France Telecom won't give in to price wars

Paris: France Telecom will not match the low-cost mobile offers recently launched by new operator Iliad because such aggressive pricing would be bad for network quality and innovation in the long-run, its chief executive said.

France Telecom's Chief Executive Stephane Richard criticised a race to the bottom on mobile prices.

"The real risk is that all the operators become ‘low-cost', meaning less investment, fewer services and jobs," he told France's Journal de Dimanche. "We will never match [Iliad's] prices because we offer security, reliability and innovation."

Defending turf

Richard's comments come at a turbulent time for Europe's third-largest telecom market where the existing players, former state-owned monopoly France Telecom, Vivendi's SFR, and Bouygues Telecom, are scrambling to defend their turf and profits from new arrival Iliad.

Iliad, which markets its services under the name Free, touched off a price war on January 10 with an offer of unlimited calls to France and most of Europe and the United States, unlimited texts, and 3 gigabytes of mobile data for €19.99 (Dh94.94) per month.

Since the price does not include a subsidised mobile phone, customers are not locked into long contracts.

France Telecom and Vivendi reacted by cutting some mobile prices but only on the offers sold without phone subsidies and contracts. Bouygues was the only operator to replicate the Free offer exactly.

To date, the incumbents are limiting their price cuts to budget options, which are sold only online and do not come with subsidised phones on long-term contracts.