Analyst: Free Mobile will struggle after launch success

Having captured 4 per cent of the French mobile market over the last four months, Iliad's Free Mobile recorded one of the best new-entrant operator results that Europe has seen, according to a report from research firm Strategy Analytics.

The market research firm says the disruption caused by Free Mobile will see service revenues in France fall by 6 per cent this year, with no operator remaining immune from Free's impact. However, a Strategy Analytics study believes that Free Mobile will now struggle to maintain its early growth rate, with its high-profile launch having already recruited many of the consumers looking for a low-cost option.

Free Mobile's parent, Iliad, reported that the operator had gained 2.6 million customers by the end of March made up in equal measures of existing Free subscribers and new customers.

The report predicts that Free Mobile is unlikely to repeat this stellar performance, which mainly took place in January and February of this year, as its rivals ramp up their competitive efforts. "The competition has suggested that the flow of customers to Free Mobile had slowed towards the end of Q1 and into April, and it will be interesting to see H1 results, both in terms of continued growth at Free and in terms of their impact on profit margins in the market," the report notes.

Orange, SFR and Bouygues Telecom have launched new low-cost offers and revamped their quad-play bundles to minimise the threat posed by Free Mobile. But in the future, claims Strategy Analytics, the three incumbents will need to build a competitive offer to Free's hire purchase deals on handsets, and keep watch on their postpaid contract offers so as to remain ahead of or on par with this new and fast-moving rival.

Phil Kendall, director of the Strategy Analytics Wireless Operator Strategies service, said: "Free is clearly a trusted brand in the French telecoms market and this launch has only enhanced its price-fighting reputation with consumers."

For more:
- see this Strategy Analytics release
- see this report (PDF)

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