Munich, Germany - 6 October 2008 - While most major European markets appeared to have weathered the Q2'08 broadband slowdown and global credit crunch, Germany was not immune, according to a report just released by Strategy Analytics' Multiplay Market Dynamics service. Although not nearly as dramatic as the second quarter downturn in the US market, the drop does suggest an overall softening of the market.

The report, "Germany Not Immune to Q2'08 Slowdown," notes that German broadband service providers (BSPs) added only 678,000 new subscribers in the second quarter of 2008, compared to 1.1 million in the same quarter of 2007.

Incumbent Deutsche Telekom saw a quarter-over-quarter decline of 100,000 in net additional subscriptions, however the company remains the clear market leader, with 9.9 million residential subscribers at the end of Q2'08. Vodafone-owned Arcor and United Internet likewise saw flat or declining quarter-over-quarter net additions.

While the German broadband market is expected to grow 10% in 2008, Strategy Analytics believes that consolidation is inevitable.

"Germany is Europe's largest broadband market, and also its most fragmented, with seven companies sharing 92% of the total subscribers," noted Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics Service. "We do not see the market supporting such a crowded playing field, and anticipate a steady increase in merger and acquisition activity in the upcoming 12 months."

"Alice and Freenet are the most likely takeover candidates in the short-term," added David Mercer, Vice-President of the Strategy Analytics Digital Consumer Practice.

In addition to reporting and analysis on Germany's second quarter results, this report includes Strategy Analytics' latest near-term subscriber performance projections for selected German BSPs.