Free Mobile corners 5.4% of France’s mobile market in 6 months

In the half year since it first launched, France’s upstart wireless carrier Free Mobile has signed up 3.6 million customers, lured in by its incredibly cheap voice and data plans. Its second quarter wasn’t quite as astonishing as its first, in which it saw 2.6 million activations, but 1 million net additions is still a staggering sum for a new carrier in a country the size of France.

Free Mobile, owned by entrepreneur Xavier Niel’s ISP Iliad, now accounts for 5.4 percent of France’s roughly 67 million mobile subscribers. It still has a long way to go before its catches up to smallest of France’s three incumbents Bouygues Telecom, which has 11 million subscribers, but Bouygues, France Telecom’s Orange(s fte) and Vivendi’s SFR are all worried about Free’s momentum.

Iliad founder Xavier Niel

Since the French mobile market is saturated, Free’s new customers are primarily defections from those three operators. That’s set off a price war among France’s carriers, and a few have begun imitating Free’s strategy of using Wi-Fi to offload mobile traffic. Bouygues has signed a deal with Devicescape to access its virtual hotspot network. The pressures of that new competition has even prompted France Telecom CEO Stephane Richard to suggest that all of the country’s operators start sharing networks to cut costs, Reuters reported.

Still, Free’s growth is coming at some cost to Iliad. The wireless group brought in €320 million (US $404 million) in new revenues for Iliad, but the division also saw a €44 million operational loss.