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1、SPECIALREPORTF-M Convergence in Europe:Strategies for SuccessPublished by BUSINESSMONITORINTERNATIONALLTD2008BusinessMonitorInternational.Allrightsreserved.Allinformation,analysis,forecastsanddataprovidedbyBusinessMonitorInternationalLtdisfortheexclusiveuseofsubscribingpersonsororganisations(includi

2、ngthoseusingtheserviceonatrialbasis).AllsuchcontentiscopyrightedinthenameofBusinessMonitorInternational,andassuchnopartofthiscontentmaybereproduced,repackaged,copiedorredistributedwithouttheexpressconsentofBusinessMonitorInternationalLtd.Allcontent,includingforecasts,analysisandopinion,hasbeenbasedo

3、ninformationandsourcesbelievedtobeaccurateandreliableatthetimeofpublishing.BusinessMonitorInternationalLtdmakesnorepresentationofwarrantyofanykindastotheaccuracyorcompletenessofanyinformationprovided,andacceptsnoliabilitywhatsoeverforanylossordamageresultingfromopinion,errors,inaccuraciesoromissions

4、affectinganypartofthecontent.F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSBusinessMonitorInternationalLtdSPECIALREPORTContentsTheStatusandFutureofFixedMobileConvergenceinEurope.5Introduction.5Mixedexperiences.5TheEnterpriseFactor.6Conclusion.7FMC/FMSUSERSEUROPE(MILLIONS).6FMC/FMSSERVICEREVENUES($BNS).

5、7MC/FMSEQUIPMENTMARKET($BNS).7Fixed-LineIndustryForecasts.8UnitedKingdom.8TABLE:UKTELECOMSSECTORFIXED-LINEHISTORICALDATA&FORECASTS.8Germany.8TABLE:GERMANYTELECOMSSECTOR-FIXEDLINES-HISTORICALDATA&FORECASTS.8France.9TABLE:FRANCETELECOMSSECTORFIXED-LINEHISTORICALDATA&FORECASTS.9Italy.9TABLE:ITALYTELECO

6、MSSECTORFIXED-LINEHISTORICALDATA&FORECASTS.9Spain.10TABLE:SPAINTELECOMSSECTOR-FIXED-LINE-HISTORICALDATA&FORECASTS.10MobileIndustryForecast.11UnitedKingdom.11TABLE:UKTELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS.11Germany.12TABLE:GERMANYTELECOMSSECTORMOBILEHISTORICALDATA&FORECASTS.12France.13TABLE:FR

7、ANCETELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS.13Italy.14TABLE:ITALYTELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS.14Spain.15TABLE:SPAINTELECOMSSECTORMOBILEHISTORICALDATA&FORECASTS.15CompanyProfiles.16BT.16FranceTelecom.19DeutscheTelekom.22TelecomItalia.25BusinessMonitorInternationalLtdF-MCONVERGE

8、NCEINEUROPE:STRATEGIESFORSUCCESSBusinessMonitorInternationalLtdSPECIALREPORTTheStatusandFutureofFixedMobileConvergenceinEuropeIntroductionFixedMobileConvergence(FMC)startedoutasastrategyforfixednetworkoperatorstoreclaimsomeoftherevenuetheirmobilerivalsweretakingfromthem.Nowitisbeingturnedonitsheadto

9、pushevenmorebutdespiteclosinginonthreeyearsofactivemarketingthenumberofcustomershavestubbornlyremainedinthemidtensofthousandsrange.Comparedto24mil-lionhouseholdsand33millionfixedlinetelephonesintheUK,thatdoesnotamounttomuch.revenuethemobileoperatorsway.Anumberofreasonsaccountforthedisappointingfig-O

10、verathirdofallcallsonmobilesareestimatedtotakeplacewithintenfeetofafixedphone,eitherathomeoratwork.AndwiththenumberofmobilephonesinuseinEuropelyingatclosetodoublethoseoffixedandinsomeplacestrebleormore,itiseasytoseewhyfixedoperatorsshouldbeconcerned.FMCisallaboutbeingabletousethesameservicesoverdiff

11、erentdevices,whethermobileorfixedphonesorincreasinglyothertypesofdevicessuchascomput-ersortelevisions.Thethreekeycomponentsaredevicemobility,servicesmobilityandnumberportability.AnFMCusershouldbeabletomakeorreceiveacallontodeviceheorshechooseswhereverheorshewantsandgainaccesstoanyserviceheorshewants

12、suchasvoicemail,directoryofcontactsorleastcostrouting.Thesectordividesintoconsumerandbusinesssegmentsontheonehandandstrategies/productofferingsthatbenefitfixedoperatorsandothersthatbenefitmobileoperatorsontheother.ures.Thelimitedrangeofcompatiblehandsetsonofferhasnothelpednorhasthemixedmarketingmess

13、agewhichmayleaveprospectivecustomerswonderingwhattheyarebuyingacordlessoramobilephone.InGermanyDeutscheTelekomsexperiencehasbeenevenworse.Sobad,infact,thatitcancelleditsfirsttryatFMC,itsT-Oneservice,inMarch2007afteronlyeightmonthsduringwhichithadattractedtheattentionofjust10,000subscribers.ThingsinG

14、ermanywerenothelpedbythefactthatthemobileoperatorslaunchedtheircounter-attackevenbeforeTelekomhadbegunitsoffensive.Anticipatingthatthemobilephonewouldbecomepeoplesprimarycommunicationsdevice,Germanysmobileoperatorshavealwaysofferedgoodvaluehomezonedealsdesignedtopromoteuseofmobilesinthehome.EvenDeut

15、scheTelekomsownmobilearm,T-Mobile,wasofferingmoreattractiverates.DeutscheTelekomsimplyfoundittoodifficulttomakeaprofitfromaconsumerFMCservice.Weestimatethattherewillbetheequivalentofover100millionEuropeansubscriptionstoFMCandequivalentservicesbytheendof2012yieldingacombinedannualequipmentandservices

16、marketof$85billion.Theonlyquestionsarewhichtechnologieswillbeemployedandwhostandstobenefitandwhostandstolose.Thefollowingsectionsaddresstheseissues.MixedexperiencesEuropesFMCpioneersarethemajorfixedcarriersbuttheirexperienceshavenotbeenuniversallygood.IntheUKBTlauncheditsFusionserviceinJune2005Busin

17、essMonitorInternationalLtdOfEuropesmajorfixedcarriersonlyFranceTelecomseemstohavefoundwhatmostobserverswouldconsideradegreeofFMCsuccess.WitharoundhalfamillionuserstoitsOrangebrandedUnikserviceitwashelpedbyanexistinginstalledbaseofDigitalSubscriberLine(DSL)broadbandInternetsubscriberstowhomitvigor-ou

18、slyencouragedtheupgradeoftheirmodem/routerstoLiveboxescapableofalsosupportingWiFiandvoiceoverIP(VoIP).ThereareanumberofreasonsforFranceTelecomsrelativesuccess,byfarthemostimportantonebeingthatitisnotjustafixedorcableoramobileoperatorF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSbutallthreethingsandthec

19、ountrysmajorInternetaccessprovidertoboot.This,webelieve,hastobethewayforwardforanyfixednetworkoperatorwishingtoexploitFMCopportunities.FranceTelecomisnowseekingtorepeatitssuccesswithUnikoverseas,inparticularinPoland,SpainandtheUK.Itdoesnothavethemarketdominanceorthequadplayadvantageinthesecountries,

20、however,andweexpectsuccesstheretobemorelimited.IneasternEuropeFMChasstilltomakeanimpact.AswellasFranceTelecomsofferinginPolandthecountryhasrecentlyseenthelaunchofanotherservicefromMobilnaTelefoniaInternetowa(MTI).Itistargetingbusinessusersratherthanconsumersandplanstoofferitserviceacrosscentralandea

21、sternEuropeduringthecourseof2008.WeexpectdemandforclassicFMCtoremainlowineasternEuropeforsomeyears,atleastasfarasconsumersareconcerned.Themomentumofthemobilephoneissimplytoogreat.Wedo,however,seeahealthyfutureforbusinessFMCservicesacrosstheregion,suchasthoseofferedbyMTI.TheEnterpriseFactorWebelievet

22、hatfixedcarrierswillfaceastrugglewiththeirconsumerFMCstrategies.ThereisoneareaofFMC,however,wherefixedcarriersmayhavesuccess:intheenterprise.TodaysFMCtechnologiestendtofallintooneoftwocamps:SessionInitiationProtocol(SIP)andUnlicensedMobileAccess(UMA).Butathirdisnowemergingwhichwilldisplaceboth,IPMul

23、timediaSubsystemVoiceCallContinuity(IMSVCC).FMC/FMSUSERSEUROPE(MILLIONS)WhenIP(InternetProtocol)isinplaceonbothmobileandfixednetworksVoiceoverIP(VoIP)willbecomethestandardmeansofvoicecommunicationandFMCwillbedefacto.ServicessuchasSkypeandVonagearealreadyIPbased.Inthelargeenterprisespacethischangehas

24、alreadyhappened.Anditisabouttohappenforsmallandmediumsizedbusinessestoo.AndthisrepresentsagreatopportunityforanumberofdifferenttypesofpotentialplayersintheFMCspace,includingfixednetworkoperators.Withsmallercompaniesthetargetgroupsarefastgrowthentrepreneurialbusinesseswhorequirethelatesttechnologiest

25、oachieveacompetitiveadvantageandwhomovefrequentlyastheygrow.Theirrequirementisforthefullspectrumoftelecommunicationsservicesstartingwithhighspeeddata,mobile.Email,faxtoemail,conferencing,managedfirewalls,voicemail,webhosting,securebackup,filesharing,Blackberry(andequivalent)access,virtualprivatenetw

26、orkingandlocal,longdistanceandinternationalvoice.Notallkindsofenterpriseswillbeinterested.Hairdress-ersandfamilyownedshopsareunlikelytoneedFMC.Somebiggerorganizationssuchasbanksormilitarymaynotwanttohavemobilephonesusedontheirpremisesforsecurityreasons.Butforbusinesseswithmobile,flexibleandcommunica

27、tionshungryworkforcesweexpectFMCtobeimportant.Weestimatethattherearesome80millionworkersinEuropeinthistargetmarketforFMCandthatby2012justunderhalfofthesewillbeusingFMCservicesyield-ingannualequipmentexpenditureofcloseto$6billionandannualservicerevenuesofover$30billion.Butthereisnoguaranteeofsuccessf

28、orfixedoperators.20082009201020112012BusinessFMCBusinessFMSConsumerFMCConsumerFMSTotalFMC10.30.846.12.50.61.5812.651.52.51625104.543250.52013.5764104.5Source: BMI researchBusinessMonitorInternationalLtdSPECIALREPORTHeretoo,however,fixednetworkoperatorswillfacestiffcompetitionfrommobilenetworkoperato

29、rsandcompa-niesalliedwiththemwhoarepursuingtheirownenterpriseorientatedFixedMobileSubstitution(FMS)strategies.EssentiallyFMSisaboutmakingmobileshavemoreoftheattributesoffixedphoneswiththeultimategoalofkeepingmoreofthetrafficonthemobilenetworkoratleastgettingashareofanyfixednetworkrevenues.Thereareth

30、reemainapproaches:Carrierbasedmobilenetworkgetsenterprisecus-tomertodumpitsfixednetworkofficephonesystemandoutsourceitscommunicationstothecarrierhasprovedspectacularlyunpopularasyearsofbeingover-chargedandreceivingsub-standardservicehavetaughtenterprisesnottotrustcarriers.Enterprise-basedenterpriseb

31、uysWiFiandSIPenabledhandsetstomakeuseofVoIP/WiFiconnectionstotheenterprisenetworkwhenon-siteandthemobilenetworkwhenoutandaboutawkwardandnotreallyintegrated(iecustomersdonotgainaccesstoenterprisefunctionssuchasdirectorywhenoutsideoftheoffice),alsorequiresphonesthatcanrunthirdpartysoftwareandnotmaycan

32、-butperhapsmostimportantlythisapproachisnotlikedbycarriers(andthereforenotpushedbythem)becausetheycutthecarrieroutoftheloop.Hybridonlyjustbecomingavailable(firstproductsemerged2007).AboxinenterprisenetworkensuresFMC/FMSSERVICEREVENUES($BNS)enterprisespoliciesareappliedtothemobilehandsetsandaboxinthe

33、mobilenetworkoperatorsnetworkensuresthattheappropriatetariffsareappliedfordif-ferentuses.TrialsofhybridenterpriseFMCsolutionsjuststartedtwointheUSAwiththreeinAsiaandoneinEuropeexpectedthisyear.Anewemergingtechnologycouldprovidemobileop-eratorswithevenmoreammunitionintheirbattlewiththeirfixedcounterp

34、artsPicocellsandfemtocellsaretinyindoorcellularbasestationsthatarebeingtoutedbymanyastheconvergencesolutionofthenot-too-distantfuture.Ifdeployedcor-rectlytheywillnotonlyservetheirprimaryfunctionofimprovingindoorcellularcoveragebuttieenterprisesintothemobilenetworkoperatorandplacemobiletechnologyandt

35、hemobilenetworkoperatorattheheartofthecorporatenetwork.Andmobileoperatorsareverymotivatedtomakesuretheyachievethis.Despitealltheiradvances,onlyafifthofEuropesvoiceminutesarecarriedovermobilenetworks.Theystillhavealottogain.ConclusionThebadnewsisthatwhenitcomestothehome,thebattleisalreadylostforpurep

36、layfixedtelephonycarri-ers.ThegoodnewsforpureplayfixedcarrierswhenitcomestoFMCisthattheyhardlyexistanymore.Thosethatdowouldbewelladvisedtodiversify.20082009201020112012BusinessConsumerTotal1.32.884.183.15.78.806.511.117.614.521.636.133.542.676.1Source: BMI researchMC/FMSEQUIPMENTMARKET($BNS)20082009

37、201020112012BusinessConsumerTotal0.270.250.520.540.471.011.020.91.922.41.754.155.73.59.2Source: BMI researchBusinessMonitorInternationalLtdF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSThebulkofEuropescarriers,eastandwest,areinfacttripleplayprovidingInternetandentertainmentservicesaswellasfixedormobile

38、telephony.Andsomeareevenquadplayprovidingfixed,mobile,InternetandIthasmadeitclearthatitintendstoadoptIMSVCCtechnologyatsomeunspecifiedtimeinthefuturewhichwillagainrenderallshippedequipmentuseless.Atrialisplannedforthisyear.entertainmentservices.TelecomItaliasFMCexperienceillustratesthecomplex-Inthee

39、nterprisespace,however,weseeanotherpicture.Evenlessadventurousfixednetworkoperatorsstillstandanexcellentchancewithbusinesscustomersiftheycanconvinceenterprisesoftheirtechnologymanagementandintegrationskills.ThebottomlinewhenitcomestoFMCisthatbecauseofthedisappearanceoftraditionaltelecommunicationsne

40、tworkswhereeverythingisneatlycompartmental-izedaccordingtofunctionvoiceordata,mobileorfixed,etcconvergenceishappeningfasterthanmanywouldhavepredicted.Thetroubleisthatitisnotthe“righttype”ofconvergence,atleastfromthenetworkityofFMCwhenitcomestocompetitionregulation.TelecomItaliawasonlyallowedtolaunch

41、theoriginalFMCserviceontheunderstandingthatitwouldnotrecruitmorethan30,000subscribersandpendingfur-therinvestigation.Aftermonthsofinvestigation,Italiantelecommuni-cationsregulatorAgcomdecidedthatTelecomItaliawouldhavetoprovideawholesaleversionofUnicatoallowrivalsthechancetoprovideasimilarservice.Rat

42、herthangoalongwiththisTelecomItaliadecidedtowithdrawtheUMAbasedserviceandintroduceaSIPbasedoneinstead.operatorspointofview.TheSIPservicewillworkonmorehandsetsthantheEverythingisbeingreducedtobits.Asaresultitisaconvergenceofservicesratherthannetworksandfromapureinformationconduitperspective,networkop

43、era-torsonlystandtolose.Ontheotherhandcustomers,whetherconsumerorenterprise,standtobenefit.Andsodothenimbletechnologysupplierswhogaintheirconfidence.Andperhapsafewcourageousoperatorswhocanadaptandarewillingtochangetheirbusinessmodelscompletely.Webelievethattheoperatorsthatnowlookliketakingthebestadv

44、antageofconvergencetechnologiesarethemobileoperators,especiallythoselikeFranceTelecom,whohavebothtypesofnetworkattheirdisposal.Prima-rilyfixedoperatorsareoutofthisgameiffornootherreasonthanpeopleliketheirmobilephones,andwhattheycandoforthem,morethantheirfixed.Casestudy1TelecomItaliasUnicaTelecomItal

45、ialauncheditsUnicaFMCserviceinSep-tember2006basedonUMAtechnology.ItchangedovertoSIPtechnologyrenderingallpreviouscustomerequipmentuselessinOctoberof2007.UMAservice.ButthedrawbackisthatthereisnohandoverbetweencellularandWiFinetworksifacallinitiatedonWiFiwandersbeyondthereachoftheWiFinetworkitjustdrop

46、s.WithUMAitwouldseamlesslytransfertothecellularnetwork.ForTelecomItaliathemainthingappearstobethatitcanofferaquad-playpropositiontoitscustomersen-tertainment,Internetaccess,mobileandfixedtelephonyinasuserfriendlyaformataspossible.Theregulatorrecognizes,however,howthiscouldputTelecomItaliainanunfairc

47、ompetitivelydominantposition.OtherEuropeanregulatorsmaywelltakeasimilarposition.Casestudy2CiceroNetworksDublin-basedCiceroNetworkswasfoundedin2002.Itisstillaprivatelyheldcompany.ItisalsoapioneerofSIPbasedFMCtechnologyandbehindmanyofthecommercialFMCofferingsofthistechnologyavailableacrossEuropetoday.

48、LeveragingunlicensedwirelessnetworksandharnessingthepowerofVoIP,CiceroenablesthedeliveryanewBusinessMonitorInternationalLtdSPECIALREPORTrangeofvalueaddedwirelessvoiceservicesmanyofwhicharekeytoFMC.Developedspecificallyforop-eratorsandserviceprovidersfixednetworkoperators,mobilenetworkoperators,broad

49、bandserviceprovid-ers,hotspotoperatorsandwirelessInternetserviceproviders.Theseservicescanbeofferedtosubscribersinmanylocationsincluding:PublicwirelesshotspotsTheenterpriseThehomeBusinessMonitorInternationalLtdUsingasinglemobiledevice,Cicerouserscanmakelow-costcallsfrompublichotspotsincafes,airportl

50、ounges,etc,connecttothecompanytelephonenetworkfromapublichotspot,connectwirelesslytotheofficephonesystemwhenatwork,connecttoyourofficephonenetworkwhenvisitingothercompanylocationsandmakevoicecallsoverthebroadbandconnectioninthehome.FMCservicesbasedonCicerostechnologyincludethoseofHelloinNorway,Messa

51、geNetinItalyandMTIinPoland.10F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSFixed-LineIndustryForecastsUnitedKingdomBasedonanassessmentofdataprovidedbyOfcomandtheUKfixedlineserviceproviders,BMIestimatesthattherewere33.273mnfixedlinesinserviceintheUKattheendof2007;thisequatestoafixedlinepenetrationrateof

52、54.5%.Althoughthefixed-linemarketcontinuestodecline,therateofdeclineappearstohavebeenmoregradualthatwepreviouslyexpected,atjust1.4%in2006.WebelievethattheUKfixedlinetelephonymarketwillcontinuetodeclineatgradualpaceoverthenextfiveyears.Bytheendofourforecastperiodin2012,weareforecastingatotalmarketofj

53、ustunder31.166mnlines,givingtheUKapenetrationrateof49.6%.Fac-torsaccountingforfixed-linedeclineintheUKincludeincreasedcompetitioninthebroadbandmarket,whichisdrivingtake-upofVoIPservices.Meanwhile,althoughBTsshareofcallvolumeisexpectedtodeclinefurtherinthefaceofincreasedcompetitionfromalternativeoper

54、ators,therearesignsthattheincumbentisstartingtominimisechurnandevenattractcustomersbacktoitsnetwork;thistrendsuggeststhatoverallmarketdeclinewillbemoreevenlysharedbythesectorsdifferentserviceproviders.GermanyDuring2006,thenumberoffixed-lineconnectionsinGermanyfellby1.7%toreach38.244mn.However,inthec

55、aseoftheincumbentDeutscheTelekom,thetotalnumberoffixedlines(PSTNandISDN)fellby5.8%.Incontrast,thenumberoffixed-linevoicesubscriptionsbeingprovidedbyalternativeoperatorsincreasedbynearly50%during2006,withcable-basedconnectionsaccountingforthegreatestgrowth.Thesebroadtrendscontinuedin2007,withDeutsche

56、TelekomcontinuingtoreportaquarterlydropinPSTNandISDNlines,andalternativeoperatorsgenerallyreportingincrementalincreaseinfixed-lines.BMIestimatesthat,asaresultofthistrend,thereweresome37.9mnfixed-linesinthemarketattheendof2007,givingGermanyafixed-linepenetrationrateof45.8%Weexpectthetrendwherebytradi

57、tionalfixedvoiceservicesarereplacedbyvoiceoverinternetprotocol(VoIP)andmobilealternativestocontinueforthedurationofourforecast.Wepredictthatthefixed-linemarketwillcontractbyapproximately1%foreachofourforecastyears,resultingin35.870mntraditionalfixedlinesinservicebytheendof2012;bythistime,Germanysfix

58、ed-linepenetrationratewillhavefallento43.1%.TABLE:UKTELECOMSSECTORFIXED-LINEHISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmaintelephonelinesinservice(000)No.ofmaintelephonelines/100inhabitants34,06856.533,60355.433,27354.532,90753.632,51252.732,08951.731,64050.731,16649.6e/f = B

59、MI estimate/forecast. Source: Ofcom, BMI.TABLE:GERMANYTELECOMSSECTOR-FIXEDLINES-HISTORICALDATA&FORECASTS2004200520062007e2008f2009f2010f2011f2012fNoofMainTelephoneLinesinService(000)NoofMainTelephoneLines/100Inhabitants39,08047.339,00047.238,24446.337,90045.837,52145.337,10844.836,69544.336,28343.73

60、5,87043.1Source: International Telecommunications Union (ITU), BMI research. e/f=BMI estimate/forecast.BusinessMonitorInternationalLtd11SPECIALREPORTFranceBMIestimatesthattherewere30.298mnfixedlinesinserviceattheendof2007,downfrom31.560mnattheendof2006.WebelievethatFrancesfixed-linepen-etrationrate(

61、basedonthetotalnumberoftraditionalPSTNandISDNlines)hasnowfallentobelow50%.AsinthemajorityofmatureEuropeanmarkets,thenumberofanalogue(PSTN)anddigital(ISDN)fixed-linescontinuestodeclineinFrance.However,thistrendisnotimmediatelyapparentwhenanalysingARCEPsdata,duetothefactthattheregulatorcountsfixed-lin

62、esubscriptionandincludesvoiceoverIP(VoIP)custom-ersinitssubscriptiontotal.BasedonARCEPsdatafor2006,thetotalnumberoffixed-linesubscriptionsactu-allygrewby4.6%,witha5.3%declineinthenumberofPSTN-supportedservicesanda2.6%declineinthenumberofISDNlinesbeingpartiallyoffsetbya94.8%increaseinthenumberofVoIPs

63、ubscriptions,anda55.7%increaseinthenumberofcable-basedtelephonysubscriptions.BMIbelievesthatthistrendcontinuedduring2007andislikelytocontinueinto2008,withtheongoingdeclineoffixedlinesbeingpartiallyoffsetbyagrowingnumberoffixed-linevoicesubscriptions.AlthoughFrancesregulatorhassuggestedthatthemobiles

64、ubstitutiontrendhaslevelledoffinFrance,thegrowingpopularityofVoIPservices,leadsustobelievethatthetotalnumberoftraditionalfixedlineswillcontinuetodeclineoverthenextfewyears,reaching26.545mnby2012andresultinginapenetrationrateof42.8%.ThenumberoftraditionalfixedlinesoperatedbyFranceTelecomisexpectedtos

65、howthegreatestlosses,justastheincumbentcontinuestoreportgrowthinthenumberofbroadbandcustomersusingVoIPservices.ItalyFollowingseveralrevisionstoforecastfiguresfortheItalianfixed-linemarket,wenowbelievethattherewere26.9mnfixed-lineconnectionsattheendof2006,andthatpenetrationwas46.1%.Itappearsthatthefi

66、xed-linemarketshrankbyaround1.9%in2006,andthisfolloweda1.8%decreaseinthenumberoffixed-lineconnectionsin2005.Accordingtotheregulator,AGCOM,thefallingnumberoffixed-lineconnectionshasmainlybeenduetothereplacementofISDNlinesusedbybusinesseswithbroadbandADSLlines.However,therehasalsobeenamoderatereductio

67、ninthenumberofPSTNlinesusedbyresidentialcustomersandthispartlyreflectstheimpactofmobilesubstitutiononthesector.TelecomItaliasownretailfixed-lineconnectionsfellby5.4%in2006,whilethenumbercarrierpre-selec-tionagreementsdeclinedbyasimilaramount.TelecomItaliasawafurther4.9%decreaseinretailandwhole-salef

68、ixedvoiceconnectionsinthefirstninemonthsof2007;goingforward,BMIexpectsTelecomItaliasfixed-lineconnectionstodeclineatamuchfasterratethanthesectorasawhole.Furthermore,weexpecttoseeacontinuedreductioninthenumberofcarrierpre-selectionsubscribersas,increasingly,alternativeoperatorsrelyonunbundledandparti

69、allyunbundledlocalloopstodelivertheirfixed-lineserviceofferings;itisnotablethat,inthefirstninemonthsof2007,al-ternativeoperatorWIND-Infostradareporteda28.5%increaseinthenumberofdirectvoicecustomersbasedonunbundledlines.Despitetheincreaseinfixed-linevoicecustomersamongsomealternativeproviders,BMIbeli

70、evesthatoveralltheTABLE:FRANCETELECOMSSECTORFIXED-LINEHISTORICALDATA&FORECASTS2004200520062007e2008f2009f2010f2011f2012fNo.ofMainTelephoneLinesinService(000)No.ofMainTelephoneLines/100Inhabitants33,60956.033,10655.031,56052.230,29849.929,23747.928,36046.327,65145.027,09843.926,54542.8Source: Interna

71、tional Telecommunications Union (ITU), BMI research. e/f=BMI estimate/forecast.TABLE:ITALYTELECOMSSECTORFIXED-LINEHISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmaintelephonelinesinservice(000)No.ofmaintelephonelines/100inhabitants27,43547.026,92646.126,41445.225,90844.325,39943.

72、424,89042.524,38141.623,87240.7e/f = estimate/forecast; Source: BMIBusinessMonitorInternationalLtd1F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSmarketisnowundergoingaprocessofgradualdecline,andweexpectoneofthebiggestfactorsaffectingthistrendtobetheincreasinguseofbroadband-basedVoIPservices.Basedonpred

73、ictionsofgradualdeclineforthedurationofourforecastperiod,weexpectthemarkettoshrinktojustover23.8mnusersbytheendof2012,withapenetrationrateof40.7%.SpainGiventhecountrysrelativelylowfixed-linepenetrationratebyregionalstandards,itishardlysurprisingthatthesectorcontinuestobeproducinggrowth.Althoughthenu

74、mberofTelefnicaoperatedretaillinesfellby0.5%inthefirstninemonthsof2007,theoperatorhascontinuedtoreportsubstantialgrowthfromitswholesaleofferingandintermsofthenumberofunbundledlocalloops(seefixed-linesectionwithinchapteronMarketData).Furthermore,cableoperatorssuchasGrupoOnocontinuetoreportanincreasei

75、nthenumberoffixedvoicecustomerssubscribingtoIP-basedvoiceservices.BMIhasmadesomesignificantrevisionstoitsforecastforSpainsfixedlinemarket,andnowpredictsthatthemarketwillcontinuetoseemoderategrowthoverthenextfiveyears.ComparedwithotherEuropeanamoderatedeclineinitsownretailfixedlinecustomerbase.Althou

76、ghweanticipateanaccelerationinthespeedofTelefnicasretaillossesoverthenextfewyears,weexpectcarrierselectionandcarrierpre-selectionservices(basedontheincumbentswholesaleoffering)tocontinuegrowingthroughout2008.Furthermore,weexpectthestronggrowthinthenumberofunbundledlocalloopstocontinueforthedurationo

77、fourforecastperiod.Takentogether,allofthesetrendswillcontributetocontinuedlossofmarketshareforTelefnicavis-visalterativefixedvoiceproviderssuchasJazztelandTele2(nowownedbyVodafone).Weestimatethatthenumberoffixedlinesgrewby3.1%in2007(comparedwith3.9%in2006)andpredictthattheywillgrowbyafurther2.3%in20

78、08.Althoughweexpectcontinuedgrowthforthedurationofourforecast,weenvisagearapidslowdownintherateoffixed-linegrowth.Bytheendof2012,weforecastamarketofover20.4mnfixedlines,andapenetrationrateof45.5%.Althoughmobilesubstitutionappearstohavehadalimitedimpactonfixed-linegrowth,weexpectthatbroadbandgrowthan

79、dthegrowingpopularityofVoIPservices,toacceler-atetheslowdowninfixed-linegrowthinthemediumterm,andbringaboutnegativefixed-linegrowthinthelongterm.incumbentoperators,TelefnicahasexperiencedonlyTABLE:SPAINTELECOMSSECTOR-FIXED-LINE-HISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmaint

80、elephonelinesinservice(000)No.ofmaintelephonelines/100inhabitants17,73541.118,42142.418,98743.219,42443.919,79344.620,0904520,31145.320,47345.5BusinessMonitorInternationalLtd1SPECIALREPORTMobileIndustryForecastUnitedKingdomFollowinga2.3%increaseinthenumberofUKmobilesubscribersintheninemonthsendingSe

81、ptember2007,BMIestimatesthattherewere73.837mnmobilesub-scribersattheendoftheyear.Althoughthisestimateislowerthanourpreviousfigureof73.914mn,itisstillbasedonanticipatedQ407growthrateof2.2%,whichisslightlyhigherthanthe2.1%growthinQ406.Despitetheoscillatingnatureofindividualoperatorgrowthtrends,themark

82、etoverallcontinuestogrowalbeitminimally.Webelievethatthemarketwillexpandbyanother2.4%in2008andbyaround2.2%thefollowingyear.Itshouldbeclearbynow,however,thattheUKmobilemarketisalreadyreachingsaturationpoint,andthatincrementalannualgrowthforthedurationofourforecastperiodisexpectedtobeminimal.However,t

83、hedecreasingsubscribergrowthrateisexpectedtobegradual,andcontinuedgrowthwillbesustainedbytheUKsrapidlygrowingpopulation.Weexpecttheretobejustover80mnsubscribersintheUKmarketbytheendof2012,equivalenttoapenetrationrateofjustover127%.Meanwhile,unlikeotherWestEuropeanmarkets,prepaidusersstillaccountfort

84、hebulkoftheUKsector(64.7%ofthetotalinSeptember2007).ThisphenomenoneffectivelymeansthattheUKoperatorshavegreaterpotentialtomigratetheirsubscribersovertomorelucrativepostpaidcontracts.Italsomeansthatourforecastfigurescontainacertainnumberofinac-tiveprepaidusers,suggestingthattheactualmobilepenetration

85、rateislower.AccordingtofigurespublishedbyUKregulatorOf-com,therewere7.8mn3GsubscribersintheUKattheendof2006,equivalentto11%totalmobileusers.Thesefiguressuggestslowergrowthfor2006thanBMIpreviouslypredicted;wepreviouslysuggestedthatthemarketwouldreach8.5mnusersbytheendof2006,equivalenttoaround12%oftot

86、almobileus-ers.Hutchison3Gcontinuestoaccountforthelargestshareofthe3Gsubscribermarket,withanestimated3.985mnsubscribersattheendofSeptember2007(around50%ofthemarket).VodafoneandO2appeartobethenextlargest3Goperators,eachwitharound16%marketshare.Meanwhile,Orangehasaround11%ofthemarketandT-Mobilehas7%.W

87、eareanticipat-ingasteadymigrationfrom2Gand2.5Gcustomersto3Gservicesinthenextfewyears.However,wehavealsodowngradedourpredictionsandanticipateamoremoderaterateofgrowththanbefore.Weestimatethatthemarketgrewby26%in2007andwillexpandbyafurther21%in2008.By2012,wepredictthattherewillbeatotalof20.798mn3Gsubs

88、cribers,equivalentto26%ofmobileusers.TABLE:UKTELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmobilephonesubscribers(000)No.ofmobilephonesubscribers/100inhabitantsNo.ofmobilephonesubscribers/100fixedlinesubscribersNo.of3Gphonesubscribers(000)3Gmarketas%ofentire

89、mobilemarket67,672112.3198.65,7898.670,610116.3210.17,80011.072,465118.8217.810,02313.874,204120.9225.512,17816.475,837122.9233.314,33318.977,354124.6241.116,48821.378,746126.2248.918,64323.780,006127.4256.720,79826.0Source: BMI. e/f = BMI estimate/forecast.BusinessMonitorInternationalLtd1F-MCONVERG

90、ENCEINEUROPE:STRATEGIESFORSUCCESSGermanyDataprovidedbyGermanysfourmobilenetworkoperatorsindicatesthatmobilesubscribergrowthfor2006washigherthanwehadanticipated.Attheendoftheyeartherewere85.699mnmobilesubscribersinthemarket,suggestingthatitgrewby8.2%during2006.Thisyear-end-yeartotalmeansthatGermanysm

91、obilemarketcrossedthe100%penetrationthresholdduring2006.Meanwhile,inthefirstninemonthsof2007,Germanysmobilesectorsawan8.9%increaseinsubscribernumbers,andthisimpressiveupsurgeinsubscribergrowthledustoraiseourforecastfortherestof2007.Wenowestimatethatthesectorgrewby9.6%fortheyearaswhole,whichmeansthat

92、2007wasastrongeryearformobilecustomergrowththan2006.Likelyreasonsfortheincreasedsubscribergrowthin2007includetheimpactofanincreasingnumberofmobilevirtualnetworkoperators(MVNOs),aswellastheemphasiswhichmajoroperatorssuchasT-Mobilehaveplacedonprepaidgrowth;webelievethatbothofthesedevelopmentshavecontr

93、ibutedtothetrendtowardsmultipleSIMownershipandtoanincreasingnumberofinactiveprepaidmobileusers.Ultimately,weexpecttoseenewsubscribergrowthbeginningtotailoffinthenearfuture,andwepredictthatmarketsaturationwillbeaccompaniedbyconsoli-dationintheMVNOmarket.Althoughwepredictthat2008willseea6.4%increasein

94、subscribernumbers,weanticipateasharpslowdownincustomergrowthfrom2009onwards.WepredictthatthenumberofGermanmobilesubscriberswillrisetoabove107mnbytheendof2012,anincreasewhichwouldraisepenetrationto129%.WithVodafonecurrentlytheonlyoperatorwhichreleasesregular3Gsubscriberdata,itisdifficulttoestimatethe

95、realsizeofGermanys3Gmarket.AttheendofQ307,Vodafonereported4.745mn3Gdevicesinoperation,upfrom2.724mnattheendofSeptember2006.ItisimportanttorememberthatVodafonesfiguresrefertothenumberofitscustomersusing3Gdevices,whichdoesnotnecessarilymeanthattheyareregularusersofdataservices.O2hasnotprovidedanysubsc

96、riberdata,althoughwebelievethatitsuserbasemustbeofareasonablesize,giventhatdataservicesaccountfor25%ofitsservicerevenues,andthatithasparticularlyhighARPUrates.Basedonthelimitedavailabledata,webelievethattherewerearound11.5mn3Gsubscrib-ersinGermanyattheendof2007,whichisequivalentto12.2%ofthecountryst

97、otalmobileuserbase.By2012,wepredictthatthenumberof3Guserswillhaveincreasedto34mn(lessthanpreviouslypredicted),orjustlessthan32%oftotalmobilesubscribers.TABLE:GERMANYTELECOMSSECTORMOBILEHISTORICALDATA&FORECASTS2004200520062007e2008f2009f2010f2011f2012fNo.ofMobilePhoneSubscribers(000)No.ofMobilePhoneS

98、ubscribers/100InhabitantsNo.ofMobilePhoneSubscribers/100FixedLineSubscribersNo.of3GPhoneSubscribers(000)3GMarketAs%OfEntireMobileMarket68,33383175.32500.479,20596203.72,5003.185,699104224.17,0008.293,926114247.811,50012.299,937121266.416,00016.0103,235125278.220,50019.9105,094127286.625,00023.8106,1

99、44128293.329,50027.8107,195129300.034,00031.7Source: International Telecommunications Union (ITU), BMI research. e/f=BMI estimate/forecast.BusinessMonitorInternationalLtd1SPECIALREPORTFranceBMIhasupdatedandextendeditsforecastforthedevelopmentofFrancesmobilesubscribermarket.Inadditiontorevisionswhich

100、showthatthesectorhadahighernumberofsubscribersattheendof2006thanpreviouslythought,ournewforecastdatanowextendstotheperiodendingDecember2012.BasedondataprovidedbytheFrenchregulatorARCEPandbythecountrysthreemobilenetworkoperators,therewere51.662mnFrenchmobilesubscribersattheendof2006;thisfigureinclude

101、s1.789mncustomersofMVNOsandisequivalentto85.4%oftheFrenchpopulation.BytheendofSeptember2007,thetotalnumberofmobilecustomershadrisento53.241mnand,ofthistotal,2.705mnwerecustomersbelongingtoMVNOs.MVNOscontinuedtohaveagrowingpresenceintheFrenchmobilemarketduring2007,withMVNOssigningupamuchlargershareof

102、newmobilecustomersthanthethreenetworkoperators.BMIbelievesthatthistrendwillcontinueduring2008and2009,reflectingthefactthatmobilepenetrationisstillrelativelylowinFranceandthatthemarket,consequently,stillhasroomforfur-thergrowth.Bytheendof2007,weestimatethattherewere54.253mnFrenchmobilecustomers,repre

103、senting89.4%ofthepopulationandreflectingagrowthrateof5%fortheyearasawhole.Wepredictsteadygrowthtocontinueforthedurationofourforecastperiod,andnowbelievethatthe100%penetrationthresholdwillbecrossedsometimein2009.By2012,weanticipateamarketofsome67.2mnmobilecustomers,andapenetrationrateof108.4%.Itisimp

104、ortanttorememberhowever,thatthesefigurescontainacertainnumberofinactiveprepaidusers.Meanwhile,themostrecentfigurestobeprovidedbythesectorsmobileoperatorssuggestthat3Ggrowthcontinuedtobestrongduring2007.Nevertheless,wehaveadjustedourfiguresforthenumberof3Gcustom-ersattheendof2006,believingOrangetohav

105、ehadahighernumberofEDGEcustomerswithinitstotalmobilebroadbandsubscriberbase.Weestimatethattherewere7.773mnsubscribersinthesectorattheendof2007,andpredictthatthistotalwillrisetoover10mnbytheendof2008(equivalentto18.3%ofmobileus-ers).Lookingahead,wehavemodifiedour3Ggrowthprojections,andnowanticipateas

106、lower,steadierrateofgrowthbetween2007and2012.Bytheendof2012,wepredictthatover31%ofFrenchmobileuserswillsubscribeto3Gservices.TABLE:FRANCETELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS2004200520062007e2008f2009f2010f2011f2012fNo.ofMobilePhoneSubscribers(000)No.ofMobilePhoneSubscribers/100InhabitantsNo

107、.ofMobilePhoneSubscribers/100FixedLineSubscribersNo.of3GPhoneSubscribers(000)3GMarketAs%OfEntireMobileMarket43,82373.2129.50.00.048,09879.4145.32,0604.351,66285.4163.75,1319.954,25389.4179.17,77314.356,84493.2194.410,41518.359,43597.1209.613,05722.062,026100.9224.315,69925.364,617104.7238.518,34128.

108、467,208108.4253.220,98331.2f = forecast. Source: BMIBusinessMonitorInternationalLtd1F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSItalySubscribergrowthinItalycontinuestodefyallattemptstosuggestthatthesectorhasreachedsaturationpoint.Despitethecountrysextremelyhighmobilepenetrationrates,overallsubscriber

109、growthin2006wasstillhigherthanwehadpredicted.Ourpreviousestimatesforthesizeofthemarketattheendoftheyearwerebasedonestimatesof2%growthduring2006.However,datapublishedbyItalysfouroperatorssuggestedthatthenumberofmobilesubscribersgrewby12.9%in2006,increasingthetotalnumberofmobileusersto74.294mn(127%oft

110、hepopulation).Furthermore,thenumberofmobilesubscribersincreasedby8.8%inthefirstninemonthsof2007and,basedonexpectationsofasolidfourth-quartergrowth,weestimatethattherewere82.835mnsubscribersinthesectorattheendof2007;thisisequivalenttoapenetrationrateofalmost142%.Despiteourincreasedexpectationsforthet

111、otalnumberofItalianmobilesubscribersattheendof2007,wecontinuetopredictadramaticslowdowninsubscribergrowthoverthenextfiveyears.Althoughwebelievethatthesectorcontainsamuchmoresignificantnumberofinactiveprepaidusersthantheoperatorsarepreparedtoreveal,theextremelyhighpenetrationratespointtoamarketwhichi

112、sclosetosaturation,evenafterinactiveusersaretakenintoaccount.Wepredictthatthemarketwillgrowby8.8%in2008andby6.4%thefollowingyear.Bytheendof2012,weanticipateapenetrationrateofjustover177%,althoughwebelievethatthiswouldbesignificantlyloweriftheoperatorsdecidedtodiscountinactivesubscribersfromtheirrepo

113、rtedsubscribertotals.Meanwhile,thelatestsetofreported3Gfiguressuggestthattheoperatorsarecontinuingtosuccessfullymigratetheir2Gcustomersoverto3Gservicecontracts.Basedonourassumptionthatallof3Italiascustomersare3Gusers,wecalculatethatthetotal3Guserbaseamountedtoalmost20.5mnattheendofSeptember2007.Desp

114、itethesolidgrowth,weestimatethatfewer3Gsubscribersattheendof2007thanwepreviouslypredicted.Wenowestimatethattherewere21.819mn3Gcustomersinthemarket,equivalenttojustover26%ofmobileusers.Althoughweremainoptimisticaboutcontinued3Ggrowthoverthenextfiveyears,wehavedowngradedourforecast,predictingasloweran

115、dmoregradualrateofgrowththanpreviously.Bytheendofourfive-yearforecastperiodin2012,wepredictjustover40mn3Gusers,whichisequivalentto38.7%ofmobileusers.Webelievethatournew3GforecastforItalymoreac-curatelyreflectsthehighproportionofinactiveusersinthesector;forexample,ifwediscountasmanyas20%ofItalysmobil

116、ecustomersasbeinginactiveprepaidusers,thiswouldmeanthatthenumberof3Gcustomers,asaproportionoftotalmobileusers,wouldbecloserto48%bytheendofourforecastperiod.TABLE:ITALYTELECOMSSECTORMOBILESHISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmobilephonesubscribers(000)No.ofmobilephonesu

117、bscribers/100inhabitantsNo.ofmobilephonesubscribers/100fixedlinesubscribersNo.of3Gphonesubscribers(000)3Gmarketas%ofentiremobilemarket65,786112.7239.810,07315.374,294127.2275.916,11721.782,835141.7313.621,81926.390,124154.0347.927,52130.595,892163.7377.531,75933.1100,016170.6401.835,34835.3102,61617

118、4.9420.938,21137.2104,053177.3435.940,31338.7e/f = estimate/forecast; Source: BMIBusinessMonitorInternationalLtd1SPECIALREPORTSpainBytheendofSeptember2007,therewere49.054mnmobilesubscribersintheSpanishmobilemarket.Furthermore,basedonexpectationsofreasonablystronggrowthinthefourthquarter,BMIestimates

119、thattherewere50.046mninthemarketattheendoftheyear;thisisequivalenttoamobilepenetrationrateof113.9%.Ourgrowthforecastsfor2008andbeyondremainroughlythesameasinthepreviousquarter:webelievethatpenetrationwillgraduallyedgeupwards,andwith56mnsubscribersinthemarketbytheendof2012,shouldreach124.5%.Onefactor

120、thatisexpectedtohaveanimpactonmobilegrowthtrendsinthenextfiveyearsistheincreasingpresenceofMVNOswithinthesector,whichshouldhaveapositiveimpactonpricecompetition.Nevertheless,webelievethattheimpactoftheMVNOsonthesectorwillbelimitedbytheiremphasisonprepaidservices,andbythealreadysaturatedstateofthepre

121、paidmarketsegment.OutoftheexistingMVNOs,onlyEuskalteloffersbothprepaidandpostpaidservices,whiletheotherserviceprovidersareallexclusivelyprepaid.IncontrasttotheMVNOs,Spainsfourmobilenetworkoperatorsareexpectedtocontinuewiththeiremphasisonmigratingprepaidcustomersovertopostpaidtariffs.Meanwhile,wehave

122、revisedourforecastfiguresforgrowthofSpains3Gmarket.Webelievethatoutofthetotalnumberof3GdevicesreportedbyVodafone,andthemobilebroadbandcustomersreportedbyOrange,onlyafractionoftheseareactually3Gsubscribers.Weestimatethattherewere3.819mn3Gcustomersattheendof2007,whichisequivalentto7.6%oftotalmobileuse

123、rs,andwhichisasignificantlylowernumberthanwehadpreviouslypredicted.Despitethesedownwardrevisions,indicationssuggestthat3Gsubscribergrowthwillcontinuetobesteadyoverthenextfewyears,as3Gandhigh-speeddownlinkpacketaccess(HSDPA)-enabledhandsetsbecomemorewidelyavailableandasretailpricesfall.Wepredictthatm

124、orethan11%ofmobileuserswillbeusing3Gservicesbytheendof2008,andthatthisproportionwillincreasetoalmost27%ofthemarketbytheendof2012.TABLE:SPAINTELECOMSSECTORMOBILEHISTORICALDATA&FORECASTS200520062007e2008f2009f2010f2011f2012fNo.ofmobilephonesubscribers(000)No.ofmobilephonesubscribers/100inhabitantsNo.o

125、fmobilephonesubscribers/100fixedlinesubscribersNo.of3Gphonesubscribers(000)3Gmarketas%ofentiremobilemarket43,114100.0243.14811.147,048108.3255.41,5943.450,046113.9263.63,8197.651,969117.6267.66,04411.653,424120.3269.98,26915.554,546122.3271.510,49419.255,419123.7272.912,71923.056,028124.5273.714,944

126、26.7f = forecast. Source: BMIBusinessMonitorInternationalLtd1F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSCompanyProfilesBTOverviewBTsfoundingmomentwasin1981,whenBritishTelecommunications-asitwasthenknown-wasspunofffromtheGeneralPostOfficeandsetupwithspecificresponsibilityforprovidingtelecommunication

127、sservices.FormalannouncementofBTsprivatisationofupto51%oftheoperatorcameinJuly1982,andinApril1984therelevantlegislationwaspassed.52.4%ofthecompanywassoldtothepublicinNovemberofthatyear:thegovernmentsolditsremainingsharesintwosalesinDecember1991andJuly1993.Aspartofarestructuringanddebtreductionprogra

128、mme,inMay2001BTsolditsYelldirectoriesande-commercebusinessforGBP2.14bn,andannouncedathreefor10rightsissuetoraiseGBP5.9bn.FurtherrestructuringoccurredinNovember2001whenBTdemergeditsBTWirelessbusiness(nowO2).CorporateStructureBTisstructuredintofivedivisions:BTRetailprovidesafullrangeoffixed,mobility,i

129、nternetandbroadbandservicestoconsumersandSMEcustomers.BTWholesaleprovidesnetworkservicesandsolutionstosome600customerswhoarefixed,mobile,internetandotheroperators.ItprovidesserviceswithinBTasitdoestootheroperatorsandserviceproviders.BTWholesaleisdrivingtheavailabilityofbroadbandacrosstheUK,withover9

130、9%ofBTexchangesbroadband-enabledbymid-2005,aswellasimplementingthe21stCenturyNetwork(21CN)initiative(seeNetworkDevelopment,below).BTGlobalServices-providesnetworking,applicationsmanagement,outsourcingandman-agedservices,andbusinesstransformationservicestocorporateandgovernmentcustomersworldwide,andt

131、owholesalecustomersoutsidetheUK.Ithassome30,000employeesin50countriesprovidingservicesin170countries.ItsglobalIPinfrastructureconnectsover160,000customersitesin71countries,withtheaimofextendingto160countriesbytheendof2007.BTMediaandBroadcast,thedigitalmediaandbroadcastsolutionsarmofBT,formspartofBTG

132、lobalServicesandisresponsiblefortheprovisionoffullymanagedbroadcastservicesandthedevelopmentofthecommercialopportunitiespresentedbydigitalcontent.BTExactisBTsITandoperationsbusiness,combiningchangemanagement,IToperations,networkdesign,ITsystemsandapplicationdevelopmenttosupportBTslinesofbusiness,asw

133、ellasworkingtocreateazerotouch,self-service,real-timeworldforBTcustomers.BTOpenreachwasformedoutoftheformerAccessServicesdivisioninJanuary2006,andwascreatedaspartofthesettlementconcludingOfcomsTelecommunicationsStrategicReview.OpenreachisresponsibleforensuringthatallserviceprovidersintheUKhavetransp

134、arentandequalaccesstoBTsnationwidelocalnetworkatthesametermsasBTRetail.ThenewKEYSTATISTICSAnnualRevenues(YEMarch2005):GBP18.623bnAnnualRevenues(YEMarch2006):GBP19.514bnAnnualRevenues(YEMarch2007):GBP20.223bnRevenues(6MSeptember2006):GBP9.805bnRevenues(6MSeptember2007):GBP10.098bnNetIncome(YEMarch200

135、5,Group):GBP1.829mnNetIncome(YEMarch2006):GBP1.548bnNetIncome(YEMarch2007):GBP2.852bnNetIncome(6MSeptember2006):GBP939mnNetIncome(6MSeptember2007):GBP947mnEBITDA(YEMarch2005):GBP5.537bnEBITDA(YEMarch2006):GBP5.517bnEBITDA(YEMarch2006):GBP5.633bnEBITDA(6MSeptember2006):GBP2.747bnEBITDA(6MSeptember200

136、7):GBP2.873bnNo.ofFixedLinesinService(Retail,September2006):24.384mnNo.ofFixedLinesinService(Retail,December2006):24.130mnNo.ofFixedLinesinService(Retail,March2007):23.900mnNo.ofFixedLinesinService(Retail,June2007):23.644mnNo.ofFixedLinesinService(Retail,September2007):23.266mnNo.ofBroadbandSubscrib

137、ers(September2006):2.980mnNo.ofBroadbandSubscribers(December2006):3.219mnNo.ofBroadbandSubscribers(March2007):3.659mnNo.ofBroadbandSubscribers(June2007):3.834mnNo.ofBroadbandSubscribers(September2007):4.074mnEmployees(March2005,Group):102,100Employees(March2005,UK):90,800YearEstablished:1981CONTACTS

138、BTplc81NewgateStreetLondonEC1A7AJUK*Web:unitisoverseenbyanEqualityofAccessboarddesignedtoensurefairaccesstoall.Openreachisthesecond-largestbusinesswithintheBTGroupintermsofstaffinglevels,withassetswortharoundGBP8bnandestimatedtobringinrevenuesinexcessofGBP1bn.BTmadeaprovisionofGBP70mnforthecreationo

139、fOpenreach.BusinessMonitorInternationalLtd1SPECIALREPORTGrowthStrategyBTannouncedinSeptember2006thatitaimstodoubleitsrevenuesinkeyITservicesmarketssuchastheUS,Japan,ChinaandIndiaoverthenextthreeyears.ThesemarketsarecurrentlywortharoundGBP750mn.BThasprovidednetworkedservicesintheUSsince2004,whenitacq

140、uiredInfonetServices,aspecialistproviderofdataservicesto2,500multinationalcompaniesandtheUSgovernment.BTisalsoexpandingitspresenceinRussia.InNovember2006,thegroupconfirmedthatithadreceivedafulllicencefromtheRussianregulatorfortheprovisionofdataservicesintheRussianFederation.BTopenedaregionalheadquar

141、tersinMoscowinOctober2006andhopestocapitaliseonthedemandfornetworkedITservicesfromdomesticandforeigncompaniesinRussiaandCISstates.Meanwhile,BTintendstogrowitsbusinessesinItalyandGermanyintoGBP1bnoperations.Thegroupsaidthatitiseyeingpotentialacquisitionstobuildupitsnetworkedservicesunit,whichlinksthe

142、ITsystemsofmajorcorporations.FundsforacquisitionswouldcomefromBTsprofitsafterreturnstoshareholders,debtrepaymentsandinvestments.RecentFinancialPerformanceForthefinancialyearendingMarch312007,BTreportedgrouprevenuesofGBPGBP20.223bn,reflectinga6.3%increaseyear-on-year(y-o-y).EBITDAwasalsoupby2.1%atGBP

143、5.633mn,whilenetprofitincreasedby84.2%y-o-ytoreachGBP2.852mn.RevenuefromBTstraditionalbusinessesassociatedwithBTRetaildeclinedby1.1%,whichwasneverthelessanimprovementonrecenttrends.Revenuefromtraditionalvoiceservicescontinuedtodeclinein2006/2007,impactedbyregulatorymeasures,competitionfromalternativ

144、eoperatorsandpricereductions,aswellasBTsowneffortstomovecustomersfromtraditionaltonewwavenetworkedservices.Thiseffortispayingoff,withnewwaverevenuesupby17.4%y-o-yintheyearendingMarch2007.Newwaverevenues,generatedmainlyfromnetworkedIT,broadbandandmobilityservices,accountedfor36.5%ofallgrouprevenuesdu

145、ringtheyear,comparedwith32.2%inFY06.BTstotalcapitalexpenditurefor2007wasGBP3.247mn,comparedwithGBP3.142mnin2006.Meanwhilenetdebtwasdownby5%y-o-yatGBP7.534mn.BThad3.464mnbroadbandcustomersattheendofMarch2007,aswellas8,827wholesalebroadbandconnections.Thisrepresentsanincreaseof1.863mnconnectionsy-o-y.

146、Theincreaseinwholesalebroadbandcustomershelpeddrivewholesalerevenuesupby3.3%fortheyearendingMarch2007.InthefinancialyearendedMarch312006BTsrevenuestotalledGBP19.514mn,up5.9%onthepreviousyear.Consumerrevenuesweredownby5.5%toGBP5.296bn,butthiswasoffsetbyincreasesinthecorporateandwholesale/globalcarrie

147、rsectors.Thenumberoffixedvoicelinescontinuedtoslide,fallingby7.7%overtheyearto22.508mn.ThetotalnumberofISDNlinesfellby8.5%to3.201mn.Inthebroadbandsectorhowever,thetotalnumberoflines(residentialandbusiness)wasupbyover47%to2.584mn.NetworkDevelopmentInJune2004,BTannouncedafive-yearprogrammetotransformi

148、tsUKnetworksfortheprovisionofthenextgenerationofconverged,multimediacommunicationsservices,atacostofuptoGBP10bn.MassmigrationofcustomersfromthePSTontothenewIP-basednetwork,knownas21CN,beganin2006,withthemajorityduetobecompletedin2008.Atthesametime,BTalsoannouncedtrialstotestthetechnicalandcommercial

149、issuesassociatedwiththepossibledeploymentoffibre-opticcableintheUKlocalaccessnetwork.InJuly2005,BTrevealedthatCardiffandthesurroundingareawouldbethefirstareatobecutovertothenew21CN,withmigrationofcustomerlinestothenewinfrastructuretoberolledoutinphasesfromNovember.Thenewnetworkwillenableanumberofnew

150、services,includinghigh-speedinternetaccess,broadcasting,VoIPandfixed-mobilehandsets.Around10%ofcustomerlineswereexpectedtobeupgradedbetweenNovember2006andMarch2007,withalllinesexpectedtobeupgradedtoIPtechnologybysummer2007.Theexperienceandcustomerfeedbackwillhelpthecompanyfinaliseplanstorollout21CNt

151、ocustomersacrosstheUKbytheendofthedecade.Thisportionoftheprojectwillrequirethereplacementofequipmentinmorethan50localexchangesandtheimplementationofnewITsystemstounderpinthedeliveryofservicestocustomers.Threenewmetronodes,orsupertelephoneexchanges,aretobedevelopedinCardiff,SwanseaandNewport,withafur

152、ther10newtransmissionsitesalsodevelopedacrosstheregion.InJanuary2007,BTselectedequipmentvendorsNortelandEricssontosupplycarrierscaleEthernetsolutionsfor21CN.BTFusionInJune2005,BTlaunchedwhatitclaimedwastheworldsfirstcombinedfixedandmobilephoneservice,knownasBTFusion.Theserviceworkslikeamobilephonewh

153、enoutofthehome,butswitchesautomaticallyandseamlesslyontoaBTBroadbandlinewhenathome.BTFusionisintendedtocombinetheconven-ienceandfeaturesofamobilephonewithfixed-linepricesandquality.Theservicerequirestheinstallationofaspecialaccesspointinthehome-calledtheBTHomeHub-whichusesBluetoothwirelesstechnology

154、toswitchtheBTFusionhandsetseamlesslytothebroadbandline,evenmid-call.TheBTHubalsoworksasaWi-FiroutertoallowtheusertoconnectupPCs,laptops,gamesconsolesandprinterswirelesslyaroundthehome.BusinessMonitorInternationalLtd0F-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSInJanuary2007,BTannouncedthelaunchofanewa

155、ndimprovedversionofBTFusion,whichnowincludesnationwideWi-Ficapability.ThismeansthatcustomerswillbeabletomakecallsatlandlinepricesfromanyofBTsWi-FihotspotsintheUK,ofwhichtherearearound2,000.Atthesametime,BTannouncedthelaunchofthreenewFusionhandsetsfrommanufacturersSamsung,NokiaandMotorola,andtheintro

156、ductionoftheserviceinhighstreetretailoutlets.BTFusioncurrentlyhasaround40,000subscribers.TheBTHomeHubisalsobeingusedforanewbroadbandpackage,knownasBTTotalBroadband,launchedinQ206.Thepackageoffersdownloadspeedsofupto8Mbps,alongwithfreeeveningandweekendcalls,andfreevideocallsoverthebroadbandconnection

157、.BTVisionAlsoinMarch2006theoperatorannouncedplansforanext-generationTVservice,tobeknownasBTVision,whichwassubsequentlylaunchedinDecember2006.BytheendofJune2007,BTreportedlyhad40,000BTVisioncustomers.TheservicecombinesdigitalterrestrialTVwithon-demandfilmservices.BThaswontherightstocarry242near-liveF

158、APremierLeaguefootballmatchesperseasonfrom2007-2010.TheoperatorhasalsosignedcontentdealswithproductioncompanyEndemol,BBCWorldwide,Paramount,CartoonNetwork,WarnerMusicGroupandNationalGeographicChannel.TheserviceisavailabletoBTbroadbandsubscribers,whoalsohavetobuyaset-topbox.Oncetheyhaveboughttheboxsu

159、bscriberscanreceivebasicBTVisionservices,althoughtheyhavetopayextraforvideo-on-demandservices,suchasfilms.BusinessMonitorInternationalLtd1SPECIALREPORTFranceTelecomOverviewTheFrenchnationaltelecomsoperatorFranceTelecomSAwascreatedasajoint-stockcorpora-tionin1997priortoanIPOwhichreducedthegovernments

160、holdingto80%;Subsequentofferingshavereducedthegovernmentsholding(bothdirectlyandthroughpublicstakeholderbodyERAP)to41.08%asofJanuary312005.FranceTelecomissuedEUR3bnofnewsharesinSeptember2005inordertofinancetheacquisitionofSpanishmobileoperatorAmena(seeOrangeentry).Thegovernmentdidnotbuysharesintheof

161、feringanditsstakenowstandsat27.4%.FranceTelecomisoneoftheworldslargesttelecomsoperators,withover150mncustomersin220countriesandterritoriesonfivecontinents.CorporateStructureInJanuary2005,FranceTelecomimplementedanewoperationalstructurecomprisingthreemainsegments:PersonalSegment-allmobileactivitiesin

162、cludingOrangeFranceandOrangeUK;HomeSegment-allfixed-lineoperationsincludingfixed-linetelephony,internetservicesandoperatorservices,primarilyinFranceandPoland,aswellasrevenuesfromdistributionandsup-portfunctionsprovidedtootherFranceTelecomgroupsegments;EnterpriseSegment-providesservicestobusinessesin

163、Franceaswellasglobalservices;CorporateStrategy2006-2008InJune2005,FranceTelecomunveileditsNewExperienceinTelecom(NExT)servicesprogrammefor2006-2008,coveringstrategicgoalsandfinancialandoperationalobjectivesfortheperiod.Themainpointsofthestrategyare:Simplification:FranceTelecomwillrolloutasingleporta

164、lin2006toprovideclientswithasimplerinterfaceandunifiedcustomerexperiencewhenaccessinggroupservices.Itaimstoprovideaunifiedcustomersupportservice,withasinglepointofcontactforallofferings.Orangewillbecometheinternationalcommercialbrandformobile,broadbandandmulti-playofferingsaswellasforallEnterprisebu

165、sinesses,whiletheOrangeandlegacybrandswillbothbeusedincountrieswhereFranceTelecomistheincumbentoperator.NewServices:FranceTelecomannouncedaraftofnewcommunication,infotainmentandEve-rydayLifeservicesforconsumers.ItalsosaiditwouldrolloutthenewgenerationoftheBusinessEverywhereMultimediaserviceinstagesf

166、rom2005to2008.OperationalObjectives:For2008,FranceTelecomaimsfor:5-10%ofgrouprevenuesfromconvergentofferings;morethan2mnIPtelephones;morethan30%ofmobilesubscribersusingsignaturedevices;morethan12mnfixed-linebroadbandcustomers,includingmorethan8mnLiveboxsubscribers(including6mninFrance);andmorethan1m

167、nsubscriberstoMaLigneTVinFrance.ItalsowantsmorethanEUR400mninrevenuesfromdirectpaidcontent;over12mnmobilebroadbandcustomers,includingover6mninFranceandover5mnintheUK;morethan1mnBusinessEverywhereclients;andmorethanEUR2bninrevenuesfromICTservices.SWOTANALYSISStrengthsOneoftheworldslargesttelecommunic

168、ationsoperators,withover150mncustomersin220coun-triesandterritoriesLargestfixed,broadbandandmobileoperatorinFranceExtensiveinternationaloperations,particularlythroughmobilearmOrangeWeaknesses2006revenuesupbyjust1.2%withslowgrowthinFranceblamedontechnologicalchanges,com-petitivepressureandtheregulato

169、ryenvironment;FranceTelecomfailedtomeetits2006revenuegrowthobjectivesof2%.Grossoperatingprofitrosebyjust1.5%in2006toEUR4.66bn,withthemediocreperformancereflect-inglacklustrefixed-lineservicesalesContinueddeclineinthenumberoffixed-linecon-nectionsinFranceandPoland,alongwithincreasedsectorcompetition,

170、hasledtofallingfixed-linerevenuesOpportunitiesNExTstrategyunveiledinJune2005withstrategicgoalsandfinancialandoperationalobjectivesfor2006-2008;Orangetobecometheglobalbrandformobile,broadbandandmulti-playofferings,aswellasallEnterprisebusinesses;newmultimediaandinfotainmentservicestoberolledout-progr

171、ammeacceleratedJanuary2006Streamlinedmanagementteamannouncedearly2006ContinuedstronggrowthinADSLandmobileserv-icesinternationallyMaLigneADSLdigitalTVservicecontinuestoberolledoutinFrance,with577,000subscribersattheendof2006and975,000bytheendofQ307Creationofatechnocentretoenablethegrouptorapidlyandco

172、herentlydevelopconvergedsolutionsFTTHnetworklaunchedinMarch2007,withplanstoconnect200,000homesbyyear-end2008OrangetestingDVB-HtechnologyforbroadcastTVonamobilehandset,inpartnershipwithBouyguesThreatsIncreasedprogressoflocalloopunbundlingandtheintroductionofmoreextensivewholesaleservicescouldseealter

173、nativeoperatorserodefixed-linemarketsharefurther;over3.2mnlinesunbundledbytheendofQ307CompetitionCouncilimposingrecordfinesonop-erators:FranceTelecomfinedEUR80mnNovember2005forhavingbarredaccesstothewholesalebroadbandmarketfromNovember1999-October2002;OrangefinedEUR256mninDecemberformarketcollusiono

174、verthe1997-2003period.BothcompaniesareappealingagainstthedecisionsFinancialObjectives:Annualaveragerevenuegrowthof3-5%onacomparablebasisin2006-2008;earningsbeforeinterest,taxes,depreciationandamortisation(EBITDA)inexcessofEUR18.5bnandEBITDAgrowthslightlyhigherthanrevenuegrowthin2006-2008;netdebttoEB

175、ITDAratiobelow2.5andbelow2%byYE08;capitalexpendi-ture-to-revenuesratiotoremainstableat12%;R&Dexpenditureupto2%ofrevenues.Thegroupisplanningtoshed22,000workersbytheendof2008aspartofitsdrivetoimproveefficiency.BusinessMonitorInternationalLtdF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSInJanuary2006,Fran

176、ceTelecomannouncedanewstreamlinedseniormanagementteam,whichincludedthedepartureofChiefFinancialOfficer,MichelCombes,afterarevenueandprofitwarn-ingearlierinthemonth.IthadalreadyannouncedaccelerationoftheNExTprogramme,notablysimplificationofthebrandportfolioin2006,settingupanintegratednetworkandcustom

177、errela-tionsstructureineachcountry,andcreationofatechnocentretoenablethegrouptodevelopconvergentsolutions.RecentFinancialPerformanceTheFranceTelecomGroupreportedanannualincreaseinrevenuesofjust1.2%in2006,withgainsintheoperatorsoverseasmarketsfailingtocompensateforpoorgrowthinFranceandtheUK.Revenuesf

178、orthefourthquarteroftheyeartotalledEUR13.262bn,whichwereupby1.5%ontheQ206figure.AlthoughQ107revenuesweredownby3.5%atEUR12.844bn,grouprevenuesroseagaininQ207toreachEUR13.068bn.IncomefromFranceTelecomsmobileoperationsgrewby5.2%during2006,fromEUR26.381bntoEUR27.745bn,whilerevenuesfromtheGroupsHomeresid

179、entialfixed-linebusinessfellby1.9%(seebelow)andrevenuesfromtheorganisationsenterpriseservicesdivisionfellby4.9%,fromEUR8.046bntoEUR7.652bn.Onbalance,FranceTelecomfailedtomeetitsfull-yeartargetof2%salesgrowth.Initshomemarket,FranceTelecomissufferingfromthefamiliarproblemofadecliningfixed-linesector.T

180、heoperatorblameditsfallingrevenuesoncutsinfixed-to-mobilecallprices,aswellasfallingvolumesofnetworkcallsasmobilephonesbecomeevermorepopular.Atthesametime,themobilemarketisbecomingincreasinglycompetitiveandcutsinterminationrateshaveimpacteduponoperatorrevenues.However,theFrenchmarketischaracterisedby

181、ahighproportionofcontractsubscribersandFranceTelecomhasfocuseditseffortsonthissegmentinparticular(seeOrangeprofileformoreinformation).Groupcapitalexpenditurefor2006amountedtoEUR6.732bn,afigurewhichwas3.5%higherthanthe2005amount.CapitalexpenditureinQ107totalledEUR1.232bnandinQ207amountedtoEUR1.735bn.

182、HomeSegmentRevenuesfromHomeCommunicationServicestotalledEUR22.487bnfor2006,downby1.9%KEYSTATISTICSAnnualRevenues(2004):EUR47.841bnAnnualRevenues(2005):EUR51.105bnAnnualRevenues(2006):EUR51.702bnNetIncome(2004):EUR3.21bnNetIncome(2005):EUR6.36bnNetIncome(H106):EUR2.759bnOperatingIncome(2004):EUR9.312

183、bnOperatingIncome(2005):EUR11.284bnOperatingIncome(H106):5.334bnNo.ofFixed-lineSubscribers(2006,Group):43.287mnNo.ofFixed-lineSubscribers(June2007,Group):41.316mnNo.ofFixed-lineSubscribers(2006,France):31.274mnNo.ofFixed-lineSubscribers(June2007,France):29.683mnNo.ofMobileSubscribers(2006,Group):97.

184、633mnNo.ofMobileSubscribers(June2007,Group):102.543mnNo.ofMobileSubscribers(December2006,OrangeFrance):23.268mnNo.ofMobileSubscribers(June2007,OrangeFrance):23.403mnNo.ofBroadbandSubscribers(2006,Group):9.823mnNo.ofBroadbandSubscribers(June2007,Group):10.691mnNo.ofBroadbandSubscribers(2006,FranceRe-

185、tail):5.920mnNo.ofBroadbandSubscribers(June2007,FranceRetail):6.575mnEmployees(June2007,Group):198,032Employees(June2007,France):115,175YearEstablished:1997CONTACTSFranceTelecomSA6,placedAlleray75505ParisCedex15Francewww.francetelecom.fry-o-yonacomparablebasis.Thiswasduetotheon-goingdeclineintheFren

186、chmarket,butalsotothesharpercontractioninthePolishfixed-linesector.Homerevenuesweredownby6.1%y-o-yinPoland,comparedwithjust1%inFrance.FranceTelecomreportedthatthefallincallpricesin2006,andalowervolumeofnetworkcallswerealmostentirelyoffsetbygrowthinthenumberofADSLconnections.Indeed,theoperatorhasadde

187、d1.5mnnewADSLcustomersinFranceduring2006.BytheendofQ307,FranceTelecomhad6.902mnADSLsubscribersintheFrenchmarket.CentraltothecompanysbroadbandstrategywithinthemassmarkethasbeenthepromotionofintegratedserviceofferingssuchasLivebox.WithLivebox,thecentralequipmentisconnectedtothefixed-linetelephonesocke

188、twhichallowsallcommunicationservicesinthehousetobelinkedbybroadband,enablingservicessuchasinternet,networkgames,TVbroadcastsandon-demandTV,video-conferencingandVoIP.ThenumberofLiveboxcustomersinFranceamountedto3.437mnattheendof2006,andreached4.692mnattheendofQ307.LiveboxesarealsousedinPoland,Spain,t

189、heNetherlandsandtheUK,withatotalof5.717mninoperationacrossEuropeasofQ307.FranceTelecomisusingtheLiveboxtodrivetake-upofVoIPservices.Attheendof2006,therewere2.081mnVoIPsubscribersinFrance,andthisfigurehadgrownto3.485mnbytheendofQ307.Theoperatorpredictsthat80%ofitscustomerswillbeusingVoIPby2010.InFebr

190、uary2006,FranceTelecomannouncedaCDqualityVoIPservice,althoughitonlyworkswhencallinganothercustomeroftheservice.TheADSLdigitalTVoffer,knownasMaLigneTV,continuestoberolledout,withover8.5mnhouseholdsconnectedbyYE05.FranceTelecomsurpasseditstargetof180,000MaLigneTVsubscribersbytheendof2005withatotalBusi

191、nessMonitorInternationalLtdSPECIALREPORTcustomerbaseof200,000.Bytheendof2006,thetotalnumberofIPTVcustomersinFrancehadreached577,000;byQ307,thisnumberhadrisento975,000.InFebruary2006,FranceTelecomintroducedtheBouquetTVpackage.Itfeatures30generalandspecialinterestchannels,exclusivechannelsformajoreven

192、ts,accesstoalltheTPSandCanal+premiumpackages,footballpackagesfromLigue1live,Canal+andFoot+,MonMagneto,saidtobethefirstADSL-baseddigitalrecordingservice,and24/24Video,saidtobethefirstchanneltopromoteVoD.Aspartofitsvideo-on-demandpackage,FranceTelecomsignedadealwithBuenaVistaInternationalTelevisioninA

193、pril2006,givingsubscribersaccesstofilmsfromproducergroupssuchasTouchstonePicturesandMiramax.Fibre-to-theHomeDeploymentInDecember2006,FranceTelecomoutlineditsplansforfibre-to-the-home(FTTH)deployment.Thefirststagewillrunfrom2007-08withthetargetof150,000-200,000customersconnectedbytheendof2008,outofap

194、otentialclientbaseof1mn.ThefirstserviceswereduetobelaunchedinParisandseveralneighbouringregionsinMarch2007,beforebeingrolledoutfromJune2007toadozenothercitiesincludingLille,Lyons,Marseilles,PointiersandToulouse.Theoperatorsaidthatithasalreadyinstalled100,000kmoffibre,passed11,500homesandconnected500

195、customers.BusinessMonitorInternationalLtdF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSDeutscheTelekomOverviewDeutscheTelekomwascreatedasaprivatestockcompanyin1995,takingoverresponsibilityforGermanystelecomsservicesfrompredecessorDeutscheBundespostTelekom.Thestatesdirectholdinginthenewcompany,initially

196、74.0%,hasgraduallybeenreduced,andnowstandsat15.4%.KfW,adevelopmentbankthatis80%ownedbytheFederalRepublicand20%ownedbytheGermanfederalstates,ownsafurther17.3%stake,followingthesaleinApril2006ofa4.5%staketoUSprivateequitygroupBlackstone.InNovember2006,formerDeutscheTelekomCEO,Kai-UweRicke,wasforcedtos

197、tepdown,followingthelossofsupportoftwoofthecompanyslargestshareholders;theGermangovern-mentandprivateequityinvestorBlackstoneGroup.BothshareholdershadbeenunhappywiththerecentperformanceofDeutscheTelekom,whichdowngradeditsfull-yearfinancialtargetsafterpoorhalf-yearresults,andfeltthatRickehadbeentoosl

198、owtointroducerestructuringplans.Atthesametime,DeutscheTelekomspowerfulworkersunionVerdi,whichcontrols10ofthe21seatsontheoperatorssupervisoryboard,wasangryatplanstocuttensofthousandsofjobsoverthenextfewyears.Kai-UweRickewasreplacedasCEObyformerT-Mobilehead,ReneObermann.InApril2007,Obermannsuggestedth

199、atDeutscheTelekomcouldbecomeatakeovertargetforfinancialinvestorsifthecompanydidnotdemonstrateimprovedfinancialperformanceinthecomingyears.Obermannalsosuggestedthatonepossibleconsequenceofatakeovercouldbethebreak-upofthecompany.CorporateStructureInMarch2005,DeutscheTelekomimplementedanewcorporatestru

200、cturefocusingonthreestrategicgrowthareas:Broadband/Fixed-network-thebusinessunitsT-ComandT-Onlineserveprivateandsmallbusinesscustomers,aswellasoperatingthewholesalebusiness,internationalcarrierbusinessandcontrollingtheentirefixed-networkinfrastructure.BusinessCustomersthroughwholly-ownedT-SystemsMob

201、ileCommunications-throughwholly-ownedT-MobileInternational(seeseparatecompanyprofile)InNovember2005,DTannouncedplanstocut32,000jobsfromitspayrollinGermanyinthenextthreeyears:25,000atitsmainoperationsand7,000atVivento.(ViventowascreatedinSWOTANALYSISStrengthsEuropeslargestoperatorintermsofturnoverand

202、oneofthelargestintheworldLargestfixed,broadbandandmobileoperatorinGermanyExtensiveinternationaloperations,particularlythroughmobilearmT-MobileInternationalHasover80%ofdomesticfixed-linemarketandcontrollingstakesinincumbentoperatorsinHun-gary,CroatiaandSlovakiaRevenuegrowthfrominternetbusinessmoretha

203、noffsetsfallingfixed-linerevenues;overallrevenuegrowthdrivenbyinternationalmobileoperationsWeaknessesCompetitionindomesticmobilemarketdrivingdownpricesandrevenuesBeatentodomestic3GlaunchbyVodafone,whichleadsthemarketOpportunitiesEUR3bninvestmentprogrammetorollouthigh-speedVDSLandtripleplayservicesCo

204、ntinuedstronggrowthinADSLandmobileserv-icesinternationally32,000joblossesover2006-2009periodshouldreducecostsandimproveefficiencyContinuedrolloutofwebnwalkmobileinternetserviceHigh-speedHSDPAserviceslaunchedinMarch2006Over13,000ownedW-LANhotspotsworldwideandafurther3,000throughroamingagreementsThrea

205、tsAnyslowdowninUSmobilegrowthwouldhaveasignificantimpactonthegroupsperformanceDomesticmobilemarket,aswellasseveralkeyinternationalmarkets,approachingsaturationEUcouldforceDeutscheTelekomtograntcom-petitorsaccesstoitsnewhigh-speedbroadbandinfrastructure,reducingitsprofitmarginsAsoperatorspushADSLandm

206、obileservices,fixed-linemarketcouldbeginasharperdeclinethancurrentlyenvisaged2002asatemporaryunitsothatDeutscheTelekomcouldtransferseveralthousandemployeestoitandavoidhavingtolaythemoff.The7,000ViventoemployeesarecurrentlyonDeutscheTelekomspayrollbuttheyperformdutiesforothercompanies).Some20,000posi

207、tionswillbecutatT-Com,whichhas110,000employees.Butthecompanyalsosaiditwouldcreate8,000jobsasitfocusesonmorepromisingbusinessopportunities:3,000atT-Punktshopsand5,000fortherolloutofthenewhigh-speedfibre-opticnetwork.RecentFinancialPerformanceInAugust2007,DeutscheTelekomsuggestedthatitwasbackontrackfo

208、rachievingits2007financialtargets.AdjustedEBITDAofEUR9.5bnwassaidtobewithintheoperatorsrangeofexpectations.Meanwhile,netrevenueincreasedby3.5%year-on-yeartoreachEUR31mn.DeutscheTelekomsnetrevenuesfor2006wereupby2.9%y-o-y,toEUR61.347bn.Theoperatorclaimedthatitsimprovedperformancewasinpartduetoaseries

209、ofnewcallplansfordomesticfixed-lineservices.However,overallperformanceinDeutscheTelekomsdomesticmarketcontinuedtobedisappointingthroughout2006.Revenuesfromtheoperatorsdomesticfixed-linebusinessdeclinedby6.6%y-o-yin2006toreachEUR5.433mn.Thisfallwaspartlyimpactedbyadeclineinrevenuesfrominterconnection

210、servicesandlowerpricesforinternetaccess,butthemainreasonwasthelossof1.546mnfixed-linecustomersduringtheyear.Thelossofrevenuesfromtheoperatorsdomesticfixed-linebusinesswaspartiallycompensatedforbya4.4%increaseinrevenuesfrominternationalfixed-lineoperations(whichamountedtoEUR754mnatyear-end).BusinessM

211、onitorInternationalLtdSPECIALREPORTAdjustedEarningsBeforeInterest,Taxes,DepreciationandAmortisation(EBITDA)fromDeutscheTelekomsfixed-linebusinessfellby11.2%during2006,toreachEUR8.752mn.ThefallinEBITDAwasmostseverewithintheorganisationsdomesticfixed-lineoperations,whereitfellby11.6%toreachEUR7.903mn.

212、Incontrast,EBITDArelatedtointernationalfixed-lineactivitiesfellby7.1%toreachEUR849mn.ThelowerEBITDAfromdomesticandinternationalfixed-lineactivitiesimpactedonoveralladjustedgroupEBITDA,whichfellby6.2%toreachEUR19.434bn.Overall,netprofitfromfixed-lineoperationswasdownby16.2%in2006,atEUR4.890mn.During2

213、006,Groupcapitalexpenditureincreasedby27.4%toreachEUR11.806mn,withbroadbandandmobileservicesreceivingthegreatestshareofnewinvestment.Capitalexpenditurewithinthecompanysbroadbandandfixednetworkbusinessgrewby32.4%toreachEUR3.284mn,whilecapitalexpendituredirectedatmobileactivitiesgrewby29.3%toreachEUR7

214、.247mn.Groupnetdebtgrewby2.4%y-o-ytoreachEUR39.555mn.GroupStrategyInNovember2006,DeutscheTelecomconfirmedthatitisplanningtosellpartofitsT-Systemsdivision,whichprovidesdataandnetworkingservicestobusinesscustomers.Thegroupsaidthatitisconsideringsellingpartsofthedivision,suchasfieldsupportfordesktopsan

215、dsoftwaredevelopment,althoughtherearenoplanstodivesttheentireT-Systemsoperation.ThemoveisconfirmationthatnewCEO,RenObermann,willpursueDeutscheTelekomspreviouslystatedstrategyofsellinguptoEUR3bnworthofnon-coreassetsinordertofocusoncoretelephonyandinternetactivities.T-Systemscurrentlyaccountsforasizea

216、blechunkofDeutscheTelekomsresources,employing52,000staff,buthasunder-performedrecently.Attheendof2006,businesscustomerrevenuewasdownby1.3%y-o-yatEUR3.339bn.17.5%ofthistotal(EUR584mn)camefromtheoperatorsinternationalbusinessactivities,revenuesfromwhichactuallygrewby19.4%duringtheyear.DeutscheTelekomh

217、asalsoannouncedacost-cuttingprogramme,Telekom2010.ThisisdesignedtoachievesavingsofEUR2bnduring2007byimprovingefficiency.ThegrouphasalreadyidentifiedspecificmeasuresinitscurrentplanningtosaveEUR4.2-4.7bn,whichwillhelpgenerateadjustedEBITDAinlinewiththegroupsguidanceforthecomingyear.DeutscheKEYSTATIST

218、ICSAnnualRevenues(2005):EUR59.604bnRevenues(H106):EUR29.972bnAnnualRevenues(2006):EUR61.347bnRevenues(H107):EUR31.028bnNetProfit(2005):EUR4.668bnNetProfit(H106);EUR2.036bnNetProfit(2006):EUR3.850bnNetProfit(H107);EUR1.137bnNarrowbandLines(Total,Q306):39.498mnNarrowbandLines(Total,Q406):38.961mnNarro

219、wbandLines(Total,Q107):38.301mnNarrowbandLines(Total,Q207):37.725mnNarrowbandLines(Total,Q307):37.166mnNarrowbandLines(Germany,Q306):33.695mnNarrowbandLines(Germany,Q406):33.192mnNarrowbandLines(Germany,Q107):32.605mnNarrowbandLines(Germany,Q207):32.089mnNarrowbandLines(Germany,Q307):31.592mnBroadba

220、ndLines(Total,Q306):10.374mnBroadbandLines(Total,Q406):11.450mnBroadbandLines(Total,Q107):12.397mnBroadbandLines(Total,Q207):12.951mnBroadbandLines(Total,Q307):13.264mnBroadbandLines(Germany,Q306):9.402mnBroadbandLines(Germany,Q406):10.280mnBroadbandLines(Germany,Q107):11.065mnBroadbandLines(Germany

221、,Q207):11.513mnBroadbandLines(Germany,Q307):12.016mnEmployees(September2007):250,871YearEstablished:1995CONTACTSDeutscheTelekomAGFriedrich-Ebert-Allee14053113BonnGermanyWeb:www.telekom.deTelekomalsoanticipatesreceivingaroundEUR3bnfromassetdisposalsinthenextthreeyears,tobereinvestedinfutureprojects.B

222、roadband/Fixed-lineBusinessInGermany,DeutscheTelekom(viaT-Com)operatesafibre-optictransmissionnetworkandacoppercable/fibre-opticaccessnetwork.Attheendof2006,T-Comoperated33.192mnnarrowbandlinesinGermany,withanadditional5.769mninCEE(Hungary,Slovakia,Croatia,MacedoniaandMontenegro).SinceQ105,DeutscheT

223、elekomhasreportedthenumberoffixed(narrowband)linesratherthanthenumberofchannels.In2006,thenumberofISDNlinesfellby7.5%y-o-ytoreach9.035mn,whileanaloguelinesfellby5.2%y-o-ytoreach24.158mn.Duringthefirstninemonthsof2007,thesetrendscontinued,withthenumberofdomesticPSTNlinesoperatedbytheGermanincumbentfa

224、llingby5.3%toreach22.888mn.Meanwhile,thenumberofdomesticISDNoperatedbyDeutscheTelekomfellby3.7%toreach8.704mn.DeutscheTelekomhasattributedthefalltoanincreaseincustomerchurn,withcustomersswitchingtocableandalternativeoperatorsofferingIP-basedtelephonyservices;churnhasalsobeentheresultofanincreaseinmo

225、bilesubstitution.ThefallinthenumberofISDNlinesisattributedtothediscontinuationofthepriceadvantageofcombiningT-DSLwithT-ISDN,ascomparedwithcombiningT-ISDNwithT-Net,fromearly2005.IntheGermanbroadbandmarket,thenumberofdomesticretailDSLlinescontrolledbyDeutscheTelekomgrewstronglyonceagain,upby29.8%y-o-y

226、to10.280mnattheendof2006.However,thebulkofthisgrowthcamefromwholesalelinesforresale,whichgrewby101.8%to3.212mnbytheendoftheyear.Inthefirstninemonthsof2007,theincumbentsdomesticretailbroadbandsubscriberbasegrewby20.2%toreach8.493mn.Incontrast,thenumberofwholesale(DSLresale)servicesgrewby21.6%toreach3

227、.524mn.BusinessMonitorInternationalLtdF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSInSeptember2005,DeutscheTelekomannouncedaEUR3bninvestmentprogramme,includingtheroll-outofanopticalfibreVDSLnetworkwithspeedsofupto50Mbit/sasthebasisforhigh-leveltriple-playservices.InOctober2007,theincumbentsignedadealw

228、ithEricssonforthedeploymentofEricssonsVDSL2solution.EricssonsEDA1200VDSL2solutionisbasedonEthernettechnologyandisdesignedtosupportlarge-scalebroadbandrolloutsquicklyandcost-ef-fectively.32citiesinGermanywereduetobeconnectedtoDeutscheTelekomsVDSLnetworkbytheendof2007.Akeypartofnewtriple-playofferings

229、willbeIPTV.DeutscheTelekomsignedadealinMarch2006with MicrosoftforsoftwarethatwillpowertheoperatorsIPTVservice.InOctober2006,DeutscheTelekomsT-ComdivisionannouncedthelaunchofitsT-Hometriple-playservice.T-HomeoffersvoiceoverIP(VoIP),50MbpsVDSLbroadbandaccess,andanIPTVservicewhichincludesmorethan100cha

230、nnelsandvideoondemand.TheservicepackagescostbetweenEUR65andEUR91permonth.DeutscheTelekomhadcarriedouttestsofWiMAXservicesin2005and2006,potentiallywithaviewtorollingoutthetechnologytoareasnotservedbyitsfixed-linebroadbandinfrastructure.However,inNovember2006theoperatorsaidthatitwouldnottakeplaceinthe

231、DecemberWiMAXlicenceauction,sayinginsteadthatitwoulduseothertechnologiestobringhigh-speedinternettoruralareas.ThesecouldincludeADSL2+,whichDeutscheTelekomsaidwillberolledouttocomplementitsVDSLinfrastructure.InternationalOperationsDeutscheTelekomisoneofthelargesttelecomsoperatorsintheworld,withsubsid

232、iariesandaffiliatesacrosstheglobe.ViaT-Com,itholdsstakesinthefollowingincumbentoperators:MagyarTelekom(Hungary,59.2%stake)-fixed-lineincumbentoperator,with2.972mnnarrowbandlinesand593,000DSLlinesasof2006;bytheendofSep-tember2007,thesefiguresstoodat2.824mnand715,000respectively.ThroughMagyarTelekom,D

233、eutscheTelekomalsocontrolsmobilesubsidiary T-MobileHungary-4.431mnusersattheendof2006and4.628mninSeptember2007;MagyarTelekomitselfindirectlyowns51%ofMacedonianfixedoperatorMaktelandmobilesubsidiaryT-MobileMacedonia,anda51.12%stakeinMontenegrinoperatorMobileMontenegro;attheendofSeptember2007,thegroup

234、had1.066mnmobilecustomersinMacedoniaand391,000inMontenegro.T-HrvatskiTelekom(Croatia,51%)-fixed-lineincumbentoperatorwith1.647mnnarrowbandlinesand216,000broadbandlinesattheendof2006;bytheendofSeptember2007,thesefiguresstoodat1.629mnand299,000respectively.SlovakTelekom(Slovakia,51%)-fixed-lineincumbe

235、ntoperatorwith1.150mnnarrowbandand182,000broadbandlinesinoperationattheendof2006;bytheendofSeptember2007,thesefiguresstoodat1.123mnand233,000respectively.DeutscheTelekomalsopreviouslyownedFrenchISPClubInternetandSpanishISPY,which,attheendof2006,respectivelyhad267,000and178,000broadbandcustomers.Howe

236、ver,inMay2007,thecompanysoldClubInternettoFrenchalternativeoperatorneufCegetel,while,inJune2007,YwassoldtoFranceTelecom.DeutscheTelekomssubstantialinternationalmobileactivitiesareoperatedthroughT-MobileInternational(seeseparateprofile).MergersandAcquisitionsInJune2006,DeutscheTelekomwonitscourtbattl

237、eagainstminorityshareholdersofitsinternetbusinessT-Online,allowingthemergeroftheinternetdivisionbackintotheparentcompany.Theshareholdershadwagedan18-monthcampaigntoblockthemerger.DeutscheTelekomcarriedoutapartialmarketflotationofT-Onlinein2000,butboughtbackthemajorityofsharesin2004.However,theminori

238、tyshareholderssuedDeutscheTelekomforofferingthemjustEUR8.99pershare,despitehavingsoldthesharesformorethanthreetimesthatamountfouryearspreviously.DeutscheTelekomiscurrentlyembroiledinanownershipdisputewithFrenchmediaconglomerateVivendiovertheownershipofPolishmobileoperatorPTC.Themainboneofcontentionh

239、asbeenthe48%stakeinPTCownedbyPolishenergygroupElektrim.Elektrimtransferredthisstaketoaholdingcompany,knownasElektrimTelekomikacja,whichwasajointventurewithVivendi,withthelatterholdingacontrollingstakeof51%.However,inFebruary2005aViennatribunalruledthatthesharetransferviolatedPTCsshareholderagreement

240、andorderedthesharestobereturnedtoElektrim.Theenergygroupwasgiventwomonthsinwhichtotakecontroloftheholding.InJune2006,anotherViennatribunalupheldaclaimbyDeutscheTelekomthatElektrimhadfailedtotakecontroloftheshareswithintheallottedtime,therebyallowingDeutscheTelekomtoinvokeaclauseinthePTCshareholderag

241、reementandbuyElektrimsholdingatbookvalue.Whenaddedtoitsoriginalstakeof49%,DeutscheTelekomclaimedthatthedealgaveitcontrolover97%ofPTCsshares.DeutscheTelekombeganconsolidatingPTCintoitsfinancialresultsinNovember2006.However,VivendihaschallengedthelegalityofDeutscheTelekomspurchaseandispursuingthecasei

242、nthePolishandUScourts.BusinessMonitorInternationalLtdSPECIALREPORTTelecomItaliaOverviewTelecomItaliaisItalysincumbenttelecomsoperator,providingawiderangeofprovidesfixed-line,mobile,dataandinternetservicesthroughitsvariousoperatingsubsidiariesbothinItalyandinternationally.CorporateHistoryOldTelecomIt

243、aliawascreatedin1997,followingthemergerofitspredecessorentitywithandintoparentholdingcompanySTET.STET,thesurvivingentity,wasrenamedTelecomItaliaSpAinJuly1997.TelecomItaliawasprivatisedinNovember1997whentheItaliangovernmentsoldthemajorityofitsstakethroughaglobalofferingandaprivatesaletoagroupofshareh

244、olders.InMay1999,Olivettiacquireda52.12%stakeinTelecomItalia.AfterthegovernmentsolditsremainingstakeinTelecomItaliainDecember2002,TelecomItaliamergedwithandintoOlivetti,withthesurvivingentitybeingthenewTelecomItaliaSpA(createdinAugust2003).Thecom-panysleadingshareholdersubsequentlybecameOlimpia,whic

245、hheldastakeofaround17.99%inTelecomItalia;Olimpiawasitself57.66%-ownedbyPirelli.InMay2007,PirellifinallysoldOlimpiatoagroupofinvestorscomprisingSpainsTelefnica,ItalianbanksMediobancaandIntesaSanpaolo,insurerGeneraliandtheBenettonfamily.ThenewshareholderswillformacompanyknownasTelco,whichwillownbothth

246、enewly-acquired17.99%stakepreviouslyheldbyOlimpia,aswellasa5.6%stakealreadyheldbytheItalianpartners.Altogether,Telcowillhold23.6%ofTelecomItalia.Telefnicawillholda42.3%stakeinTelco,meaningthatitwillhaveanindirect10%stakeinTelecomItalia.CorporateStructureInDecember2006,TelecomItaliaconfirmedthatitwou

247、ldbeadoptinganeworganisationalstructureandreshufflingitsmanagement,withfourmajorbusinessunits:Fixed-offersdomestictelephony,internetanddataservicesforretailcustomersandwholesaleprovidersinItaly.HeadedbyMarcoCastelli.Mobile-domesticmobileoperations,ledbyLucaLuciani.Networks-TelecomItaliasdomesticandi

248、nternationalnetworkinfrastructure.TopClients/ICTTheOlivettiunit,whichmanufacturesink-jetproductsfortheoffice,digitalprintingsystemsandproductsassociatedwithsilicontechnologythroughOfficeProducts,willbemanagedseparately.TheorganisationalstructurereflectsachangeoffocusatTelecomItalia.Inparticular,theS

249、WOTANALYSISStrengthsLargesttelecomsserviceproviderinItaly,witha78%shareoflocalfixed-linecalltrafficAmajorplayerinItalysbroadbandmarketwith7.395mnADSLsubscribersattheendofQ307(includingretailandwholesale);estimatedtohavea63%shareoftheretailbroadbandmarketMobileservicedivisionhascontinuedtomaintainacl

250、earleadovermobilemarketrivals,witha43.7%shareofthemarketinQ307;alsohasnearly28%ofItalian3GmarketMajorinternationalpresenceincludesbroadbandoperationsinGermanyandFranceandmobileoperationsinBrazilWeaknessesFixed-lineuserbaseandvoicetrafficcontinuetodeclineinfaceofbroadband/mobilesubstitutionandincreas

251、edcompetition,despitepricecutsandpromotionsMobilemarketbecomingincreasinglysaturated(130%mobilepenetrationin2006)StillheavilyreliantonprepaidmobileuserswiththeirconsiderablylowerARPUspendinglevelsOpportunitiesIntegratednatureoffixed-lineandmobilebusiness-esenablesdevelopmentofconvergedfixed-mobilese

252、rvicesBroadbandsubscriberbaseexperiencingsignificantgrowthonbackofheavypromotions;ADSLservicessupportrolloutofIPTVMobiledivisionisincreasingitspostpaidcustom-ers,whichincreasedby8.8%ofthetotalinQ305to19.1%inQ307EmergenceofnewMVNOsrepresentpotentialsourceofwholesalerevenueThreatsTheMay2007acquisition

253、ofFastwebbySwitzer-landsSwisscomhasboostedFastwebsinvestmentpotentialandcreatedanewsourceofintensifiedcompetitionforTelecomItaliaRegulatorypressurehasbeenmountingforTel-ecomItaliatoseparatefixedandmobiledivisionsVodafoneItaliaandFastwebhavepartneredtochal-lengeTelecomItaliainquadrupleplaysectorProfi

254、tsinmobilesectormaybesqueezedasnumberofMVNOsincreasesgrouphasdivestedmanyofitsinternationalactivities,sellingEntelChilegroup,TIMHellasinGreeceandTIMPerduring2005,aswellasCorporacinDigitelVenezuelainJanuary2006.InJuly2006,theoperatorannouncedthatitwassellingits40.5%stakeinTurkishmobileoperatorAVEAtoo

255、thermajorshareholderTurkTelekom,inadealworthUS$500mn.TelecomItalianowhasforeignoperationsinsevencountries,themostsignificantofwhichareinBrazil.BusinessMonitorInternationalLtdF-MCONVERGENCEINEUROPE:STRATEGIESFORSUCCESSRecentFinancialPerformanceTotalTelecomItaliaGrouprevenuesfor2006totalledEUR31.275bn

256、,up4.5%ontheendof2005total.TheoperatorclaimedthatexcludingthenegativeeffectofcutstoterminationratesinItaly,organicrevenuegrowthwouldhavebeen4.6%.EBITDAwasupby2.7%y-o-ytoEUR12.850bn,againnegativelyimpactedbyterminationratecuts.Consolidatednetprofitfellby18.6%in2006toEUR3.003bn.Inthewirelinesector,200

257、6revenuesweredownby0.2%y-o-ytoEUR17.795bn.Resultswereaffectedbythecutinfixed-to-mobileterminationratesinItaly,whichtookeffectinthesecondhalfof2005,andtheongoingeffectofvoicetrafficmigrationfromfixedtomobileservices.However,asinpreviousquarters,growthwasunderpinnedbygainsinthebroadbandsector.Thenumbe

258、rofbroadbandsubscribersinEurope(Italy,France,GermanyandtheNetherlands)increasedto8.660mn,upfrom7.020mnatthebeginningoftheyear.TheintegrationofAOLGermanysinternetaccessbusiness,whichwascompletedinearly2007,tookTelecomItaliastotalbroadbanduserbaseto9.3mn.TelecomItaliaclaimsthatthiswillmakeitEuropeslar

259、gestbroadbandoperator,alongsideFranceTelecom.TelecomItaliasgroupcapitalexpenditurefor2006totalEUR5.114mn,anamountthatwasEUR59mnlowerthanin2005.WirelinebusinesscapitalexpenditureincreasedfromEUR2.823mntoEUR3.002mn,whiledomesticwirelesscapitalexpendituredecreasedfromEUR1.276mntoEUR1.146mn.Theincreasei

260、nwirelinecapitalexpenditureresultedpartlyfromhigherexpenditureonbroadbandservicedevelopment.Domesticmobilerevenuesfor2006amountedtoEUR10.210bn,anincreaseof1.3%comparedwiththeendof2005.Theoperatorclaimedthatexcludingthenegativeimpactofterminationratecuts,itsrevenueswouldhavegrownby5%y-o-y.However,rev

261、enuesfromvalue-addedservicesgrewby10.2%comparedwith2005,thankstotheincreasingnumberof3Gusers.Growthinvalue-addedservices(VAS)offsetthenegativeeffectofcutsinfixed-mobileandmobile-mobileterminationcharges.VASnowaccountfor16.2%ofallmobileservicerevenues,comparedwith14.9%attheendof2005.FortheyearendedDe

262、cember312006,TelecomItaliaMobilesprofitsrosebyanimpressive77%y-o-ytoEUR3.22bn.EBITDAwasdownby0.7%toEUR5.064bn.ThecompanyclaimedthatanEBITDAgrowthrateof2.5%wouldhavebeenseenhaditnotbeenforthenegativeeffectofcutstoterminationrates.MobileBetween2005and2007,TelecomItaliacommitteduptoEUR4mnintoitsdomesti

263、cmobileunit,reflectingcost-savingsynergieswithTelecomItaliasinfrastructurereinvestedininnovationproc-essesandthedevelopmentofitsUMTSnetwork.InvestmentsindevelopingitsUMTSnetworkamountedtooverEUR1bn,withcoverageextendedto80%ofthecountrybytheendof2007.Inearly2006,TIMannounceditwouldbeinvestingEUR60-70

264、mnovertheyeartoenhance5,000UMTSbasestationswithHSDPAtechnology,covering50%ofthecountry.ServicesweremadeavailablefromMay2006allowingmobilebroadbandaccessatupto4Mbit/s,initiallyinRome,MilanandTurin.TelecomItaliahadbeenduetodeployitsfirstcombinedfixed/mobilehandsetin2006underthenameUnico.Thiswouldfollo

265、winthefootstepsoftheUK-basedtelecomsoperatorBTGroup,whichearlierlauncheditsBTFusionphoneallowinguserstoautomaticallyswitchfrommobiletolandlinedependingonwhethertheywereathomeoroutside.However,inJune2006,theconvergedofferingwasblockedbythenationalcompetitionwatchdog,whichclaimedthatrivalfirmswouldbeu

266、nabletomatchtheservice,therebyendangeringcompetition.KEYSTATISTICSAnnualRevenues(2004):EUR28.573bnAnnualRevenues(2005):EUR29.919bnRevenues(Q106):EUR7.482bnRevenues(H106):EUR15.335bnRevenues(9M06):EUR23.104bnAnnualRevenues(2006):EUR31.275bnRevenues(Q107):EUR7.540bnRevenues(H107):EUR15.470bnRevenues(9

267、M07):EUR23.359bnNetProfit(2004):EUR1.815bnNetProfit(2005):EUR3.690bnNetProfit(Q106):EUR772mnNetProfit(H106):EUR1.473bnNetProfit(9M06):EUR2.351bnNetProfit(2006):EUR3.003bnNetProfit(Q107):EUR775mnNetProfit(H107):EUR1.502bnNetProfit(9M07):EUR2.208bnNo.ofFixed-linesinService(December2005,Italy):25.05mnN

268、o.ofFixed-linesinService(December2006,Italy):20.540mnNo.ofBroadbandSubscribers(December2006,Group):8.660mnNo.ofBroadbandSubscribers(March2007,Group):10.208mnNo.ofBroadbandSubscribers(June2007,Group):10.5mnNo.ofBroadbandSubscribers(September2007,Group):10.701mnNo.ofBroadbandSubscribers(September2006,

269、Italy):6.5mnNo.ofBroadbandSubscribers(December2006,Italy):6.770mnNo.ofBroadbandSubscribers(March2007,Italy):7.095mnNo.ofBroadbandSubscribers(June2007,Italy):7.277mnNo.ofBroadbandSubscribers(September2007,Italy):7.395mnNo.ofCellularSubscribers(September2006,Group):55.6mnNo.ofCellularSubscribers(Decem

270、ber2006,Group):57.680mnNo.ofCellularSubscribers(March2007,Group):59.876mnNo.ofCellularSubscribers(June2007,Group):61.812mnNo.ofCellularSubscribers(September2007,Group):64.510mnNo.ofCellularSubscribers(September2006,Italy):31.488mnNo.ofCellularSubscribers(December2006,Italy):32.450mnNo.ofCellularSubs

271、cribers(March2007,Italy):33.569mnNo.ofCellularSubscribers(June2007,Italy):34.312mnNo.ofCellularSubscribers(September2007,Italy):35.310mnEmployees(September2007):83,691YearEstablished:1997BusinessMonitorInternationalLtdSPECIALREPORTBroadbandTheoperatorhasstatedthatitexpectedtosee8mnbroadbandaccesslin

272、esinItalybytheendof2007,upfrom5.707mnatthestartof2006.TelecomItaliawillinvestatotalofEUR7.3bnintobroadband,withEUR6.5bngoingtodevelopingitsdomesticmarket,whileEUR800mnwillbeinvestedintotheEuropeanBroadbandProgramme.InFebruary2006,TelecomItaliaintroducedCONTACTSTelecomItaliaSpAPiazzaDegliAffari220123

273、MilanL6www.telecomitalia.itADSL2Plustechnologytoitsnetwork,offeringdownstreamspeedsofupto20Mbps.InDecember2005,TelecomItaliacommerciallylauncheditsEUR350mnAliceIPTVserviceinfourItaliancities(Rome,Milan,BolognaandPalermo),of-feringsubscribersapackageofmovies,sport,newsandmusicdowntelephonelinesbundle

274、dwithhigh-speedinternetaccessandtelephony.Serviceavailabilitywasextendedtoafurther17ItaliantownsinJanuary2006and250townsbytheendof2006.Thebasicpackage-comprisingAlice4MbpsADSLactivation,unlimitedhigh-speedinternetaccess,anADSLWi-Fimodem,aset-topbox,aremotecontrol,anextrapersonalhomephonenumberandactivationoftheAliceVoiceservicepackage-costsEUR45.90permonth.BusinessMonitorInternationalLtd