Iliad boosts profits as Free's mobile market share continues to rise

Iliad said profits rose sharply in the first six months of 2015 as the enfant terrible of the French telecoms sector continued to build its mobile market share and expand network coverage.

The company, which sparked a price war on France's mobile market when it started selling low-cost mobile plans under the Free Mobile brand in 2012, said EBITDA increased by 16 per cent year-on-year to €725 million ($813 million). Net profit also grew by 16 per cent to €162.9 million.

Overall revenue was 7 per cent higher at €2.2 billion, while revenue from the mobile business alone increased by more than 18 per cent to €880 million. On the fixed-line side, aggressive promotional activity diluted ARPU, although the company noted that growth in subscriptions more than offset this effect and enabled it to increase fixed-line revenue slightly by 0.5 per cent to €1.3 billion.

The company also attributed its strong mobile growth to a rise in customer numbers. The number of mobile subscribers increased by 820,000 to 11 million and enabled Free Mobile to build its mobile market share further to 16 per cent, up from 15 per cent at the end of 2014. The company reiterated its goal to achieve a 25 per cent share of the mobile market in the longer term.

Reuters noted that the company added 400,000 mobile customers in the second quarter alone, beating forecasts from Berenberg Bank for 372,000 new customers. Iliad added that it remained France's "leading recruiter" of mobile subscribers for the 14th consecutive quarter.

Iliad also continued to expand its network in the first half of this year, noting that it deployed 1,900 new 4G sites and 800 new 3G sites and invested total capex of €613 million. The company said the expansion of its mobile fixed networks would enable it to become more independent and profitable in the coming years.

By the end of 2015, the company hopes to achieve 4G coverage of around 60 per cent of France's population. The company achieved 3G coverage targets set by regulator Arcep after it reported 78 per cent 3G population coverage in April. A 2G and 3G roaming agreement with Orange is due to expire in early 2018, by which time Iliad has an obligation to provide 95 per cent 2G and 3G network coverage.

The operator reconfirmed its objective of achieving more than 10 per cent growth in consolidated EBITDA in 2015 while maintaining capex at a similar level to expenditure in the first half of the year. It also aims to achieve a consolidated EBITDA margin of 40 per cent by the end of the decade, up from the current level of 33.6 per cent.

For more:
- see Iliad's results
- see this Reuters article

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