Boston, MA -- (SBWIRE) -- 03/06/2013 -- BMI View: New competition finally brought growth back to the French mobile market, catalysing a number of changes. The market's return to growth propelled it to the top of our Risk/Reward Ratings, but downward pressures on ARPUs threaten its position. France's established operators are seeing their ARPUs decline sharply, leading to a variety of cost-saving measures being announced, including network infrastructure sharing and tower sale deals. BMI expects lower costs to remain the operators' focus as pricing pressures play out. Converged services and operations in the broadband arena offer some respite, but consumer spending remains squeezed and telecoms operators are feeling the brunt.

Key Data

- Mobile subscriber growth in Q312 was the fastest since late 2006, despite the market having passed 100% penetration. Free Mobile continues to make a strong impact on the market, accounting for the bulk of net additions but the established players began fighting back by H212.
- Local loop unbundling by alternative operators continues apace, keeping the broadband market buoyant, though France Telecom notes a slowdown in wireline broadband adoption as more consumers turn to alternative forms of broadband access.
- Growth in fibre-optic subscriptions remains strong, although the technology accounts for a small proportion of the overall market. While DSL continues to be attractive owing to the lower cost, subscribers are slowly moving to higher speed services.

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Key Trends & Developments

- Orange launched LTE services for business clients with commercial services to be made available in early 2013. Second-ranked SFR also launched LTE but brought services to its commercial subscribers in November 2012. We expect take-up to be slow until a wider range of devices are released, but we see 4G encroaching on 3G growth once handsets are available to take advantage of the new speeds.
- Mobile broadband has grown rapidly, but the launch of LTE services capable of offering speeds that rival fixed-line connections may help open up the mobile market to more demanding broadband customers who would not otherwise switch.
- Bouygues, SFR and Orange all announced different plans for saving costs with infrastructure sharing mooted by the market leader and Bouygues selling off its towers and leasing them back. As price pressures continue, operators will consider a number of options to improve bottom lines. While ARPUs remain high in 2012, pressures are great and are driving ARPUs down to regional levels.

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