Government launches fourth licence process; FT to contest asking price

3 Aug 2009

The French authorities last Saturday launched the tender for a fourth 3G mobile operator licence in the country and confirmed the asking price of EUR240 million (USD330 million) in the official government gazette. However, France Telecom (Orange) immediately responded by saying it would contest the licence fee with the European Commission. FT is aggrieved that the amount being asked for the unallocated licence is only around a third of the EUR619 million which Orange, SFR and Bouygues Telecom had to pay in 2001 and 2006 respectively. A spokesman for FT told AFP: ‘France Telecom is going to complain to the European Commission about state aid, that is the advantage being granted to the fourth operator compared to the other three holders of mobile network operating licences’.

The deadline for bid applications has been set at 29 October 2009, with the award of the licence expected to follow around eight months from that date. It had been expected the bidding process would be launched before the end of July. The telecoms regulator Arcep will review the applications based on nine criteria. The terms and conditions of the fourth licence award will be identical to those of previous calls for applications: the winner should cover 25% of the population after two years and 80% after eight. The regulator will also be particularly attentive to the coherence and credibility of the successful candidate’s financial and business plan, whilst all candidates must demonstrate their ability to support a full network rollout (to the tune of EUR1 billion). New measures reportedly in the offing will improve the lot for MVNO operators, which currently account for just over 5% of the mobile market.

Iliad, the parent company of French internet service provider Free, has confirmed its intention to bid for the licence. A joint bid from Virgin Mobile and Numericable could also emerge but Free is widely considered as the only credible candidate. Les Echos writes that Free’s arrival on the mobile market could profoundly reshuffle the cards in the domestic industry. It has a strong brand, a fixed network, customer service, a billing system and more than 4.3 million internet subscribers, which it hopes to cross sell mobile services.

France, Iliad (Free), Orange Group