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Xavier Niel
Xavier Niel sees himself as a revolutionary storming the Bastille. Free is now France's second largest broadband firm with a 23% market share. Photograph: Thomas Coex/AFP
Xavier Niel sees himself as a revolutionary storming the Bastille. Free is now France's second largest broadband firm with a 23% market share. Photograph: Thomas Coex/AFP

Xavier Niel: rebel storms bastions of Gallic elite

This article is more than 12 years old
Former teenage porn baron who took over Le Monde newspaper plans a telecom revolution

To his fans Xavier Niel is the French Steve Jobs. Anti-establishment to the ends of his collar-length hair, he made his name and his fortune from upsetting the Gallic business elite but is fast becoming its most prominent member, controlling France's second biggest broadband business and with a new mobile phone network that has signed up 1.5 million customers from rivals in its first month.

A teenage porn baron turned internet tycoon, briefly behind bars in 2004 and prosecuted for undeclared earnings from peepshows, Niel is also one of a trio President Nicolas Sarkozy tried unsuccessfully to block from buying the country's newspaper of record, Le Monde.

To his rival Martin Bouygues, owner of France's third largest mobile network and heir to a construction empire, this rabble-rousing adversary and his troops are "gypsies camped on the lawns" of the chateau he built.

Last month Niel launched Free Mobile to a room full of cheering self-styled "Freenauts", the customers who signed up for his discounted broadband and TV deals a decade ago and are now queuing for pay-by-instalment iPhones.

On the same day, a lorry bearing the words "we are not gypsies" parked outside Bouygues' head office. Niel sees himself as a revolutionary storming the Bastille.

"He has the chateau, he has everything, we are nothing, we come from nowhere," says Niel, wearing jeans and an open-necked shirt. "We don't like the camping analogy, it makes us sound like squatters. We are there with pickaxes hacking his castle apart and giving the stones to the French people."

Stirring words, delivered in the most privileged of surroundings: the top floor of his head office, a few streets away from the Elysée Palace. Formerly occupied by Suez, one of France's oldest multinationals, tThe building is a miniature stone Parthenon encased in a larger, modern glass structure and houses 1,500 call centre staff as well as the top brass.

Niel can afford the rent – Forbes magazine ranks him as France's 8th richest man with an estimated £2.4bn fortune, thanks to a 60% share in Iliad, the publicly quoted company that operates his businesses.

These days he is often seen out with Delphine Arnault, the couture-clad daughter of the country's richest person, fashion and spirits billionaire Bernard Arnault. But Niel's odyssey to the heart of the Paris beau monde began in the high-rise suburb of Créteil.

While his father studied for 18 years, both law and medicine, his mother worked as an accountant to support the family. Niel was given a Sinclair ZX81 computer for his 14th birthday and quickly worked out how to make money from it. He made a small fortune while in his teens from adult services on Minitel, France's popular internet precursor.

While his sister Véronique studied to become a speech therapist, Niel, gave university a miss. By his mid-20s, he was lending office space and equipment to France's first consumer internet service, Worldnet. A year after launch he invested in the business and made millions when Worldnet was sold for €40m in May 2000, just before the dotcom crash.

"People say, 'What a stroke of genius!' It wasn't a stroke of genius, it was a stroke of luck," he says.

In 1999, Niel launched the Free brand, offering a gratis dial-up internet service. With miles of fibre-optic cable lying unused following the late 1990s building boom that bankrupted a number of telecoms companies, he rented lines cheaply and realised the internet would be a handy way to broadcast television.

In 2000, unable to find an appropriate set-top box, he asked his own engineers to design one and Free's DIY approach was born. It allowed it to become France's first "triple-play" provider – offering broadband, phone and TV.

Free is now France's second largest broadband firm with a 23% market share. Less than France Télécom's 45%, but ahead of more established operator SFR. Given his disruptive success in broadband, French mobile operators – France Telecom's Orange, SFR and Bouygues – fought long and hard to prevent Niel obtaining a mobile phone licence. He says of the heads of rival operators: "They were brought up in the same schools, they go to the same dinner parties, they are friends with each other. Competition in these circumstances cannot exist."

Their cause was helped by his chequered past. In 1997, Niel sold most of his pornography interests but, for a reason he now finds hard to explain, held on to a peepshow in Strasbourg and one in Paris. From time to time, an envelope stuffed with cash was delivered to his office.

One summer's day in 2004, Niel woke at dawn to find 30 armed police officers raiding his apartment. He was in custody for a month pending trial, accused after an anonymous tipoff of pimping and tax evasion. He was found not guilty of profiting from prostitution, but was fined €250,000 (£210,000) and given a suspended two-year sentence for non-declared earnings.

A technology multimillionaire, why did he remain in the sex industry? "I didn't care. If you are worried about the risk to your reputation you don't launch a telecoms firm in an aggressive way."

It does now. Free Mobile opened for business on 10 January by offering two tariffs for the first three million customers: one at €19.99 a month with a mobile internet connection, one at €2 without. The latter undercuts the government-imposed €10 package all operators offer, and Free claims it will still make a profit.

"It just goes to show to what extent the poorest and the most deprived have been hit over the head," Niel bellowed as he strode the stage at the launch event, in a style inspired by Microsoft boss Steve Ballmer's manic performances. "You have been milked like dairy cows and you will have to teach your operator a lesson."

When he "saved the world", as he likes to say of his purchase of Le Monde, the paper was reportedly weeks away from not being able to pay its journalists. His chief-of-staff at Iliad, Michaël Boukobza, was sent in and the cost cutting quickly earned him the nickname Bazooka.

A senior journalist says Niel does not interfere in the paper's agenda, but that his methods to return it to profitability were a culture shock. "When the new owners presented themselves following the acquisition, it was Niel who seduced us. He was warm, imaginative. But there is another side to him that is violent, capable of anything."

Staff resistance to cuts was neutralised by leaks to rival papers about chauffeur driven cars and other profligacies.

Niel cherishes his two young sons, spending most school holidays away from the office and mornings at home when they were small. He dismisses the trappings of wealth – saying private islands and yachts are "English" affectations. He claims to take taxis everywhere, though there is a black Mercedes in his garage. Friends say he has lost weight, washes his hair and has his shirts ironed more often.

One thing that has not changed is his belief in working one's way up from the bottom. There will be no silver spoon for his family - because Neil also wants to change the French law that entitles children to inherit the majority of a parent's estate.

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