x
Optical/IP

FastWeb Unveils Expansion Plan

Italian triple play service provider FastWeb SpA is to spend €1.4 billion ($1.83 billion) during the next two years, and then a further €1.4 billion by 2010, to expand its high-speed access network.

News of the ambitious rollout plan, which will be funded in part by an €800 million ($1.05 billion) new shares issue, follows last week's confirmation that merger talks with fellow Italian competitor Wind Telecomunicazioni SpA have been called off for good (see FastWeb Denies Wind Rumors).

The two operators had identified a merger as one way to take on dominant incumbent operator Telecom Italia SpA (NYSE: TI). (See FastWeb Blows Hot for Wind).

But now FastWeb, which provides voice, Internet access, and TV/video services over fiber and DSL connections, will shoulder the entire cost and risk of taking on the incumbent operator, and will be hoping it can capitalize on its initial success (see Italians & Triple Play: It's Amore).

FastWeb's new plan marks a significant step up in spending. It had previously earmarked €800 million in capex for the coming two years, according to analysts at Lehman Brothers.

The extra spending during the next 24 months will result in a dramatic increase of the operator's coverage. FastWeb aims to have increased its potential customer base to 7 million by the end of 2005 and 10 million by the end of 2006, compared with its previous targets of 4 million and 6 million respectively.

The accelerated rollout should spell good news for the operator's incumbent access equipment suppliers -- Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), and Siemens Communications Group -- though they will no doubt face fierce competition from the likes of Huawei Technologies Co. Ltd., which is now figuring in major European broadband contract shortlists (see TV Over DSL Over Italy and BT Has 21CN Shortlists).

Other companies set to benefit include BitBand, Cisco Systems Inc. (Nasdaq: CSCO), integrator and softswitch supplier Italtel SpA, Juniper Networks Inc. (Nasdaq: JNPR), Kasenna Inc., Minerva Networks Inc., NetCentrex SA, and Optibase Ltd. (Nasdaq: OBAS). (See FastWeb Upgrades With Italtel, Cisco, NetCentrex Claims VOIP Milestone , FastWeb Picks Kasenna, FastWeb Picks Siemens, Juniper, FastWeb Selects Optibase, and Minerva Drives Italy's IPTV).

FastWeb has also increased increased its customer target for 2010 to 2.2 million, up from 1.5 million. Its new business target for 2010 is earnings before interest, tax, depreciation, and amortization (EBITDA) of €1.2 billion ($1.6 billion) from revenues of €2.4 billion ($3.14 billion), up from the previous goal of €1 billion ($1.3 billion) in EBITDA from €2 billion ($2.6 billion) in revenues.

On Friday FastWeb announced it had 496,000 customers at the end of December, and that its 2004 revenues of €718 million ($940 million) had exceeded expectations (see FastWeb Reports Q4, Full Year Prelims). Telecom Italia currently has about 3 million broadband customers.

The new expansion plan means the service provider will now break even in 2006 instead of this year.

The details unsettled investors, with FastWeb's share price on the Italian bourse in Milan dropping €2.4 (6%) to €37.70 Monday morning.

— Ray Le Maistre, International News Editor, Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE