Bouygues Telecom seeks €2.3B compensation from French state - Mobile World Live

Bouygues Telecom seeks €2.3B compensation from French state

09 DEC 2015

Bouygues Telecom claims a roaming agreement between Orange and newcomer Iliad caused it a financial loss of more than €2 billion, according to Les Echos.

The amount is owed to Bouygues Telecom by the French government because Arcep, the country’s telecoms regulator, did not properly supervise the 2G and 3G roaming agreement, it said.

Bouygues Telecom claimed the compensation in a letter to French Prime Minister Manuel Valls dated 4 December. It was signed by the operator’s chief executive Olivier Roussat.

The agreement enabled Iliad’s Free Mobile, which launched its service three years ago, to compete with rivals while it built its own network. The agreement runs until January 2018.

However, Bouygues claimed that agreement should have been framed more strictly by Arcep, effectively providing Free Mobile with an unfair advantage.

Without such an advantage, Free Mobile could not have competed so aggressively on price, which cost Bouygues Telecom financially, it said.

The letter listed seven shortcomings of the agreement that add up to the €2.3 billion figure. Most important is the loss of income and profit since the launch of Free Mobile in 2012 up to the present day, which is valued at €1.16 billion. In addition, the company added a further €527 million to reflect the 2015-18 period.

Loss of customers during 2012-15 cost €206 million and redundancies represent a further €309 million loss.

Bouygues Telecom also complained about a rise in the cost of acquiring new customers (€20 million), increased indebtedness (€33 million) and damage to its brand (€24 million).

The letter turns up the pressure on Arcep, which since the summer has had new powers to approve network sharing deals. The regulator is set to issue new guidelines in the coming weeks on how it will regulate such agreements.

Bouygues Telecom was earlier this week the subject of renewed takeover interest, this time from market leader Orange, amid government fears that consolidation will lead to jobs losses and a loss of investment.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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