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Italy Telecommunications Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-1836 Description Subscriber growth in Italy continues to defy all attempts to suggest that the sector has reached saturationpoint. In the first nine months of 2007, the number of Italian mobile subscribers grew by 8.8%, to reach80.827mn (equivalent to a mobile penetration rate which is now over 138%). We estimate that there were82.835mn Italian mobile subscribers at the end of 2007. Despite this strong performance, we continue topredict a dramatic slowdown in subscriber growth over the next five years. Although we believe that thesector contains a significant number of inactive prepaid users, the extremely high penetration rates pointto a market which is close to saturation, even after inactive users have been accounted for. Although weanticipate a penetration rate of just over 177% by the end of 2012, this figure would be significantly lowerif the operators decided to discount inactive subscribers. Meanwhile, by the end of September 2007,Italy’s 3G user base amounted to almost 20.5mn, encouraging our belief that there were 21.819mn 3Gcustomers at the end of the year (equivalent to 26% of mobile users). Although we remain optimisticabout continued 3G growth over the next five years, we have downgraded our forecast, predicting aslower and more gradual rate of growth. By 2012, we anticipate a market of over 40mn 3G users. In October 2007, Telecom Italia saw the resignation of two board members, just hours after Spain'sTelefonica SA and a group of Italian financial institutions took control of the Italian incumbent,completing the long-awaited EUR4.1bn (US$5.8bn) takeover. The acquisition of a 23.6% controllingstake in Telecom Italia by Telco, a holding company comprising Telefonica and four major Italianfinancial investors, was expected to bring to an end a period of limbo which has affected Telecom Italia.One consequence of the acquisition’s completion is expected to be further regulatory pressure to break-upTelecom Italia’s telecoms operations; in October 2007, the head of Italian regulator, AGCOM, said thathe wanted more power to make Telecom Italia put its fixed-line network under independent management.Meanwhile, in October 2007, that Europe’s biggest mobile operator Vodafone had acquired the Italianand Spanish operations of Swedish operator Tele2, for EUR775mn. The deal gives Vodafone access toalmost 1mn broadband customers in the two countries, meeting its desire to increase its non-wirelessactivities. At the end of September 2007, Tele2 Italia had 2.6mn customers, including more than 400,000broadband users. In acquiring Tele2 Italia, Vodafone beat off competition from the likes of Tiscali,WIND and Fastweb in order to secure the deal. Furthermore, it was revealed in September 2007 that 3Gonlymobile operator, 3 Italia, had been put up for sale by its owner, Hutchison Whampoa. An auctionfor 3 Italia is expected to generate interest from Deutsche Telekom, which has expressed interest inboosting the international operations of its mobile phone division, T-Mobile. Italy currently sits in fourth place in our Business Environment Rankings for Western Europe. Althoughthe country receives the third highest score for the state of its telecoms market, its overall score iscompromised by a relatively weak country structure score, and by relatively country risk low score. Table of Contents
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