IPTV goes international: Swisscom eyes up Fastweb

Today presented a new chapter in the young story of IPTV: Swisscom made an all-cash offer of €3.7 billion for Fastweb, the Italian broadband company that has been a pioneer in IPTV and triple play services. If the sale goes through, it could mark the first instance of an international IPTV merger.

A tie-up would put Swisscom back on the map as an international player after it spun off/outsourced its international carrier network in a joint venture with Belgacom.

Of course, what Swisscom would be buying with Fastweb wouldn't be an international wholesale business but an Italian retail customer base and expertise in television/IPTV services. Fastweb, which has 1 million customers, was called an "innovation leader" by Swisscom's CEO Carsten Schloter in a conference call.

Reportedly, Swisscom had tried to expand last year by buying Telekom Austria (another IPTV leader) but that deal fell through.

Swisscom could do with the Fastweb experience: it has had some hiccups with its own IPTV service, Bluewin. Bluewin, which is powered by Microsoft's IPTV software and servers, launched last November, a year behind schedule (technical/quality of service issues were to blame, according to reports). The delay was a major embarrassment to Microsoft, which had been touting the Swisscom deployment as a key deal in its strategy to target the telco market for TV services.

From what I can see, telcos offering IPTV will have a long road ahead of them before those services are profitable. Operators in the US and elsewhere have spent billions on new networks. And even Fastweb, which has been around since 1999 and has benefitted from using some fibre that Telecom Italia had in the ground already, says that it expects turn a net profit for the first time only this year. With that in mind, getting some scale into the business through acquisitions will only help them along that road.