In 2012, Mobile service prices dropped 11% due to Free Mobile (of course)

In 2012, Mobile service prices dropped 11% due to Free Mobile (of course)


Free’s entry into the mobile space continues to profoundly transform the French mobile space. According to 2012 figures from ARCEP, mobile contract prices in France dropped 11,4% in 2012 pretty much entirely due to the Free effect. This drop was consistent when looking at mobile contract pricing (with engagement), which declined 12%. For mobile services without a subsidized phone, the drop was even more stark, dropping a whopping 28,4% over the previous year.

Rapidly declining prices in themselves are obviously causing some pain for the big telcos, as overall revenues in the sector declined in 2012 by 3% to €50,9 billion. At the same time, however, they’re also dealing with a big leap in mobile communication consumption (voice and data), as mobile telephone traffic increased 13,6% and overall communication traffic reached 231.2 billion minutes in 2012, an increase of 13 billion over 2011. Not surprisingly, the most massive jump came from mobile data consumed which increased 67% to reach 95 500 terabytes last year. While this is, of course, a positive trend for the sector, it’s clear that the positive increase in usage isn’t offsetting the losses driven by the steep drop in prices. Orange, in particular, may have stopped the worst of the bleeding and is stepping up its game by going after Free on its home turf. However, it’s clear that the fat days for the telecoms have clearly come to an end.

To keep up with the competition as well as mobile user’s insatiable appetite for more mobile data and services (ie high-speed mobile), the telcos are pretty much obliged to step up their investment. Continuing the trend of the last few years, 2012 proved to be a banner year in terms of telco investment as total sector investment last year reached €10 billion, a €3 billion increase over the previous year. A good chunk of this increase was driven by their investments in high-speed mobile (3G and now 4G), which increased by approximately 70% to reach €4 bllion last year.