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Iliad signs up a million Italian customers in 50 days

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Iliad caused chaos in France with the launch of Free Mobile in 2012 and it looks set to repeat the trick in the Italian market.

Launched on May 29, Iliad became Italy’s fourth mobile operator. Competitors have been moaning since, but you cannot argue with the success of the launch. Iliad claimed it was signing up more than 10,000 customers a day in the first month, a trend which seems to have accelerated. 50 days after launching in the ancestral home of pizza, mopeds and questionable hairstyles, Iliad has hit the 1 million subscriber milestone.

The original offer was certainly an aggressive one, 30GB of data, unlimited voice minutes and unlimited texts for just €6 per month, and the Italians have snapped it up. Some might have wondered what the next play would be, this initial offer was only available for the first million customers, though the firm has confirmed it will be extending the offer for the next 200,000 subscribers.

The strategy seems to be simple here; disruption and very little else. Most newcomers aim for disruption as a means to gain a foothold in the industry, but many will also hope to make money simultaneously. With such a deal on offer to customers, you have to wonder where Iliad is going to make any cash, and how long regulators will allow this deal to continue before stepping in.

The status quo has already been shifting in Italy, with many operators attempting to lessen the impact of Iliad’s offer with reduced price tariffs of their own. Vodafone, for example, launched its own cut price brand Ho, offering 30GB of data a month for €7. It might be resisting the temptation to undercut Iliad, but we’ll see how long competitors can stomach the steady flow of customers heading to the exit before the race to the bottom begins.

India is another recent example where a newcomer has caused chaos, with little apparent concern of the cost. Upon launching, Reliance Jio seemingly sacrificed profit in pursuit of scale, though after extending the ‘free’ deal several times, Indian regulators stepped in. Disruption is all well and good, but when an aggressive pricing strategy threatens to bankrupt the telco industry, something has to be done.

Arguably, the sacrifice of profits in pursuit of establishing a comfortable subscriber base worked very effectively. Speaking at Light Reading’s Big Communication Event in Austin, Mathew Oommen, President of Reliance Jio Infocomm, said the company had 186 million subscribers, while the JioTV service has 100 million subscribers and JioChat has 50 million. The foundations were laid in mobile before the team looked to convergence to build profitability elsewhere. Aside from content and chat, the team also have made moves in finance, healthcare and music. The next major step will be in the drastically underdeveloped Indian broadband market.

Iliad can learn from these lessons in Asia, as well as its own disruption in France with Free Mobile in 2012. Considering the telco currently has a 17% market share in its home market, and has started making moves in parallel markets (admittedly with mixed results) there is precedent for the success of the strategy. With quarterly results on the horizon, Iliad needed some good news considering its most recent conversation with the financial markets.

Back in May, following the Q1 results call, Iliad share price crashed by 20%, the largest ever drop for the telco in a single day. Net additions for mobile subs did not meet expectations, while the number of broadband subscribers dipped for the first time in the company’s history. Time will tell whether the team has managed to improve the performance of the business in France, though gaining traction in the Italian market will certainly be welcome news for competitors.

We suspect the pain for Italian competitors will not be over for some time. Iliad will likely continue to stress the market on its own terms, offering loss-leading subscriptions in search of scale, until it is told not to anymore. The Italian market could be a very interesting place over the next couple of months.

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