Orange to earn €1 Billion in 2 years from Free Mobile contract


40279_free_mobile_accord_orangeWhen Free Mobile launched just one year ago, it didn’t quite have its mobile network up & running, and so it signed a deal with Orange whereby it would use some of Orange’s network. In an interview with Les Echos this week, Pierre Louette, #2 at Orange’s parent company France Telecom shared a bit of info on how Orange is fairing in the year since it signed the aforementioned contract. Originally expected to bring one billion euros over three years, that has since been adjusted and it is now expected that they will have made one billion euros from Free Mobile alone by the end of 2013.

Without this contract, Free Mobile would frankly not exist. Free was required by ARCEP, the TelCo. regulatory committee in France, to launch in a fixed period after announcing and getting approval to become a Mobile Operator, and as the date grew nearer and Free was no closer to having a mobile network up & running, it turned to the other mobile operators, and Orange stepped up. This deal is said to be the deal which caused Bouygues (hit the hardest by Free Mobile’s entrance into the market) to fire 1000+ employees, for SFR to switch CEOs and close down its chic “Le Studio,” and has been the cause of much commotion.

In response to a question about Orange’s role in the market share loss of the incumbent mobile operators, Louette called the other operators “cry babies” (literally larmes des crocodiles) who were upset about having missed out on the deal. Orange’s deal will last through 2016, after which Free Mobile is expected to have its own mobile network up & running.

Orange’s deal with Free isn’t all wins though; France’s larges mobile operator will be late to the game in building a 4G network compatible with the iPhone, as it has no spare network frequencies to spare; Bouygues, meanwhile, has requested to have its old 2G network converted to 4G, and may have a large advantage on the next generation of iPhones

Given this new news, it’s no surprise that Orange is the only network provider unaffected by Free Mobile‘s entrance into the market. As SFR heads to Brussels to get sanctions against Free Mobile, and as Free Mobile crawls its way out of #Adgate, it will be interesting to see if Orange’s close relationship with Free has any downsides.