Our take...
The French broadband market is highly competitive. Four significant players now remain – DSL providers France Telecom (incumbent telco), Neuf Cegetel, Iliad and cable operator Numericable. All have invested in rolling out fibre-based networks to offer speeds up to 100Mbit/s in some cases, and each provides TV services bundled in with broadband access. The tough conditions have pushed out a number of players and encouraged consolidation - large providers to have already left in last 3 years include Deutsche Telekom, AOL and Tiscali (from whom Telecom Italia bought Liberty Surf, completed in 2005).

The acquisition would boost ADSL retail subscribers served by Iliad to just shy of 4m and give the company approximately 26% share of the retail DSL market, based on 1Q 2008 results analysed by Screen Digest. Iliad would become the second largest player in the broadband market after incumbent France Telecom.

Following the deal, beyond its home market Telecom Italia is likely to focus on its fixed broadband services in the Netherlands (BBNed) and Germany (Hansenet) in Europe. The Italian incumbent also owns stakes in telcos providing fixed line broadband in emerging Latin American markets - Telecom Argentina (50% stake), Etecsa in Cuba (27% stake), Entel in Bolivia (50% stake).