Bouygues profits nosedives 57% as domestic price war bites

Bouygues Telecom said its profit plummeted by 57 per cent year-over-year during the first half of the year as intense competition in the French mark bit into earnings.

The mobile operator, part of the giant Bouygues media and construction conglomerate, was said it is "facing deep-seated changes on the mobile market, significantly denting its financial performance," reported the Financial Times. Bouygues Telecom's contribution to group net profit was €83 million, down 57 percent from €191 million in the first half of 2011,

Bouygues Telecom has traditionally provided about half of the parent company's net profits. But the country's third-largest mobile phone operator now expects underlying EBITDA will decline to €900 million this year, down from €1.27 billion in 2011 and a previous forecast of €1.02 billion.

The parent company confirmed that it had already launched a €300 million cost-cutting plan to reduce marketing costs and operating expenses within Bouygues Telecom, and that a voluntary redundancy plan affecting 556 employees had been proposed in early July, according to AFP.

The operator also reported a net loss of 71,000 customers in its second quarter, albeit this is significantly lower than the 379,000 lost in the first quarter, reports La Tribune.

The damage to Bouygues Telecom is being blamed on Iliad's Free Mobile since its launch earlier this year with cut-price offers. Some analysts believe that Free Mobile will report its second-quarter customer numbers to have risen to around 4 million, up from the 2 million announced after its first three months in operation.

For more:
- see this Financial Times article (sub. req.)
- see this AFP article
- see this La Tribune article (translated via Google Translate)
- see this Reuters article

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