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Tiscali signs Italian MVNO deal

Carrie Pawsey

Tiscali signs Italian MVNO deal

It was announced on Friday that the alternative fixed line provider and ISP Tiscali has signed an MVNO deal with Telecom Italia allowing it to launch mobile services in the Italian market. It has set itself a relatively long term launch date (by end Q2 2008) and stated that it intends to offer quad-play services.

Comment: As with most MVNO deals, the details of the contract are sketchy and not in the public domain. However, what we do know is:

  • It is a nationwide deal, and Tiscali is also piggybacking on Telecom Italia's    international roaming agreements
  • Tiscali is able to offer prepaid and postpaid services
  • Tiscali can target business customers and consumers. We anticipate it will initially target mobile to its existing customer base, but in the future use quad-play to attract new customers
  • Tiscali has the right to set its own tariffs and commercial prices
  • It plans to offer reduced on-net tariffs
  • And it has hinted at introducing an FMC solution.
Tiscali has recently been in the news for its UK acquisition of Pipex (see Euroview Daily, 16 July) and it appeared for a while that the Italian operation had taken a back seat to the UK. It's fair to say that Tiscali has struggled in Italy, achieving just 5% of the Italian broadband market - dwarfed in comparison to Telecom Italia which has in excess of 60%. However, this deal signals that Tiscali is looking for growth in Italy and it is back on the corporate agenda.

However, we think it's not going to be easy for Tiscali. Telecom Italia and Vodafone are very strong in the mobile market. Even Wind as the third MNO has struggled to gain a strong position against the two mobile giants, achieving 18% market share in eight years of operation.

In addition, Tiscali will face increasing competition from other MVNOs entering the market and it will be interesting to how the new MVNOs fair. As well as Tiscali, there are three launched MVNOs - grocery giants Co-Op and CarreFour as well as a new business MVNO called Elsacom. There are also two further players that have signed wholesale agreements and are poised to launch - the Italian Postoffice and BT, as well as other interested parties like Fastweb looking for MVNO deals.

So why has Telecom Italia signed this deal with Tiscali and why are MVNOs entering the market after being blocked for so long? The regulator has made no secret of its desire to see competition increase in the market. While the MNOs have fought off MVNOs longer than most European markets, it became clear that third party players would enter the market at some point. It was this recognition together with growing pressure from the regulator (who has yet hasn't actually mandated access) which led to TIM, Vodafone and Hutchison 3 all signing wholesale deals. They have recognised that it's better to commercially negotiate deals and choose their partners rather than being forced by the regulator to open their networks to anyone that requests access (as happened in Denmark for instance where MVNOs have achieved in excess of 25% market share).

This deal should appease the regulator as it seems to give some independence to the tariffs and services that Tiscali can offer. However, at the same time we believe it is a limited threat to Telecom Italia given the relatively small market share and brand power of Tiscali.




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