Iliad, the French telecom group known for shaking up the market with low-cost mobile and broadband plans, reported its half-year results on Thursday, and the numbers tell a clear story: the company's growth is increasingly coming from outside its home turf.
Core profit—a measure that strips out some one-off costs and is closely watched by investors—rose 2.2% in the first half of the year. That may not sound spectacular, but the details beneath the headline show a business that is finding new momentum in Italy and Poland, even as its French operations mature.
Italy leads the charge
The standout figure was Italy, where revenue jumped 10.2% compared with the same period last year. That is a sharp acceleration for a market that has been fiercely competitive, with several operators fighting for customers. Iliad entered Italy in 2018 as a disruptive newcomer, and its aggressive pricing has helped it build a substantial subscriber base.
By the end of June, the group's total customer base reached 52.5 million, up from the previous year. While the brief doesn't break down the numbers by country, the growth in Italy and Poland is clearly driving the overall expansion.
Poland, where Iliad operates under the Play brand, has also been a key contributor. The company has invested heavily in network infrastructure and 5G rollout there, and those investments appear to be paying off in terms of subscriber growth and revenue.
France: still the base, but maturing
France remains Iliad's largest market, but it is no longer the primary growth engine. The French telecom market is saturated, with intense price competition from rivals like Orange, SFR, and Bouygues Telecom. Growth in France has slowed as the company focuses on defending its market share and improving profitability rather than adding new customers at any cost.
This shift is not unique to Iliad. Many European telecom operators are finding that their home markets have reached a plateau, and they are looking abroad for expansion. For Iliad, the strategy has been to replicate its low-cost model in markets where there is still room to grow.
What it means for investors
For everyday investors, the key takeaway is that Iliad's growth story is becoming more diversified. That can be a positive sign, as it reduces reliance on any single market. If Italy and Poland continue to perform well, they could offset any slowdown in France and help sustain overall profit growth.
However, there are risks. International expansion comes with its own challenges, including regulatory hurdles, currency fluctuations, and the need for ongoing capital investment. Telecom is a capital-intensive business, and Iliad has been spending heavily to build out its networks in new markets. Investors will want to see that those investments eventually translate into higher returns.
The 2.2% rise in core profit is modest, but it suggests the company is managing costs effectively even as it invests for growth. The customer base of 52.5 million is a solid foundation, and if the Italian and Polish operations continue to gain traction, the company could see stronger profit growth in the second half of the year.
Broader market context
Iliad's results come at a time when European telecoms are under pressure from high inflation and rising interest rates, which increase borrowing costs. At the same time, competition remains intense, and consumers are increasingly price-sensitive. Companies that can grow their customer base while keeping costs in check are likely to fare better than those that rely on price hikes.
In that context, Iliad's performance in Italy is particularly encouraging. It shows that the company can still win customers in a competitive market, which bodes well for its long-term prospects.
Investors should also note that Iliad's growth is not just about adding subscribers; it's about increasing revenue per user and improving operational efficiency. The company has been pushing higher-margin services like fiber broadband and 5G, which could help boost profitability over time.
Looking ahead
The second half of the year will be crucial. Investors will be watching to see if Italy can maintain its double-digit revenue growth, and whether Poland continues to gain ground. They will also be looking for signs that the French market is stabilizing, as that would remove a drag on overall performance.
Iliad's management has been clear that it sees international markets as the key to future growth. The latest results support that view, but execution will be everything. If the company can keep delivering strong growth in Italy and Poland while managing costs, the stock could reward patient investors.
For now, the message is simple: Iliad is no longer just a French telecom. It is becoming a European challenger, and its growth story is shifting beyond its home borders.
