EE in the UK currently adds an extra €7 to €12 for LTE.
Such a move was forecasted in October by FT CEO Stephane Richard. "There will be a premium. The model with HSPA+ has made it clear that customers will pay," he told Bloomberg at the time. "We want to accelerate the LTE rollout in France in order to get ahead of the competition."
This move to place a premium on LTE is being seen as an attempt by FT to blunt the appeal of low-cost packages offered by Free Mobile. The three French incumbent operators have seen their profitability and cash generation severely impacted as they have been forced to lower their prices over the past 12 months to compete with Free Mobile.
However, SFR has trounced FT by launching its consumer LTE service this week in the La Défense, Puteaux, Courbevoie and Nanterre districts of Paris. This move, according to SFR CEO Stephane Roussel, makes it the first operator to provide a consumer-focused LTE service that provides coverage to a potential 250,000 Parisians.
SFR y said that its two LTE packages are the same price as their 3G equivalents, and it has no plans to charge a premium.
Franck Cadoret, SFR's general manager of consumer and professional services told L'Expansion that it would look to launch new LTE packages in the coming weeks that would provide higher data bundles. The exec suggested that these 2 GB and 4 GB offers would cost around €10 extra.
SFR has already launched LTE in Lyon, Montpellier, Marseilles, Toulouse, Nantes and Lille, and said that all of central Paris should have LTE coverage by the end of this year.
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