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Fitch Sees Italian Telecom Market Disruption but Rating Headroom to Remain
September 19, 2017 / 8:16 AM / a month ago

Fitch Sees Italian Telecom Market Disruption but Rating Headroom to Remain

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Italian Telecoms: A Changing Competitive Landscape here LONDON, September 19 (Fitch) Fitch Ratings says in a new report that it expects the Italian mobile market to contract over the next three years given the expected impact of a disruptive Iliad SA. The French-based operator is now expected to enter the Italian market in early 2018, providing a regulatory remedy to the 2016 market consolidation involving WIND Tre. Iliad is expected to enter the market with a no-frills cheaply priced offer that will attract customers away from the existing operators, producing pricing pressure across the market and is likely to be successful in gaining market share approaching its initial target of 10%. Fitch is less certain Iliad can be as aggressive as when it started operating in its home market France, for a number of reasons. These include Italy already being one of Western Europe's lowest average revenue per user (ARPU) countries, due to competition and the protracted price wars between 2012 and 2014. Operational differences including Iliad's lack of an established fixed-line base or retail distribution channel in Italy are also factors. The report outlines our central case for Italian mobile over the three years following Iliad's entry. Over this period we expect mobile service revenue to contract by around 5%. Broad assumptions over Iliad's market share gains and how these gains will be shared between the existing mobile service operators (MNOs) nonetheless point to rating headroom remaining in place for each of the issuers present in the market - Telecom Italia SpA (TI; BBB-/Stable), Vodafone Group plc (BBB+/Stable) and WIND Tre SpA (B+/Stable). A more severe market stress is also discussed, predicting a high teen percentage contraction in mobile service revenue, testing rating sensitivities more thoroughly. The stress shows a range of sensitivity outcomes across issuers, depending on the degree to which revenue and therefore ratings profiles are most exposed to Italian mobile. Our conclusions nonetheless suggest a degree of rating stability across issuers. The report outlines Fitch's current view of Italian market conditions across both fixed and mobile. It further discusses the scope of the Enel Open Fiber infrastructure build and how this might be expected to benefit Vodafone and WIND Tre as well as how it might affect TI. The report - "Italian Telecoms: a Changing Competitive Landscape, What Investors Want to Know" can be found at www.fitchratings.com or by clicking the link above. Contact: Stuart Reid Senior Director +44 20 3530 1085 Fitch Ratings Limited 30 North Colonnade London E14 5GN Slava Bunkov Director +7 495 956 9931 Media Relations: Stefano Bravi, Milan, Tel: +39 02 879 087 281, Email: stefano.bravi@fitchratings.com; Adrian Simpson, London, Tel: +44 203 530 1010, Email: adrian.simpson@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. 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