Iliad puts France Telecom on defensive

French telecoms incumbent France Telecom has managed to slow its loss of mobile-phone customers, many of whom were believed to be defecting to new rival Iliad.

France Telecom lost a staggering 615,000 customers in the first quarter of the year, when Iliad first entered the market, but customer losses for the second quarter were a less troubling 155,000.

Iliad has an established fixed broadband operation in France but won a licence to provide mobile-phone services in 2009, finally launching earlier this year.

French telecoms incumbent France Telecom has managed to slow its loss of mobile-phone customers, many of whom were believed to be defecting to new rival Iliad.

France Telecom lost a staggering 615,000 customers in the first quarter of the year, when Iliad first entered the market, but customer losses for the second quarter were a less troubling 155,000.

Iliad has an established fixed broadband operation in France but won a licence to provide mobile-phone services in 2009, finally launching earlier this year.

Iliad has made a name for itself as a low-cost provider of high-quality services, but France Telecom appears to have been caught unprepared for its entry into the mobile market.

For €2 a month, Iliad customers can enjoy 60 minutes of calls and 60 text messages, while for €19.99 they get unlimited calls and texts plus three gigabytes of data usage. A voice, texting and data service from France Telecom, with similar allowances, costs as much as €49.40.

Rivals, including SFR, have hit back at Iliad by complaining to ARCEP, France’s communications regulator, that it has not met some of the coverage obligations contained within its licence.

SFR has been further angered by a deal between France Telecom and Iliad, under which the new entrant can use the incumbent’s mobile-phone network in areas it does not yet cover. SFR says Iliad would not have been able to offer such low prices without this arrangement.

That deal, however, has helped France Telecom to defend its sales. Revenues for the first half of the year fell just 2%, year on year, to €21.8 billion, while net income dropped from €2.1 billion to €1.9 billion.