DECISION SHEET Omnitel Pronto Italia

Arpit Agarwal, Section A- 17061

Problem Statement: Building Omnitels market share while avoiding a price war with TIM, and
remove fixed fee structure

5 C Analysis-
Company Background: First private sector participant in Italian telecom market GSM license in
December 1994 for 750bn Lit Launched commercial service in Dec, 1995, with network coverage of
40% of Italian territory. By 1996, 180,000 subscribers 4% market share. Initially they offered similar
plans as of TIM and avoided price ware with TIM and differentiated themselves on high-quality
customer service. This led to low churn ratio. However it is not financially strong as TIM.
Competitor Analysis (TIM): TIM was formed in July 1995 after divested from Telecom Italia and
was listed separately on Italian stock exchange. It had monopoly power and enjoyed substantial portion
of market share. Generated 97% of Italys 7.5% market penetration It offered two types of tariffs Euro
Family and Euro Professional. It primarily directed its product towards the uppers echelons of Italian
society touting cellular phone as a status symbol.
Customer Analysis: Perceived possession of mobile phone as a status symbol Willing to pay
handsomely as they liked to show off so no need of subsidizing phones Impulsive shoppers
Reluctance in paying monthly charges and other activation charges as they considered it as taxation Pay
per usage Wanted different set of tariffs for local calls, long distance calls and international calls.
Satisfied with Omnitels customer services
Collaborator: The electronics goods and telecommunication goods and services sold Omnitels
handsets - 2000 in number. Omnitel paid commission of Lit 40,000 for each account they activated and
thus Omnitel didnt make any profit on the handsets sold.
Context Analysis: Under pressure from business interests, the EC liberalized the cellular telephony by
January 1994, subjected to interpretation by the country involved though it was scheduled to be in
1998. Cellular penetration rates were relatively modest.Value for Money of the service continued to
increase because of reduced costs and improved quality. Many European countries began to have
multiple players resulting in increased marketing. High growth rate of subscribers 23% CAGR from
1994 to 2004 was in Italy.

Final Decision: Basically, the need is to increase the market share & improve the average talktime
which can be done by provoking the impulse call making of the customers. This shows the behavioural
segmentation of the consumers where 48% of the consumers were Brand Loyal & Service oriented &
could see their benefits easily. In my opinion, LIBERO should get companys nod for going ahead with
the plans. LIBERO positioning should be a celullar operator for people who want the efficient tarrif,
because LIBERO offer free monthly fee.
The revenue that is lost due to no monthly fee would be compensated with higher sales volume and
increase consumption. It would increase the customer base and no commission has to be paid to the
seller because the sellers would be required to keep the Omnitel brand if they dont want to lose sales.