RPT-Fitch: Southern European Telco and Pay-TV Convergence a Defensive Strategy

Thu Jun 5, 2014 6:39am EDT

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June 5 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings says in a new report that Southern European telecoms companies are entering the pay-TV market in a move to defend and stabilise market share, rather than generating additional cash flows from TV.

The renewed interest in pay-TV is one of the strategic initiatives pursued by telecom operators to differentiate their service offering and reduce churn as competition intensifies. Premium video distribution could also drive demand for data consumption and for higher broadband speeds across their mobile and fixed-line networks.

In the report, Fitch analyses the rationale behind recent transactions between telecoms and pay-TV providers in Southern Europe, and follows the recent agreement between Telecom Italia SpA (TI, BBB-/Negative) and Sky Italia in Italy as well as the potential takeover of Digital+ by Telefonica SA (TEF, BBB+/Negative).

The report focuses on the different strategic approaches adopted by incumbent operators with regard to premium video content distribution and the potential economic impact of increasing convergence of broadband and TV services, taking into account the increasingly important role of telecom operators in video distribution given low pay-TV penetration rates in southern Europe. It also provides also an overview of the pay-TV market in Italy and Spain with particular focus on household penetration, competitive landscape and content distribution platforms (e.g. satellite, IPTV, DTT etc.).

The report, Southern European Telco and Pay-TV Convergence - Premium Video to Play Key Role in Churn Reduction, is available on www.fitchratings or by clicking on the link below.

Link to Fitch Ratings' Report: Southern European Telco and Pay-TV Convergence

here