Competition strategies used by France Telecom may change a little now that the national company has become a private entity, researchers say.
“As a private company, they have to be more accountable for their operations, and there will be more pressure to be competitive,” said Bukasa Tshilombo of Northern Business Information in New York.
In addition to being France’s monopoly landline operator and dominant cellular operator with a million subscribers, France Telecom also is the fourth-largest telecommunications carrier in the world.
The status of France Telecom officially changed from government entity to private corporation on July 27; the government, however, continues to be the owner. In preparation for the possible issuance of stock, France Telecom has hired Banque Nationale de Paris, Lazard Freres and Merrill Lynch as financial advisers for the equity sale.
Competitor Bouygues Telecom said it’s a step in the right direction, but they would like to see France Telecom’s Mobiles division completely separated from the landline giant.
“Right now, they don’t have to include their costs or expenses in any accounts,” Bouygues said. “It’s all internal. If they make a public offering, those figures will be disclosed and there can be a correct evaluation of the real costs.”
If that happens, carriers could begin operating on the same level, Bouygues said. Genuine competition may be one way to grow a market that is mature but hasn’t advanced, analysts say.
The cellular penetration rate for France is a little over 2 percent, despite the introduction of analog cellular in 1985; nearby countries such as Germany have penetration rates around 8 percent.
“The market has never really taken off because France Telecom Mobiles has been able to prevent effective competition through its dominant position in the French telecommunications market,” Northern Business said in its analysis of the French market.
France Telecom Mobiles operates two networks, an analog and a Global System for Mobile communications digital system.
France Telecom’s first wireless competitor, Societe Francaise du Radiotelephone (SFR), entered the market in 1989. SFR now has more than 600,000 subscribers and two networks, one analog and one GSM.
Bouygues, the third player, entered the market on May 13 with a system operating at 1800 MHz; Bouygues claims more than 20,000 subscribers.
Prospects for the French market are good, Northern Business reports. This year, the customer base is expected to increase by about 860,000 subscribers, and grow to more than 2 million users by year end. Bouygues is expected to have about 2.7 percent of the subscriber base by the end of 1996.
But the lion’s share of future French customers will probably be attracted to GSM systems, likely because GSM roaming is possible with so many other European networks.
When Bouygues was awarded its license in 1994, it came with an exclusivity clause-no further licenses would be granted for the five major cities until 1999.
A new operator entering the market in 1999 or later will probably have to apply the kind of creative marketing now being used in the United States, where numerous new operators are jumping into markets with entrenched competitors, Tshilombo said.
