France Telecom admits large customer losses due to Free

France Telecom has said that five days after Free Mobile’s launch on January 10 2012, it had lost 201,000 mobile subscribers.

The first assessment of Free’s impact by the leading French operator was in response to what France Telecom called “numerous comments and contradictory statements concerning them mobile market in France”.

The market loss represented 0.7% of France Telecom’s total mobile customer base, which stood at just over 27 million subscribers on December 31 2011. The operator also said that it experienced approximately one million mobile contract terminations between January 1 and February 15 2012 and received 837,000 additions over the same period.

Details of the 2G and 3G roaming contract France Telecom has with Free mobile were also revealed, with the contract expected to generate €1 billion over a six-year period. In what can be seen as an attempt to ease previous concerns surrounding the strain Free was placing on the France Telecom network, France Telecom said that “the traffic generated by Free mobile subscribers could be substantially higher than expected without this having a negative impact on the quality of service for Orange customers”.

The launch of Free Mobile last month, with its highly competitive pricing strategy, stirred what had previously been a fairly static French mobile market, dominated by three operators. Recently there have been accusations that Free had not been fulfilling its coverage obligations and that it was relying too heavily on France Telecom to carry its network. An investigation by regulator Arcep is under way.

In a separate announcement, France Telecom also released its 2011 financial results. The company reported an 8% increase in total group customers, reaching 226.3 million by December 31 2011, which it claims was driven by growth in Africa and the Middle East. Despite the increase in customers, consolidated revenues were down 1.6% compared to the previous year, standing at €45.277 billion, but still in line with expectations.

One figure that analysts will be keeping an eye on is the French revenue of the company, which stood at €22.534 billion. France Telecom still generates the bulk of its revenue from its home market and it is expected that the price war instigated by  Free will have some impact on France Telecom's results in 2012.

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