Disruptive French telco Iliad has reported 6.9% growth in consolidated revenues for the three months to March 31, but depressed device sales took some of the shine off.
While sales of fixed and mobile devices only brought in €45 million across the quarter, a 38.6% decrease in year-on-year sales would have bruised some egos. Reporting a 6.9% increase in consolidated revenues would certainly keep investors happy, but without the dent to device sales, Iliad executives would have been boasting about a 9.1% increase.
Still, few will complain with the performance of the business over the last three months, as share price increased 5.3% (12.30pm, May 12).
“All crises are revealing,” said CEO Thomas Reynaud. “And for our Group, this one has brought out the best in us, clearly showing the agility of our organization and the strength of our fundamentals.
“I have been particularly impressed by the commitment and drive of our employees who are working so hard to keep people connected. The crisis has strengthened the incredible spirit of solidarity which has always characterized Free.”
|Iliad Group financial performance for three months to March 31 (Euro (€), millions)|
Source: Iliad Investor Relations
As with many other telcos in Europe, Iliad is now searching for value outside its core competencies. This can be broken down to two main ventures, both of which are looking quite healthy.
Firstly, in pushing into the convergence business model in France with a FTTH proposition, Iliad is evolving to much more than a disruptive nuisance. The broadband network has now passed 15 million homes across France, adding 215,000 subscribers this quarter. The subscriber base now stands at 1.97 million, with the objective to have 4.5 million by the end of 2024.
The second venture is the launch of its own mobile network in Italy. This has proven to be a very successful bet, with Iliad providing plenty of disruption to the status quo. Revenues are growing in tough circumstances, while the team now has 5.8 million subscribers and market share of roughly 7.3%. The network currently has 2,936 active mobile sites, though this should be 5,000 by the end of the year and more than 10,000 by the end of 2024.
Although the COVID-19 pandemic is currently having a limited impact on the financial performance of Iliad, the team has warned of the operational consequence and the knock-on effect this would have. Like most of the telecoms industry, COVID-19 is not having a material impact, but the longer the lockdown persists, the more difficult it becomes to realise new revenues promised by vast expenditure.