Free Continues to Disrupt French Market

While T-Mobile USA and Sprint attempt to reverse their fortunes in the U.S. mobile market, Free, the upstart mobile operation owned by Illiad, continues to do so in the French market, largely on the strength of disruptive packaging and pricing that, in the context of the French market, arguably goes far beyond anything T-Mobile USA has promoted as part of its “Un-Carrier” program, which relies more on transparency than significant savings.

The Free attack is based squarely on disruptive levels of value and retail pricing.

Iliad offers users unlimited calling (domestic) and three gigabytes of data for €20 per month, prices that have proven attractive enough to entice 9 percent of French consumers to change providers.

To be sure, European mobile revenue has been under pressure since at least 2007. In part, that is because mobile data revenue has so far failed to compensate for the sharp decline in mobile voice revenue, according to Wireless Intelligence research.

That study found mobile average revenue per user had fallen by 20 percent between 2007 and 2010, dropping from €25 in 2007 to €20 in 2010 on average.

A major reason is a decline in the average per-minute price for voice calls, which dropped from €0.16 to €0.14 in the EU27 mobile markets over the period. France has been particularly affected, one might argue, because of the new level of competition.

SFR in the first quarter of 2013 suffered an 11-percent year-over-year revenue decline, as it faces the second year of price competition with Free.

Orange recently reported an 8.1-percent fall in first-quarter 2013 revenue.  

In the 15 months since its launch, Free has secured around 9 percent of the French mobile customer base.

Illiad Group, parent company of Free Mobile, said that sales in its mobile business had increased by 202 percent to €294.5 million from €97.5 million, with the company adding 870,000 mobile subscribers during the first quarter to take its total to 6.08 million.