France Telecom’s Orange has reacted to the launch of new low-cost rival Free Mobile in its home market this week by slashing tariffs at its own low-cost brand, Sosh.

The market leader said yesterday that Sosh would next month launch three new tariffs starting at just EUR9.90 per month for both existing and new customers. The lowest tariff offers 120 minutes of calls, unlimited SMS and MMS messaging, Wi-Fi access and “unlimited access to Facebook and Twitter.” Other plans are priced at EUR14.90 and EUR24.90 (the latter reduced from EUR39.90).

Iliad’s Free Mobile made its much-anticipated launch into the French market earlier this week, offering a EUR19.99 unlimited bundle of SMS/MMS, voice and mobile/Wi-Fi data (with 3GB mobile data limit), discounted to EUR15.99 for users of its Freebox broadband services. It will also offer a 1 hour of voice and 60 SMS bundle for just EUR2, which is free to Freebox users.

According to Wireless Intelligence figures, France currently has 63.35 million subscribers, with Orange dominating with a 46.6 percent market share. Number two operator SFR has a 35.5 percent share, with the remaining 17.9 percent held by Bouygues. Both SFR and Bouygues are also expected to lower prices in response to the threat from Free Mobile.

Thomas Reynaud, CFO of the new player, said earlier this week that the company can break-even on mobile services with a 4-5 percent market share.