The latest financial results from SFR and Bouygues Telecom would indicate that the French mobile telecoms market is feeling the pressure.
SFR, the second largest operator and part owned by Vivendi and Vodafone, reported that its Q4 adjusted EBIT fell by 7 per cent to €451 million, nevertheless remaining the greatest contributor to Vivendi's overall profit figures. Commenting on the results, one industry analyst said that SFR is a worry and would appear to have the same problem as Bouygues Telecom, namely the cost of recruiting and retaining subscribers.
Bouygues failed to disclose the actual damage to its Telecom's division, but the stock market expressed its disappointment by marking down the share price by nearly 6 per cent regardless of a 26 per cent rise in full year profits to €746 million from the Telecoms business.
According to Citigroup, the division only managed a 16 per cent EBITDA margin and 4 per cent operating margin in the fourth quarter, which Bouygues attributed to the cost of acquiring and retaining subscribers, yet customer additions are still half that of rivals France Telecom and SFR.