France Telecom (FT) Orange CEO Stéphane Richard told a government committee that its 35 per cent profit margin on its mobile services is commonplace.
Appearing before the French parliament's Economic Affairs Commission, Richard said that the company operates in 35 countries, so was able to make comparisons. "The level of margins in France is by no means unusual, and is at the low end of what we achieve elsewhere."
The profit margins being realised by Orange, SFR and Bouygues Telecom have become the subject of controversy since the launch of Iliad's Free Mobile last month, with Iliad CEO Xavier Niel accusing its much larger competitors of keeping mobile phone prices too high.
In a robust defence of its pricing policy, Richard told the committee: "I disagree with the sweeping and unfair judgments [on mobile pricing] when compared with the reality prior to the arrival of the fourth operator [Free Mobile]."
According to a report in the French newspaper Les Echos, Richard said that the level of margin being generated by Orange is necessary so the company could invest in maintaining its 2G and 3G networks. The exec also said that France Telecom is a "champion of the French economy," and annually invests €2.6 billion in France, including €800 million in research and development. Richard also took the opportunity to point out to the committee members the 39 per cent margins being achieved by Free for its triple-play service.
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