BMI View: The Spanish market is highly developed from a global and regional perspective, with deep penetration of mobile, fixed-line and broadband services as well as high investment levels in nextgeneration services. However, in 2012 Spain was one of the worst performing telecoms markets globally, with large losses in the mobile market in terms of subscriptions, as well as a squeeze on revenues from market saturation, regulatory measures and the hostile economic environment. The outlook for the sector in the coming years is mixed, with growth potential remaining in the wireless data market and in high-speed broadband, particularly when bundled with pay-TV services. However, the market will continue to be affected by economic conditions, with rising consumer price sensitivity set to limit financial performance in the sector in the short to medium term.
- The mobile market contracted by 9% y-o-y in 2012, reaching 51.421mn. This was the result of the squeeze on consumer spending and inactive subscription discounting by market leader Movistar and second-ranked Vodafone.
- Mobile ARPU continued to decline as a result of the heightened price sensitivity of consumers and the implementation of mobile termination rate cuts.
- Dedicated mobile broadband subscriptions saw the largest declines, according to CMT data, down 24.4% in 2012 to 2.563mn.
Key Trends And Developments
Mobile operators have been looking at drastic measures in order to respond to the hostile conditions in the mobile market in 2012. Telefonica saw some success with the introduction of the Movistar Fusion bundle in which reportedly attracted 1mn subscriptions from October 1 to mid December 2012. The quad-play bundle of mobile, fixed-line, broadband and pay-TV services has seen Telefonica compromise on price in order to stem subscription losses, with Morgan Stanley estimating the bundle, which starts at EUR49 a month for quad-play, offers consumers a 23% saving.
Meanwhile Vodafone has also responded to the weak market, and the considerable impact on financial performance. In mid January 2013 it was reported that Vodafone was in negotiations with unions to lay off 4,300 workers - up to a quarter of its total staff. This follows the write down it had to take on its Spanish and Italian operations of GBP5.9bn in November 2012. Vodafone is also paying attention to growth opportunities, and in late February 2013 it was reported that it was once again looking at the prospect of acquiring fourth place mobile operator Yoigo (owned by TeliaSonera).