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RESEARCH PRODUCT

The France’s mobile phone market faced with the entry of the 4th operator, Free

subject

description

At the end of 2009, the competition authorities have granted a 4th mobile license to Free, French operator already present in the fixed telephony and the Internet. The new operator not having a good coverage, he obtained permission to sign a roaming agreement with the incumbent operator Orange, enabling Free subscribers access to the network in areas not yet covered. Given its dependence on Orange, Free can be seen as a virtual mobile operator. We use a parameter that describes the level of independence of Free and can take three possible values. At first Free is an operator totally dependent on Orange. Then, a part of the traffic of Free passes by its own network. Finally, Free is an independant operator like Orange, SFR and Bouygues Telecom. From a comparative static analysis, we study the consequences of the granting of this license under Cournot competition. When Free is an operator totally dependent on Orange, with a low rate of access to the Orange network, its entry leads to a reduction of price and profits of some incumbent operators with an increase in consumer surplus. However the magnitude of the reduction is greater when Free becomes more independent. Stackelberg competition allows to notice better the price reduction after the entry of Free. Thus, the objective of this thesis is to highlight the importance of the inclusion of the roaming contract to analyze the effects of the entry of Free. Free had negative impacts on his competitors, in particular Bouygues Telecom. To remain in the sector, there are three possibilities of merger. The mergers with Free or SFR-Numericable are made with reduction of costs, whereas that with Orange is without synergy. The analysis of these mergers show that they are at the same time profitable and socially beneficial. Thus in this thesis, we show that any merger creates no synergy, is not necessarily anti-competitive. However a dilemma arises for Bouygues Telecom, because the merger accepted by the authorities of regulation is not the one that gives him the highest profit.