Orange and Bouygues hit back in LTE war, as Free launches handset leasing

Free Mobile's new onslaught on the French LTE market has now prompted both Bouygues Telecom and Orange France to add LTE to their own low-cost brands. Meanwhile, the Iliad-owned operator is extending its attack to a former preserve of the incumbent operators by offering a leasing programme for high-end smartphones.

Stephane Richard, France Telecom Orange

Stephane Richard

Free Mobile's announcement last week that it had added LTE to its €19.99/€15.99 and €2 mobile plans first saw Bouygues Telecom say it is extending LTE to its low-cost B&YOU plans that currently cost €19.99 ($27.50) and €24.99 a month for 3 GB and 5 GB of data, respectively.

Orange France, while publicly haranguing Iliad and Free Mobile's founder Xavier Niel for his actions, has also now said it will integrate LTE into the plans of its low-cost Sosh brand starting Jan. 9, 2014. Sosh subscribers to the €24.99 plan will then be able to get LTE with 5 GB of inclusive data.

"I do not want to penalise our Sosh customers," Orange CEO Stephane Richard said in an interview with Le Figaro in response to the B&YOU LTE offer.

Somewhat ominously for Free Mobile, Richard also said Iliad should not forget that the 2G/3G roaming deal the company has with Orange is not a "perpetual right." He said Orange would manage quite well without such an agreement, but questioned whether Free Mobile would. The operator currently only has 700 masts in service to support its LTE network, for example.

According to Dow Jones Newswire, Richard ruled out signing an agreement with Free to share its LTE network. "There is no way we will sign such a deal," Richard told Le Figaro, according to Dow Jones Newswires. Iliad has recently asked to join the ongoing network sharing discussions between SFR and Bouygues Telecom.

As well as attacking its rivals on LTE prices, Free Mobile has also just launched a smartphone leasing plan that will allow customers to effectively rent a smartphone for 24 months and then hand it back. The cost is €12 a month after an initial payment of €49.

"The success of Free's offer will depend on whether French people take to the system of leasing a phone," Stephan Beyazian, an analyst at Raymond James, told Reuters. "One thing is clear, though; on price, the packages are very attractive."

For example, the Free Mobile lease plan would represent a discount of about 40 per cent on the cost of buying an iPhone 5s and then taking out a Free Mobile monthly plan. This presents a further challenge to the incumbent operators, which have relied on subsidies to sell high-end smartphones.

These latest salvos from Free Mobile certainly round off an eventful period on the French mobile market, and more could be yet to come.

The French government has also been highly critical of Free Mobile's move with LTE and warned that Iliad's claims to offer LTE speeds despite the lack of coverage risked confusing consumers and damaging the image of the new technology.

Industry Minister Arnaud Montebourg also accused Iliad founder Niel of destroying jobs in the telecoms sector, provoking a war of words between the two men on Twitter.

For more:
- see this Le Figaro article (translated via Google Translate, sub. req.)
- see this Reuters article
- see this separate Reuters article
- see this Dow Jones Newswires article (via Total Telecom)

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