4G values destruction by French operators:
PARIS, Dec 9 (Reuters) - French mobile operator Bouygues Telecom said on Monday it would include a superfast 4G mobile broadband service in all of its service packages at no extra cost, in a response to upstart rival Iliad's 4G pitch last week. Bouygues said all of its current 3G customers would immediately and automatically be upgraded to 4G, having already said last week it would include the new service in its low-cost offers, just like Iliad's Free Mobile.
Bouygues and its larger rivals Orange and SFR had hoped their newly built 4G networks would command higher prices and help restore profit margins which have been eroded by the new competition from Iliad.
"Operators could have used these 4G offers to boost their margins, but instead, they're shooting themselves in the foot," a Paris-based trader said.
Bouygues Telecom will now offer an unlimited 4G mobile package for 24.99 euros a month, down from 29.99 euros previously. This is pricier than Free Mobile's 19.99-euro package, but Bouygues is hoping to capitalise on the headstart it has in rolling out its 4G network, thanks to the authorisation it obtained earlier this year to re-use radio spectrum once used for voice traffic. A second trader said that while Bouygues' move could help it boost market share it would make it tougher for the company to raise average revenue per user (ARPU) and to steady earnings before interest, tax, depreciation and amortisation (EBITDA). Bouygues reaffirmed its full-year outlook last month and aims to stabilise EBITDA in its telecom unit at around 900 million euros through savings. All eyes are now on Orange and SFR, which have so far left their tariffs unchanged despite Free's new marketing on 4G.