• January 11th, 2012
  • Dafiq Hussein

A French billionaire, Xavier Niel, has embarked upon an aggressive price war with a number of telecoms companies in order to attempt to break their stranglehold over one the most expensive mobile phone markets in Europe. Mr Niel has gone up against France Telecom, Vivendi’s SFR and Bouygues Telecom.

The founder of Free Telecom has announced plans for a pricing strategy that will undercut his rivals. This announcement took place at an event in Paris where he launched his Free Mobile service.

By entering the market Mr Niel has promised that he will halve French mobile phone bills – a bold claim indeed! Yesterday, he stated that his service would only cost €19.99 per month, which equates to just £16.52 a month. Included in this price, customers will get unlimited texts, domestic calls and data, and free calls to 40 countries in Europe and North America. That is quite a package! One wonders whether the signal will however be a bit vague…

Nevertheless, to get all these services included in a France Telecom package, it would set customers back €49.40. Rivals and analysts have now however warned that Free Telecom’s parent company, Iliad, is still a small company and that there may be concerns and issues when trying to deal with the demand. Rivals also hit back warning that prospective Free Telecom customers should wait to see what conditions were attached to the mobile phone contracts they are offering.

A telecoms analyst has been commenting on Free’s plans, saying: “The price levels are much more aggressive than people had thought. If the incumbents rebased themselves entirely to Free then they could be in considerable financial difficulties given their heavy overheads.” Analysts are therefore not as optimistic as Mr Niel it seems.

Mr Neil has also announced that Free’s services would also include a cheaper deal where customers can pay €2 for 60 texts and 60 minutes of calls a month. However, those looking to make cheap calls abroad on such a price plan may find they will be charged a fortune. Furthermore, neither of these offers will include a handset, which is, in my opinion, quite a negative aspect if you are after one of the latest smart phones for example as they are reasonably expensive bits of kit.

Nonetheless, Free are upbeat and optimistic about their chances in the French telecoms market, anyone in the UK making cheap calls to France in order to speak with friends or relatives may indeed find that the recipient of the call is, in months and years to come, on a Free Telecom price plan!