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(Last updated: 17 Oct 2008)
Trends and opportunities
The market
ICT encompasses electronics, IT, telecommunications, software, hardware and services. Of these industries, France employs 60,000 people in components equipment, 54,000 in communications equipment and 312,000 in software and IT services. In total within the industry, 45,000 workers are employed for research and development. These figures have enabled around 6,500 new jobs on average over the last 10 years.
The software and IT services industry alone in 2006 represented an annual turnover of more than A$75 billion.
There also exists large potential for foreign investment within the electronic sector where around 71.5 per cent of turnover was enabled by foreign companies.
(Source: Invest in France)
Telecommunications
Consolidation remains an issue in the telecommunications industry as the economy slows down. In 2007-08 a number of mergers occurred. SFR placed a bid for Neuf Cegetel, a company it in which it already owns a large stake. Neuf Cegetel itself acquired AOL and T-online in late 2007.
Mobile Virtual Network Operators (MVNOs) continues to make a large impact in the industry. The main company creating this impact is Iliad operating under its ‘free’ brand, which seized some of the market share from Orange in early 2008.
VoIP has also increased significantly in France with around 17 per cent of fixed lines having VoIP subscriptions only; while only 14 per cent had VoIP and analogue connections. These figures are attributable to around 10.4 million VoIP subscribers in France.
Within the mobile phone industry, the market grew 7.1 per cent in 2007 and is expected to grow steadily by around 5.8 per cent for at least the next five years until 2012. There are approximately 55.4 million clients in France; 10 fold from 1997. BMI has predicted that the driving force of this growth will come from MVNOs.
Fixed lines in France have continued to fall as a result of the mobile phone and VoIP services in France. Fixed lines subscribers have fallen from 31.6 million in 2006 to around 28.75 million in 2007; an 8.9 per cent drop between 2006 and 2007.
IPTV is likely to be a driving factor in years to come. France Telecom has announced a A$350 million investment into its online IPTV content. France Telecom’s IPTV subscribers also increased from 421,000 to 975,000 in 2007.
In the mobile market the main players are France Telecom with 49 per cent market share, SFR (Vivendi) at 35.71 per cent, and Bouygues Telecom at 17.6 per cent.
France Telecom has become established in 220 countries worldwide. It provides local, long-distance, and international calling services, as well as wireless phone service and data transmission.
In 2005, Virgin commenced a penetration into the French market, combining with French company, Carphone (Europe’s largest mobile phone retailer).
Ownership of telecommunications companies in France has become very complex with a larger number of mergers and acquisitions in recent years. France telecom is the largest company within the market also holding a 100 per cent stake in Orange. The company itself is owned by a majority of individual shareholders.
SFR hold a 40 per cent share in Neuf Cegetel which is the second largest company. SFR however is 56 per cent owned by Vivendi and 40 per cent owned by Vodafone.
Bouygues Telecom is the third largest company in France in this industry.
Other smaller companies that exist are Iliad (operating under ‘free’), Numéricâble, TPS, TFI (owned by Boygues telecom) and Canal Satelleite (66 per cent owned by Vivendi).
It is also worth nothing that Iliad was the first company in France to bundle ADSL Internet, pay television and unlimited phone contract offers into a combined package; a commodity that is now very popular with a great reduction in costs as a result of competition in the industry.
(Source: Telecommunications Report 2008 from BMI)
Internet
Internet access tariffs are amongst the lowest in Europe resulting in increasing acceptance rates both for businesses and consumers.
French ISP, Orange, one of Europe's largest providers has been on a buying everything from small ISPs to large content portals, giving it a stranglehold on France's dot-com industry. Orange currently retains a 49.5 per cent share of the broadband market.
The market has become very competitive over the last 12 months leading to a large number of mergers, creating larger operators who are more readily available to compete on a price basis.
According to Business Monitor Online, there are currently a total of 35.1 million Internet users in France for 2008; 18.9 million of which are broadband connections. This figure is set to increase by 45.2 per cent by 2012 to 27.49 million. Over this period, market penetration for businesses is expected to rise from 29.7 per cent to 42.5 per cent. However, the broadband market is expected to slow as recent figures have indicated and operators are expected to look to their services in order to retain their customer base, offering faster speed and more online content.
ADSL connections in France for 2007 remained the most popular choice for Internet with around 92.5 per cent of the market. This was slightly down on the 2006 figures of 94.7 per cent. Broadband subscriptions increased in 2007 by 22.5 per cent, compared to 34.4 per cent in 2006.
As a result of the growing popularity, availability and cheaper pricing of broadband, dial up connections in 2007 decreased by 41 per cent.
(Source: Business Monitor)
E-commerce
E-commerce has grown dramatically in France. Approximately 93 per cent of businesses with more than 10 employees have the Internet at work which has enabled the B2C network in France to increase by 6000 businesses in 2006, to a total of more than 17,500 sites.
The total revenue in 2006 for the e-commerce industry in France represented $A22.6 billion.
There were 17.9 million online buyers with an average online sale of A$170. France ranked third for online sales; behind Germany and the UK.
The online market was split into the following cultural groups:
- Books – 39%
- Movies – 37%
- Music – 13%
- Leisure software – 11%
(Source: Research Wikis)
Opportunities
With more than six per cent of GDP, the ICT sector in France contributes more to the nation's growth than the automobile and energy sectors combined. It is the biggest employing sector creating more than 400,000 jobs in the past three years.
Research in the ICT sector represents 25 per cent of industrial research in the country. However, the Parisian Chamber of Commerce believes France is lagging behind in R&D. The most recent figures suggest that R&D in France was around 19 per cent compared to 35 per cent in the USA, and 34 per cent in Japan. France realises that the country's competitiveness depends on such investments.
Opportunities exist in the ITC industry for people with qualifications. France ranks second in Europe for the total number of qualified workers and also boasts a large network in many sectors for first class higher education teaching.
Additionally, France's rapidly developing telecommunications sector provides great opportunities for international companies. Current growth trends indicate that France will continue to be one of the world's most attractive markets for:
- mobile infrastructure
- satellite equipment
- optical fibre
- telephone sets
- mobile telephones
- pagers
- Internet services
- VoIP
- IPTV
- MNVOs
Other key areas of growth in France include:
- Services – The ICT industry employs approximately 274,000 people and services more than 360,000 people. Telecommunications services dominate in terms of turnover (57 per cent), then computer services (43 per cent).
- Systems security – This will increase rapidly with the increasing uptake of Internet services and e-commerce. It is anticipated to grow at 20 per cent annually.
- Application Service Provider (ASP) – This role is set to increase as a result of worldwide increasing market demand.
- M-commerce – French businesses are acknowledging the need to plan ahead and this technology is becoming more popular. Many French businesses now enable customers to purchase products such as phone credit, train tickets and magazine and Internet subscriptions using the mobile phone.
- E-learning – The French Government has set various goals such as providing 1 in 3 pupils with a computer at schools and 1 in 2 for university students. They also aim to create a certificate of computer skills.
- IPTV – the market is expected to drive the demand for Internet services in France for the next five years.
- VoIP – is also expected to help drive the Internet market.
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