Free Acquires Alice France

Iliad, the parent of the French broadband provider Free, has completed its acquisition of Alice France for 775 million euros. This price reflects:

• A portfolio of about 850 thousand active subscribers
• Loss carry forwards which will generate a tax savings of 350 million euros for Iliad
• Cash and equivalents of 15 million euros

Free stated that this acquisition would return it to the position of the leading competitive broadband provider in France with about 4 million subscribers and a 25.5 percent market share.

This acquisition puts Free ahead of Neuf Cegetel, which achieved the leading position through a series of acquisitions. Free has set the standard offering for broadband in France with a complete triple play offering of 29.99 euros per month.

Frees next challenge is how to enter the mobile market. Both France Telecom's Orange and Neuf Cegetel's parent company SFR are major mobile operators in France.

Neuf Cegetel FTTH Plans

Neuf Cegetel joins France Telecom and Free in France with FTTH deployment plans. It ended 2007 with 130 thousand homes passed by fiber and 20 thousand subscribers. It plans to invest 300 million euros to pass 1 million homes by the end of 2009. It expects to have 250 thousand FTTH subscribers at that time.

Neuf Cegetel is targeting over 500 thousand homes in Paris and its suburbs based on successful cooperation with local authorities. It also has public/private partnerships in Rennes, Bordeaux, and Grand Nancy and agreements with municipalities in Toulouse and Strasbourg.

FTTH is moving forward based on partnerships that spread the risk. The competitive structure of the French market has facilitated fiber. The incumbent is not able to control the situation as is the case in the U.S.

Neuf Cegetel Targets 1 Million IPTV Subscribers in 2008

Neuf Cegetel has set a target to grow from its current base of 750 thousand IPTV subscribers to 1 million by the end of 2008.

Neuf Cegetel is introducing a new video on demand service based on content from the top French studios as well as leading Hollywood studios. Its video on demand service will offer 3,500 films and 5,000 TV programs.

Neuf Cegetel has also developed Pure Pixel, a technology for enhancing the reliability of IP video. This system involves real time retransmission and end-to-end correction of data lost between the network and the customer’s set-top box. It will be available to all Neuf TV HD customers, and be phased in gradually across the channels from May 2008, reaching all channels in the Neuf TV service by next autumn.

Neuf Cegetel is in good shape to achieve this goal. IPTV has been widely accepted in France. These two new services will support its efforts to increase its TV customer base.

Neuf Cegetel has 750K IPTV Subscribers

Neuf Cegetel in France ended 2007 with 750 thousand IPTV subscribers. It experienced an increase over €4 in broadband ARPU compared with the fourth quarter of 2006. During the second half of 2007, the it launched two new services. By the end of December, Neuf Music, the Neuf Cegetel’s unlimited legal music download service, had generated 5 million downloads. Less than four months after their launch, the Neuf TV Sélection and Neuf TV Grand Spectacle pay-TV packages, which are available for a monthly fee starting from €10.90 per month, had around 10% of the eligible IPTV subscribers.

Neuf Cegetel continues to grow its IPTV base and together with Free and France Telecom have made France the number one IPTV market globally.

SFR to Acquire Neuf Cegetel

SFR, a mobile service provider, plans to acquire Neuf Cegetel in France. SFR currently owns 40 percent of Neuf Cegetal and is looking to acquire the remaining 60 percent. It appears that the combined company currently has about 600 thousand IPTV subscribers.

The combination of SFR and Neuf Cegetel will be strong competitor to the incumbent, France Telecom. Neuf Cegetel is a major IPTV provider in France and will bring that to the combination.

Neuf Cegetel Fiber Deployment

Neuf Cegetel has initiated a FTTH deployment. It will use Alcatel-Lucent PON systems and Ericsson Redback access routers to support this network.

Neuf Cegetel is now joining France Telecom and Free in starting FTTH efforts in France. Just another good reason to move to Paris!

Neuf to buy Club Internet

Neuf Cegetel, the French competitive carrier, has agreed to buy Deutsche Telekom's French broadband carrier Club Internet. This will make Neuf Cegetel the number two broadband carrier with 3 million subscribers after France Telecom.

Club Internet has been a Microsoft showcase account in Europe. It is almost a certainty that Neuf will abandon the Microsoft platform and convert Club Internet to its own software and delivery system.

Neuf Cegetel Acqure #2 Position in France?

Neuf Cegetel is in exclusive discussions to acquire Deutsche Telekom's French broadband subsidiary Club Internet. At the end of 2006 Neuf Cegetel had 2.172 million broadband subscribers, 106 thousand subscribers in back of Free. Club Internet's 570 ADSL subscribers would push Neuf Cegetel ahead Free into the number to position in France.

There were reports that Iliad/Free was also bidding for Club Internet but dropped out as the price went up.

Neuf Cegetel has used merger and acquisition as its primary strategy for catching and passing Free. The first step was the merger of Neuf and Cegetel two years ago. Last year it acquired AOL's customer base in France.

This acquisition will mean that Microsoft will lose one of its leading deployments. Neuf Cegetel has a well honed, competitive IPTV offering and is unlikely to switch to Microsoft.