March 8, 2012 / 8:36 AM / 7 years ago

UPDATE 2-Iliad to speed mobile rollout in France

* 2011 results in line, helped by broadband growth

* Iliad says mobile launch a ‘success’, no customer numbers

* Plans 2011 dividend of 0.37 euro, down from 0.40 euro (Adds detail from news conference)

By Leila Abboud and Gwénaëlle Barzic

PARIS, March 8 (Reuters) - French telecoms group Iliad said low-cost Free Mobile offers launched in January had been an immense success and it will accelerate the rollout of its mobile network.

Iliad’s new services forced larger rivals Bouygues Telecom , France Telecom and Vivendi to cut prices and lavish attention on customers to prevent mass defections.

Speculation has mounted over how many customers Free Mobile has siphoned off. Iliad said it would provide figures with its first-quarter results in May.

France Telecom’s chief executive estimated 1.5 million while unofficial tallies given by operators totalled 800,000 and France’s telecoms regulator forecast up to 2 million.

“I do not think a new mobile operator anywhere in the world has ever taken on so many subscribers so quickly,” said Iliad’s founder Xavier Niel at a press conference.

Iliad’s experience looks set to differ markedly from other late entrants to mobile markets such as Yoigo in Spain that has taken five years to build up roughly 5 percent market share or Hutchison’s 3 in the U.K. that took 9 years to reach 10 percent share.

Iliad’s rivals have sniped that its network coverage is poor and it relies too much on a roaming contract with France Telecom.

Some customers waited weeks to activate their new mobiles because the company was overwhelmed by a rush of orders.

Niel said on Thursday Iliad had installed 1,700 antennas already, with some 1,000 activated, and would accelerate deployment.

Iliad aims to have 2,500 antennas by the end of the year and Chief Financial Officer Thomas Reynaud said it would invest some 250 million euros ($328 million) on mobile this year.


Iliad is already having a deep effect on the French mobile market, with France Telecom, Vivendi’s SFR and Bouygues Telecom set to become structurally less profitable as it wins market share, draining cash flow and eroding margins of larger players.

Market leader France Telecom lost 201,000 customers on a net basis from early January to Feb. 15, with roughly 40 percent going to Free. SFR said it lost 208,000 subscribers in the first two months of 2012, while the smallest mobile player, Bouygues Telecom, lost 159,000 mobile customers through Feb. 15.

Stephane Beyazian, an analyst at Raymond James, predicts the average revenue per mobile subscriber will fall by one third in the coming years. Investment bank Nomura predicts core operating profit from mobile at the three existing players will drop 28 percent by 2015, slicing off 25 billion euros in market value.

In its last full year of activity without mobile, Iliad’s revenue rose 4 percent to 2.12 billion euros ($2.78 billion), while earnings before interest, tax, depreciation and amortisation (EBITDA) also rose 4 percent to 833 million.

Analysts expected 2011 revenue of 2.14 billion euros, and EBITDA of 861 million, according to Thomson Reuters I/B/E/S.

Its total broadband customers grew to 4.85 million at the end of 2011 from 4.53 million a year earlier, helped by the launch of a new set-top box for its bundled offers of telephone, broadband and TV.

Iliad’s overall capital expenditure ballooned in 2011, up nearly 50 percent to 1.2 billion euros, because of the cost of buying mobile licences and launching a new set-top box.

CFO Thomas Reynaud said in a radio interview that roughly 90 percent of Free’s mobile traffic was now being carried by France Telecom’s network but said this was only because the company was in the initial stage of its rollout.

“Our priority for 2012 is to sign up the most mobile subscribers that we can and deploy our network as fast as possible,” he said.

He said it was too early to say whether the roaming contract with France Telecom would cost Iliad more than the planned 1 billion euros over six years.

Iliad shares were flat at 98.87 euros at 1258 GMT. ($1 = 0.7622 euro) (Editing by James Regan and David Cowell)

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