France Telecom

"Investment in research and development of equipment and software positions Free as one of the most advanced operators in the implementation of innovative technological solutions. Over time, the group has become a recognized interlocutor of all major global equipment manufacturers such as Intel, Cisco, and Alcatel-Lucent. The brand image is so strong in France that the best French technicians fight to join its teams. With the emergence of the internet in the daily lives of the French, the number of access providers has multiplied. In addition to independent operators for local coverage, promising competitors with particularly strong support include Wanadoo from the France Telecom group, Club Internet supported by the German T-Online after being created by Lagardère, the Italian Tiscali, LDCom, and cable operator Noos."

"The story of Free, the internet service provider (ISP) launched in the first months of 1999, is one of technological adventure, but also of an incredible bond created with its subscribers who will accompany it throughout its development. Self-named "Freenautes," and organized into a community via the Association of Free Users (ADUF), these users behave like a true fan club, commenting on every initiative of the operator on dedicated sites such as Univers Freebox, Freenews, etc. This represents significant savings for the group's advertising budget. The first offer put on the market shines with its simplicity. There is no subscription. The user pays the telephone communication related to the duration of their connection at the local internet rate of France Telecom, which then reverses approximately 98% of the revenue generated back to Free. The word "free" is permanently etched in the public's mind on this occasion."

"The economic equation of Free? There is its own technology, but also and above all its investment in unbundling the local loop, a technical operation that allows the operator to control access to the subscriber and largely bypass the dependence on France Telecom's physical network."

"Play is itself quite a story. I founded it in 2005 at a time when in my opinion the Polish telecoms market was badly run, being dominated by big European companies, each of which was having to deal with tussles between its shareholders. Vodafone had a dispute with its Polish partner that ended with its Polish operation being bought by Polkomtel; France’s Vivendi and Deutsche Telekom’s T-Mobile were fighting over their asset in Poland; and France Telecom’s Orange was having a problem with its local partner. We saw an opportunity for a fourth player to start afresh and try to capture market share, so we sneaked into the market by buying telecoms licences. We didn’t bother with 2G and decided to bid only for 3G licences. It was unheard of for a private equity company to buy licences without any experience in building the infrastructure. But we found Netia, a small fixed-line independent, to help us as a local player in the Polish market. We ended up outbidding 3, the mobile phone provider backed by Hong Kong’s Hutchison Whampoa. The key to making this work was getting funding, which we did principally from China Development Bank. We had spotted in our privatisation and tender processes for upgrading Bulgaria’s telecoms that the Chinese government has a long-term strategic plan to become a major player in telecoms infrastructure. We saw that the best kit was coming from Chinese subcontractors, so we went straight to them and found that they had big plans. We had big plans too and suggested that we work together, building a new mobile telecommunications infrastructure in eastern Europe’s biggest country, with a population of 40 million. The Chinese like to take a long-term view, so we signed a letter of intent in China at the same time as we were bidding for licences. I used the occasion of an official state visit from Iceland to China to get the deal rubber-stamped, and so in the Palace of Heavenly Peace in Tiananmen Square there was an official signing ceremony as the climax of the state visit. We signed a letter of intent to buy all the equipment from Huawei, which has since emerged from the shadows as a dominant player in global telecoms, and it lobbied China Development Bank to make its first ever major loan in Europe. In total, this loan amounted to more than $1 billion. I have a great picture of the deal being signed by us and Huawei with the presidents of Iceland and China standing behind. It was an occasion that I am sure went a long way towards getting China Development Bank’s support and resulted in Huawei sending an army of Chinese engineers to Poland, where they helped us set up the towers, transmission and other infrastructure from scratch. We entered Poland as outsiders and targeted the youth market. It was tough going for the first two years but our patience paid off, and after about four years we broke even. Today, Play is profitable and growing significantly. It now has more than 11 million customers and a 20 per cent market share…"

"Play is itself quite a story. I founded it in 2005 at a time when in my opinion the Polish telecoms market was badly run, being dominated by big European companies, each of which was having to deal with tussles between its shareholders. Vodafone had a dispute with its Polish partner that ended with its Polish operation being bought by Polkomtel; France’s Vivendi and Deutsche Telekom’s T-Mobile were fighting over their asset in Poland; and France Telecom’s Orange was having a problem with its local partner. We saw an opportunity for a fourth player to start afresh and try to capture market share, so we sneaked into the market by buying telecoms licences. We didn’t bother with 2G and decided to bid only for 3G licences. It was unheard of for a private equity company to buy licences without any experience in building the infrastructure. But we found Netia, a small fixed-line independent, to help us as a local player in the Polish market. We ended up outbidding 3, the mobile phone provider backed by Hong Kong’s Hutchison Whampoa. The key to making this work was getting funding, which we did principally from China Development Bank. We had spotted in our privatisation and tender processes for upgrading Bulgaria’s telecoms that the Chinese government has a long-term strategic plan to become a major player in telecoms infrastructure. We saw that the best kit was coming from Chinese subcontractors, so we went straight to them and found that they had big plans."