- 1 Definition / Scope
- 2 Market Overview
- 3 Key Metrics
- 4 Market Risks
- 5 Top Market Opportunities
- 6 Market Drivers
- 7 Market Restraints
- 8 Industry Challenges
- 9 Technology Trends
- 10 Pricing Trends
- 11 Regulatory Trends
- 12 Market Size and Forecast
- 13 Market Outlook
- 14 Competitive Landscape
- 15 Key Market Players
- 16 Strategic Conclusion
- 17 Further Reading
Definition / Scope
The Telecom sector in France is a well-developed and mature market. The sector includes mobile phones as well as broadband connections. Apart from these, the sector also includes certain allied services such as servers and telecom-related infrastructure. France is one of the top performing markets in Western Europe, and mobile penetration is extremely high. It stands at 78% as of 2017. The sector has been investing in technology and infrastructure in order to achieve better growth.
As of 2017, there were approximately 75.5 million mobile subscribers in the country. In terms of broadband, the number of subscribers has been growing well. As of 2017, 42.8% of the country's households are connected via broadband. France has one of Europe’s largest subscriber bases. Investment in telecom infrastructure has been increasing year by year. As of 2017, the telecom operators in the country had a combined capex of USD11.3 billion, according to telecom regulator Arcep.
The market is mainly held by four players: Orange Telecom, Altice, Bouygues and Illiad. There are other smaller players as well, but these have a limited market share.
|Base Year||2018||Researched through internet|
One of the major risks in the market is the potential of reaching a saturation point in the near future. Since the mobile penetration in the country is so high, there is a chance that the market will stagnate in the near future. Companies are looking to attract new customers from the non-urban regions as there is a little scope of growth in these regions.
Another risk faced by the market is that France has been pretty slow to implement the latest technology such as 5G. It has been noted that the country failed to take the initiative on laying down 5G cables and is lagging behind others in Europe. There is a big risk that slower internet speeds will hamper the growth of the industry in France. Although recent investments have been made in this field, there is an urgent need to do more.
Top Market Opportunities
The major opportunity for this market lies in the LTE space. In November 2015, France held an auction of LTE frequencies, and this raises US$2.89 billion from the sale of six packages. The major players of the industry should look to utilize these new packages and make sure that the consumers get the best possible services. This will ensure sustainable growth in the future.
Another potential opportunity is in the Internet-of-things (IOT) space. There have been major investments made in this area, and it has the potential to keep growing in the long-term. IOT has been gaining momentum not just in France but around the world. In order to make sure that revenues are maximised to the fullest, there needs to be a major investment in this space.
The key drivers of the market are as follows:
- 4G and 5G Technology driven market: Higher speed data and better voice quality is a key driver of the market. The revenue base of the industry will only increase if the quality of services improves as well.
- Increasing demand for data: In today's connected world, everyone has the need to consume data. This in turn drives the mobile data revenues for the telecom operators. It is likely that this will remain as the key catalyst for growth.
- Growing popularity of IOT: Augmented Reality and Virtual Reality are being increasingly embraced by the customers. In Western Europe, there is an increasing need for all household devices to be connected with devices such as smart speakers and controllers. This is a key driver for the telecom sector.
- Easing regulations for small and medium players in France: The regulatory authorities in France have been promoting the growth of small and medium players by providing them with suitable measures such as subsidies. This will help the industry to grow further.
The only major restraint on the market is that it is now highly matured and there is a risk that demand for new connections could fade off. If this happens, it will hit the revenues of the major players and may result in a market contraction. In order to overcome this restraint, it is important to make investments in infrastructure as well as technology.
2017 growth rate of the market was only 1%, and in order to improve this, there is a need to embrace newer technology very quickly. The operators in the market need to invest heavily in 5G technology in order to provide quicker internet speeds. Also, the industry needs to make sure that the demand levels are sustained. For this, they need to innovate and provide newer offerings such as Augmented Reality and Virtual Reality based products.
The technology within the French Telecom industry has been improving rapidly. Most consumers are now using 4G connections and 5G is the next big thing. Recently, there has been an investment of US$115 million in 5G technology in order to upgrade the networks of the country, and such investments are only likely to grow further.
5G technology is likely to boost speeds as well as provide a better calling experience to the customers. This will in turn attract more and more customers towards the data services, helping the industry in growing even more. 5G technology is also likely to boost Value Added Services (VAS) such as video calling as well as live streaming of events. All these factors will help in improving revenues.
In 2012, the French Telecom market was disrupted by a new player known as Illiad. The company entered the market with extremely low price points, and this helped it in quickly establishing itself. However, the other players in the market began to lose market share, and they also had to reduce prices.
But these reduced prices resulted in a drop in the quality of the services. Infrastructure investment was not prioritized anymore, and this impacted the quality of voice calls and data. The large scale price reductions have benefitted the consumers in one sense that it fits their budgets, but on the other hand, it has damaged the quality of services.
In 2012, the then French President Francois Hollande announced that within 10 years, everyone in the country would have high speed internet. Additionally, in 2015, the French government announced an auction for 5G bands. Major players such as Orange Telecom bid for the blocks and won their bids. This will help them in improving the speeds of the network. Also, the government has been encouraging investment in newer technology such as the latest fibre cables.
Further, in 2017, the French Regulatory Authority for Electronic and Postal Communication (ARCEP) announced that it would put certain restrictions on Orange Telecom in order to encourage smaller and medium sized companies in the sector. This was a great move from the regulator since it will improve the competition in the market and ultimately the consumers are going to benefit the most from it. ARCEP is an independent body, although the commissioner is appointed by the government.
Market Size and Forecast
The French Telecom industry is already worth US$80.2 billion, and it is likely to continue on the growth path. The industry is estimated to reach US$85.8 billion by the end of 2018. This is a good performance in comparison with the rest of Western Europe. Additionally, factors such as the incoming 5G infrastructure and the advent of technologies like AR and VR will only help the industry in growing quickly.
The industry is forecast to grow at a CAGR of 2.0% between 2017 and 2022. This will be driven by sustained growth in the mobile as well as the fixed broadband segments. Within the mobile segment, the growth will be primarily driven by data consumption.
The market outlook is stable. There is little chance for extreme growth in France since the market is already nearing a saturation point. Instead, it is important for the existing players to make sure that the current market is utilized to the maximum. For this, it is important to launch newer products and services, while keeping the prices down. This will ensure growth in the subscriber base.
The competition in this space is increasing on a regular basis. The entry of newer players has been encouraged by the government, and it is likely to increase the competition further. New players such as Illiad have already ensured that the others pull up their socks. Orange Telecom has been forced to cut prices in order to compete. Prices for services are likely to decrease further in the future.
Key Market Players
There are four major players operating in the French Telecom market. These are as follows:
- Orange Telecom: It was founded in 1988 and is headquartered in Paris, France. It holds 36.99% of the market share in France as of 2017. It is the largest telecom company in France.
- Altice: A Netherlands based company operating in France as well. It was founded in 2001 and is the second largest telecom company in France. It is headquartered in Woerden, Netherlands. As of 2017, it has a market share of 31.34%. The company was previously branded as Numerique-SFR.
- Bouygues: It was founded in 1952 and is primarily an Industrials company which has a telecom subsidiary. It is a blue chip company in France. The company has a telecom market share of 16.24% as of 2017. It is headquartered in Paris.
- Illiad: It was founded in 1990 and has a subsidiary known as Free Mobile. The company has a market share of 15.66% as of 2017. It is headquartered in Paris.
The French telecom industry has achieved sustainable growth in recent years. However, now it is nearing a saturation point and needs to innovate in order to deal with this issue. Additionally, there is a need to create more demand by offering newer technology based products which are attractive to consumers. Investment is the key for the major players and will help in ensuring that revenues can be maximised.
- Freedom House Report France 2017
- Orange Telecom Annual Report 2017