Quality over quantity - TIM Italy responds to market saturation
Churn-driven market share gains trigger change in strategy
Italy is one of the most competitive and dynamic mobile markets in Western Europe, characterised by a high penetration rate, price sensitive demand and the fast adoption of high-speed mobile services. Operators in such markets are facing great challenges in finding the right balance between profitability and capital expenditure. In most cases, operators in such markets are focusing on: rationalising offers by introducing innovative tariffs (flat rates, fixed-mobile substitution) and bundled deals; targeted promotions and loyalty programmes to fight churn; MVNO developments; customer migration from prepaid to contract; and acceleration of VAS adoption.
Over the last two quarters, the Italian landscape seems to have changed, and by end of year, TIM Italy could find itself with a connections market-share around 39% as it switches its focus to customer retention. Vodafone in Western Europe is facing similar pressures and is taking several initiatives to stimulate revenues, reduce its cost structure and maintain capex levels. The situation is similar to the UK mobile market, which registered a negative quarterly growth in second-quarter 2008 for the first time since 2006. The combination of a slowing economy and saturated telecom markets will mean operators in such markets will face increasing challenges in speeding-up technology migrations and future deployments.