Wednesday, May 13, 2015

Mobile Attackers Eventually Will Balance Share Gains, Profits

There are some continuing parallels between the U.S. and French mobile markets, with a one perhaps surprising twist. In both markets an attacker is shaking up pricing and perceptions of value, and at least so far making steady market share gains.

Free Mobile has gotten 15 percent market share in just three years, for example, and T-Mobile US leads the market in net additions of postpaid accounts. Likewise, Free Mobile has lead the French market in net account additions in 2014.

At a high level, and perhaps despite expectations, the respective markets have maintained their overall direction: slight revenue declines in France, slight revenue gains in the United States, but relatively flat in either case.

Another difference is that Iliad, owner of the Free Mobile service in France, seems to be closer to an expected phase where it starts to shift towards enhancing profit margins, rather than emphasizing subscriber growth, at the expense of profits. T-Mobile US still has not reached that point.

To be sure, Free Mobile continues to have a goal of reaching 25 percent market share in both its mobile and fixed network segments, long term. But Iliad also is aiming for 40 percent cash flow margin by 2020.

So the tactical issues increasingly will include balancing the desire for continued market share gains and the drive to boost profit margins.

T-Mobile US, at least so far, seems on track to continue favoring subscriber growth over margins, as will Sprint.

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