Bouygues, Iliad and SFR Q3 results hint at shift in France's price war

Bouygues Telecom and SFR reported slight improvements in their third-quarter results while Iliad registered a slow-down in subscribers to its Free Mobile service, signalling that France's more established mobile operators may finally be regaining their momentum following a price war that has been ravaging France's mobile market since January 2012.

Admittedly, SFR's and Bouygues Telecom's thid-quarter improvements were largely down to cost cutting, but the two operators plus Orange France have been working hard at restoring some balance to the French market after Free Mobile turned the market upside down with its low-cost mobile tariff in January 2012.

In its results for the first nine months of 2013, Bouygues Telecom's sales were down 13 per cent to €3.5 billion ($4.71 billion) from a year ago, but Reuters noted that the telecom unit's earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4 per cent in the quarter and the group restated its goal to stabilise earnings at around €900 million this year through savings.

"In keeping with the second-quarter trend, and thanks to the effectiveness of the transformation plan, EBITDA in the third quarter of 2013 amounted to €258 million, up €10 million versus 2012," Bouygues Group said in a statement on the telecom unit's results.

Bouygues added that the transformation plan implemented in early 2012 has exceeded its target of saving €400 million in mobile costs, achieving savings of €455 million by the end of September 2013 from the end of 2011.

Meanwhile, SFR was also able to slow its decline in profits excluding non-recurring items in the third quarter thanks to cost cuts. In a statement on SFR's results, parent company Vivendi said EBITDA for the 2013 third quarter was €731 million, down 12.6 per cent compared to the third quarter of 2012, excluding non-recurring items. In the first nine months of the year, EBITDA amounted to €2.20 billion, a 19.5 per cent decrease compared to the first nine months of 2012. Excluding non-recurring positive items, EBITDA decreased by 18.0 per cent. SFR's sales declined 8.7 percent to €2.5 billion.

"We are reassured by these results. Despite continued weakness in the quarter, performance at SFR appears to be stabilizing,"  Sanford C. Bernstein analyst Claudio Aspesi wrote in a research note, Bloomberg reported.

Iliad continued to report strong revenue growth of 23 per cent in the first nine months, but Reuters noted that the Free Mobile unit registered slower growth in subscriber numbers in the third quarter. The number of new mobile customers fell to 640,000 in the third quarter, down from 720,000 in the second quarter.

For more:
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article
- see this separate Bloomberg article

Related Articles:
Vivendi targets mid-2014 for SFR split
Orange, SFR taken to task by French consumer watchdog over LTE claims
Orange hails success of operator-branded low-cost smartphones
Report: Iliad and Free Mobile founder Niel eyes deals in Europe

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