Xavier Niel is amassing assets in Europe (and beyond) and is ready to disrupt the mobile markets. Not in the way that other so-called challengers disrupt, but in a truly agressive way. With assets potentially up for sale in several countries, investors need to take note. His latest chosen battleground: Ireland.
Xavier Niel, the founder of France's Iliad Group, has expanded into a number of other countries, under various brand names: France (Free), Italy (Iliad), Switzerland (Salt), Ireland (Eir), Monaco (Monaco Telecom), Telecom Comores, Singapore (MyRepublic) and Senegal (Free). Ownership varies, with stakes held mostly via his investment vehicle NJJ Holding. He also (co-) owns companies in other sectors, such as the newspaper Le Monde and multiple start-ups.
Strategy: disrupt
His strategy can be described in several different ways. He consistently approaches the market as a consumer, aiming for true user friendliness (much like Steve Jobs). He works at making organisations lean and mean, and products need to be innovative (such as the Free set-top boxes) and prices low (including international rates, showing that Niel must be a tough negotiator). He focuses on mobile and has a pragmatic approach to the fixed-line market (compare FTTH in France to the incumbent network in Ireland and wholesale access to third-party fibre in Switzerland and Italy).
What characterises Niel's approach most is his aggressive pricing on the mobile market. His entry on the Italian market had long been foreshadowed, but upon arrival he still managed to take the mobile incumbents (TIM, Vodafone, Wind Tre) by surprise with ultra low tariffs. His first offer: EUR 6 per month for unlimited minutes and texts, plus 30 GB. The offer was for Iliad Italia's first 1 million customers, and they will enjoy the price for life. Back in 2012, Free's entry on the French mobile market was fashioned in a similar manner (EUR 20 per month for unlimited minutes and texts plus 3 GB data), and the company quickly amassed market share.
Battleground Ireland
Next in line: Ireland. The Iliad Group and NJJ control around two-thirds of the equity in Eir since April 2018. Eir has just launched the SIM-only sub-brand GoMo, offering unlimited minutes, texts and data (with fair-use policies) for just EUR 10 per month. The first 100,000 subscribers may keep their subscription for life. The pricing is spectacularly below that of the unsuspecting incumbents (3 Ireland and Vodafone).
We note that Eir is the smallest of Ireland's three MNOs. And more importantly, Ireland is among the most expensive countries for mobile services in Europe (alongside Greece, Spain and Portugal), according to our latest EU Mobile Benchmark report. One current example: the 3 Ireland SIM-only Flex Max subscription offers a similar package, but at EUR 30 per month.
Investors will be alarmed. With several operators potentially up for sale around Europe (such as T-Mobile Netherlands, O2 UK, Bouygues Telecom in France, T-Mobile Poland, Telekom Romania), ARPUs could be coming down before they go up.
