Thursday, March 15, 2007

Free Grows to 1.7 M IPTV Subs in France

Free reported that it had 2.278 million broadband subscribers up from 1.595 million at the end of 2005. It expects to have 2.8 million broadband subscribers by the end of 2007. It stated that it is the number two broadband supplier in France with 19 percent market share compared to the number 1 company Orange's (France Telecom) 49 percent share and the number 2 company Neuf Cegetel at 18 percent. Telecom Italia's Alice service has 6 percent of the market and Deutsche Telekom's Club Internet has 5 percent of the market. the remaining competitors have 2 percent of the French market.

Free also stated that over 75 percent of its broadband subscribers are able to receive TV services. This means that it has 1.7 M subscribers that are able to access IPTV services as part of their broadband subscriptions. It had 2.2 million video on demand views during 2006 with 311 thousand in the month of December.

Free will start offering FTTH services using active Ethernet technology in 2007. It expects to pass 4 million homes with its fiber service by 2012. It expects that it will cost about 1,500 euros of capex to convert and existing ADSL customer to fiber and about 400 euros for new subscribers. It expects to spend 150 million euros to pass 150 thousand homes in 2007. It is forecasting that it will have 30 thousand FTTH subscribers by the end of this year.

Free also claims to have the lowest broadband customer acquisition cost in France at 50 euros each. Orange is at 78 euros per month. The customer acquisition cost for Neuf Cegetel, Telecom Italia, and Club Internet range between 247 euros and 419 euros per month.

Free's compelling offer has set the standard in France. At 29.99 euros per month it provides an Internet service at 28 Mbps, free VoIP calling in France and 49 international locations, 250 TV channels (including HD) and 3,000 video on demand titles.

The details of Free's 2006 results can be found at

Free is a difficult to assess. It did not announce how many paying IPTV subscribers that it had at the end of 2006, but based on previous announcements they should have around 500 thousand paying IPTV subscribers now. The 1.7 million IPTV capable subscribers are those people that have the service available to them. It is not clear now many of these people watch the service. I expect that more than one million of them watch the service at least once a month.

Free is an important company to watch to understand the French IPTV and broadband markets. Its fiber initiative will keep them in a leadership position in this market.

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