Can't see where this news could be bad for MRVC and it might be good for MRVC
PARIS — Iliad SA, a provider of phone, Internet and TV services, announced plans to roll out a 1 billion euro ($1.3 billion) high-speed fiber-optic network to French households beginning next year without raising prices. The company's shares plunged as some investors judged the plan too ambitious.
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The alternative telecommunications operator, which has steadily won market share from France Telecom SA with its triple-play offering of broadband Internet, unlimited phone calls and high-definition TV for 29.99 euros ($38) per month, said it will begin offering the new fiber-optic services to customers in the first half of 2007.
About 300 million euros ($380 million) of the costs will be incurred in 2006 and 2007 as Iliad begins the rollout in central Paris, the company said, with the remaining 700 million euros ($890 million) to be invested by 2012 _ when the new network is set to reach 4 million households.
Iliad shares fell as much as 11.37 euros ($14.45), or 19 percent, before closing at 53.00 euros ($67.20) in Paris trading _ 11.9 percent below Friday's close. Analysts cited concerns that Iliad may have overstretched itself with the plan, which is to be funded from the company's own cash flow.
The company also said it will sell capacity on its fiber-optic network to rival operators, generating additional revenue and boosting competition in the French broadband market.
France Telecom, which currently commands 50 percent of the nation's broadband market compared with Iliad's 18 percent, has launched its own pilot fiber-optic services to French households and is mulling a wider rollout while discussing with the regulator whether the network would have to be opened to competitors.
Iliad is betting that the service improvements brought by fiber-optic delivery _ which almost doubles the maximum Internet download speed of 28 Mbps currently offered _ will boost the acquisition of new clients. |
