Industry Trend Analysis - Vodafone Uses Loophole To Pre-Empt Iliad - AUG 2017

BMI View: With its new plans, Vodafone is looking to pre-empt Iliad ' s entry in the Italian mobile market, due in early 2018. The use of zero-rating highlights the lack of clarity and fragmentation at the European level, as EU rules were not explicit on the service, leading operators to take advantage and offer free data on their tariffs.

Vodafone Italy has launched three new plans, giving unlimited data access for either social networking and chat, music or video. The plans will be available for prepaid and postpaid subscribers, with each category zero-rated based on a recurrent top-up. The launch has two main implications. The first is that Vodafone is gearing up to meet Iliad's entry in the market, by looking to retain its most premium customers onto its network. The second is that zero-rating continues to be a contentious issue, especially in Europe.

Iliad is planning to enter the market in early 2018, and Vodafone's new plans, as well as TIM's launch of a MVNO, are ways to pre-empt the new player (see ' TIM Learning From French Experience ' , March 31 2017). While we continue to believe that Iliad will not have the same impact in Italy as it did in France, because the structures of the two markets are completely different, it will still have a disruptive effect. The three operators are doing their best to minimise that effect, through segmentation like TIM and the new merged Wind Tre, or by innovative plans like Vodafone, as they realise that the majority of Iliad's growth would come from cannibalising their own customer base, as opposed to growing the market. It is therefore crucial they keep these customers, even on a prepaid basis.

Iliad To Cannibalise, Not Grow Market
Italy Forecasts, 2015-2021
f = BMI forecast. Source: BMI, Operators, Agcom

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