Market Report, "Spain Telecommunications Report Q1 2013", Published

New Fixed Networks research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 04 January 2013

BMI View: The Spanish market is highly developed with high levels of penetration in mobile, fixed-line and broadband services. However, the telecoms market has been hit hard by economic conditions, resulting in subscription losses and downward pressure on prices. The outlook for the sector 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 impacted by economic conditions with rising consumer price sensitivity set to limit financial performance in the sector in the short- to medium term.

Key Data:

¦ The mobile market contracted by 6.1% y-o-y to the end of September 2012, reaching 52.672mn subscriptions as a result of inactive subscription discounting by market leader Movistar and secondranked 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 declined 12.7% y-o-y to the end of June 2012, according to CMT data.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/523895_spain_telecommunications_report_q1_2013.aspx) (http://www.fastmr.com/prod/523895_spain_telecommunications_report_q1_2013.aspx)

Key Trends And Developments

A consequence of the macroeconomic crisis impacting the sector has been the speculation about changing ownership in the sector. In July 2012 it was reported that TeliaSonera was ready to sell its Yoigo mobile operations in Spain. The rumoured price tag for Yoigo is EUR1bn (US$1.2bn). Meanwhile, in October 2012 two high profile private equity companies invested up to EUR200mn for a 48% stake in Spanish regional converged services provider, Euskaltel.

Mobile operators have faced an increasingly hostile operating environment as macroeconomic conditions have raised consumer price sensitivity - leading to subscription losses and declining ARPU. However, regulatory measures have also played a key part, with cuts to mobile termination rates (MTR) enacted in Q212 contributing to declining ARPUs for operators. (However, it should be remembered that there will be a benefit in terms of reduced operating costs). Looking ahead, further MTR cuts in 2012, 2013 and 2014 will add to the pressure from macroeconomic crisis, which is set to continue at least in the short- to medium term.

In Q212 the two largest mobile operators, Telefonica (Movistar) and Vodafone announced they would follow Yoigo in moving away from handset subsidies in Spain. Meanwhile, Orange maintained handset subsidies, helping to boost subscription figures. Telefonica maintained its strategy, while Vodafone reinstated handset subsidies in August 2012, although the operator claimed this was only temporarily until mid-September 2012. Operator strategy over the issue is expected to be a key short- to medium-term competitive dynamic.

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