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Iliad's Italian odyssey

Following the acquisition of mobile assets from Wind Italy and Three Italia’s merger, Iliad - which owns disruptive Mobile Network Operator (MNO) Free in France - will soon be entering the Italian mobile market. The mobile assets include 3G/4G mobile spectrum and a selection of mobile towers that will enable the formation of a new Italian MNO, keeping a total of four Italian operators after the merger is completed. However, Iliad is unlikely to generate a mobile shockwave as big as it caused in France in 2012.

Much of Free’s rapid success in France stemmed from undercutting the three national operators; in a majority post-pay market, it offered plans without a fixed-term and minimised operating costs by exclusively selling its products online. Since 2011, the post-pay Average Revenue Per customer (ARPR) in France declined from more than €40 in 2012 to less than €25 in 2016. A similar decline has already been seen in Italy - in 2016 it was less than €17, down from €33 in 2011. Furthermore, Italy remains a majority prepay market, contributing to a lower overall mobile ARPR of just €14 compared to €24 in France in 2016. Italy’s lower ARPR leaves less room for Free to undercut prices.

Free’s success in France can also be attributed to multiplay discounts. Prior to launching its mobile operation in France, Free had a significant subscriber base for its fixed services, to whom it offered a discount on its mobile plans. In Italy, it will be a mobile pure-play unable to initially offer multiplay discounts on its own services. Furthermore, mobile operators in Italy have already been looking for ways to cut costs, offering “online-only” discounted price plans, which saves them expenses on a physical presence.

Free will need to come up with a new strategy to make its mark on the Italian telecommunications market. However, given its recent success, the Italian MNOs will need to stay alert of their new fast-moving competitor.