PARIS Jan 12 Vivendi's French
mobile phone service company SFR is cutting prices on several of
its offers to compete with new market entrant Iliad,
while rival operator Bouygues promised similar price
cuts next week.
France Telecom has already moved to reduce prices on its
low-cost brand Sosh, which is aimed at young, web-savvy
urbanites in response to Iliad's Free Mobile offers launched on
Even after the cuts, however, none of the larger operators
has matched Free Mobile's main offer of unlimited calls to
France and most of Europe and the United States, unlimited
texts, and 3 gigabytes of mobile data for 19.99 euros per month.
Instead France's incumbent mobile operators are pursuing a
strategy so far of limiting their price cuts to budget options,
which are sold only online and do not come with subsidised
phones on long-term contracts.
Such deals, known as SIM-only offers, account for only a
small sliver of the overall French market.
However, Frederic Boulan, telecoms analyst at Nomura,
questioned whether France's operators would be able to hold this
line for long, and predicted that Free Mobile's aggressive
prices would soon force them to lower prices on traditional
"The price gap between 'brick and mortar' and Internet
pricing is not sustainable, in our view, and the new Internet
norm with unlimited voice/text at 20-25 euros (a month) is
likely to spill over to all tariff structures," Boulan said in a
"We expect further repricing in the weeks to come, and we
remain cautious on the French mobile industry and France Telecom
Shares in Vivendi were down 0.1 percent, France Telecom down
1 percent, while Iliad was down 1.8 percent at the close.
Bouygues shares were up 0.3 percent amid a largely flat French
(Reporting by Leila Abboud; Editing by Greg Mahlich)