We may soon see a test of the rule of three and rule of four in the France telecom service provider market, as Bouygues Telecom tries to move up from the third spot to number two. The rule of three suggests a stable French telecom service provider market would be led by three firms. The rule of four suggests the market share structure will be 4:2:1 (40 percent, 20 percent, 10 percent) in terms of shares held by the top three firms.
That is quite different from today's structure.
According to Bouygues, its mobile market share (excluding M2M accounts) stood at 16.4 percent in 2020. At that point, the firm was in fourth place behind Iliad with 18 percent, SFR with 24 percent and Orange with 30 percent share. Adding the M2M or internet of things accounts, Bouygues already had reached the third position in market share.
The more important part of the story is that Bouygues has been gaining market share for at least a decade. In 2010 it had about eight percent share. The conglomerate’s mobile business has the highest growth rate of Bouygue’s businesses. Average revenue per account also has been rising.
The company had 12 million mobile customers (excluding M2M) in September 2020, an increase of 455,000 new customers since the end of 2019, of which 181,000 were in the third quarter.
Bouygues Telecom had 1.4 million fiber to the home customers in September 2020, with 378,000 new adds since the end of 2019. The FTTH penetration rate continued to rise to 34 percent versus 22 percent a year earlier.
The company had a total of 4.1 million fixed network customers in September 2020. The roll-out of Bouygues Telecom’s FTTH network is accelerating with 15.8 million FTTH premises marketed at end-September 2020 versus 11.8 million at the end of 2019.
Bouygues has raised its target to 27 million premises marketed by end of 2022.
After an acquisition adding two million accounts, Bouygue should have reached about two percent, possibly three percent additional share points. So the assault on number two SFR, and supplanting that firm, means an overall shift of about four points: moving from 20 percent to 24 percent, ideally based on taking two points of share from SFR in the process.
When Bouygues is able to take customers directly from SFR, it gains double: growing its own share and reducing SFR’s at the same time.
The other issue is that, depending on how one wishes to count market share, fixed network revenue and accounts might prove important. In fact, some might argue that Bouygue’s ambitions are based on gains in fixed network customers and revenues more than mobile accounts and revenues.
In principle, a jump into second place--by market share--is possible. The French mobile services market is not so stable that movement at the top of the market is largely impossible. It would be quite difficult indeed to make such a move if Orange had 40 percent share rather than 30 percent.
Were that the case, One could then expect SFR share to be about 20 percent or so, with a third provider having 10 percent or perhaps a bit more. Under such conditions, it is next to impossible for number three to supplant number two, and virtually impossible to overtake the leader.
So far, though, Bouygues Telecom has been able to steadily grow both mobile and fixed network accounts, gaining market share in the process.
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