Altice's Combes says 'non' to French price war, as Free presses on regardless

Rumours that Michel Combes would join Altice and Numericable-SFR were finally confirmed this week. Altice said the former CEO of Alcatel-Lucent has been appointed COO of Altice Group -- which encompasses various mobile and cable assets in Europe and elsewhere -- and chairman of French fixed and mobile operator Numericable-SFR.

The acquisitive Altice has thus gained a seasoned telecoms executive whose most recent achievement was to overhaul troubled vendor Alcatel-Lucent through his famous "shift plan", eventually sealing a deal to sell the company to Nokia. Although Combes' departure from the Franco-U.S. vendor was marred in recent days by criticisms over a payout of what could reportedly be close to €14 million ($15.7 million), the new Altice executive has lost no time in setting out his ambitions for his new group.

In an interview with Les Echos, Combes said his primary aim would be to turn Numericable-SFR back into a profitable company. In order to win clients, the company intends to invest in its network and redefine its offerings to make them more attractive to customers.

However, Combes told the newspaper he had no intention of launching a new price war in order to win back customers. "We will continue our investments. I do not believe that winning back customers requires lowering prices," Combes was quoted as saying.

Rival operators Orange and Bouygues Telecom, which have both suffered the effects of a mobile price war that has raged on the French market since Free Mobile first launched its low-cost mobile plans in 2012, will no doubt be relieved that Combes is putting his focus on investment rather than cutthroat prices.

However, only this week enfant terrible Free Mobile gave all three operators further food for thought: the Iliad-owned operator launched a new smartphone plan that now offers 50 GB of 4G data instead of 20 GB for the same price of €19.99. Interestingly, only 20 GB can be used on 3G networks, reflecting what Emma Mohr-McClune, service director for global consumer services at Current Analysis, described as an "upside-down, two-tier network-sensitive 3G/4G fair-usage policy".

Mohr-McClune noted that the new offer will also present challenges to Free Mobile, which as things stand only has 50 per cent 4G population coverage in France.

"On the face of it, 50 GB sounds risky, but these carriers have a very good handle on average usage, and of course we also have to keep in mind that Free Mobile is an early pioneer on EAP-SIM WiFi offset across its Iliad network," Mohr-McClune said.

Extensible Authentication Protocol or EAP enables mobile devices to automatically connect to WiFi networks where they are available.

At the end of the day, Mohr-McClune is prepared to bet that Free knows what it is doing. "The real impact will be on the French market and Free's mobile competitors. All will now be busy trying to figure out if, and how, they should close that differentiation gap, and through which channel," she said.

Over to you, M. Combes et al.--Anne

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