Thursday, March 8, 2007

Telecom Italia Targets "Ultra-Broadband" with NGN2 Rollout

Telecom Italia outlined a multi-year strategy to defend its domestic fixed-line and mobile markets by launching a Next Generation Network 2 (NGN2) project to deliver "ultra-broadband" services in line with market demand and the regulatory framework.

In a press event covering its 2007-2009 business plan, Telecom Italia said it is now expecting its domestic wireline revenues to fall between 2.5% and 3.5% in 2007 compared to last year, while mobile revenues also decline by an estimated 2% to 3%. Mobile voice revenue growth is expected to decline because of market saturation, cuts in roaming fees, and the spread of flat pricing. In its home market, Telecom Italia currently serves 21 million fixed line customers, about 33 million mobile customers and 7 million broadband subscribers.

The company is looking to international markets for growth, including its investments in Brazil, Argentina, France and Germany. Telecom Italia will emphasize strategic alliances abroad, possibly including Telefonica, France Telecom and Deutsche Telekom.

In IPTV, Telecom Italia is currently offering "Alice Tutto Incluso" for EUR 60 per month, including 60 TV channels, VOD, unlimited national voice calling and an additional VoIP line, and ADSL 20 Mega flat service. During 2007, the company will introduce the Microsoft TV platform, offer a DTT integrated set-top box, add HD and multi-room PVR capabilities, build the content portfolio to over 100 TV channels, and significantly expand the VOD library.

The NGN2 rollout calls for the introduction of FTTx and VDSL2 in the access network, while continuing ADSL2+. The goal is to support bandwidth of over 50 Mbps over fixed connections. By 2009, the goal is to have 99% coverage for ADSL, 67% coverage for ADSL2+, and 5% coverage of VDSL2+FTTB across Italy.

The NGN2 investments are not expected to increase CAPEX over 2007 levels. Instead, the rollout should be self-funding given major savings in OPEX.

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