* Telecom operator hopes to launch in Italy by early 2018
* Shares rise, among top performers on Paris stock market
* Italian operators are the "most hated" in Europe-Niel
(Adds Xavier Niel's comments on Italy, background)
By Mathieu Rosemain and Gwénaëlle Barzic
PARIS, March 7 French telecoms operator Iliad
reported on Tuesday its biggest annual profit margin
since the launch of its low-cost Free brand mobile service five
years ago, giving it firepower for its next assault, on Italy.
The Paris-based group, founded and controlled by billionaire
Xavier Niel, said it would step up investments in France in 2017
and 2018 and is readying to launch in Italy by early next year.
Free brand has been a pioneer in packages that combine
broadband internet, television and fixed-line telephones and
triggered a price war in the French mobile sector when it was
launched in 2012.
Competition with Orange, SFR Group and
Bouygues' telecoms services remained intense last year
but Iliad said it managed to boost profitability through a drop
in costs tied to its roaming contract with Orange and increasing
its mobile customers. It also saw a higher number of customers
upgrading from its cheapest contracts to its higher-priced
That helped it achieve an earnings before interest, tax,
depreciation and amortisation (EBITDA) margin of about 35
percent, its best performance since 2012.
Its shares jumped 4.6 percent after the results, among the
top performers on the Paris stock market, as the company said it
targets a consolidated EBITDA margin of more than 40 percent in
France by 2020.
It will invest 1.4 billion euros-1.5 billion euros ($1.5
bln-$1.6 bln) in its home market in 2017 and in 2018, up from
1.3 billion euros in 2016, and aims to secure a quarter of the
market in both high-speed broadband and mobile services, up from
24 percent and 18 percent respectively at present.
Building on his success in taking on established players in
France, Niel now aims for Iliad to become Italy's fourth mobile
operator when two existing players merge, targeting a 15 percent
share of that market.
"Italian operators are the most hated by consumers in
Europe," Niel said in a conference call after the results
"We have everything to create something with a little more
transparency and a little more honesty," he added, citing as an
example the existence in Italy of monthly subscription contracts
running for only 28 days instead of 30.
Iliad plans to launch in Italy in "late 2017, start of
2018", Chief Executive Maxime Lombardini said in a telephone
interview. Chief Financial Officer Thomas Reynaud said the group
will spend about 100 million euros on the project this year.
Iliad signed an agreement in June with CK Hutchison
and VEON to acquire some of their respective
assets as the two groups want to merge their Italian
Iliad's core operating profit rose 12.5 percent to 1.675
billion euros last year ($1.8 billion), driven by higher margins
at its mobile business, it said.
($1 = 0.9468 euros)
(Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by
Sudip Kar-Gupta and Susan Fenton)