Bouygues Telecom Aims for Cash Seen Before Iliad Cut Prices

  • Free cash flow to rise to 400 million euros in `mid-term': CEO
  • Wireless carrier has `structural lead' over Iliad, CEO says

Bouygues SA, owner of the carrier that’s fighting discounter Iliad SA to retain its third place in the French market, said its high-speed wireless network is attracting customers who will help the business return to the cash flow levels seen before its rival began service in 2012.

“We have a structural lead, not something temporary,” Bouygues Telecom Chief Executive Officer Olivier Roussat said in a phone interview on Wednesday.

Roussat predicts free cash flow will rise to 400 million euros ($450 million) in the “mid-term.” That’s about what Bouygues Telecom was generating before Iliad entered the French mobile market. Bouygues Telecom had free cash flow of 138 million euros last year and a negative 67 million euros in the first half of 2015.

Bouygues shares pared losses of as much as 1 percent in Paris and traded 0.2 percent lower at 9:52 a.m. to 33.76 euros. The stock has added 13 percent this year, giving the company a market value of 11.4 billion euros.

Earlier this week, Roussat told investors of his plans to increase sales and cut costs to boost profit margins by 2017. Bouygues was first to sell so-called fourth-generation mobile packages in France after a change in regulation in 2013 allowed carriers to use the 1,800 megahertz frequency for high-speed wireless Internet. This gave Bouygues an advantage over competitors that needed more time to adapt their infrastructure after investing in different frequencies.

Billionaire Martin Bouygues, whose group also owns media and construction assets, in June rejected a $11 billion offer by cable tycoon Patrick Drahi for the phone unit. Bouygues Telecom also competes with market leader Orange SA and SFR, which is now part of Drahi’s Numericable Group.

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