Neuf Cegetel is a French wireline telecom services
provider and a
mobile
virtual network operator (MVNO) offering different services to
consumers, enterprises and wholesale customers, ranking number two
in the country (based on annual revenues). It was legally
established in 2005 following the completion of the merger between
Neuf Telecom (formerly known as
LDCOM) and
Cegetel. As of June
2008, the company is a wholly-owned
subsidiary of
SFR.
History
Origins
LDCOM (future Neuf Telecom) was established with telecom
deregulation in 1998 by the
Louis
Dreyfus Group,
"with a mission to rapidly gain access to a
network, penetrate into the center of the major urban areas,
provide means of interconnection with the motorway networks, and
offer the possibility of competitive long-distance links". The
group was originally providing services to other operators and
internet services providers (national and metro fiber networks,
colocation and hosting centers...). In other words, it was present
on the wholesale market only. LDCOM was the owner of the network.
Its main subsidiary, LD Cable, was in charge of carrying out the
engineering work, obtaining the necessary permits for the
construction works, supplying the fiber optic cables, laying
optical cables using rights of way beside waterways, through
pipelines and along transport infrastructure, negotiating with
local and regional authorities in France.
Cegetel was a separate company established in 1996 as a subsidiary
of "Groupe SFR Cegetel", which combined a fixed line operator
"Cegetel" and a wireless operator "SFR" established in 1987.
Cegetel was France's second fixed-line operator, competing directly
with
France Telecom. It had about
2,000 employees and was using the network operated by "Telecom
Development" (TD), a joint venture of Cegetel and the French
railways,
SNCF. It therefore had extensive
network coverage in France: 32,000 kilometers of fiber along
France's railway lines and highways, fiber loops in metropolitan
centers, points of interconnection at the local exchange level
etc.
LDCOM was a smaller company, but it was an opportunistic and fast
mover player. Cegetel had good service, recognized brand especially
on the enterprise and wholesale segments (over 16,000 corporate
clients), but was probably more conservative and therefore was
moving at a much slower pace.
Market consolidator in France
Unlike many (80+) loss-making alternative licensed operators in
France, LDCOM was not affected by the so-called telecoms crash in
march 2000, due to a cautious and pragmatic overall approach. From
2000 to 2003, the French telecom services market went through a
major consolidation. LDCOM acquired inexpensively several alternate
operators, including:
- Kertel (January 2001 - part of its customers and assets)
- Fortel (Squadran) (May 2001)
- Kaptech (December 2001)
- Belgacom France (March 2002)
- FirstMark France (May 2002)
- 9 Telecom, from Telecom Italia
(August 2002)
- Ventelo France (October 2002)
- Siris, France's third largest operator, from Deutsche Telekom (May 2003)
Thanks to these acquisitions, LDCOM became in 2003 a major
competitor (#3) to France Telecom, across all segments: wholesale,
enterprise, residential.
In 2003, Cegetel merged with "Telecom Development" (TD) and was 65
percent owned by Groupe SFR Cegetel and 35 percent by the French
railways,
SNCF. Groupe SFR Cegetel was owned 56
percent by
Vivendi Universal and
44 percent by
Vodafone.
Mass market DSL deployment
In contrast with the North American market, DSL is the dominant
broadband access technology in France, partly because the
penetration of cable systems has been historically relatively low,
the incumbent operator France Telecom and the domestic telecom
vendor
Alcatel decided in the late 1990s
that ADSL was a strategic decision to make, and also because a
favorable regulatory environment was subsequently offered to
alternative operators for the implementation of
Local Loop Unbundling .
The country liberalised the long distance market in 1998, organised
LLU trials with
France Telecom in January 2000 and
established a legal framework for
LLU in early 2001, but in practice
there was no real option for alternative operators to be profitable
on the broadband access market until 2003-2004. France Telecom's
tarifs and technical conditions then became progressively more
attractive encouraging several alternative operators, including
Free Telecom and LDCOM, to invest
massively in
DSL
infrastructures. In 2004, LDCOM was renamed "Neuf Telecom" ("N9uf
Telecom") and launched its first
Triple Play service on the
consumer market using this type of access technology, which
produced very strong growth.
Cegetel was amongst the first participants of LLU trials in January
2000. However, Cegetel subsequently slowed or froze its investments
in LLU, claiming the market and regulatory conditions in France
were not acceptable. It chose to offer DSL services by means of the
France Telecom's wholesale offer. In a second stage it announced a
major plan to invest EUR300 million in local-loop unbundling (LLU),
but the decision was made probably too late. Wanadoo, the Internet
subsidiary of
France Telecom,
Free Telecom and LDCOM gained a
considerable head start and captured significant market
shares.
New steps in the consolidation of the French market and
IPO
Cegetel's revenues on the traditional services market were
declining and the group arrived late on the DSL market. In August
2005, Neuf Telecom and its rival Cegetel merged to create Neuf
Cegetel. It was the signal for further consolidation among
operators and ISPs in France.
In October 2006, Neuf Cegetel announced that French competition
authorities approved the acquisition of
AOL
France’s internet access business (505,000 customers).
To aid its expansion program and accelerate the roll-out of
broadband services, an
initial
public offering of its stock was successfully performed on the
French
Euronext exchange in October 2006.
The offering was oversubscribed nearly 15 times.
In July 2007, Neuf Cegetel announced that French competition
authorities approved the acquisition of
T-Online France (aka "Club Internet")
At the end of September 2007, the group had 3.12 million
broadband-Internet clients, up 56 percent from two million a year
earlier.
Major FTTH investments
In 2006-2007, several services providers including
France Telecom ,
Free Telecom ,
Noos
Numericable and Neuf Cegetel announced plans to roll out
FTTH services in major
population centers in France. To make such investments pay off, it
was required to achieve scale i.e. to have a large number of
customers. Neuf Cegetel acquired several ADSL-based
Triple Play operators (see
previous section) to increase its market share and became the
second-largest broadband operator in France after
France Telecom .
In January
2007, Neuf Cegetel purchased Mediafibre (3,000 customers), a small
regional fiber-based Triple Play operator in
Pau
, southwest France. This operator was in
charge of a famous municipal FTTH project called "Pau
Broadbandcity" and therefore brought a strong expertise in this
area to Neuf Cegetel.
In
February 2007, Neuf Cegetel took control of Erenis, an alternate
services provider which has been laying fiber in Paris
since 2003
and has more than 10,000 customers.
In April 2007, Neuf Cegetel announced that its FTTH-based
Triple Play offer was
available to 55,000 households in Paris, with internet access at
speeds up to 50-Mbit/s for a head-line price of €29.90 ($40.75) per
month. The services provider announced plans to invest €300 million
($408 million) in 2007, 2008 and 2009 to pass 1 million homes in
the French capital and other cities, and sign up 250,000
customers..
LD Collectivités, a Neuf Cegetel subsidiary specialised in local
government networks, was selected for the first public service
contract to develop a
FTTH
network in the Paris region.
Exploring the possibilities that WiMax can offer
Its
subsidiary LD Collectivités announced, in partnership with HDDR,
the roll-out of WiMax services in the
department of Haut
Rhin
and launched a WiMax network
in the department of Loiret
.
Through their joint venture SHD,
SFR and Neuf
Cegetel have announced plans to roll-out a WiMax network in the
region of
Ile de France.
Fixed mobile convergence and threat on the 3G market
Unlike other European countries which have 4 or 5 mobile operators,
France has three mobile operators only:
Orange,
SFR and
Bouygues
Telecom, which are also the only ones to have a
3G license. In December 2006, the Court of Appeal
approved the initial decision of the “Conseil de la Concurrence”
(an administrative authority in charge of competition’s regulation)
and confirmed
FT ,
SFR and
Bouygues Telecom
would have to pay respectively 256, 220 and 58 million euros due to
collusion. The
National Regulatory
Authority Arcep reopened the
3G beauty
contest for a fourth license, but rejected the sole bid for the
license from fixed broadband access provider
Free Telecom , because it failed to meet
the required financial conditions (the same for new entrants and
for the 3 incumbents). In November 2007, the French Senate approved
an amendment to the country's budget bill for 2008 that allows the
government to change the financial conditions for assigning the
fourth license. In December 2007,
Vivendi's
SFR mobile phone division, which owns 40.5
percent of Neuf Cegetel, has offered to buy the rest for €4.5
billion. The goal is to challenge
France
Telecom in the market for combined fixed-line, internet and
cellphone services and create "
the biggest, strongest
non-incumbent in Europe" according to the group's statement
The acquisition was completed on
24 June
2008.
About the name "Neuf"
"Neuf" in French is the cardinal number "Nine". It is also the
"indirect access" prefix code granted originally by the
National Regulatory Authority to
Telecom Italia ("9 Telecom") in
1998. "9 Telecom" was subsequently acquired by
LDCOM as indicated earlier.
The prefix code "9" is dialled call by call by switched voice
customers before the destination number when they place calls from
a different access network (France Telecom) and when they want to
select Neuf Cegetel as the preferred local or long distance
operator. Because customers tend to forget to dial the prefix code,
"9" was reminded in most advertisements and, to be more effective,
integrated in the brand name and logo as well ("9 Telecom", "N9uf
Telecom", "N9uf Cegetel"). "Neuf" also means "brand new".
Note: Today "Indirect access" is a marginal and declining business
in France.
Mains services
Residential segment
According to the 2007 annual report, the "Mass Market division"
generated revenues of €1.437 billion or 42% of the Group’s total
revenues (€3.348 billion), mainly with the following
products:
- "Neuf Box": Via different broadband access technologies and a
multiservice CPE (the so
called "Neuf box"), Neuf Cegetel provides its customers in the
larger urban areas of France with high speed internet access (up to
20 Mbit/s download with ADSL, up to 50-Mbit/s
with FTTH) and landline phone services. This
type of offer enables french subscribers to fully cut out France Telecom traditional phone services by
using voice over broadband (VoIP), and pushed
the incumbent operator to launch similar voice over broadband
services in a defensive manner. The headline price is 29€90. With
3,224,000 broadband clients on December 31 2007, Neuf Cegetel is
ranking number two in the country and has expanded its client base
by over one million subscribers in 2007. Its broadband market share
is close to 21%, up from 17% a year ago.
- "Neuf TV": The "Neuf Box" can be connected to a separate HD
decoder using HomePlug powerline bridges, to provide various
Digital Television packages (over
200 channels available). Neuf Cegetel has more than 750,000 TV
subscribers at year-end 2007, and is ranked #4 amongst the world's
leading telco TV players by number of subscribers
- "Neuf Mobile": Neuf Cegetel provides its customers with GSM
telephone services through an MVNO agreement with SFR. These are often coupled with one of the "Twin" packages, a SIP-based
fixed mobile convergence solution based on a dual-mode Wi-Fi/GSM handset which offers
unified voice, messaging and multimedia communications services for
home use or for working remotely via high-speed broadband Internet
connections. The TWIN phone connects to a "Neuf box" Wi-Fi access point and enables calls to be made at the
same price as from a landline phone. Users receive a consolidated
phone bill as a result. The TWIN phone also enables users access to
their services using 500,000+ hot spots
operated by Neuf Cegetel's partners (e.g. FON, Adaël, SNCF rail
stations, free-hotspot.com...). During the final quarter of 2007,
Neuf Cegetel claimed approximately 300,000 "Neuf Mobile"
subscribers. Twin packages accounted for over 30% of the growth in
the number of "Neuf Mobile" contracts sold.
On this segment, the group competes primarily with:
Enterprises segment
In contrast with residential pure players like
Free , Neuf Cegetel has also an important
activity on the enterprise segment following the acquisition of
Siris and Cegetel. According to the 2007 annual report, the
Enterprises division generated revenues of €1.039 billion or 31% of
the Group’s total revenues (€3.348 billion), mainly with the
following products:
- IP services: broadband internet access, IP VPN ("9 Ipnet").
- "9Office": a multiservice offer targeting the SMB (20-250 employees) &
multi-site enterprise segments based on a VoIP-enabled multiservice
router (OneAccess). On the customer's side, various data services
are delivered as well as ISDN PRI/BRI digital interfaces to connect the
customer's PBX. On the
WAN side it is connected to the
Neuf Cegetel network by means of an ADSL/G.SHDSL
interface.
- "9office Mobile": Neuf Cegetel provides its customers with GSM
telephone services through an MVNO agreement with SFR.
- "9Pass": a multiservice offer targeting the
small business segment (3-20 employees) based on a CPE developed in house using
Intel
and Microsoft
technologies. The CPE delivers basic IP PBX voice features, LAN and Internet services. It is managed
by Neuf Cegetel or a partner.
- "9 Ipnet ToIP": a managed IP PBX offer coupled with IP VPN and SIP trunking services targeting
the government and large enterprise segments.
- Connectivity and legacy voice services: Leased lines, Indirect
access, direct access, special numbers...
At the end of December 2007, 173,000 business access links were
connected to Neuf Cegetel’s network, representing an increase of
34,000 on annual basis. The "9office" VoIP offer in particular
accounted for close to 40% of new data links during the 4th quarter
2007.
On this segment, the group competes primarily with:
Wholesale segment
According to the 2007 annual report, the wholesale division
generated revenues of €871 millions or 26% of the Group’s total
revenues (€3.348 billion), mainly with the following products
proposed to other services providers and ISPs:
ADSL wholesale, IP
peering,
PSTN
interconnect & call termination, hosting etc. This historical
activity has experienced a decline linked to the discontinuation of
wholesale sales to AOL and Club Internet (following the Group’s
acquisition of these ISPs), the contraction in the traditional
switched voice business, the decline of dial up Internet business
and the end of GSM gateways business.
On this segment, the group competes primarily with
France Telecom,
Completel and
Telecom Italia.
Notes and references
External links