* Free Mobile service took 8 pct share last year
* Mobile business fuels growth in fixed, broadband
* 2012 EBITDA 921.4 mln v. consensus 827.77 mln
* Aim to grow fixed revenue by more than 5 pct in 2013
PARIS, March 19 France's low-cost telecom
operator Iliad posted a 26 percent earnings drop
because of the ongoing cost of building its new mobile network
that still beat analysts' forecasts.
Since its launch in January 2012, Iliad's Free Mobile
service has taken an 8 percent market share and forced larger
competitors France Telecom, Vivendi's SFR, and
Bouygues Telecom to cut price to compete. Iliad is
also the second-biggest broadband provider behind France
"We are in a period of transition to becoming an integrated
fixed and mobile operator," said Thomas Reynaud, chief financial
"Although our profits fell we are still in the black, with a
solid financial structure that allows us to invest heavily in
Earnings before interest, tax, depreciation, and
amortisation (EBITDA) rose 10.6 percent to 921.4 million euros
as the mobile service drew additional customers to the
traditional broadband and fixed business.
Net profit fell to 186.5 million euros, and the dividend was
stable at 0.37 euros per share.
Analysts expected EBITDA of 827.77 million and net income of
164.12 million euros, according to Thomson Reuters I/B/E/S.
Iliad, which markets its services under the brand name Free
in France, also said it would aim for revenue growth from fixed
services of more than 5 percent this year.
Iliad's fixed business has flourished since it launched
mobile service because more customers are buying discounted
all-included bundles. Its free cash flow from fixed telephone
and broadband jumped nearly 66 percent to 508.8 million last
Earlier Iliad posted an increase of nearly 50 percent in
full-year sales to 3.15 billion euros, and said it had gained
5.2 million customers last year.
Amid a price war, France's average revenue per mobile user
(ARPU) fell 10 percent to 336 euros last year, according to its
telecom regulator, with a further 10 percent drop predicted by
France Telecom this year.
Iliad also sparked fierce political debate on jobs and a
competition regulator inquiry on whether the group was relying
too much on a roaming contract with France Telecom to carry its
mobile traffic while it builds its network.
Last week, the regulator said Iliad should end the roaming
deal by 2018 at the latest and called for closer scrutiny of its
buildout. Iliad is required by law to cover 75 percent of the
French population with its own mobile network by 2015, and 90
percent of it by 2018.
It said in January the coverage was 50 percent with some
2,300 mobile antennas erected compared to the 10,000 it
typically takes to cover France.
On Tuesday, it pledged to hit its 2015 obligation of 75
percent coverage a year earlier than planned, by end-2014.
"We need roaming to begin our mobile business but we are
investing massively to build our own network at the same time,"
Iliad shares rose 36 percent last year, and are up 15
percent this year to 149.70 euros. In contrast, the European
telecom index fell 10.7 percent last year, and is up 7.4
percent this year.
(Reporting by Leila Abboud and Catherine Monin; Editing by