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Telekom Austria Group (TAG) has given its Austrian subsidiary, A1, a digital unit, called A1 Digital. Headed by Elisabetta Castiglioni, the unit has set out a plan for M2M and cloud-based ICT solutions. Ovum believes the operator will benefit from such a focused approach.

A1 Digital will focus on M2M and cloud-based ICT solutions

A1 Digital may seem part of a "me-too" strategy, but it differs substantially. The digital business unit (DBU) has a specialist approach, meaning that it is only focusing on M2M and cloud-based ICT solutions – at least to begin with. This is likely to be more successful than an all-in approach which would struggle to cover all segments of digital services.

Eight months after announcing A1 Digital, A1 has laid out its digital plan. The Vienna-based unit, which is headed by Elisabetta Castiglioni, a former Siemens global media business CEO, will offer IoT and cloud-based ICT solutions to SMEs in Austria. Germany will also be a focus area, and there are plans to establish a similar unit in Munich.

Last year TAG saw its revenue drop by 0.9% and its EBIDTA drop by 17.7% on a pro-forma basis. In December, the operator decided to acquire a B2B telco in Croatia, called Metronet, via its local subsidiary, Vipnet. Metronet provides managed IT and cloud services, which can support A1 Digital's growth in the Eastern European region.

TAG is entering the digital segment some five years after operators active in the same markets (e.g. Deutsche Telekom). Therefore, A1 Digital is neither a unique nor novel idea. However, with TAG's recent acquisitions across Eastern Europe, the business is building itself the right resources to exploit opportunities beyond traditional telco services. The DBU should consider a country-by-country go-to-market approach similar to Orange Group, as Orange's smart home strategy for each country is different.



Armita Satari, Analyst, Europe

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