Avishai Cohen and Goran Bregovic Sunday eveningFind our folder on the Clearstream trial onBut I want to be able to listen as I wantAdidas and Puma should follow in his footstepsThe vaccine should be available midOctoberThe ISP should however stop supply of Fund of funds3 for the whole of the DJ Stoxx 600 companiesAbroad these activities are concentrated in universitiesWhat is not so common in the current contextChangeux think today perform this promiseWith time, Xavier Niel is notabilisé. Fine intellectual goggles, suits good cut, fancy restaurant, interview in the "Financial Times", the founder of Free no longer has to hide. But it should not be pushing it to much to discover in the wise flannel sabre of the pirate ready to start from the collision. With the prospect of a new mobile license granting and fighting around of fibre optics in buildings, combat resumed again with France Telecom flagship. And what combat! As noted in a recent study by analysts of Exane BNP Paribas (1), it is a tornado which prepares and that could redraw again the French telecoms landscape. For two reasons: firstly because the place that occupies the mobile in the Telecom, then because Free absolutely need a relay of growth to continue his adventure.
If one is interested that the only trade of Internet broadband, 98 of the turnover of the group, the position of Free is enviable. The society has grown in seven years the number two French sector with a quarter of the market and more than four million subscribers. But if it offers the prospect to the broad field of telecommunications, vision changes. The historical operator France Telecom Orange control still more than half of the French market, SFR a quarter, Bouygues a tenth free barely 5. Because on the telecom world is now the mobile phone which is the law. It represents well over half of the turnover and well more of the benefits of the three operators. In all, a cheese of 25 billion euros of turnover and almost $ 9 billion of gross margin. This course attracts the envy. A case that the CEO of Free sums up in his own way, always inevitable, a hair exaggerated and confusing. Build a network of fixed telephony costs EUR 20 billion against 1 billion for a mobile network, he said. But the minute of communication is sold 1 cent for the fixed and 20 cents for the mobile. Conclusion: the mobile is four hundred times more cost-effective than the fixed! What do salivate all pirates of the phone.
And this falls well because Free is looking for a relay to its growth. It is declining slowly since the launch of its offer in 2002 with the increase in its portfolio of customers. It was more than 33 in 2007 and is around 18 (organic) in 2008. With 19 million homes connected to broadband in France, it approaches the asymptote. This penetration is already higher than that of computers in homes. It subscribes now for telephone and television to the Internet. There are still between four and five million subscribers to conquer, the more difficult. Very fast growth should therefore approach the 2 to 3 per year. It is the reason for which all operators compete for additional services to raise expenditure by Subscriber.
In the case of Free, monthly revenues by client break between subscription, 27 euros excluding tax, phone (mobile calls are paid) and television for 4 to 5 euros each. This additional 10 euros has increased by more than 23 in 2008 and is now a quarter of total revenues. They are including subscriptions to pay-TV channels (type Canal ) and especially the video on demand, which is progressing very well. In fiber optics, which occupies much the spirits at this time, it does provide that little additional income since Free will propose the same price and convert its existing customers free of charge.
Therefore mobile. Exane analysts have calculated that if Free to capture only 7 of new subscribers to the France mobile by 2015, it would increase its turnover by 70 and its gross margin by 50. As competitors, they would at the same time their revenues and margins drop 10 to 20. But the road is long and still planted with obstacles in arriving at this "optimistic" for Free. The schedule is tight, aggressive competitors and high stress. The call for applications should be launched this summer and, given the time to review the files, the licensing interfere in the first quarter of 2010. From now on there will undertake a race to deploy a network as soon as possible. With hazards that one begins to discover about particular installations of antennas on the roofs of buildings. Some say it takes now two to three years of struggle to implement a new with the hostility of some associations. What made us a start between 2012 and 2013, with competitors who do not opportunity to conclude agreements of sharing networks. Bouygues has already initiated the iron by launching a convergent offer combining the fixed and mobile at low cost.
But Free is accustomed to adversity. It will use the same weapons that made his success in previous combat: a network, a very low cost structure and an offer of rupture. The network responds to the same idea from the beginning: a preference for investment against operational expenditure. In other words, better investing, even heavily, rather than rent lines to competitors (mainly France Telecom). It is heavier to start but strongly generator of cash from the amortized expense. Today, an alternating operator reverse France Telecom about half of its turnover (around 600 million euros for Free) leased lines and interconnection fees. A passage from the current subscribers to the fibre, at least 15 that can, would save heavily on this invoice. It is for this reason that Free spending about 30 of its turnover each year in investments, either two to three times more in proportion than its competitors. To retrieve as soon as it can from the tutelage of the "wholesaler" France Telecom.
The second pillar of the Free strategy, this is of course its cost structure. And for now, society is still subscribed to the lean regime. Its marketing service includes three people when that company Alice bought last year included ninety three times less subscribers. At the time, this redemption has pushed the population of 170 Free frameworks more than 600 people. The only population that has significantly increased in five years is customer support centres (about 4,000 people). And the company ensures that the transition to the mobile would result in the hiring of additional staff ten, not much more. This superlight is the consequence of trade costs in their simplest form while they account for more than 10 of the turnover in a mobile operator. To maintain this advantage, allowing margin equal to offer lower prices to the customer, it must play as was the case with the ADSL on word-of-mouth, the Internet and shops, and non-subsidizing of mobile. Then Free may try its martingale: unlimited mobile packages for a few tens of euros. Remains whether the recipe that worked so well for ADSL, with the goodwill of the regulatory authorities not upset to generate competition and lower prices, will give the same results. Or if full of gold of the mobile merchant vessels, knowing the tactics, will find the parade to stop the pirate of telecoms.
