Phone
Iliad may be the sole contender for Frances fourth mobile-phone license, after Numericable SAS and Omer Telecoms Virgin Mobile France dropped out last week and Egypts Orascom Telecom Holding SAE did the same on Oct. 12. Paris-based Iliad filed an application yesterday, a day before the deadline.
“The new entrant will have to be competitive, and if its Free, it would be positive because in Internet access it is very, very aggressive and is priced very, very low,” said Edouard Barreiro, a representative for consumer group UFC-Que Choisir in Paris. “Thanks to them, we have practically the best Internet offer in Europe.”
For Niel, who owns about 66 percent of Iliad, seeking a piece of the 25 billion-euro ($37.4 billion) mobile-phone market is a “natural” progression, the company said. After shaking up Frances Internet market, he will take aim at the three current mobile-phone operators, France Telecom SAs Orange, Vivendi SAs SFR, and Bouygues SAs Bouygues Telecom. They are anxious about Iliads entry, said Andrew Hogley, an analyst at Execution Ltd. in London.
“Its the threat to pricing in the mobile market that theyre concerned about,” he said. “If an established operator cuts its prices by 20 percent, theyre not going to make it up with more usage.”
Maverick Leader
Niel is something of a maverick in France. In a country where most top executives come from Frances Grandes Ecoles, or elite universities, Niel, 42, is a self-made billionaire, having become an entrepreneur without family money or a university education.
The executive, who is the chief strategy officer at Iliad, started by creating sex chat services and invested in sex shops. In May 2004, just months after Iliads initial public offering, he was investigated after one of the shops was found to be involved in prostitution. He was exonerated from the charges and paid a fine.
His company is credited with giving France among the lowest Internet-access prices of countries tracked by the Organization for Economic Cooperation and Development.
“French prices werent good until Free entered the market,” said Taylor Reynolds, an OECD economist. “Free essentially set the price for the entire market.”
Mobile Market
French high-speed Internet-access costs $28.50 a month, compared with $36.98 in the U.K. and $87.32 in Canada, as of September 2008, OECD numbers show. Iliad offers Internet, television, and phone packages for 29.99 euros a month.
If it does win the fourth license, Iliad will start offering mobile-phone services within about two years.
“Its a market where today were not present,” Chief Financial Officer Thomas Reynaud said in an interview. “Mobile is not a breakaway from our current activity. It is a natural continuation of what we do.”
France Telecom spokesman Tom Wright, SFR spokesman Nicolas Chatin and Bouygues Telecom spokeswoman Brigitte Laurent said they had no comment on the financial impact of the fourth operator.
Consumer Friendly
In France, “competition on the mobile market is not, shall we say, that fierce,” said Rosalind Craven, an analyst at Business Monitor International, a market-research firm. “Growth has stagnated, mostly thanks again to this lackluster competition and not enough downward pressure on prices.”
France is unusual among Europes large countries in having just three mobile phone operators. Until Deutsche Telekom AG and France Telecom agreed to merge their British operations last month, the U.K. had five, while Germany and Italy each have four.
“Theres not enough competition,” Jean-Ludovic Silicani, the president of the telecommunications regulator, Arcep, said in an interview published in Le Monde on Oct. 26. “The arrival of the fourth actor could, without endangering existing operators, be favorable for consumers.”