The takeover follows a string of acquisitions and ongoing consolidation in the Dutch broadband market in recent years. Incumbent telco KPN, the largest provider, acquired five rival providers between 2005 and 2007, while in 2006 three cable operators merged to form Ziggo, the second largest operator. As broadband penetration in the country reaches saturation, growth in the broadband market has slowed, and in the case of DSL flattened over recent quarters. High broadband penetration has forced ISPs to look to stealing customers from rivals or to acquisitions as a way of growing subscriber bases, rather than to signing up those still unconnected.

For Tele2, the acquisition will bolster its place as fourth largest broadband provider in the country, with a combined broadband customer base of 0.5m. The deal will raise Tele2's broadband market share from 7.0% in Q2 2010 to 8.1%. Tele2 trails nearest competitors in the broadband market, UPC (13% market share) and Ziggo (24%), and incumbent telco KPN (41%).

Tele2 has organically expanded market share over recent quarters while overall the DSL market has been flattening. Its success has been driven by its position as a low-cost brand with value for money broadband offerings. The appeal of Tele2's budget offers, supported by a strategy of local loop unbundling (LLU) with its accompanying low ongoing payable fees, has enabled the ISP to undercut incumbent telco and cable operators' offers. At the end of 2009, Tele2's 20Mbit/s standalone broadband cost €19.95, versus €50 for the same speed from KPN's Planet Internet and €47.95 for 25Mbit/s from Ziggo. Further, Tele2's pricing strategy has helped it slow migration to rivals' very-high speed, premium-priced offers. For example, although the incumbent has rolled out its very high-speed VDSL network to >0.45m homes, its VDSL broadband subscribers still stand at only 0.016m. The telco's FTTH network, in partnership with Reggefiber, now reaches 0.46m homes, but serves only 0.026m active subscribers.

Outside of the Netherlands, Tele2 has withdrawn from multiple markets over the past few years, including selling operations in well-developed Western European markets (UK, France, Spain and Italy), in order to focus on operations in the Nordic region and Eastern Europe.

For Telecom Italia, the sale marks the end of its European retail broadband operations outside of its domestic territory. The company still owns a stake in telecom companies Telecom Argentina and Etecsa, and operates a subsidiary in Latin America, TIM Brazil, which focuses on the consumer mobile voice and broadband market.