Italian mobile service revenues contract 6.8% in 2012

Thursday 25 April 2013 | 15:35 CET | Background

Italian mobile connections increased by just 0.4 percent in 2012 to a total 92.7 million, giving a penetration of 152 percent. The market still consists of 80 percent prepaid customers, but growth has been mainly coming from the postpaid segment. TIM and Vodafone remained market leaders with a combined share of 66.4 percent at the end of the year. In terms of mobile service revenues, the Italian operators saw a decline of 6.8 percent over 2012, to a total EUR 17.8 billion. Just like in other European markets, revenues were down due to a combination of factors including the challenging macroeconomic situation, competitive environment and regulation (mainly MTR rates). This article provides an overview of the current state of Italy's mobile market, including the latest statistics based on Telecompaper's database, the key regulatory issues and the growth in mobile data services.

Penetration more than 152 percent; possible merger of TIM and 3 Italia

The popularity of multiple prepaid SIMs among Italy consumers has led to a mobile penetration rate far higher than the European average, at 152 percent at the end of 2012. The market is dominated by three operators (TIM, Vodafone and Wind), while a fourth, 3 Italia, has struggled to significantly expand its customer base and business. Recently news emerged of talks between Hutchison Whampoa (which owns the 3 brand in several countries) and Telecom Italia on merging their mobile operations in Italy. Hutchison Whampoa is interested in acquiring a controlling stake in Telecom Italia in exchange for 3 Italia. 

Mobile connections grow 0.4%; TIM and Vodafone remain market leaders but lose subs

The Italian mobile market added 340,000 new lines in 2012 (excluding MVNOs and M2M, expect for TIM, which includes M2M). This is equivalent to 0.4 percent growth, to end the year with a total 92.7 million registered mobile connections. The slow growth is due to the loss of 1.6 million prepaid customers (-2.2%), whereas postpaid grew by 11.6 percent or 1.9 million clients annually. This lead to a higher share of postpaid customers in the total base, at 20.4 percent compared to 18.4 percent at the end of 2011. Nevertheless, the market remains mainly prepaid, with 80 percent of all mobile connections.

TIM and Vodafone remain the largest MNOs, but only Wind and 3 Italy were able to add mobile connections to their base during 2012, increasing their market shares. Wind added 0.6 million customers (or 3.0 percent), growing its market share to 23.3 percent, and 3 Italia added 0.3 million (or 3.7 percent), remaining the smallest operator with a market share of 10.3 percent. TIM continues to lead the market, although its market share fell slightly to 34.7 percent (down 0.2%). Vodafone followed with a share of 31.7 percent, down by 0.7 percent points over the year.

Figure 1: Italian mobile connections per MNO (x millions) at year-end in absolute numbers and in market shares per MNO. Sources: company annual reports, Telecompaper estimates.

Around 18 MVNOs in Italy with a total 4.5 million connections; PosteMobile largest MVNO

We estimate there are around 19 MVNOs active in the Italian market (for more information see following link). According to the Italian telecommunications regulator AGCOM, there were 4.5 million MVNO subscribers at the end of 2012, equal to around 4.6 percent of the total connection base and up from 3.65 million a year earlier. The MVNOs are clearly managing to take some customers from the MNOs. The largest MVNO in Italy is PosteMobile with around 55.3 percent of the total MVNO base in Q4 2012. According to the company itself, it has around 3 million cards in operation. Fastweb followed as the second-largest MVNO (15.0%), while Coop Italia (7.2%) and Erg Mobile (7.1%) were roughly tied for third place.

Service revenues decrease 6.8 percent in 2012

Italian mobile service revenues decreased to EUR 17.8 billion in 2012, down 6.8 percent year-on-year. Mainly prepaid revenues were down, dropping by more than 10.5 percent during the year. Prepaid accounted for 60.2 percent of all revenues in 2012, while postpaid lost only 0.1 percentage points compared to 2011. Most Italian operators, the same as other MNOs in Europe, attributed the decline in service revenues to the continuing intense competition and macroeconomic weakness, which impacted consumer confidence, as well as MTR cuts. In Italy termination rates were almost halved in July 2012. Under the current glide path, the next cut will happen in July 2013 (see figure below).

Figure 2: MTR tariffs. Source: Wind’s presentation (AGCOM)


The lower termination rates contributed to a sharp drop in voice revenues of 11.3 percent in 2012. Voice contributed 66.3 percent of total services revenues last year. Non-voice revenues (consisting of SMS and data) were only able to grow 3.6 percent, reaching 33.7 percent of all revenues.

In terms of service revenue, Vodafone and TIM remained market leaders with respective market shares of 35.0 and 34.3 percent in Q4 2012. Vodafone lost 1.9 percentage points of market share during the year. Wind followed with 20.8 percent, up 0.5 percentage points from Q4 2011. 3 Italia was able to gain service revenue market share, ending Q4 2012 with 9.9 percent vs 7.4 percent in Q4 2011.

The above figures are based on Telecompaper’s database on the Italian mobile market, which are available for purchase. For more information, click here.




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