Iliad SA's (ILD.FR) stock rose nearly 6% Thursday after it struck a roaming deal with France Telecom SA (FTE) that will give it access to the telecom giant's third-generation mobile network, resolving a major hurdle for the French Internet provider as it prepares to enter the cellphone market in 2012.

Striking a 3G roaming pact with one of the country's bigger mobile operators is crucial for Iliad, which is preparing to launch cellphone services in 2012 after winning France's fourth third-generation mobile license in 2009. Using France Telecom's network will allow Iliad to offer subscribers faster data services on smartphones until its own network is fully operational.

In return, the 3G roaming deal will bring France Telecom one billion euros ($1.4 billion) in revenue over six years, a France Telecom spokesman said.

France's three existing mobile operators--France Telecom, Vivendi's (VIV.FR) SFR, and Bouygues SA's (EN.FR) Bouygues Telecom--had been reluctant to negotiate a 3G roaming deal with Iliad, which had pledged to slash prices on mobile communications. Competition among existing operators has heated up over recent months as Iliad's move into mobile approaches.

The French competition body Autorite de la concurrence Thursday said it approves of the agreement reached by Orange and Iliad.

"Iliad's difficulties to have access to a third-generation mobile network for its mobile-phone unit Free Mobile was indeed a concern for the Autorite de la concurrence, and which it had pointed out in a decision in June on cross-selling practices and bundled quadruple-play offers," a spokeswoman told Dow Jones Newswires. Quadruple-play offers combine mobile and land-line services, Internet and TV.

In June, the competition authority warned that the dominant market players' convergent offers could represent a risk to competition given the hurdles new competitors face in the market. As consumers increasingly turn to operators as single-providers for an array of services, competitors who cannot provide the whole range of services are disadvantaged and risk eviction from the market, the body had said. The risk could be reduced if the fourth mobile operator with a license, Free, was rapidly able to use one of its competitors' third-generation mobile networks, the body had said, noting that negotiations were not succeeding on this subject.

"Our June 2010 decision had a determining impact," the Autorite de la concurrence spokeswoman Thursday told Dow Jones Newswires.

The spokeswoman also said that the investigation it opened last year into France Telecom's quadruple-play offers to examine any possible competition distortions continues and that no decision has been taken yet. Free's difficulties to access 3G was not the authority's only concern, she said.

The agreement between Orange and Iliad will take effect once Free Mobile covers 25% of the French population with its mobile network. Free Mobile has committed to have a mobile network that covers at least 90% of the country's population ready by 2018.

French telecom regulator Arcep said the agreement will inject a "new dynamic" into the French telecom market.

Iliad shares closed up 5% or four euros to 84.74 euros on Thursday while France Telecom shares ended down 1% or 12 European cents to 15.71 euros amid a higher Paris market.

-By Ruth Bender and Angeline Benoit, Dow Jones Newswires;

+33 1 4017 1740; ruth.bender@dowjones.com

--Inti Landauro contributed to this article.