Analyst conferences are a good way to get an quick fire update on a company's strategy, so I'm spending a valuable couple of days in Boston with Alcatel-Lucent. But often the best presentations at such events are given by partners or customers, and today was no exception. It was Paul Corbel, the CTO of French mobile operator SFR, who had the most interesting things to say about the state of the wireless industry and the outlook for new technologies and services.
Paul described the highly competitive environment in the French mobile market, where MVNOs are now taking 50% of new customers, the third largest player has introduced flat rate bundles of unlimited calls, and SFR recorded 0% revenue growth last year. In spite of these challenges, SFR, 44% owned by Vodafone, continues to see the mobile phone as key to its success, since it believes this is the device most preferred as a communications tool. Paul cited data suggesting 40% of home-based phone calls in France are now made from a mobile phone.
SFR's strategy is to continue to push the mobile phone as the preferred consumer device, as well as extending its capabilities in data, taking share from the fixed voice and data market. Expect SFR to be very aggressive in HSDPA pricing later this year.
At the same time, the CTO was refreshingly cautious (compared to the rosy scenarios often presented by certain technology vendors) on the potential for new services such as advertising, games and video to make up for declining voice ARPUs. The company's own models suggest that €100m advertising revenue could be a realistic target, and this makes it very small in the context of the company's overall scale.
There does seem to be an inherent conflict in SFR's plans, which can also be detected in its parent company, namely that there is a love-hate affair with the fixed access business. SFR's 40% subsidiary, Neuf Cegetel, has just acquired Ozone, a Wifi provider, presumably partly to offer more cost-effective roaming web access and even Voice over Wifi like its competitors. SFR has in any case been offering DSL and will continue to do so in order to remain competitive. You get the strong sense that SFR sees all this wireline stuff as a necessary evil rather than a positive strategic play. But the company has aggressive plans for a number of new technologies, including residential femto cells, so it's a company that should stay on the radar.
Anyway, congratulations to ALU for inviting a customer to tell analysts it will continue to reduce capex by 10% a year and encourage more competition between its suppliers. That is a better reflection of the real story behind the wave of new communications technologies coming down the pipeline.