Market Monitor ICT Italy 2017

                                                                                     

• The rebound is expected to continue
• Payments take between 60 and 90 days on average
• Low level of payment delays and insolvencies

The ICT sector has a 1.6% share in the Italian economy, with approximately 75,000 companies and 460,000 employees. According to the industry association Assinform, the Italian ICT market grew 1.8% to EUR 66.1 billion in 2016, and in 2017 another 2.3% increase is expected.

In the business-to-business segment, it is mainly larger companies that are investing in IT (especially in the financial services sector, followed by manufacturing and telecommunications), accounting for more than 60% of total domestic IT expenses. However, demand from the public sector still remains modest, and the IT spending capacity of SMEs remains subdued, a consequence of still restricted access to bank loans for smaller businesses and a lack of resources.

In the consumer segment, e-commerce, which is still at an early stage in Italy compared to other European countries, is recording increasing ICT sales, while sales in the brick-and-mortar shops tend to be declining. The on-going economic uncertainty still limits higher ICT spending by Italian consumers.

In most ICT segments margins improved in 2015 and remained stable in 2016. Due to limited organic growth opportunities and the on-going economic uncertainty, market players strive to expand through acquisitions and specialisation (customised and value added services). Payments in the ICT sector generally take between 60 and 90 days, payment experience has been good so far and the level of notified non-payments is low. The amount of ICT business failures is rather low compared to other Italian industries, and expected to remain stable in the coming months.

Our underwriting approach remains generally open for ICT, especially for providers of value added IT services with growing market opportunities (network infrastructures, cloud computing).

However, low value added wholesalers and smaller players have to be monitored more closely, as they are more exposed to financial distress related to working capital requirements, especially when depending on large clients and the public sector. We also maintain a more cautious approach on wholesalers with low value added services and poor critical mass and any businesses which are higly dependent on sales and services to the public sector (due to common late payments by public bodies).