The Mediobanca Research Area presented the annual survey on TLCs relating to the major European and Italian groups in the years 2014-2018 and in the first 6 months of 2019, from which it emerges that Italy is confirmed as the fourth largest European market, behind Germany, the United Kingdom and France. The Italian TLC sector represents 1,8% of the national GDP and 5,9% of total investments, without considering the auction for the assignment of licenses to use the 5G frequencies, which resulted in revenues for the Italian State for 6,55 billion. In a context of slight decrease in revenues in 2018 (31,6 billion, -2%), due to the drop in mobile telephony (-5,3%), investments in infrastructure (8,4 billion, +17%), which are approaching Germany's levels, bode well for the future.
She's just a German, Deutsche Telekom, ahead of the Spanish Telefònica, to lead the ranking of European TLCs by turnover. Further back, in sixth place, TIM, which nonetheless boasts a first-class rate of industrial investment on turnover (30,1% in the last three years), even higher than the American giants AT&T and Verizon Communications, first in the world for revenues. Finally, in the first 6 months of 2019, the performance of the main Italian operators was fluctuating (especially in mobile telephony) with Fastweb as the only growing company, in addition to the startup Iliad. The complete survey is available for download on the Mediobanca website.
THE TELECOMMUNICATIONS SECTOR IN EUROPE
In the last year, the telecommunications market in Italy suffered a contraction in revenues of 2%, attributable to the drop in mobile telephony (-5,3%) due to lower prices and greater competition in the sector. Nonetheless, Italy is confirmed as the fourth largest market in Europe with sales of 31,6 billion. Germany (57,4 billion; -1,3%) leads the ranking, ahead of the United Kingdom (37,8 billion, excluding device sales) and to France (35,6 billion; -1%). Behind Italy, however, is Spain (30,2 billion; +0,9%). As for the major European telecommunications companies, on the top step of the podium we find the German Deutsche Telekom (75,7 billion in turnover in 2018, +0,7% on 2017 and +20,7 on 2014), ahead of the Spanish Telefònica (48,7 billion, -6,4% on 2018, -11,3% on 2014), the British Vodafone (43,7 billion, -2,2% on 2017 and +3% on 2014) and the French Orange (41,4 billion, +1,3% on 2017 and +4,9% on 2014).
The first Italian company, TIM, ranks sixth with a turnover of 18,9 billion, down by 3,3% compared to 2017 and by 11,7% compared to 2014. TIM, however, reports an industrial profitability of 17,5% (MON on turnover), lower only to that of Telenor (23%) and Swisscom (17,6%). Telenor scores the best share also in terms of current result (21,4%) and net result (13,3%). As regards the cumulative net result in the period 2014-2018, Telefònica is in the lead (14,6 billion), which just behind Deutsche Telekom (14,5 billion) and BT Group (13,2 billion). TIM ranks seventh having accumulated profits of 2,8 billion, of which 2,1 billion obtained from the Brazilian subsidiary.
The British Vodafone Group leads the ranking of European operators with the greatest foreign exposure with a share of turnover generated abroad equal to 84,9%. Followed by the Norwegian Telenor (74,3%) and the Spanish Telefònica (73,9%). The 10 most important European companies invoice abroad on average 47,6% of the total (it was 51,5% in 2017). Below the TIM average, with a share of 24,1%, of which 23% in Brazil. Regarding the asset profile, Vodafone has the greatest financial strength, with financial debt on shareholders' equity equal to 86,4% (down from 63,1% in 2017), while for TIM the incidence is higher (134%), but still down from 159,4% % of 2014. Similar values for Telenor (131,6%) and Deutsche Telekom (143,4%), while Telefónica has the highest leverage (202,8%).
TIM, on the other hand, excels in terms of industrial investments on turnover (both tangible and intangible), with 34,7% in 2018 which puts it in first place ahead of Telenor (29,8%) and Altice Europe (21,9% ). Also in 2018, TIM's industrial investments amounted to 6,5 billion (including 2,4 billion due to the award of telephone frequencies for the development of 5G in Italy). What happens in the first 6 months of 2019? The aggregate turnover of the main European telephone operators grew by +1,5%. In particular, the revenues of Deutsche Telekom (+6,8%), Telenor (+1,7%) and Orange (+0,2%) increased, while those of Telefònica decreased (-0,9%) , Vodafone Group (-2,3%) and Telecom Italia (-4,4%).
REVENUES, INVESTMENTS, PROFITABILITY: THE ECONOMIC DATA OF TELECOMMUNICATIONS IN ITALY
In 2018, the telecommunications sector represented 1,8% of GDP in Italy (1,9% in 2017), 2,4% of household spending (2,5% in 2017) and 5,9, 5,2% of total investments (2017% in XNUMX). Own investments, which grew by 17%, reached 8,4 billion and they bode well, especially when compared with the 9 billion in Germany which, however, has a turnover almost double that of Italy. From this point of view, the acceleration of the infrastructural process relating to ultra-broadband services and the start of preparatory operations for the launch of the 5G mobile network are significant. Compared to 2017, revenues in Italy decreased by 2% in 2018, settling at 31,6 billion and interrupting the albeit weak positive trend started in 2016.
It is above all mobile telephony that influences the results, with revenues down by 5,3% mainly due to falling prices in the context of more marked competitive pressure. Fixed telephony, on the other hand, is growing (+1,2%), thanks to the improvement in the mix of broadband access speeds. The contraction in revenues for the entire sector (-2,6%) and for mobile telephony (-5,5%) and the resilience for fixed telephony (+0,3%) are also confirmed in the five-year period 2014-2018. Once again this year the ranking of the main players in our country is dominated by TIM, with a turnover of 18,7 billion, despite the 4,2% drop compared to 2017. Vodafone Italia is confirmed in second place (5,9 billion , -5,6 on 2017), followed by Wind Tre (5,4 billion, -9,9% on 2017).
Highlights Fastweb, the only company to see its turnover grow both in 2018 (+8,2%) and in the last five years (+24,6%). The greatest contraction in turnover is recorded by Tiscali (-18% on 2018 and -22,4% on 2014). Industrial profitability chapter in 2018: TIM stands out (Mon at 17,5%), followed by Wind Tre (15,4%) and Vodafone (10,1%). Again TIM in first place for current income (10,3%), which is slightly higher than both Vodofane and Wind Tre (both 10%). Thanks to capital gains Tiscali (50,4%) is the top performer in terms of net result, an index which instead records the decline of TIM, which went from 5,8% to -7,6%. Fastweb at the top for average investment rate in the five-year period 2014-2018 (33,7%).
Since 1999, the date the company was founded, it has invested over 50,5 billion in its fixed network infrastructure, extending over 10 thousand km. Compared to 2018, on the other hand, Vodafone Italia invested the largest share of revenues (51,8%), still followed by Fastweb (39,9%) and Wind Tre (35,3%). Industrial investments in 2018 are influenced by the results of the auction for the assignment of 5G frequencies, which resulted in revenues for the Italian state of 6,55 billion (TIM and Vodafone Italia with 2,4 billion each, Iliad with 1,2 billion, Wind Tre with 516,5 million and Fastweb with 32,6 million). What happens in the first 6 months of 2019? The dynamics of the revenues of the main operators is fluctuating: Fastweb rises +3,8%, but Wind Tre (-3,8%), TIM (-4,4%), Vodafone (-6,7% in the 1Q 2020 ended in June 2019) and Tiscali (-20%).
The trend in mobile telephony revenues was negative for the three main groups, down by over 600 million compared to the same period of 2018; those of Iliad instead go from 55 to 177 million in June 2019.
PENETRATION, 5G AND MARKET SHARE: THE STATE OF TELECOMMUNICATIONS IN ITALY
Italy is one of the countries with the highest penetration of mobile telephony (137%), behind only Russia (161%) and Sweden (140%). The 4G data is also improving: in December 2018, approximately 65% of total subscriptions are, in fact, equipped with fourth generation data transmission technology. On the other hand, the diffusion of fixed broadband lines is still low with 28 connections for every 100 inhabitants compared to 44 for Holland and 43 for France. The figure for coverage in FTTH (Fiber-to-the-home) mode is improving, with 23,9% of Italian homes reached (12,2% in 2013).
Italy it then excels in the experimentation of 5G, ranked second in Europe behind Finland, and improving in connectivity and digital public services, although progress in super-fast connectivity is slow. Ultra-fast coverage is 45,1% of Italian lines (rising to 50,3% in June 2019), a sharp increase compared to 2,8% in 2014 but still very far from countries such as Germany (53,9%) and Spain (74,3%). In terms of mobile market shares (including virtual operators and not human SIMs), TIM is the leading operator (30,4% at the end of June 2019), ahead of Vodafone Italia (29%), Wind Tre (28,5 .4%), PosteMobile (3,7%) and Iliad (48,1%). In the landline (voice + data) sector, TIM is still in first place at 14,8%, followed by Vodafone Italia (13,6%), Wind Tre (13,6%), Fastweb (3,1%), Linkem (1,9%) and Tiscali (XNUMX%).
TIM also holds the largest market share in broadband (43,2%). Followed by Vodafone (16,3%), Fastweb (15,1%), Wind Tre (14,1%), Linkem (3,6%) and Tiscali (2,6%).
