New research from Telecompaper casts fresh doubt on the long-term sustainability of the price war launched by Italy’s mobile network operators following the market entry of low-cost challenger Iliad. The latest quarterly results show that Iliad’s aggressive end-May launch offer of 30GB of mobile data plus unlimited calls and SMS for EUR 5.99 a month – immediately countered by a slew of similar data-led offers from TIM, Vodafone and Wind Tre – is already hurting average revenue per user (ARPU) across the board.
Wind Tre appears to have been most affected by the competitive pressure, posting a 9.8 percent year on year fall in mobile service revenues to EUR 940 million in Q2 2018 and a 5.3 percent decline in mobile customers at its Wind and 3 Italia brands, according to Telecompaper’s quarterly report. The company’s blended ARPU fell to EUR 10.8 in Q2 2018 compared to EUR 11.4 a year earlier, led by an 8 percent decline in postpay ARPU.
Vodafone Italia and, to a lesser extent, TIM also saw recent progress disrupted by the new entrant. Vodafone’s overall mobile ARPU fell to EUR 14.7 in Q2 from EUR 15.7 the previous year, including a 6.4 percent sequential drop, and its mobile customer base also declined, to 21.99 million at the end of June. TIM’s mobile ARPU declined to EUR 12.1 from EUR 12.9 a year earlier, although its customer base increased by over 600,000 year on year to 31.63 million.
Total mobile service revenues at the four Italian mobile operators contracted to EUR 3.06 billion in Q2, including an initial EUR 8.90 million from Iliad’s first month. The market was down over 6 percent year on year from EUR 3.27 billion in service revenues in Q2 2017.
More pain can be expected for the Italian operators, as the full effects of the “revolution” promised by Iliad Italia CEO Benedetto Levi are felt in the coming months. In addition to the increased retail competition, the operators also face the cost of EUR 4 billion and counting in the ongoing 5G spectrum tender.
The above figures are based on Telecompaper’s database on the Italian mobile market, which is available for purchase. For more information, click here.
