Financial Review - Bouygues

Customers have access to anenhanced portal with 300 official sites,5,000 independent sites, more than200 games and 50 Java applications.New features are constantlybeing added: video was introducedin May, Digitalsound and Digitalvideoin November. Customers can alsochoose between a wide range ofattractively priced handsets.Universal Mobile, a unique servicefor young peopleA new service that creates value,brings a strong brand into the marketand makes optimum use of the network:that is the MVNO concept(mobile virtual network operator) promotedby Bouygues Telecom, in partnershipwith Universal Music. This linkupwith a major group partly solves theMVNO conundrum and gives the marketa unique offering.On 25 August 2004, Universal Mobilelaunched three locked top-up contractswith attractive usage and pricefeatures: billing by the second fromthe first second, SMS at 9 euro centsand a double talk time option. Anotherunique innovation is the "call me"security feature (users can still sendfive SMS after their credit is exhausted).They are the first no-commitmentcontracts designed specifically foryoung people (SIM cards can be purchasedfrom newsagents). For the firsttime, the "double talk time after school"option and billing by the second arevalid for calls not only to landlinephones but also to the three mobileoperators. Universal Mobile contractsalso open the door to the world ofUniversal Music.Listening to customersBouygues Telecom continued todevelop its own distribution networkin 2004 and to harmonise the 450Bouygues Telecom Clubs. Throughpersonal attention to customerrequirements, the company undertakesto support its customers at alltimes, including in emergencies.Having acquired the Bourges callcentre from Infomobile, BouyguesTelecom now has six customer relationscentres with over 2,700 multiskilledcustomer advisers. BouyguesTelecom products and services are onsale at almost 70,000 outlets, from bigsupermarkets to small local retailers,including over 4,000 which deal exclusivelywith new customers. They arealso available on the internet atL@ boutique.Fast responseOn 17 November 2004, a fault in theequipment that identifies subscriberscaused a general failure of theBouygues Telecom network. Theentire workforce mobilised immediately,enabling the company to handle50% of a normal day's traffic and thento gradually re-establish the wholenetwork. Additional steps were takento assist customers and compensatethem for the inconvenience resultingfrom the failure. Bouygues Telecom istaking legal action against the supplierof the equipment that failed.Technological choicesBouygues Telecom continued toincrease the density of its GSM networkin 2004 (it now has 11,300 basestations) and spent almost €450m onoptimising coverage and meeting thegrowth in traffic. In July 2004,Bouygues Telecom committed to participatingin Phase 2 of the programmeto cover blind spots.Bouygues Telecom has chosen EDGEas its first broadband technology, tobe followed by second-generationUMTS (HSDPA). The first-generationUMTS technology currently availableis not as promising as had beenexpected. After successful trials,EDGE is being rolled out so as to offernationwide coverage in 2005. UMTStrials began in late 2004 in the Parisregion. These technological choicesare complementary and pragmatic interms of investment and will enablethe company to adapt its offering tocustomers' expectations and thechanging usage of data services.Two distribution subsidiariesRéseau Club Bouygues Telecom(RCBT), a wholly-owned subsidiary,coordinates the 450 boutiques in thenetwork of Bouygues Telecom Clubswhich, covering the whole country,develop close customer relations. Theestablishment of a network of boutiques,begun in 1998, is one of thekey elements of the company's retailand customer loyalty strategy.Building on a strong presence in citycentres, the network has sought toensure a better balance since 2003 byopening outlets in thriving shoppingcentres. RCBT reported sales of€229m in 2004.Téléciel, a wholly-owned subsidiary,is a wholesale distributor of telecommunicationsproducts and services. Itsupplies handsets and rechargecards to a network of 1,800 sales outlets.Some of them specialise inmobile phones, others are members ofstore chains with a wider range ofactivities. Téléciel was named BestWholesaler of 2003 by the trade magazineDistribution et Filaires. It hasexpanded considerably over the lasttwo years, generating sales of €94min 2004.French AntillesBouygues Telecom Caraïbe (BTC),a wholly-owned subsidiary, openedits network in Martinique andGuadeloupe in 2000, subsequentlyextending it to French Guiana.Proposing products suited to the localmarket, the company has over130,000 customers. Like its parentcompany, in 2004 it established a networkof Bouygues Telecom Clubs,giving it a local retail presence inthe three Caribbean départements.Bouygues Telecom Caraïbe reportedsales of €101m in 2004 while also optimisingits operating costs. Followinga complaint against Orange foranti-competitive practices in theCaribbean, the Competition Councilordered interim measures in favour ofBouygues Telecom Caraïbe which will30