SFR CEO says sees no market slowdown

By Astrid Wendlandt and Cyril Altmeyer

PARIS (Reuters) - There is no slowdown in the French mobile market, the country's second-largest wireless operator, SFR, said in response to concerns it could be maturing and running out of steam.

"We have no indication of a slowing down of the market in the current quarter (to June)," SFR Chief Executive Frank Esser told the Reuters Technology, Media and Telecoms Summit in Paris on Wednesday. "For us the French market is still growing."

SFR is controlled by Europe's largest entertainment group Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz) through a 56 percent holding. The balance is in the hands of Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz), Europe's leading mobile operator in terms of market capitalization.

The operator saw sales rise 4.1 percent in the first quarter, lifted partly by the launch of new offers.

Esser said the French market was continuing to expand because mobile penetration had not yet reached its peak and many people were now using two mobile devices, a handset and a blackberry or personal digital assistant.

SFR is in the process of acquiring France's second-largest broadband operator and fixed-line telecoms group, Neuf NEUF.PA, a deal it expects to complete by mid-June.

The two companies hope to present the newly combined business to staff before the summer break and to investors in September.

"We are well positioned to be more than a challenger to France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz)," Esser said.

He said the deal should generate between 100 million euros ($157.6 million) and 300 million euros in annual savings.

ORANGE OFFENSIVE

Esser said SFR, together with Vivendi, was weighing options regarding France Telecom's aggressive push into the entertainment and broadcasting market.

France Telecom, which trades as Orange, is competing head-on with Vivendi pay-TV unit Canal Plus by offering exclusive content such as sport and premium films to subscribers.

"We have to ask the regulator if it thinks it is good or not," Esser said, adding the company had spoken to France's regulator about Orange's move already. "We are not in favor of this...But we have not decided yet what our actions will be."

Esser said SFR, via Neuf, was ready to spend more than its current annual budget of 450 million euros on building up its next-generation fiber network, commonly known as fiber to the home (FTTH).

But the company would not move before the regulatory environment for the roll-out was defined, which he said should be settled "in a matter of months".  Continued...