So the French mobile market will continue with four network operators, with Bouygues in third place behind a strengthened SFR. As Free is not getting any extra spectrum from Bouygues, it will have to continue building its own mobile network.
The main question now is whether Bouygues will manage to stay alive in a French market where price competition is causing a significant decline in mobile service revenues. With the EU now expected to end roaming surcharges at the end of 2015, the mobile operators will lose a small source of service revenues. Bouygues and Free, both of which are only active in France, will have particular difficulty absorbing this cost. Orange has its own international network, while SFR has a partnership with Vodafone. Free is already anticipating the changes with the addition of free roaming for a certain number of days a year for its mobile customers, and Bouygues will need to catch up quickly.
Numericable is likely to use the addition of SFR to step up competition in quad-play offers, a segment which remains under-developed in the French market. Mobile is usually offered at lower prices in a quad-play than as a stand-alone service, again putting pressure on operators' total revenues. Bouygues is already active in the quad-play market, but it will struggle to sustain any further price pressure, after already cutting its prices for triple-play plans recently.
Given the relentless competition on price in France, Bouygues may soon be forced to consider other options for cooperation or consolidation. It already has a mobile network-sharing agreement with SFR, but the terms of this may be subject to change given SFR's new ownership. Numericable is strengthened by its stock market listing and owner Altice's willingness to take on debt to finance network expansion, making the company less in need of infrastructure sharing. A Bouygues deal with Orange would be impossible in the eyes of regulators, making Free the most likely candidate for cooperation or even a merger. Based on end-2013 numbers, a Free/Bouygues combination would account for around a quarter of mobile customers in France – still the smallest player, but significantly bigger than on their own.
