French integrated operator Bouygues Telecom said it is facing “deep-seated changes on the mobile market”, as it reported weaker results for the first half of 2012.

The company has seen its home market shaken-up by the arrival of low-cost operator Free Mobile earlier this year, a development which has also impacted its rivals.

Bouygues said it is in the process of reducing the marketing and operating costs for its mobile unit, and it has begun consultation over a plan to shed 556 jobs.

Bouygues Telecom’s contribution to group net profit was EUR83 million, down 57 percent from EUR191 million in H1 2011, on sales of EUR2.68 billion, down 7 percent.

The company noted a steeper decline in sales during the second quarter, decreasing by 10 percent, due to the “introduction of new price plans and a smaller customer base in the mobile segment”. Fixed broadband sales were up 40 percent.

It also said that after a net loss of 379,000 mobile customers in the first quarter, the mobile market has “gradually settled down after a turbulent start to the year”. It mobile customer base fell by 71,000 in the second quarter, which was attributed to “the departure of prepaid customers” – it added 55,000 contract subscribers in the three months.

Vivendi, owner of rival French operator SFR, is currently undertaking a “strategic review” of its assets, as its telecoms operation has also faced challenges following the debut of Free.

Vivendi is expected to report its latest results this week.

Incumbent France Telecom said that its mobile market share had stabilised in the second quarter, with significantly fewer subscriber loses than in Q1.