French operators under pressure as costs rise, but revenues drop

The latest figures from French telecoms regulator Arcep provide a stark reminder of the pressures being faced by France's operators, which spent €2 billion more in 2012 than in 2011 but recorded a 3.3 per cent drop in revenue to €50.9 billion.

According to Arcep, operator spending increased substantially for the third year in a row, exceeding €10 billion for all 2012, or €2 billion more than in 2011.

"This is the highest level since 1998, the year France's telecommunications market was liberalised," the regulator observed. It attributed some of the increase to the sums that operators paid for LTE licences: €2.6 billion in 2012 for 800 MHz band frequencies, compared to €936 million in 2011 for licences in the 2.6 MHz band.

In addition to spectrum acquisitions, operators spent a record €7.3 billion during the year, with mobile operations accounting for roughly half of their capital expenditures, Arcep said. Their estimated investments (networks, frequency licences, etc.) in high-speed mobile, both 3G and LTE, came to €4 billion in 2012, compared to around €2.4 billion in 2011.

Arcep partly attributed the 3.3 per cent revenue decline to the decrease in call termination rates. On the plus side, it added, traffic indicators reveal a sizeable increase in consumption, and particularly mobile usage.

"Mobile traffic rose to 231.2 billion minutes in 2012 (+13.3 billion minutes compared to 2011), 183.1 billion SMS were sent, and data traffic originating on mobile networks grew to 95,500 terabytes which marks a 67.1% increase over the year before," the regulator remarked.

The 12.6 per cent drop in postpaid prices in 2012 also highlighted the increased competition on the market following the arrival of Free Mobile in January 2012. The Iliad-owned operator competes with Vivendi's SFR, France Telecom Orange and Bouygues Telecom.

For more:
- see this release

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