Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.

Iliad calls on courts to block Wind Tre and Fastweb sharing deal

Wind Tre and Fastweb have been attempting to take network sharing in Italy to a new level in recent months, but once again, Iliad has its objections.

While there will always be objections to network sharing agreements from some corners of the telecoms industry, Iliad is making a habit of it. As the only telco without a partnership to share communications infrastructure, the Italian disruptor is seemingly attempting to make sure it isn’t left on its lonesome.

According to Reuters, Iliad has submitted documents to an Italian court seemingly in an attempt to obstruct the partnership between Wind Tre and Fastweb. A first hearing will take place on February 12 to access whether Iliad should have access to the deed, though this follows objections made by to Italian courts for a similar deal between Vodafone and Telcom Italia.

The agreement between Wind Tre and Fastweb was originally signed in June 2019. The pair would deploy a shared 5G radio access and back-hauling network across Italy, and also Wind Tre and Fastweb macro and small cells, connected through dark fibre from Fastweb. The aim is to cover 90% of the Italian population with 5G connectivity by 2026.

Wind Tre will also provide Fastweb roaming services on its existing mobile network, while Fastweb will provide Wind Tre wholesale access to its FTTH and FTTC network. It is a very complementary deal for the pair, with the opportunity to realise genuine cost savings when looking forward at 5G.

However, Iliad seems to want to put a stopper on the partnership before it gets going in earnest. This is not the first time it has rejected the network sharing momentum in the country either.

The European Commission is also investigating whether plans to merge Telecom Italia and Vodafone Italia tower assets into a single operating company violate antitrust laws. Iliad has reportedly complained about this deal to regulators also. A decision on this dispute is set to be given on February 21.

The tie-up between Telecom Italia and Vodafone Italia is built along similar lines to the Wind Tre and Fastweb partnership. Firstly, the tower assets of both companies would be merged within telco neutral infrastructure company INWIT, with each telco taking a 37.5% stake. The next stage would be sharing active infrastructure, testing first on the existing 4G network with the intentions of realising efficiencies on 5G deployment plans.

But perhaps the most interesting aspect of both these partnerships is the validation of network slicing. While other agreements have focused on the passive infrastructure, this extends the sharing model to active equipment. Both of these parties would effectively be running virtualised networks over the shared infrastructure, a major validation of network slicing if it works.

This is the sort of partnership which telcos will be very keen to see work, while network infrastructure vendors will pray to see fail. Validation of network slicing could revolutionise the way in which rural networks are deployed and managed, allowing consolidation of CAPEX between national telcos through a single point for both passive and active infrastructure. It could drastically reduce overbuild and save the industry billions.

“Completion of this transaction is key for the country’s infrastructure and technological development and will enable us to further accelerate the deployment of 5G, with Italy already among the countries taking a lead in trials of this new technology,” TIM CEO Luigi Gubitosi said at the time.

Despite the clear benefits of network sharing agreements, there are still concerns in the industry. Regulators are worried over the impact of competition, most notably as to whether non-participants in the sharing trusts will be squeezed out of the market. One means to counter this would be to have an independent or nationalised wholesale party, with all mobile service providers effectively becoming MVNOs, but it is highly unlikely telcos would want to move in this direction, effectively diluting their influence on the industry.

That said, the industry is gradually heading that direction as telcos search for funds to fuel the 5G expansion.

Infrastructure companies such as Cellnex are hoovering up passive infrastructure assets across the European continent, while infrastructure investment funds are also seeking out deals. In both of these instances, the acquirers recognise the telcos need money desperately; there are good value acquisitions to be made for those who have a long-term view on ROI in the passive infrastructure game.

The next step is network slicing, which will be taken forward during with 3GPP’s Release 16. Should network slicing be validated, it will only be a matter of time before owners of passive infrastructure start to put their own active infrastructure on the assets and sell slices to the mobile service providers. It certainly won’t happen overnight, but it is a very feasible outcome.

The telecoms industry is at somewhat of a crossroads. 5G is on the horizon, and the realities of funding this expansion are hitting home. The telcos have seen revenues eroded over the last decade but are now being asked to underwrite the most expensive infrastructure project to date. The equation is not balanced, so new ideas are needed.

Italy is a country which is perhaps under more pressure than most. Aside from the drastic reduction in pricing thanks to the introduction of the disruptive Iliad, few spectrum auctions have pushed the financial capabilities of telcos as much as the Italian’s. This is a market which is under pressure.

Network sharing agreements, both passive and active infrastructure, are interesting ways to generate more with less, though it does appear Iliad will attempt to derail progress. As the mobile player in the country without a deal, it does appear the firm fears being squeezed out of the market.

Interestingly enough, the question remains whether authorities will care? If Fastweb is to introduce its own mobile products, Italy would have four mobile service providers fuelled by the efficiencies of network sharing agreements. This might be deemed sufficient competition in the market, therefore the needs of Iliad might be sacrificed in pursuit of benefits for the greater good.

Iliad joins the tower divestment trend

Iliad has confirmed the sale of its tower businesses in France and Italy to European infrastructure giant Cellnex.

As part of the deal, a 70% stake of the tower infrastructure unit in France will be sold to Cellnex, while 100% of the Italian tower unit will be off-loaded. Heading the other direction will be €2 billion, a useful amount of cash as the 5G spending spree looms large on the horizon for Iliad.

Although this deal has been in the works for some time, it demonstrates an increasingly popular trend around the world. Telcos need cash for 5G and fibre upgrades, and tower businesses have been deemed as surplus assets. Vodafone, Reliance Jio, Telefonica and Altice Portugal are all companies who are using the passive infrastructure assets as a means to raise cash, and we suspect the trend will become more apparent through 2020.

What remains to be seen is whether the divestment in fixed, dependable assets will be in the future? Without owning the passive infrastructure, these telcos become tenants. Could this be considered a short-sighted move?

Iliad is a firm which needs to ease some pressure on executives and perhaps this is one way in which is can achieve this. Share price has marginally increased off the back of this announcement, though it is still 50% down on the price in May 2017. The company is also harbouring considerable debt, which needs to be addressed sooner rather than later.

For Cellnex, this is just business as usual. The sites acquired from Iliad adds to the 1,500 purchased from Orange in Spain earlier this month, as the infrastructure giant benefits from the telcos woes. Owning passive infrastructure might not be the most exciting business in the world, but it is very profitable.

Passive infrastructure is a long-term investment which will never stop paying off (highly unlikely anyway). Radio antennae will have to be placed somewhere after all, and networks are only going to become denser, increasing the demand for passive infrastructure. While the wallets are strained for the telcos, it could prove to be a very profitable period for the infrastructure companies who will accept the valuable assets without hesitation.

Iliad confirms Nokia for France and Italy 5G push

In a much needed win for Nokia, the Finnish network vendor will be the central cog to the Iliad 5G deployment strategy across France and Italy.

In recent months, Nokia has at times looked like a bit of a suspect partner to work alongside, though that doesn’t seem to bother Iliad that much. In South Korea during April, unnamed officials said all three operators were told to expect delays in receiving 5G base stations, while Sprint in US it was also suggested delays were down to the Finnish vendor’s tardiness.

CEO Rajeev Suri acknowledged the delays, suggesting they were only ‘short-term’ issues, in April’s earnings call, though the chief also tried to shift the blame onto ‘instabilities’ in consumer chipsets. The fact that these issues were not reported by Nokia’s competitors says more than Suri would like.

However, Iliad is an important win for the vendor.

After partnering with Iliad for both its 3G and 4G networks, Nokia would have been confident in retaining the relationship, though it has been losing out over the last 12-18 months. The telco is currently planning its 5G roadmap, with the first base stations set to go live in 2020.

This is somewhat of an important juncture for the telco, which has been licking its own battle wounds over the last couple of financial periods. Despite taking the French market by storm in the early years, Iliad has been suffering at the hands of competition as rivals stepping their own promotional games, chasing down Iliad during the race to the bottom.

The last financial period looked much more promising, though it still has some work to do to repair the damage. In May, Iliad reported an increase in mobile service revenues in France of 2.3%, however the total number of subscribers decreased by 50,000, down to 13.4 million.

The damage was most notable across 2018. Across the first half, Iliad was beaten at its own game, being undercut by rivals and being forced into announced a reduction in profit forecasts. Q1 in 2018 saw churn of 200,000 mobile subscriptions, the first net decline since the introduction of Iliad in 2012. The broadband business suffered the same fate, resulting in roughly a 40% share price crash across the whole of 2018.

Looking at the most recent numbers, there is a bit more stability and perhaps this is where the greatest enthusiasm for an aggressive 5G rollout will emerge from. In both France and Italy, Iliad has an opportunity to generate momentum through the new connectivity euphoria. This is an era which, once again, looks perfect for aggressive pricing and the first to scale 5G across a nation will reap the profits.

The opportunity for Iliad to get back on track is certainly there, it just needs the right partner to help facilitate the rollout and get the company back on track in the 5G world. Iliad executives will be hoping Nokia’s troubles are in the rear-view mirror.

Iliad flogs a bunch of towers to reduce debt pile

French telecoms conglomerate Iliad is selling most of its tower assets in France and Italy to Cellnex for €2 billion.

Iliad has debts in excess of €4 billion and seems to think paying some of them off might be an idea. Fellow French giant Altice has recently had to do a bunch of debt refinancing but it apparently had to pay a premium to do so. European telcos are increasingly inclined to sell and lease back assets like towers to free up cash for 5G investments and that sort of thing.

In France Iliad will be selling 70% of the company that manages 5,700 cell sites to Spanish infrastructure specialist Cellnex, while in Italy it’s offloading the whole company that takes care of 2,200 sites. Right now the whole process is at the ‘exclusive negotiations’ stage but that seems like a formality.

“This transaction is part of a long term industrial strategy allowing us to accelerate rollout of our 4G and 5G networks and to increase Iliad’s investment leeway,” said Thomas Reynaud, Iliad’s CEO. “This transaction supports the group’s new growth and innovation cycle. It enables more efficient infrastructure roll-outs in the future while meeting the challenges of further increasing territory coverage.”

On top of this Cellnext is acquiring 90% of the company that owns 2,800 sites in Switzerland from Salt.

“[These deals] allow us not only to reinforce our position as the main independent infrastructure operator in France, but also to decisively strengthen our platform in Italy, a key a strategic market, and significantly expand our foothold in Switzerland,” said Cellnex CEO Tobias Martinez.

“Furthermore, Cellnex strengthens its role as a neutral host by having two major anchor tenants within its sites network. The combined effect of these agreements is an increase of our current  portfolio across six European countries by more than 50% –to 45,000 sites in total. The latter allows us to properly assess the very quantum leap nature of these deals.

“A greater density and capillarity of our sites networks means a differential added value that enhances Cellnex’s role as a natural partner for all mobile operators in Europe, meeting their densification needs in the current 4G roll-out while accelerating that of 5G.”

Mobile data could get even costlier after T-Mobile and Sprint merger

Report by Rewheel showed Americans already have the most expensive mobile data among all four-operator markets. A move to reduce the number of them could make it worse.

According to the 2H2018 release of its mobile data price monitoring report, the Finland-based research firm Rewheel focused on the US market, which is likely to see the proposed merger of T-Mobile and Sprint closing in the first half of 2019. The report showed that among the 41 countries it analysed (OECD34 + EU28, with seven EU countries not being OECD members), the median gigabyte price of a smartphone deal (nominal price + VAT) in the US is among the highest. Rewheel told Telecoms.com that Greece and Cyprus topped the table, followed by Korea and Canada. The median gigabyte price of a mobile broadband deal in the US is the most expensive among all.

Rewheel mobile data prices

The research compared two groups of markets, those with effectively four mobile operators and those with three. The mobile data price in the four-MNO markets is shown to be about half as expensive as the three-MNO markets, but the US is an outlier. The median US mobile data price per gigabyte is four times higher than the EU four-MNO markets, and sixteen times higher than the big EU markets with four MNOs.

To look at it from another angle, a 30€ monthly deal comes with unlimited data plans (and at least 1000-minute talk time) on smartphones in 13 markets (Korea, Mexico, and 11 EU countries) but can only buy 6GB in the US. Similarly, a 30€ monthly wireless broadband deal can buy unlimited data in 11 EU markets but can only get 40GB in the US.

The effect of the “magic four” driving price down is most telling in Italy: after Iliad launched its mobile service, the price per gigabyte fell by 70% in half a year. On the other hand, the research showed data price stopped falling in the Dutch market after the announced merger of T-Mobile and Tele2, and the price drop has visibly slowed down in Austria after it became a three-MNO market.

The researcher therefore argued that the Americans are already paying more than other four-MNO market users, it could get even worse if the US market became a three-horse race. However we can see in the data that North America is generally more expensive, with Canada, a four-MNO market, is as expensive as the US. Admittedly though, Freedom Mobile is still weak.

An additional angle to examine data price is to look at what is offered to contract users vs. prepaid users, which is excluded from the Rewheel research. The discrepancy is probably most obvious in Africa. According to the analysis published by the research firm Ovum, South Africa’s mobile data is among the highest in the world. This is largely down to the high prices PAYG users face when buying smaller data packages. Rob Shuter, the CEO of MTN, corroborated with his comments at the recent AfricaCom that, despite the average price per gigabyte for postpaid users in Africa is comparable to that of the US (around $3), data prices for prepaid users are prohibitive. The large majority of mobile users in Africa and other emerging markets are on prepaid services.

Iliad Italy hits 2.2 million subscribers in Q3 2018

French telecoms group Iliad has released its Q3 2018 numbers and they reveal continued strong subscriber growth from its new Italian business.

By the end of September Iliad Italy had 2.23 million subscribers, up from a million in mid July. This means the subscriber growth rate slowed a bit, but not much, and there was still plenty of momentum. On top of that Iliad Italy contributed €46 million to group revenues in Q3, having chipped in less than ten prior to that, so Iliad seems to be doing a decent job of monetising those subscribers already.

Iliad Q3 2018

Here’s what Iliad had to say in its quarterly report about its Italian performance:

  • Outstanding commercial success: The Group had over 2.23 million subscribers7 in Italy at end-September 2018, just four months after launching its Italian mobile business. By way of comparison, the Group signed up 2.6 million subscribers in three months when it launched Free Mobile in France.
  • A successful upscaling strategy: The Group successfully introduced two consecutive price increases and enriched its offerings, while pursuing its strong pace of net adds. At September 30, 2018, Iliad’s original offer in Italy was invoiced at €7.99/month, including unlimited calls and texts, as well as 50 GB of 4G/4G+ and 4GB roaming allowance.
  • A recognized brand, with the Iliad brand now widely recognized in Italy: At end-September, four out of five Italians knew the Iliad brand, compared with one out of ten before the launch.
  • Third-quarter 2018 revenues generated by Iliad’s Italian operations totaling €46 million, already representing almost 4% of the Group’s total revenues: This amount comprises (i) the subscription cost (€5.99/month, €6.99/month or €7.99/month depending on the offer) and (ii) SIM card activations carried out during the period, at a price of €9.99 per SIM card.

Over in France revenues declined by 2%, with landline operations and sales of mobile handsets cancelling out growth in mobile subscriber revenues. Iliad just blamed competition for the landline situation and lauded an improvement in subscriber mix (i.e. more postpaid) for the mobile improvement. The main reason for the handset revenue decline was a ‘stricter commercial strategy for rental offers’.

Iliad threatens Italy with legal action over 5G spectrum extensions

Iliad is reportedly on the verge of taking Italian watchdog Agcom to court over licence extensions in the valuable 3.5 GHz band which were offered to various WiMAX operators back in 2008.

After having to defend the almost laughable prices operators will be having to fork out for 5G spectrum, Agcom is now under-fire for considering cut-price extensions for four companies in the 3.5 GHz range. With Iliad Italia forking out €1.2 billion 20 MHz of 3.7 GHz and 10 MHz in the 700 MHz band, you can see why the team has issue with the extensions being offered.

The licenses in the 5G-applicable frequencies were initially granted to Linkem, Tiscali, Go Internet and Mandarin back in 2008, with the option of a six-year extension once the initial license expires in 2023. According to Corriere delle Comunicazioni, all of Italy’s operators are irked at the situation, but Iliad is leading the charge with the threat of taking the regulator to regional courts to dispute the decision.

What is worth noting is this is not taking any of the spoils away from the victors of the expensive auction. Not all of the valuable assets in the 3.4-3.6 GHz frequency range were released for auction, with the remaining licenses being used to honour the extensions. Whether these extensions will be allowed to stand is unknown for the moment, as aside from Iliad protests, Italian Senators have requested an investigation by Ministry of Development boss Luigi Di Maio.

One company which will certainly benefit from the saga is Fastweb, a Swisscom subsidiary which primarily offer broadband services in Italy. Fastweb came to a €150 million wholesale agreement with the cash-strapped Tiscali in 2016 for 40 MHz in the 3.5 GHz band, an absolute steal when you compare to the inflated prices for 5G-capable spectrum in the recent auction. Fastweb might be looking pretty now, but the convergence plans will certainly come under-threat with Iliad legal ambitions.

For those who are of a logical disposition, and considering the inflated figures being discussed in the recent Italian auction, one would think the Italian government would decide against renewing the extensions and offer the available spectrum in an auction. Legacy-agreements are certainly something to consider, though the landscape has seemingly evolved enough over the last decade suggest these extensions are no longer viable.

This certainly will not be the only legacy-agreement in place around the world which will come back to bite, though the saga does not add credibility to the Italian government’s ability to operate in a fair and just manner.

Italy trousers €2 billion in pre-5G 700 MHz auction

A spectrum action in Italy covering a bunch of bands has concluded its first phase with prices roughly in line with expectations.

Bidding is underway on spectrum in the 700 MHz, 3.7 GHz and 26 GHz bands, but only the former has concluded. The starting price was €338 million per 2×5 MHz block of 700 MHz spectrum and TIM, Vodafone and Iliad all got 2×10 paired. Iliad apparently didn’t need to bid but the other two don’t seem to have craven the price up much as you can see from the table below.

Wind didn’t get any 700 MHz spectrum, but seems to be pretty keen on some 3.7 GHz action, having bid €338.5 mil for an apparently pre-specified 80 MHz block of it. TIM is leading the chase for the only other 80 MHz chunk, with Iliad apparently content with 20 GHz and Wind the front runner for the other 20 MHz. A contiguous 100 MHz block of 3.7 GHz would come in handy but it seems likely that Wind is bidding against Vodafone for that bit.

TIM issued an announcement gloating about the fact that it now has spectrum in every sub-1 GHz band available. “This important result increases the frequencies available to TIM which are essential for the 5G services,” said the TIM statement. “The new spectrum will be added to the 20+20 MHz that TIM has in the low frequency 800 MHz and 900 MHz bands, which already ensure the supply of UBB services to more than 98% of the population.”

It seems sensible to have a great big auction of a bunch of different spectrum, given the imminence of 5G in the wild. Iliad has been guaranteed a nice lot of 700 MHz, which will help a lot with coverage, but it might want to have another bid for that bigger block of 3.7 GHz if it want to be a significant 5G player. You can read further analysis on this at Light Reading here.

Italy 700 MHz auction table

Iliad share price continues to tumble as competition heats up

The share price of French telecoms wild-child Iliad has continued to tumble as lukewarm results fail to impress investors looking for a spark in the broadband business.

Since the turn of the year, the erosion of share price has been quite noticeable. Some companies might be able to accept a small blip in performance, but a 45% decline over the last ninth months will certainly have the executive team shifting uncomfortably. Revenues remained relatively stable, however losing 70,000 subscribers in mobile and 47,000 in broadband over the first half of the year is a worrying trend.

Looking specifically at the financial side of the results, total revenues stood at €2.4 billion, a minor decrease on the same six month period of 2017, with mobile rising 2.4% to just over €1 billion and broadband dropping 2.2% to $1.3 billion. Italy brought in €9 million, though the team has been boasting of reaching 1.5 million subscriptions in early August. This seems to be one of the few bright spots in the six months.

Having kicked off the race to the bottom, causing chaos for the incumbent mobile providers during 2012, Iliad seems to be getting a taste of its own medicine with a competitive market being blamed for the tepid performance. Unfortunately for the telco, the misery is not being equally shared as rivals Orange , SFR and Bouygues Telecom all gained subscribers over the same period. Stability in the revenue column might be an uptick, but investors should be concerned about the first drop in mobile subscriptions since the 2012 launch, and a cash-intensive fibre business which is not hitting the marks.

That said, Iliad caused chaos once and has the potential to do it again.

The management team has excepted this performance is not good enough, though various new initiatives will look to return the business to a new growth cycle. On the mobile side of things, new tariffs have been introduced to diversify the subscriber mix, while incentives have been put in place to upgrade users to the more lucrative 4G contracts. 4G subscriptions did increase by 200,000 over the period, and the team are targeting a 25% market share, though have declined to put any deadlines on the objective. Perhaps this is one of the reasons for a lack of confidence in the business, no commitment to top-line objectives.

In the broadband business, a new promotional campaign with competitive prices has been introduced, as well as a play to catch attention through TV services. The content side is yet to be launched, and it will be interesting to see whether Iliad takes the value add or revenue generation approach to content. We suspect with subscribers numbers going south, a value add proposition would be a much more sensible approach to stemming the consistent flow of customers heading towards the exit.