Telecom Italia Essay

The Telecom Italia Group is the largest telecom operator in Italy and one of the leading global providers of telecommunication services. Positioned among the top 10 international communication companies in terms of growth and profitability, its main global competitors are AT&T, BT, Deutsche Telekom, France Télécom, Telefónica, and Vodafone.

During fiscal year 2007, it recorded revenues of €31.290 million, an operating profit of €5.764 million, and employed 83,221 people. The core business is represented by fixed-line/mobile telecommunications and the Internet, where it operates through brand names Telecom Italia, TIM, Alice, and Virgilio. The office and systems solutions business operates under the Olivetti brand. Telecom Italia Lab is the brand name used for research and development (R&D). In the media industry, it operates through La7, MTV Italia, and APCOM. The television business unit manages satellite channels and pay-per-view services. The news business unit provides news and special reports.

Created in 1994 from the merger of Iritel, Telespazio, Italcable, and Sirm, after the merge with Stet and privatization in 1997, Telecom Italia has based its growth on new markets of expansion, and on the development of new business models, entrepreneurial ventures and technologies, monitoring its investment portfolio, and divesting noncore and low-return businesses. Its primary focus is organic growth, with selective mergers and acquisitions activity to support international development. National and international strategic partnership agreements have also been very important in accelerating its expansion.

While Italy is still its most important audience, with a market share of more than 94 percent of access line customers, 70 percent of broadband customers, and 40.3 percent in the mobile communications market, the group’s internationalization has been very strong, particularly in Europe, the Mediterranean, and South America. The Telecom Italia Group offers fixed voice and mobile telecommunication in Italy and Brazil. Broadband is offered in Italy, Germany, France, the Netherlands, and Brazil. It also has stakes in Entel Bolivia, Telecom Argentina, and ETECSA in Cuba. Its international presence is the result of a selective strategy focused on high-growth markets where Telecom Italia has developed a strong competitive advantage mainly based on innovative business models.

In Europe, after a 2003 launch of its international broadband project, through its subsidiaries Telecom Italia France, HanseNet, and BBNed, the company has gradually rolled out Alice-branded broadband services to France, Germany, and the Netherlands, gaining a European portfolio of around 3.4 million customers.

In Germany, where Telecom Italia is one of the top four operators, with 2.3 million customers, the company has implemented an innovative business model based on the offer of a comprehensive and groundbreaking range of services: HanseNet is the only operator in the market proposing a full quadruple play offering, with ADSL, voice, mobile telephony, and IPTV, which will be integrated in the near future with mobile Internet, new channels, and new e-portals.

In the Mediterranean region, the Group has a leading role, handling over 50 percent of phone traffic between countries in this area through its extensive submarine cable ring.

TIM Brasil is one of South America’s biggest suppliers of mobile lines. With a market share of about 26 percent and an offering of more than 31 million lines, mainly targeted to higher-value customers, it is the second operator in the country, continuously expanding into new markets and segments, such as the lower social segments and the broadband business.

Innovation is another distinctive factor of Telecom Italia: research and technology’s investments create a relevant competitive advantage over other players in the market. The Telecom Italia Lab is not only an internal technology center, it also operates externally as a center of excellence for the telecommunications industry. Since 1995, the Group has had a significant involvement in defining the GSM and MP3 standards, and with optical transmission.

There are numerous projects currently supported by the company: fixed-line and mobile access network design and development, next-generation transmission networks, platform and service development, trials of next-generation handsets, and sensoristics. The relevance of innovation in Telecom Italia is consistent with its plan to expand its market share, not only in adjacent market sectors, such as IT, digital media, and advertising, but also in the advertising and digital content sector, where the company aims to grow in digital content distribution and Web 2.0 new media sectors.

Bibliography:

  1. Business Insights, The Top Ten Telecom Service Providers: Positioning, Performance and SWOT Analyses (Business Insights, 2008);
  2. Datamonitor, Telecom Italia SpA, www.datamonitor.com (cited March 2009);
  3. Hoovers, Telecom Italia S.p.A, www.hoovers.com (cited March 2009);
  4. Paolo Passeri, Carlo Cori, and Paolo Impiglia, “Broadband: Telecom Italia Experiences and Future Developments,” Journal of the Communications Network (v.1/2, 2002);
  5. Telecom Italia, www.telecomitalia.com (cited March 2009).

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