May 29, 2018 / 10:54 AM / a month ago

France's Iliad ventures into Italy with low-price mobile offer

MILAN/PARIS (Reuters) - French telecoms operator Iliad (ILD.PA) launched its first foray outside France on Tuesday when it presented its new low-price mobile offer for Italy as it looks to offset weakness at home.

Guests waits before French telecoms operator Iliad the media conference in Milan, Italy, May 29, 2018. REUTERS/Stefano Rellandini

At a press conference in Milan, Iliad’s Italy head Benedetto Levi said the group would offer a mobile package costing 5.99 euros ($6.92) per month with a view to winning a “substantial” share of the Italian market.

Iliad’s arrival in Italy is expected to put pressure on the country’s biggest phone group Telecom Italia (TLIT.MI) and the other operators in the country, Vodafone (VOD.L) and Wind Tre. Each control around a third of the Italian mobile market.

“People are fed up with paying too much... hidden costs... we think there is a margin to get an important share of the market in a short period of time,” Levi said.

The offer, available to the first million clients, includes 30 gigabytes of traffic and unlimited voice minutes and text messaging, he said, adding he expected to reach the one million threshold fairly quickly. The package also includes 2 GB of data for roaming in Europe.

He declined to say what the offer would be once the one million threshold was breached.

“This is the cheapest quasi-unlimited 4G pricing in all developed countries,” Raymond James analyst Stephane Beyazian said in a note. “We are convinced that existing Italian players are now facing years of price wars and earnings erosion, eventually leading to consolidation.”

Entering the Italian telecoms market will be a major test for the French group, already pressured by fierce competition at home. Iliad missed quarterly revenue forecasts earlier this month, triggering a management rejig to try to revive growth.

Iliad attacked the French market in a similar way, offering mobile packages at cut-throat prices to the first 3 million customers. The price did not change afterwards.

MONEY BACK

The offer in France met with almost instant success thanks to prices 50 percent to 80 percent lower than those offered by established players, companies that Iliad founder Xavier Niel accused publicly of ripping off consumers.

Niel tweeted after Tuesday’s presentation that Levi was “the first leader to give Italians money back”.

The wide variety of packages on offer makes comparisons difficult. Telecom Italia’s Silver offer, for example, provides unlimited phone calls and 2 GB of internet traffic for 12 euros a month, according to its web site. That rises to 49 euros a month, under its Platinum offer, for unlimited calls and internet traffic.

Levi declined to give any financial details other than to say the company expects to reach break-even in Italy at the core earnings level with a market share of less than 10 percent.

He said the company’s plans were not affected by political turmoil in Italy, which is heading for new elections after an inconclusive vote in March.

Two sources familiar with Iliad’s plans told Reuters last year the company believes it can win 10 percent of the Italian mobile market in the first two to three years and ultimately reach 25 percent.

The company is expected to have 100 retail sites in Italy, with a few flagship stores in the main cities - Rome, Milan and Turin, another source close to the matter said.

Customers can also sign up with Iliad via machines that will be set up in shopping malls or online.

Iliad did not rule out entering the fixed-line business in Italy in future, Levi said. The group will spend more than one billion euros in Italy in coming years to build its own infrastructure and market its services, he added.

Additional reporting by Mathieu Rosemain, writing by Stephen Jewkes and Agnieszka Flak; Editing by Adrian Croft

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