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Free Mobile's successful entry in France is driving structural changes in the market

Samer Mourad Principal, Consulting

Free Mobile has acquired a market share of about 4% of subscribers in France in less than three months, making it one of the fastest-growing new entrants.

The French mobile market has experienced significant growth in the first quarter of 2012, adding 854 000 subscribers. By the end of March 2012, the mobile penetration rate had reached 106% of the population and the number of mobile subscribers had reached 66.8 million (see Figure 1).

For more than a decade, the increase in mobile subscribers in France has always been modest during the first quarter of the year. One would need to go back to the first quarter of 2001 to see a higher subscriber growth than the 854 000 added in the first quarter of 2012.

Figure 1: Mobile subscribers and revenue, France, 1Q 2010–1Q 2012 [Source: Analysys Mason, ARCEP, 2012]1

Evolution of the French mobile market

1 Figures for subscribers exclude French overseas territories.

The number of churners also increased significantly following Free Mobile's entry in the French mobile market on 10 January 2012. The churn rates in the first quarter of 2012 were around 8% and 18% for postpaid and prepaid subscribers, respectively. By comparison, these rates were around 3–5% and 11–14%, respectively, during the previous eight quarters. Free Mobile is one of the fastest-growing new entrants, acquiring a market share of about 4% of subscribers in less than three months. As a result, France's established operators have all lost subscribers to Free Mobile during the first quarter of 2012 (see Figure 2).

Figure 2: Subscribers and market share by operator, France, 4Q 2011 and 1Q 2012 [Source: Analysys Mason, ARCEP, 2012]



Subscriber growth rate, 4Q 2011 to 1Q 2012

Net additions, 1Q 2012 (million)

Market share
(percentage of subscribers) 


4Q 2011

1Q 2012

4Q 2011

1Q 2012















Bouygues Telecom














Free Mobile








One might expect the incumbent operator (or the operator with the greatest market share) to suffer the most from the arrival of a fourth operator. However, Bouygues and SFR were affected the most by Free's market entry in France. In addition – again rather unexpectedly – all the MVNOs' subscriber bases have only suffered modest declines, thanks to their positioning in the market.

Following their immediate competitive responses (mainly reducing their prices), established operators are now reviewing their portfolios and providing simpler offers with the following characteristics.

  • Voice: Simpler offers that focus on low voice usage (for example, 1–2 hours) and high voice usage (that is, unlimited).
  • SMS: Unlimited offers.
  • Data: The end of unlimited offers and a shift of focus towards pay-per-volume and pay-per-speed offers.
  • Terminal subsidies: SIM-only offers and contracts with a duration of 24 months.

We can expect interesting times ahead in the French mobile market, as mobile operators face the challenge of finding ways to stop the decline in their revenue, which had already started in the fourth quarter of 2010. Market revenue decreased by 2.5% in 2011 to EUR19 billion.

Analysys Mason has worked on a variety of projects to help operators in developed and emerging markets to define growth strategies through the identification of new revenue streams and cost optimisation.