IPTV & Fibre Pioneer Fastweb Bought by Swisscom

IanFogg | March 12, 2007, 11:02 AM

Swisscom intends to acquire Fastweb. There are tremendous potential implications for this offer. I'll split my first takes into the benefits for Swisscom, and the impact on the Italian market.

Swisscom:

Swisscom gains an experienced competitive unbundled local loop and fibre operator. This will help Swisscom understand future unbundled threats in its home market and secure FTTH expertise.

Fastweb's IPTV platform may also be of interest given the widely reported teething problems Swisscom has faced with its Microsoft IPTV solution. Microsoft needs to move quickly to ensure that if the IPTV platforms are standardised between the two companies, Microsoft wins a new client rather than losing its lead operator customer. On this, Swisscom states:

"Fastweb also has a competitive edge in terms of expertise in the strategically important field of multimedia applications based on broadband, and has been delivering IPTV to its customers since 2001."

Swisscom sees the fixed broadband market in Italy as highly attractive, with strong growth to complement Swisscom's steady home market. Such a home and away game is far from a unique incumbent strategy in Europe, but it is a major break from Swisscom's previous domestic-centric strategy. Swisscom implies that this is a one-off expansion as the company reiterates a continued Swiss market focus.

Italian market impacts:

Swisscom plans to support Fastweb's plans for an MVNO. Such support should strengthen Fastweb significantly both through cash, mobile expertise and Swisscom's existing Vodafone relationship.

Telecom Italia now faces a mammoth competitive alliance. Fastweb must ensure that its existing partnerships with Vodafone and Sky Italia survive its change of ownership both intact and stronger. They should. Telecom Italia's modest VDSL2 build out plans provide the Fastweb alliance with a tremendous opportunity to enhance their very high speed broadband and IPTV customer base.