Vodafone in mobile tie-up with Poste Italiane

Vodafone will on Thursday announce a wholesale deal on mobile telephony with Poste Italiane as part of efforts to counter slowing revenue growth in its Italian business.

The Italian postal service, which has 14,000 branches, will offer mobile phones and related services to its customers.

They will be branded Poste Italiane and offer the postal service’s own call plans and services, while running on the Vodafone network.

The move follows a similar Vodafone deal in Italy announced on Monday with Carrefour, the French retailer.

Vodafone’s UK business last week announced a wholesale deal with Asda, the UK supermarket chain.

It also has a whole-sale arrangement with BT which enables the UK’s dominant fixed-line telecoms group to offer mobile services.

Some European regulators have been encouraging the establishment of so-called virtual mobile companies, which offer services using the networks of established operators such as Vodafone and Orange, as a means of increasing choice for consumers.

Such wholesale deals are one way for Vodafone to bolster slowing revenue growth across its core European businesses.

Arun Sarin, chief executive of Vodafone, told the Financial Times that the deal with Poste Italiane was one of several efforts to counter the saturation of the Italian market, which has the highest number of mobiles per person in Europe.

More than one in five Italians had two mobiles, he said.

“We have to offer our customers choices and we have to find distribution channels,” said Mr Sarin.

Vodafone was targeting growth in client segments “in which we are underrepresented.”

Massimo Sarmi, Poste Italiane chief executive, said Vodafone’s customers in Italy were “generally higher-margin…higher-spending”.

Poste Italiane wanted to sell calling plans and telephones to “families, youngsters and immigrants”, he told the FT.

Mr Sarmi said most customers were expected to use pre-paid phone cards, usually a lower-margin source of revenue.

He expected a margin of about 20 per cent, which is low in Italy where operators have some of the most profitable business in Europe.

Mr Sarmi said he wanted 2m subscribers in four to five years and a turnover of €500m ($668m).

In spite of the existing high margin, Telecom Italia said recently that mobile voice call revenue would “stop being a key contributor to growth”, an indicator of how the whole sector is facing declining profitability because of fierce competition and pressure from regulators for price cuts.

Mr Sarin said Vodafone was expanding into broadband, entertainment and information services.

It wanted different call packages and greater use of more advanced handheld devices as it sought new ways to attract customers.