French telecommunications network operator Iliad has announced a strategic agreement with Nokia to roll out its 5G networks in France and Italy. In a statement, Iliad said deployment of 5G will start in 2020 and will eventually be made available to its 17 million or so mobile subscribers in the two countries.
Iliad emphasized that by retaining Nokia for 5G, it had “made a clear choice for European technology and strategic independence.” The companies have partnered in the rollout of 3G and 4G mobile networks since 2010.
With the right frequencies, 5G will enable Iliad to connect more customers, support the exponential growth of usages, and meet the needs of companies following the launch of its B2B operations in France in the near future. Iliad has a latest-generation mobile network stretching across France, which, thanks to the constant densification and almost systematic use of fiber to backhaul sites, will be ready for 5G as soon as the new frequencies are made available.
The decision comes amid U.S.-led scrutiny of Chinese rival Huawei Technologies Co., which is essentially barred from the U.S. over concerns that the Chinese government could order Huawei to spy on or disable communications networks. The U.S. has been urging allies to enact similar bans and some governments, including France, have avoided Huawei after saying the concerns are legitimate. Huawei says it is employee-owned and has never done espionage or sabotage on behalf of any government. e.g. China.
Iliad confirmed that it plans to launch its B2B operations in France in the near future and will be ready for 5G as soon as the new frequencies are made available “thanks to the constant densification and almost systematic use of fibre to backhaul sites.”
Iliad, which offers services under its Free brand, has more than 13.4 million mobile customers in France and more than 3.3 million mobile customers in Italy.
In Italy the company currently uses the Wind Tre network for 3G and 4G coverage but has reached agreements to rent out 4G and future 5G capacity on 11,000-plus towers owned by Telecom Italia’s tower unit Infrastrutture Wireless Italiane (Inwit) as well as the 7,766 towers owned by Spanish operator Cellnex. It’s also in the process of expanding its own infrastructure network with a view to becoming an independent operator in the medium term and is aiming to reach 3,500 installed sites by the end of 2019.
Iliad Financial Comments (Sources: telecoms.com and reuters):
This is somewhat of an important juncture for the Iliad, which has recently had difficult financial periods. Despite taking the French market by storm in the early years, Iliad has been suffering at the hands of competition as rivals stepping their own promotional pricing. The last financial period looked much more promising, though it still has some work to do to repair the damage. In May, Iliad reported an increase in mobile service revenues in France of 2.3%, however the total number of subscribers decreased by 50,000, down to 13.4 million.
The damage was most notable during 2018. During the first half of that year, Iliad was beaten at its own game, being undercut by rivals and being forced into announced a reduction in profit forecasts. Q1 in 2018 saw churn of 200,000 mobile subscriptions, the first net decline since the introduction of Iliad in 2012. The broadband business suffered the same fate, resulting in roughly a 40% share price crash across the whole of 2018.
In March 2019, Reuters reported that Iliad was sounding out funds to buy part of its mobile towers business as it seeks to raise cash after heavy promotions hit its sales in 2018. Iliad hopes to generate cash flow of more than 800 million euros next year and around 1 billion euros in 2021. It had previously aimed for around 1 billion euros in 2020. The group has shaken up the French mobile market since 2012 with low-cost services, but is now facing aggressive fixed and mobile discounts from French rivals Altice Europe’s SFR, Bouygues Telecom and Orange.
It lost about 250,000 mobile subscribers and 93,000 broadband clients in France in 2018, while at the same time investing hundreds of millions of euros in Italy, where it is building a mobile infrastructure from scratch.
Looking at the most recent numbers, there is a bit more stability and perhaps this is where the greatest enthusiasm for an aggressive 5G rollout will emerge from. In both France and Italy, Iliad has an opportunity to generate momentum through the new connectivity euphoria. This is an era which, once again, looks perfect for aggressive pricing and the first to scale 5G across a nation will reap the profits.