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France - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. France's telecommunications services market was worth approximately €41,037 million in 2006, representing a year-on-year increase of 0.7%. Over the same period, investment in networks and equipment grew by 10.5% to €7,010 million as operators and service providers deployed next-generation networks and boosted interconnectivity under local loop unbundling rules that aim to spread broadband services to the bulk of the country's population with all possible speed. While the traditional fixed-line services sector is seeing a continuing downturn in demand for and use of basic telephony services, spending on mobile and Internet services remains buoyant, at 4.1% and 18.5% respectively (although the latter figure masks a 35% decrease in narrowband revenues and a 30% increase in broadband revenues). The mature mobile sector has been revitalised by the introduction of mobile virtual network operators (MVNOs), which are able to engage in protracted price wars and develop innovative content and applications for various customer markets. At the time of writing, there were at least 10 MVNOs active in France, including Tele2 and two subsidiaries of 'triple play' operator Neuf Cegetel. The latter is expected to ramp up its development in the next few years and was touted as a likely purchaser of Tele2's fixed-line and MVNO operations In France. Indeed, in October 2006, Tele2 agreed to sell its fixed line and broadband business in France to SFR, which owns a 35% stake in Neuf Cegetel. In the fixed line sector, Neuf Cegetel continues to grow both organically and by acquisition, with a number of high-profile acquisitions in 2006 and, so far, in 2007. In September 2006, Neuf Cegetel and Time Warner finalised an agreement for Neuf Cegetel to acquire AOL France's Internet access business, including 500,000 broadband customers, for €288 million in cash. Neuf Cegetel claimed it had reinforced its position as the leading alternative provider in its markets: mass market, enterprises and operators. In January 2007, Neuf Cegetel acquired Médiafibre, an ISP offering very-high speed services in Pau. Médiafibre had 2,500 customers. In April 2007, Deutsche Telekom and Neuf Cegetel entered into exclusive negotiations in relation to the sale of Deutsche Telekom’s French Internet access unit, T-Online France SAS, which trades under the Club Internet brand. Club Internet had close to 570,000 ADSL customers at the end of 2006. In June 2007, French anti-trust authorities approved the acquisition. In March 2007, ARCEP launched a tender process for a fourth 3G mobile licence. The basic terms of the auction mirrored those of the first two UMTS licensing rounds in 2000 and 2001, where each concession cost €619 million. Among the companies expected to bid for the licence were the French broadband Internet companies Iliad (Free) and Numéricâble Noos. The closing date for bids was July 31, 2007, and only Iliad actually submitted a bid. The outcome of the auction was not known at the time of writing, and the licence is not expected to become effective until March 31, 2008. Incumbent operator France Telecom is engaged in a massive project to roll-out broadband services to as many French citizens as possible. Previous efforts to deliver high-speed services to customers beyond the reach of broadband-enabled France Telecom switches had been focused on wireless local loop (WLL) networks developed by a number of independent operators in the early-2000s. However, WLL proved largely unsuccessful, mostly due to technical limitations, a low demand for high-speed services, and the poor financial health and ill-prepared business plans of the operators. The largest surviving player is the Iliad Group, which acquired France's sole national 3.5GHz WLL operator, Altitude Telecom, in late-2005. Iliad, which owns the 'Free' Internet service provider, has the clout to turn this operation into a successful business. In the summer of 2006, 3.4-3.6GHz WiMAX licences were auctioned, covering all of France plus two overseas territories. Three groups netted large numbers of licences, these being Bolloré Telecom (partnering with hotspot operator Hub Telecom), HDRR (a consortium that includes France's national broadcaster), and Maxtel (a joint venture led by the stand-alone part of the Altitude business not purchased by Iliad). Iliad itself did not secure any WiMAX licences, but could well purchase those licences sold on at a later date by the successful bidders. Another notable development has been the emergence of Altice as France's leading broadband cable operator. Altice has swallowed up Est Videocommunication, France Telecom Cable, NC Numéricâble, and, UPC France/Noos. With these cable businesses now controlled by a single entity, it seems more likely that success will be met in expanding the availability of Internet and telephony services via cable.
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