This update to BMI's Telecommunications Market Report on Italy takes in the latest data and operating indicators disclosed by the country's leading public telecommunications network operators, as well as the national regulatory authority and related industry bodies. While the mobile and broadband markets generally grew within expected parameters, the contraction of the fixed-line market was a little slower than forecast. Therefore, forecasts for these sectors have been amended only slightly. Deeper adjustments have been made to our mobile ARPU forecasts as H211 data have been obtained from WIND and 3 Italia and these showed ARPU contracting more sharply than expected. ARPU contraction also weighs on Italy's Risk/Reward Ratings score, which has been downgraded this quarter.
There were 92.436mn mobile subscribers in Italy at the end of 2011, up by 2.9% from 89.868mn a year earlier. The mobile penetration rate passed 152% in 2011. This is based on final Q411 data published by Telecom Italia, Vodafone, WIND and 3 Italia, as well as data relating to MVNOs published by the regulator. With mobile broadband uptake growing robustly and with 4G spectrum now in operators' hands, we expect continued positive growth, which will take the market through to 98.451mn subscribers by 2016, yielding a penetration rate of 160.6%.
The average mobile ARPU rate for Italy fell by 8.3% in 2011 to reach EUR17.7. All of Italy's mobile operators contributed to the fall in blended ARPU in 2011. The decline in blended ARPU was steepest for 3 Italia, which suffered the greatest exposure to the reduction in mobile termination rates (MTRs) in July 2011. 3 Italia saw blended ARPU decline by 15.7% to EUR19.9 during 2011 while Telecom Italia contracted by 10.1%, Vodafone 4.4% and WIND 7.9%. Besides MTRs, price competition sparked by bundled service promotions and the launch of new services by MVNOs are also weighing on ARPUs.
The mobile operators continue to roll out their 3G/3.5G networks as more subscribers upgrade to dataintensive smartphones and tablet computers. WIND appears to have caught up with the market leaders in terms of HSPA/3.5G deployment and reports significant increases in non-voice service revenues and mobile broadband usage. All four operators secured spectrum that will enable them to deploy 4G services and, although initial services are not expected before early 2013 and mass market adoption not expected until 2016, the signs for accelerating mobile data uptake are encouraging and should prolong the operators' lives in the mobile market.
Within BMI's Risk/Rewards Ratings analysis, Italy's Industry Rewards score was reduced by 2.4 points, giving it a total of 54.6 points. Specifically, though, it reflects the sharp decline in blended mobile ARPUs that is linked to the issue of competition but also to the quite substantial reductions applied to some operators' MTRs in 2011, which particularly affected 3 Italia and Telecom Italia. This was partially offset by an increase in Italy's Country Rewards score. The overall effect was to reduce Italy's aggregate score by 0.3 points to 62.7.
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