Iliad's campaign for French 3G licence heats up

In an effort to persuade the French government to award it a 3G licence next month, the country's second-largest ISP, Iliad, has promised strong growth in free cash flow to fund its competitive challenge to France Telecom. The company claims it will generate €300 million in free cash flow in 2009, up from €210 million last year, giving it the necessary financial clout to invest in a 3G cell phone business and the costly roll-out of a fibre optic network.

Iliad, the only declared bidder for France's fourth mobile phone licence, has accused France Telecom (FT) of being a "repeat offender" in attempting to block competition, and lodged a complaint, along with Vivendi, to the European Commission about FT's allegedly anti-competitive practices.

While Iliad has a history of technical and market innovation, industry observers have questioned the company's ability to invest €1 billion in a new fibre network over the next three years while paying for a new mobile infrastructure, assuming Iliad wins the licence. The new fibre network is considered essential to reduce its use of FT's costly backhaul infrastructure.

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