Just days after rivals blamed it for denting their profits, French telecoms upstart Free (Paris, France) claimed to have secured a 5.4% share of the country’s mobile-phone market, with 3.6 million customers, since launching its services in January this year.
The company has been accused of starting a price war by rivals including Vivendi-owned SFR (Paris, France) and Bouygues (Paris, France), both of which announced disappointing results last week.
Owned by Iliad (Paris, France), which already runs a successful broadband business in France, Free provides mobile voice and internet services at just half the price of its competitors.
Unlike France’s established mobile-phone companies, it has also been offering “no obligation” services that do not tie customers to long-term contracts.
Xavier Niel, Iliad’s founder, has rebuffed accusations of recklessness, saying that French telecoms companies have paid out some €5.5 billion ($6.9 billion) in dividends since Free’s launch and do not appear to be struggling.
Even so, both SFR and Bouygues have recently unveiled cost-cutting plans, which include a voluntary redundancy program at Bouygues Telecom.
Iliad is aiming to sign up between 10 million and 20 million mobile-phone subscribers, with a 15% share of the French mobile market in the “mid-term” and a 25% share in the “long run”.
It is also forecasting revenues of more than €4 billion by 2015.
For the first half of 2012, Iliad’s revenues were up by 39% year on year to €1.4 billion, but net income dropped by 45%, to €80 million, owing to the costs of rolling out a new mobile-phone network.
SFR and Bouygues have also been critical of France Telecom (Paris, France), with which Iliad has struck a roaming agreement while it deploys its own network.
The two companies say Free would not have able to promote such generous packages without that deal, while France Telecom insists the arrangement represents a “hedge” against the impact of Free’s market entry.