Citing the need to protect its investors, FastWeb says a claim by Citigroup analyst Giancarlo Castelli in a research note issued Thursday is "absolutely not true." The analyst had written that Telecom Italia had gained about 20,000 customers from FastWeb in the past few weeks.
The alternative operator rebuked the analyst for not mentioning a source or providing any evidence to back up the numbers, and continued: "Real figures are radically lower and [the] Citigroup statement is misleading compared to the real situation." The figure claimed by Citigroup is equivalent to about 3 percent of FastWeb's total customer base.
FastWeb's share price fell €0.35 to €35.07 on Thursday.
The claim and counterclaim come as competition in the Italian broadband market, and specifically the triple-play (voice, video, data) market intensifies further.
Just last week FastWeb stated it had added 56,000 new subscribers during the second quarter of this year, taking its total user base to nearly 600,000 at June 30. It also said it generated record revenues and EBITDA (earnings before interest, tax, depreciation, and amortization) in the second quarter and first half of this year (see FastWeb Reports Q2 Prelims).
Not surprisingly, those subscriber figures are much smaller than the incumbent's, which at the end of April had 4.4 million DSL customers. And to make matters even more sensitive, Telecom Italia is about to launch its own TV and video-over-broadband services, and is ramping up its VOIP services, to rival the triple-play package that has proved to be FastWeb's unique selling point (see Tiscali Italia Picks NetCentrex).
But FastWeb has aggressive expansion plans, and is set to spend €2.8 billion ($3.4 billion) in the next five years building out its Italian network. Its customer target for 2010 is 2.2 million (see FastWeb Unveils Expansion Plan).
And these two are not the only service providers targeting Italy's broadband users. Following its financial revamp, Tiscali is investing further in its own infrastructure and is trialing a triple-play service called Tiscali Plus, while the recently acquired Wind Telecomunicazioni SpA also offers DSL services. However, between them, these two players total less than half of FastWeb's customers (see Tiscali Italy Expands With UTStarcom, Tiscali Italia Uses Nortel's WDM, Tiscali Reorganizes, and Enel Sells Wind to Weather).
Heavy Reading senior analyst Graham Finnie believes Italy needs Tiscali's involvement to keep the market competitive. In a recent report, Next-Generation Broadband in Europe: The Need for Speed, Finnie notes, "FastWeb's new funding initiative and aggressive expansion plans could result in the emergence in Italy of a virtual duopoly, characterized by effective innovation by both the major players. However, Tiscali could continue to pose a threat to the two big operators" (see HR Tracks Europe's Need for Speed).
He also notes that there's plenty of room for growth in the Italian broadband market, with market penetration at the end of 2004 standing at about 17 percent, below the European average of about 20 percent and well behind the majority of the continent's other markets. Of the other major European economies, only Germany had a lower penetration rate (about 16 percent).
— Ray Le Maistre, International News Editor, Light Reading
For more on this topic, check out:
- The Heavy Reading report:
— Next-Generation Broadband in Europe: The Need for Speed