France's Iliad launches new set-top box, holds fire on mobile

By Leila Abboud

PARIS (Reuters) – France’s low-cost telecoms group Iliad upgraded its entry-level broadband offer with the launch on Tuesday of a new, more powerful set-top box but did not cut mobile prices, comforting rivals who had feared the reigniting of a price war.

After Iliad’s billionaire founder Xavier Niel unveiled the Freebox Mini 4K set-top box the shares in Orange rose as much as 4 percent, the biggest gainer in the French blue-chip index <0#.FCHI>. Numericable-SFR climbed 2.7 percent, and Bouygues 2 percent.

“It’s a relief,” said a Paris-based trader. “We feared a bloody return to a price war and mobile prices being cut in half but finally nothing of the sort.”

Niel has shaken up the French telecoms market in the past decade, pioneering triple-play bundles of broadband, television and fixed line telephony that are now standard and then entering the mobile market with cheap, non-contract offers in 2012.

Niel on Tuesday went back to basics by improving the entry-level triple-play offer, which is priced at 29.99 euros per month and remains the group’s cash cow.

The new set-top box features 4K technology that promises super-high definition TV images, and comes with a voice-operated remote control.

It will also run Google’s Android TV operating system so users will be able to access content from their phones and tablets easily on their TVs.

On mobile the only change was that current broadband customers will be allowed to add up to four rather than the previous two mobile subscriptions at a discounted 15.99 euros.

Iliad has won a 14 percent market share since it entered the mobile market in 2012, sending prices down by more than a third and causing larger rivals Orange and Numericable-SFR to slash costs to cope.

Shares in Iliad were up 2.6 percent at 224 euros by 1139 GMT, a near 45 percent rise in the past 14 months.

Bouygues Telecom, the third-biggest mobile operator, has been hit hardest, laying off staff and sparking talk that founder Martin Bouygues could sell.

Thomas Reynaud, Iliad’s finance chief, said the aim of the Mini 4K launch was to boost the attractiveness of Free’s cheaper offers. Bouygues has been on the offensive in recent months in broadband winning 110,000 customers in the fourth quarter with low-cost offers to counter Free.

“We wanted to re-dynamise our entry-level offers,” he said.

The higher-end offer, Freebox Revolution, will remain at 35.99 euros, with a new replacement product expected later this year.

(Additional reporting by Alexandre Boksenbaum-Granier; Writing by Andrew Callus; Editing by Blaise Robinson, Greg Mahlich)

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