France Telecom-Orange
vs. Free Mobile
Business Strategies and Performance Comparison
Juan Pablo Lasso
Strategies
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New operator, Challenger
Traditional Operator, Leader
Type of Services and Pricing strategy:
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Low prices - €19.90 for unlimited services and € 2.00 for 60 minutes and 60
SMS.
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No terminal subsidies, SIM-only deals. New to the market.
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Internet Sales only
Spectrum Acquisition
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Current 3G Roaming Agreement with Orange. Costs €2 Billion for 6 years.
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Got a 4G license in the 2.6 GHz band for 4G.
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Will look for roaming agreement for the 800 MHz band.
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Network Development
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Started in January by covering 27% of the population in 3G.
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Must reach 90% by 2018. Relies on roaming agreement for now.
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Will look for network sharing in 4G.
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Customer Segment
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Just aimed to gain as many customers as possible in the beginning, relying on
low prices.
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Customer Relationship: Still to see what happens
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Important: Free is part of Iliad, an already established fixed
services provider.
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Type of Services and Pricing Strategy
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Traditionally, focused on high quality services, at a fairly high cost.
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Decided to launch low-cost offers to stay competitive
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Alternative Brand: SOSH – Prices from € 19.90 including unlimited calls and
SMS.
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Launched an offer to lower costs and enhance services for their “Origami”
product.
Spectrum Acquisition
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Was able to fight the impact of new operator by signing a 3G roaming
agreement with them.
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Invested Almost 1 Billion Euros in 4G Auction. Will take advantage of current
roaming agreement to sign a new one with Free Mobile
Network Development
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Will invest 18.5 Billion euros in their 4G network until 2013. Marseille,
already with enjoys this service.
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Interested in performing network sharing for 4G.
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Investmend of 2 Billion euros in FTTH network.
Customer Segment
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Traditionally, aims at customers who can pay more for high quality services
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Now, forced to aim at customers between 18-35 years old offering low-cost
services (SOSH)
Customer Relationship – Orange Care
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Plan to enhance customer support – Anticipate needs, offer assisted migration
to new services, wararnty, insurance and online support
Performance
Successful Market Entry
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Iliad’s EBITDA einitially xperienced loses due to launch
investments.
Small Revenue Decrease
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Impacted by:
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European crisis
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Still, finished First Half of 2012 with 11% growth in EBITDA.
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Increase of data traffic (revenue gap)
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Successful entry will allow for extra € 250 Million in network
deployment investment this year.
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Loss of customers to Free Mobile
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Lost 201,000 customers by February 2012.
First Quarter 2012:
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Went back to subscriber growth by June 2012 (+27,000).
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Roaming agreement prevented disaster, which was
experienced by SFR and Bouygues.
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Revenues First half 2012: €10,826 Million
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4% Market Share.
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2.6 Million mobile subscribers.
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€ 97.5 Million in Revenues.
End of First Half 2012:
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5.4% Market Share.
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3.6 Million mobile subscribers.
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€ 320 Million in Revenues.
Forced other operators to launch low-priced alternative
products.
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EBITDA First half 2012: €3,984 Million
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First Half 2011: €11,305 Million
First Half 2011: €4,323 Million
Chrysalid Project
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Reduce operational expenditures
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Avoid growth in costs being faster than revenues by 2015
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Limit expenditure to € 33.5 billion until 2015