French operators cut costs to compete with Free Mobile

France's telecom operators are rationalising costs ahead of an anticipated fall in margins expected from stronger competition with new entrant Free Mobile in January, Les Echos reports. The Christmas period will be hotly contested to attract and retain customers. This comes at the risk of high marketing and recruitment costs, putting pressure on margins. Another approach is to maximise profit as the market adjusts to a fourth mobile network. Orange, SFR and Bouygues Telecom's low cost-brands, Sosh, Red and B&You risk cannibalising their most profitable tariffs even before Free's pricing is revealed. In parallel, the three are increasing cost-reduction measures. Two operators, SFR and Bouygues, were far behind in third quarters subscriptions, SFR for fixed services, with only 29,000 triple-play boxes installed (three times fewer than its competitors) and Boygues in mobile, with only 69,000 net new mobile customers, compared to SFR's 161,000. Bouygues paying new customers' cancellation fees with their current operator. The three mobile operators are saving EUR 350 per contract by working less with independent resellers as they extended their own-store networks. In fixed services, SFR did not make the same financial efforts as Free, which included calls to Tunisia and Algeria in its unmetered VoIP service. Orange has just announced its Chrysalid cost-cutting programme. The company saw a slight EBITDA margin reduction to 35.4 percent of turnover, with lower margins expected through the rest of the year.