UPDATE 1-France Tel sees pressure on mobile client revenue

Wed May 30, 2012 8:07am EDT

(Adds exec comments, background)

By Gwénaëlle Barzic

PARIS May 30 (Reuters) - France Telecom plans to slash prices for its main mobile offers by a fifth on average as it fights for customers in a domestic price war triggered by new low-cost mobile competitor Iliad's Free Mobile.

France Telecom's Orange, Bouygues Telecom and Vivendi's SFR have all taken hits to sales and margins since the launch of the fourth French mobile operator in January.

Average revenue per mobile client at Orange France will likely fall almost 10 percent this year, unit head Delphine Ernotte said at a press conference.

"On average revenue per client, clearly we have forecast that revenue was going to fall," she said.

Ernotte said the reduction included the effect of a 20 percent price cut on its new set of mobile offers, dubbed Origami and unveiled on Wednesday.

France Telecom had initially responded to Free by adjusting its tariffs for its low-end Sosh mobile offer and its Open quadruple-play offers combining mobile, TV, phone and Internet.

The company plans from next month to cut prices on its main mobile offerings, which include phones that are subsidised in return for customers signing up to one or two-year contracts.

The Origami range will go from 24.90 euros ($31.21) a month for an hour of calls and unlimited SMS and MMS to 159.90 euros with the possibility of upgrading smartphone each year.

Orange France will thus come closer to Bouygues and SFR in terms of price, though it will remain more expensive than Free in many cases. Orange is banking on the quality of its network and partners such as online music service Deezer to help it woo and keep clients despite its higher prices.

Bouygues Telecom has already cut its prices on its Eden range of mobile offers, which include subsidised phones with long-term contracts. SFR has so far largely focused its price cuts only on its low-cost, no mobile offers.

France Telecom shares were unchanged even as the European sector, was 0.2 percent lower. So far this year, France Telecom shares have slumped 35 percent, more than double the decline in the overall sector. ($1 = 0.7977 euros) (Reporting by Gwenaelle Barzic; Editing by James Regan)