June 27, 2006

Making Broadband Triple Play Profitable: Sweden

This is the eighth document in the "Making Broadband Triple Play Profitable" series.

by Lars Godell, Lizet Menke

with Ellen Daley, Andrew Parker, Andrea Carini

Executive Summary (This is a document excerpt)

Swedish consumers are interested in broadband triple play but do not want to pay a lot for it. This means that incumbent telco TeliaSonera will struggle mightily to make money on its IPTV-based triple-play offering. Forrester's new, detailed, bottom-up P&L model looks at the profit potential from 15 main revenue categories across 17 countries and shows that the vendor-recommended solution that require significant deep fiber investments would be financial suicide for TeliaSonera. We predict a cumulative per-subscriber loss of €2,058 in year 10, thanks to low revenue growth and massive backhaul costs. In addition to limited price tolerance from Swedish consumers, IPTV-based triple play is also up against well-entrenched and inexpensive cable TV offerings and increasingly popular, cheap DTT services, thereby limiting revenue growth. What can TeliaSonera expect if it continues down this path? High investment costs and lots of price and content competition for TV subscribers.

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