(Adds details on sales, Vivendi cross-reference)
PARIS, May 15 (Reuters) - French telecom operator Iliad , founded by billionaire Xavier Niel, reported a 38.4 percent rise in first-quarter revenues after subscribers took up its cheap mobile-phone offers in droves.
Iliad's Free Mobile service has touched off a price war since it launched in January 2012, forcing larger competitors France Telecom, Vivendi's SFR and Bouygues Telecom to cut costs to compete.
Iliad grew its mobile subscriber base by 870,000 in the first quarter of 2013, lifting revenues at its mobile division threefold, to 294.5 million euros ($382.2 million).
Group sales rose to 907.2 million euros, from 655.7 million for the year-ago period.
Vivendi, meanwhile, saw a 17-percent drop in operating profit for the first quarter as SFR continued to suffer from Iliad's arrival on the market.
$1 = 0.7705 euros Reporting by Lionel Laurent; Editing by Mark Potter