Iliad, operator of popular French internet service provider Free, reported a sharp 30.2 percent increase in revenues in its third quarter, but that didn't keep the market from punishing the stock. Illiad' price dropped 2.52 percent to 60.4 euros on Nov. 6.

The company said that setting aside the additional revenue from its acquisition this year of Alice, another ISP, its results would have increased by 17 percent. Over nine months, the company reported, revenues passed the billion-euro barrier to 1.09 billion euros, an increase of 23.9 percent over the previous year.

Iliad continues to gain customers at a steady pace. The company reported signing up 141,000 new customers, matching the previous year's gains. With 4.12 million customers, Free is once again the No. 2 ISP in France, behind market leader France Telecom's Orange (8.1 million customers) and ahead of Vivendi's SFR-Cegetel.

Iliad, which has ambitions to acquire France's fourth mobile phone license, has set a goal of signing up 5 million Free customers by 2011. It is now disputing an agreement between Orange and SFR-Cegetel that would have the companies divide up the process of bringing fiber optic cables to French homes. Under the deal, the company closest to an apartment building would wire the building and rent access to other ISPs. Iliad has called the deal monopolistic and warned that it would stifle competition.
France has one of the lowest rates for Internet acess. Free offers a basic triple-play package of broadband, telephone and television service for under 30 euros ($40).