Bouygues Raises the Pressure in French Telecom Price War

By Ruth Bender and Inti Landauro

PARIS--Bouygues Telecom Wednesday said it will offer a package of Internet, television and fixed-line phone services for around ten euros less than its main competitors, ratcheting up the pressure in France's telecommunications sector where price wars in the mobile segment are already capping profits.

Bouygues Telecom, owned by Bouygues SA (EN.FR), said it will offer a triple-play package for 19.99 euros ($27.5) a month, an offer it hopes will boost its market share in the fixed-line business.

Most competitors' standard triple-play offers are priced around EUR30 a month, though clients can often get the package for lower price if they are also a mobile client.

Operators--including Vivendi SA's (VIV.FR) SFR, Orange SA (ORA.FR) and Bouygues Telecom--have been hurting since low-cost operator Iliad SA's (ILD.FR) Free entered the mobile telephony market two years ago and forced operators to lower their prices, which has been eating into their profit margins.

"The large players of the industry manage to make a 40% margin on the fixed service, that is the kind of margin you make on luxury products," Bouygues SA Chief Executive Martin Bouygues said at a press conferenceto launch the company's new offer. "This will bring prices down." The CEO had previously said he would start a price war in the fixed-line telephone business, hitting out at his key rival Free.

Bouygues's new offer, to be launched March 3, will only be available to clients residing in cities with more than 100,000 inhabitants.

Write to Ruth Bender at [e-mail] and Inti Landauro at [e-mail]

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