Bouygues forecasts hit by competition in French market
29 August 2012 | Kavit Majithia
Telecoms operator Bouygues reported lower first half year profits indicating the company is struggling against low cost competition in the French market.
Bouygues is one of many operators in the market reporting poor financial profits for 2012.
The company cut its forecast for its telecoms unit by 12%, to reach €900 million, as mobile operators in France continue an aggressive price war.
Competition in the market has intensified since operator Illiad launched its ‘Free Mobile’ service, offering lower prices. Iliad’s strategy has also effected the position of both market leader France Telecom and Vivendi-owned SFR.
"Bouygues Telecom is facing deep-seated changes on the mobile market, significantly denting its financial performance," said a company statement.
Iliad has made a significant dent in rivalling operator subscriber rates since launching the service earlier this year. The company signed 2.6 million customers in Q1 and although defection rates have slowed in Q2, Bouygues still lost 71,000 customers in the period, according to Reuters, but this was largely less than the 379,000 customers it lost in Q1.
The French conglomerate, which has operations in several sectors, had an overall 2% increase in revenues for the first half of the year, largely because of the success of its construction business.