Further underlining its aggressive expansion into the telecommunications market, Ing C Olivetti & Co SpA’s telecommunications subsidiary Telemedia will offer a speech and data communications satellite service in Italy within the next two months. The satellite move follows the recent unveiling by Olivetti Telemedia of Sinfonia, a domestic long- distance service aimed at small and medium-sized Italian businesses. Due to start operating in June, Sinfonia poses a direct challenge to Telecom Italia’s speech telephony monopoly. Olivetti expects the Sinfonia domestic long- distance service to undercut Telecom Italia’s voice telephony offerings. Telemedia says it has already signed up customers for the service, but would not reveal further details. Although its VSAT very small aperture terminal offering is technically illegal because the government has yet to approve a Euro- directive permitting competition in this sector, Olivetti Telemedia’s managing director, Marco De Benedetti says he is determined to go ahead with the plan. He said the company’s joint satellite venture – Hughes Olivetti Telecom – with Hughes Network Systems Inc of Germantown, Maryland would exploit a clause in the directive which after 12 months comes into effect by default if member governments fail to act. We are Europe’s largest operator of VSAT service, but I can’t operate in my own country, he said. It just shows the strength of the monopoly culture in Italy. A satellite capability in Italy would also enable De Benedetti to use very small aperture technology to flesh out the network of Olivetti Telemedia’s main subsidiary, Infostrada, in areas where leased lines are not practical.
By Marsha Johnston
Hughes Olivetti will provide Automotive with two networks to service Volkswagen AG dealers and German automobile manufacturers association DAT. Sinfonia and all other Olivetti Telemedia network services – such as Italy’s largest Internet service Italia Online – use the same network, owned by subsidiary Infostrada, and based on Olivetti’s corporate network. Sinfonia customers dial into the local node, from where the call is routed across Sinfonia’s network to the node nearest the destination, at which point it is switched onto the public network. Three years ago, it wouldn’t have been possible to put speech, data and images on the same node. Today I can do it all with one infrastructure, said De Benedetti. My biggest operational cost is the bill to Telecom. Fortunately, I can tailor that as a function of my business. Those leased line costs will come down, he said, when Italy has more than one supplier. While Olivetti Telemedia’s revenue of $205m account for only a tiny percentage of the group’s total, De Benedetti predicts growth of 50% or so this year. By the turn of the century, he said, Olivetti Telemedia could account for 20% of the group’s revenue. He added that Olivetti’s strategy was not to abandon the IT side, but to have significant growth on the telecommunications side. Revenues for Sixtel, its joint venture with Northern Telecom Ltd to resell switching equipment, will reach $83m this year. The market is pretty well divided between Siemens, Alcatel and ourselves, he said. Outside of Telemedia, Olivetti’s Omnitel announced that, in 1995, it hired 1,200 people, invested some $576m in its network and attracted 40,000 clients in its first month or so of commercial operation. Omnitel closed 1995 with revenue of about $29.6m, of which over $19m came from network services and telephone sales. Operating expenses totalled some $180m – about $16m less than budgeted. The Groupe Speciale Mobile operator’s total debt climbed to $331m at the end of last year from about $235m at the end of 1994. The company also secured nearly $1,000m in capital on international financial markets. Chief executive Francesco Caio said Omnitel expects to invest another $375m in 1996 in new Nokia Oy Groupe Speciale Mobile network equipment, in part with the help of a fixed-rate five-year financing for half the amount from Finnish Export Credit. More
recently, Omnitel signed international roaming agreements with Cellnet Mobile Communications Ltd in the UK, Airtel Mobiles SA in Spain and Turk Cell in Turkey. So far, it has roaming agreements with 20 operators in 18 countries.
