Competition bites: French telcos opt against hiking mobile prices

8 Feb 2011

France’s second largest fixed and mobile telecoms service provider SFR yesterday announced it will not be increasing its prices to existing mobile users after all, prompting larger rival France Telecom (FT) to mirror its move within hours. The country’s main players previously announced their intention to hike prices after the government implemented a rise in value added tax (VAT) on triple-play bundles. The operators’ latest moves show that competition is biting in the domestic market as the date-imposed VAT hike takes effect. SFR and FT previously confirmed their plans to pass on the rise to end-users but have now made a significant u-turn. Smaller rival Bouygues Telecom claims it is ‘absorbing’ the cost of a government-imposed tax hike which took effect on 1 January and will not pass on the rise to its customers. However, its DSL broadband users are set to see a small rise in their monthly connection fee.

According to TeleGeography’s GlobalComms Database, France has increased VAT to 19.6% from 5.5% on combined internet, TV and telephony packages, scrapping a reduced rate applied to the TV portion of triple-play bundles. SFR and FT earlier reported tariff increases to partially compensate for a VAT rise on triple-play services. SFR said it would raise retail broadband prices – by EUR2 for most monthly packages and by EUR1 for its entry-level option – and many of its mobile tariffs on 1 February 2011. FT meanwhile, said it will increase monthly tariffs by between EUR1 and EUR3 as of February 2011, although a company spokesperson said the tax increase will still cost it around EUR70 million a year (compared to around EUR316 million without any price raising). For its part, cableco Numericable’s prices are expected to rise by 3% on average as of August 2011.

France, Orange Group, SFR