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Telecoms turmoil in France

Telecoms turmoil in France
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France Telecom suffered an 8.1 percent fall in operating profit and sales slipped in the first quarter of the year.

It, and the other established French phone companies, are facing stiff competition with the launch of Iliad ‘s low-cost Free Mobile.

The former state-owned monopoly lost 615,000 clients between January and March but said the haemorrhaging has slowed.

First-quarter revenue was down 1.8 percent to 10.92 billion euros, that compared with a forecast for 10.81 billion.

It was helped by a deal to carry Free Mobile’s traffic while the new player builds its network.

The price war sparked by Free Mobile has changed France from being one of Europe’s more profitable markets to one of the toughest. Margins have been forecast to fall to the mid-20s percent – akin to the competitive British market – from the mid-to-high 30s.

France Telecom, Vivendi’s SFR and Bouygues Telecom are having to spend heavily to retain customers, and two of the three have scaled back dividend pledges.

France Telecom itself has cut prices, pushed its low-cost brand Sosh, and offered all-inclusive bundles of mobile, fixed, TV and internet.

Bouygues buys Dartybox

French mobile phone and broadband operator Bouygues is to buy Dartybox paying 40 million euros.

That is the telecoms business of household appliances chain Darty which is part of struggling British retailer Kesa.

As part of the deal Kesa will continue to get some revenue from existing and future subscribers.

New boss at SFR

Vivendi has named Michel Combes, an industry veteran who is currently head of Vodafone’s European business, to lead its French mobile operator, SFR, as it struggles with brutal competition.

With Combes, Vivendi has chosen an executive with deep knowledge of the French telecoms market gained as France Telecom’s chief financial officer from 2003 to 2006 and chief executive of France’s broadcast tower operator, TDF, from 2006 to 2008.

Vivendi Chief Executive Jean-Bernard Levy has been running SFR on an interim basis since late March when he forced out the former chief for not sufficiently coping with the arrival of the competition from Iliad.

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