Swisscom is looking to fast track subsidiary Fastweb’s climb to conquer a greater share of Italy’s fixed, mobile, and multiplay segments with the acquisition of Vodafone Italia.

The exclusive talks may lead nowhere, but the potential pairing would pose further disruption to an already fractious Italian market, where fixed-mobile convergence (FMC) has promising prospects for growth. According to GlobalData’s Italy Multiplay Forecast, the country’s 2023E 29% FMC household penetration rate will increase annually to reach 41% by 2028E, while total FMC revenues will progress from $2.6bn to $3.4bn.

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Swisscom looks for foothold in Italy

The negotiations would see Swisscom’s Fastweb subsidiary merge with Vodafone Italia in a bid to leapfrog into the country’s integrated and convergent top three. This would result in a foothold alongside incumbent TIM and fellow amalgamated challenger WindTre (wholly owned by CK Hutchison Holdings), leaving aspiring contender and frustrated Vodafone Italia suitor Iliad to rely on a line hitched to wholesale for fiber provisioning, including coverage supplied by Fastweb.

Contributing almost a quarter of Swisscom’s total revenue, Fastweb’s own revenues grew 6.1% year-over-year in 2023, with a declining number of retail broadband accesses (down -3.1% to 2.6 million) but a burgeoning wholesale presence (up 41.5% to 648,000 wholesale broadband connections) and solid growth in mobile to reach 3.5 million lines (up 13.7%). The company’s FTTx network coverage passes 10.6 million premises, and its 5G reach (including network sharing with WindTre) touches 72% of the population.

Boost for Fastweb

Pairing up with Vodafone, Italy’s number three mobile provider in terms of human SIMs and residential market share and the country’s number two fixed broadband and FTTH player, would significantly bolster Fastweb’s competitive presence, bringing aboard more than 17.2 million mobile and 2.9 million fixed broadband customers. Combined, the two operations would benefit particularly from Vodafone’s existing mobile reach.

However, together the paired businesses would represent around 30% of Italy’s fixed broadband market share according to regulator AGCM, behind TIM’s roughly 38%, as well as having a substantial presence in the country’s FTTC, FTTH, and potential FWA segments. This alignment of complementary mobile and fixed network assets at a significant scale is a key incentive for Fastweb in pursuing this matchup, in which Swisscom and Vodafone have agreed upon a preliminary purchase price of €8bn ($8.6bn) on a debt- and cash-free basis.

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