Without Abandoning Price Attack, Free Mobile Plans to Boost Profit
It long has been obvious that Illiad’s Free Mobile attack on French mobile market pricing would eventually have to pivot a bit to ensure sustainable profit margins. Illiad might now, after attaining market share of about 15 percent, be preparing to do so.
The company now says it aims to boost operating profit by 10 percent in 2015. Earnings before interest, taxes, depreciation and amortization will grow more than 10 percent in 2015 after rising 6.6 percent to 1.3 billion euros ($1.4 billion) last year, Iliad said.
Oddly enough, significant mobile account additions hurt profit margins, as mobile accounts represent lower gross revenue and profit than the fixed line accounts.
Illiad might be banking on a shift of Free Mobile accounts from basic to enhanced service plans, specifically those supporting mobile Internet access.
That doesn't mean Illiad is going to abandon its price assault in the French market, only that it believes it can encourage a higher percentage of accounts to pay for mobile Internet access.