SFR and Bouygues Telecom reach accord on network sharing

Vivendi-owned SFR and Bouygues Telecom have agreed to share their respective mobile networks in order to improve indoor and outdoor coverage and reduce costs by between €100 million and €200 million a year.

SFR CEO Jean Yves Charlier told Reuters that his company expects to save around €200 million ($269.8 million) a year from 2017-2018, while Bouygues Telecom said it expects to save around €100 million.

Charlier added that the two operators would initially have to spend hundreds of millions of euros on taking down mobile antennas, meaning that savings will not be immediate.

In a joint statement the companies said they will cover 57 per cent of France's population with the shared network. The agreement brings to a conclusion the negotiations that were started in July 2013.

The two operators added that the agreement will involve the creation of a joint entity to manage the infrastructure, and said the process will take until 2017 to complete. At the same time, each operator will retain total commercial independence.

No mention was made of Iliad-owned Free Mobile, which in November last year reportedly indicated that it would like to join the network-sharing negotiations currently being carried out by rival operators SFR and Bouygues Telecom.

According to a report in November by French newspaper Les Echos, Iliad CEO Maxime Lombardini sent a letter to SFR and Bouygues Telecom and forwarded copies to the French telecoms and competition regulators. In the letter, Lombardini expressed concerns that Free Mobile would be put in a weaker position if SFR and Bouygues Telecom joined forces and left it on its own to fight against Orange France.

At the time, sources told Reuters that Iliad's move was partly to show Orange, which is currently Free Mobile's network partner as it builds out its own network, that it could have other options. Orange CEO Stephane Richard had previously indicated he was not interested in network sharing with Iliad and was only interested in discussing their roaming relationship.

How welcoming SFR and Bouygues Telecom would be to Free Mobile remains questionable: the strategy of the French telecoms market's enfant terrible of offering highly competitive prices in France is a primary reason why the three incumbent operators have suffered from falling revenue in the past two years and need to cut costs further.

Separate reports in the Financial Times on Monday also said that EE and 3 UK have extended their 3G network sharing venture, Mobile Broadband Network Limited (MBNL), to their LTE networks. The two companies plan to invest a further £1 billion (€1.215 billion) to complete their infrastructure investment, the report said. Neither EE nor 3 UK had confirmed the report before publication.

[Editor's note: EE made the following statement after we went to press: "The new framework increases cost efficiencies as we continue our roll out of 4G to cover more than 90 per cent of the UK population by the end of the year. This is part of our £1.5 billion three year investment to significantly differentiate the EE network in terms of the people we connect and the experience they receive."]

For more:
- see this Bouygues Telecom/SFR statement (translated by Google Translate)
- see this Reuters article
- see this separate Reuters article
- see this Financial Times article (sub. req.)
- see this Les Echos article
- see this third Reuters article

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