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The latest European operator to introduce femtocells is France's SFR, which claims to be closing the gap with Orange via a range of new offerings, including the iPhone. It will boost mobile capex next year to press home its advantage, though it does not plan any short term moves to a full quad play, a strategy adopted by its smaller rival Bouygues Telecom.

Vodafone UK was the first European cellco to go commercial with femtocells, and now its SFR joint venture is following suit - both companies initially marketing the tiny base stations as a way for customers to improve indoor coverage, and later planning a range of other applications including fixed/mobile convergence. In a reversal of national loyalties, Vodafone UK is using devices from Alcatel-Lucent of France, while SFR has chosen products from UK-based Ubiquisys. Both gadgets run on the picoChip silicon, and SFR's unit supports Kineto Wireless' femtocell network gateway. SFR's service is called SFR Home 3G and the femtocell is priced at €199.

A shift of value towards mobility is reflected in SFR's broader investment plan - CEO Frank Esser said this week that capex would remain stable in 2010, at about 11% of sales, but with an increase in spend on mobile networks and products, particularly handset subsidies, balanced by a decrease on the wireline side. The company has been offering the iPhone since April and says it will sell 600,000 units by the end of this year.

SFR has also initiated a cost reduction program but expects a fall in EBITDA of around 5% this year, partly because of increased subsidies; and a "very slight" fall in fixed line EBITDA. However, Esser said there are no plans for a quad play, despite the success of Bouygues' offer. "We don't need this today, we still do four times as many sales than Bouygues," Esser told Dow Jones. "We will continue to watch this offer but we're in no rush."

The operator could soon face another competitor, broadband provider Iliad, which is the only candidate for the fourth French 3G license, and is eyeing its own quad play for 2010. It also owns WiMAX spectrum via its Altitude subsidiary.

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