Market Insight

Sky and Telecom Italia launch quad play service

April 17, 2015  | Subscribers Only

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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Sky Italia and incumbent Telecom Italia have unveiled what they claim to be Italy's first quad play service. Branded as TIM Sky, the new offer was launched yesterday and includes 150 Sky TV channels, fixed and mobile broadband internet as well as fixed and mobile phone calls. The service will cost €39 a month for the first year and €64.80 for the rest of a two-year contract. Existing Telecom Italia fibre or ADSL clients will pay €14 a month.

The service uses a dedicated My Sky HD decoder and the incumbent's nationwide fibre optic network. The channel offering will include Sky's premium movie and sports channels together with Sky On Demand. The partnership agreement was signed in April last year. 

Our analysis

Italy's pay TV market has become a two horse race between satellite platform Sky Italia and DTT service Mediaset Premium. Sky, which merged with Sky Deutschland and BSkyB last year into Sky Europe, has a clear lead in subscribers, with 4.7 million at the end of 2014 compared to our estimate of 2.8 million Mediaset subscribers.

However, since reaching a high point of just over five million subscribers in Q4 2011, Sky's penetration has stagnated. One reason is the availability of the lower-cost service from Mediaset Premium, which offers a smaller choice of channels but, crucially, matches from the Serie A football championship. Restrictions on the installation of satellite dishes are another factor. IHS estimates that just under 27% of Italian households had a satellite dish at the end of last year, implying an untapped market of up to 18 million households for Sky to target.

The pricing of the Sky TV packages also undercuts Mediaset Premium, which is currently on offer for a discounted €26 a month compared to a full price of €36 a month. In January last year, Spain's Telefonica took an 11% stake in Mediaset Premium, investing €100 million, and Mediaset has been rumoured to be on the lookout for other partners for some time. 

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