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Italy Telecommunications Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8573 Description BMI’s latest update on Italy’s telecommunications market contains new subscriber data which show howthe country’s mobile, fixed-line telephony and broadband internet markets developed in the first sixmonths of 2009. One of the most notable developments in the mobile market has been the contraction inthe number of mobile subscribers, particularly in the second quarter of 2009. The latest figures show thatItaly’s mobile customer base contracted by 2.2% in H109, following falls of 0.4% in Q109 and 1.8% inQ2. By the end of June, Italy’s mobile customer base was down 1.8% year-on-year (y-o-y), andpenetration had fallen to 139.4% from its peak of 142.7% in December 2008.Italy’s shinking mobile customer base stems from the ongoing deduction of inactive prepaid users bymobile market leaders Telecom Italia and Vodafone Italy. The deduction of inactive prepaid customersreflects the saturated nature of the market and the need for these operators to improve their subscribermixes by moving prepaid users to postpaid contracts. The discounting strategies of Telecom Italia andVodafone are expected to result in negative growth in 2009; by the end of the year, we predict thatpenetration will have fallen back below 137%. In the event that Italy’s two smaller mobile operators,WIND and 3 Italia, join their larger rivals in discounting inactive customers, a much steeper drop insubscriber numbers could be seen. Meanwhile, the first six months of 2009 saw extremely weak growth for Italy’s broadband sector. InH109, the total number of Italian broadband connections grew by 3.2% to reach 11.775mn; the number ofconnections grew by just 1% in the first quarter of the year, the growth rate rising to 2.1% in Q209. BMIbelieves that the economic slowdown is partly to blame for the weak broadband growth. However, wealso attribute the performance of the market to the slow speed at which broadband network infrastructuresare being extended to smaller towns and rural parts of the country. We have reduced our full-year growthexpectations for the sector, and now envisage a 7% expansion for the year; by the end of 2009, we predictthat Italy’s broadband penetration rate will have reached 20.8%, up from 19.5% at the end of 2008. In thelonger term, however, we predict that 2010 and 2011 will see stronger growth rates for the sector. Thenetwork sharing agreement signed in August between broadband operator Fastweb and alternativeoperator WIND is exemplary of the sort of developments which BMI believes will result in strongerbroadband growth in the latter years of our forecast. Among other things, the agreement between Fastweband WIND concerns investments in fibre-optic infrastructure. An improved country risk rating is behind Italy’s greatly improved position in this quarter’s set ofBusiness Environment Rankings for Western Europe. The higher country risk score reflects our slightlymore upbeat view of the way Italy’s economy will develop in 2009. We also predict that economicgrowth will return to positive territory in 2010 with a 0.2% real expansion. Table of Contents
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