Free Mobile grabs 5.4% of French market, aims for 25%
The disruptive French mobile operator Free Mobile has attracted 3.6 million mobile phone customers after only six months in operation, according to its parent company, Iliad.
The company said Free Mobile has already captured 5.4 per cent of the French mobile market, and believes it can achieve significantly more. "When we look at the wave of subscribers we've gotten on mobile and fixed, we have hints telling us that it won't just stop from one day to the next," Iliad CFO Thomas Reynaud said in an interview with Bloomberg.
Iliad forecast its share of the French mobile market should reach 15 per cent "in the mid-term" and 25 per cent "in the long run," without giving specific times for achieving those goals.
However, the success of Free Mobile was dampened by Iliad reporting that, while first half revenue rose 39 per cent to €1.44 billion, net profits dropped by 45 per cent to €80 million due to the investment required to launch the mobile service, and the construction and financings costs in building its own network.
Reuters reported that a consensus given by Goldman Sachs had been expecting €1.36 billion in sales, €370 million in EBITDA, and net profit of €71 million.
Commenting on the Free Mobile progress, Stephane Beyazian, an analyst at Raymond James Euro Equities, told Bloomberg: "The mobile trends are strong again--they've got solid customer intake in the second quarter. One point to keep an eye on is how heavy investments will be going forward."
Iliad CEO Maxime Lombardini acknowledged the cost associated with launching Free Mobile, but said the situation would improve once the operator had its own network, and would then "avoid having to pay hundreds of millions in roaming charges to the incumbent" – a reference to the deal struck with France Telecom to use its network during the time Free Mobile builds its own. He told L'Expansion that the roaming deal is "a necessary evil," but said the company will improve its margins as it builds out its own network.
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