France Telecom said its network was being stressed by a rapid growth in traffic brought on by its hosting of new mobile entrant Iliad and vowed to protect its clients from service interruptions, its CEO told magazine Le Point.
The two telecom companies met on Tuesday to discuss the roaming contract under which France Telecom (Paris) carries Iliad 's (paris) mobile traffic in areas where the new operator has not yet built its own network.
The contract, which has been estimated as being worth $1.3 billion over six years, calls for Iliad to pay certain fixed and variable charges, but the exact terms have not been disclosed.
The faster than expected growth of Iliad's ultra low-cost mobile service, which launched in early January, could lead the two sides to revise the contract terms, according to sources familiar with the situation.
Iliad's Free Mobile service upended the French telecom market in January when it launched its main offer at $26 per month for unlimited calls to France and most of Europe and the United States, unlimited texts, and 3 gigabytes of mobile data.
Since then a price war has engulfed the French mobile market , and Free's rivals have criticized it for poor customer service and a weak network.
Richard told Le Point that the roaming contract included ways for France Telecom to protect its own subscribers if traffic demands were too high and said there should be no problems if both sides respected their promises.
"I wouldn't be insulting anyone by saying that what is happening has not been well planned for," said Richard. "When you put these kinds of offers on the market, you should expect there to be a lot of demand. Free largely underestimated the demand."
Asked how many clients Free had signed up to date, Richard said he couldn't provide specifics. "But my estimate is that Free Mobile has roughly 1.5 million subscribers to date."
Iliad declined to comment.
(Reporting by Lelia Abbound; Editing by Will Waterman)