Vivendi’s SFR prepares ‘urgent’ review to tackle Iliad threat

30 Mar 2012

French media and telecoms group Vivendi is to implement an ‘urgent’ cost-cutting plan at its domestic mobile subsidiary SFR, as it looks to formulate a long-term strategy to counter the threat of cutthroat sector competition following the launch of fourth entrant, Iliad’s Free Mobile, at the start of this year. Reuters claims to have seen internal documents which highlight the parent’s concerns for France’s second largest cellco by subscribers, including a series of measures to be taken immediately, which were presented to labour union officials earlier this week. The meeting was reportedly chaired by Vivendi CEO Jean-Bernard Levy, who took over the helm of SFR on Monday after replacing its long-time chief executive. Plans under discussion could include trimming the number of temporary staff on its books and postponing a number of software projects and network ‘fixes’. Although no specific details or potential cost savings were divulged, Reuters writes that the document’s validity was confirmed by two union sources who were aware of the discussions held in the meeting. The unnamed union officials said that SFR management told them to ‘expect a broader strategy review and more details on cost cutting by this summer’.

Along with the other established mobile carriers in France, SFR is struggling to deal with the fall-out of Free Mobile’s launch of ultra-low cost mobile offers in mid-January. The newcomer’s entrance sparked an immediate and brutal price war that has forced Orange France, SFR and Bouygues Telecom to spend heavily to try to hold on to customers. Unofficial sources claim Free Mobile has already signed up between 1.5 million to 2.2 million customers – although Iliad will not divulge the actual figure until May. SFR alone said it had lost 200,000 customers by the end of February and is forecasting a drop in core profit of between 12%-15% this year as a result.

In a further strand of its rearguard action, SFR has used its Twitter feed to announce a series of new upgrades on its network – covering LTE, HSPA+, Wi-Fi and femtocells. The cellco intends to launch a commercial 4G/LTE network in Montpellier and Lyon in 2013, it said. Turning to HSPA+, SFR says that it currently has 98% population coverage with its ‘3G+’ branded service, and is claiming ‘the best coverage’ in the country. From April this year it aims to have 21.2Mbps HSPA coverage available across its entire 3G network, and has already deployed 42Mbps HSPA in 50 cities and urban areas. Previously, SFR had announced plans to have 42Mbps HSPA in Paris, Lyon and Marseilles in the first half of 2012.

France, Free Mobile (Iliad), SFR