Sky’s triple play in Italy: a tough sale
Convergence as a means to growth in a crowded market
Recently Fastweb and Sky signed a multi-year partnership to launch Sky Mobile in Italy in early 2024. It will be 5G from the start and is the latest stage in Sky’s strategy of launching mobile services into its territories.
Sky UK launched a mobile service in January 2017 to complement its existing fixed line broadband and pay TV services. It currently has just over 3 million users, which equates to growth at a rough rate of 500k per year. Given the competitiveness of the UK market, that is respectable. A similar mobile service was due to launch in Ireland in partnership with Vodafone in 2023, but this yet to happen; despite being announced as far back as March 2022.
Italy seems to have jumped it in the queue. Fastweb’s Italian mobile user base is roughly similar to Sky’s UK one, currently at 3.4 million users, and it is growing at a similar rate, up 17% YoY on its latest figures. It already has a relationship with Sky through its role as a technology partner for Sky Wifi’s broadband offering, which launched in 2020.
This seems a low-risk, even a cautious strategy for both parties. Sky TV’s impact in Italy has been modest so far, and it has had to refocus its sports-first strategy given a reluctance to pay over the odds for Serie A TV rights (as of October, it has ‘co-exclusive’ rights with main rights holder DAZN to three live matches per matchday out of ten until 2029). The risk was further mitigated by a carriage deal between both parties which made the DAZN app available on Sky ahead of the new Serie A 2022-2023 season.
Meanwhile, international connectivity has been called out repeatedly on Comcast's quarterly earnings calls as a revenue driver. This move, therefore, is aligned with the wider group strategy to focus on connectivity in a quest to sell more to the existing base, drive revenue, and increase loyalty. This strategy is paying dividends in the UK.
The Italian mobile market is similar to the UK in that it is challenging with many players. Iliad has been hugely disruptive in Italy with punchy pricing and has been stealing market share from its rivals to the point that it is considering merging with one of the established mobile players, Vodafone. The traditional players are looking to consolidate, merge and offload assets. For Fastweb, then, the Sky deal offers a comparatively easy route to growing its numbers yet further via Sky’s well-honed marketing machine and offers to its TV subscribers, which will help it gain traction while it continues to build out its 5G offering.
Ultimately, there is a huge focus on convergence given the limited opportunities for future growth. This is similar to other markets as providers seek to diversify their offerings to generate more value from the existing base and seek to lure new subscribers with bundles.