Spanish mobile operators feeling the heat as the recession bites

Spanish mobile operators feeling the heat as the recession bites

Summary: Spain’s two biggest mobile operators are facing tough times, as consumers increasingly switch to low-cost alternatives.

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TOPICS: 4G, Mobility, EU
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It's been a disappointing year so far for Movistar and Vodafone, Spain's two largest mobile operators. Between them they account for well over 50 percent of Spain's mobile subscribers, but their market share is shrinking as cash strapped consumers switch to cheaper alternatives.

This week in particular has been a bad one for the two companies. First came Vodafone's financial results, released on Tuesday. The results saw the country's second biggest mobile operator – with around one-quarter of the market – announce lacklustre figures. Full-year revenue across the company was down 4.2 percent, with recession-hit Spain and Italy helping to keep it low. In total, Vodafone has had to write down £7.7bn in the two countries for the year ended 31 March 2013.

Vodafone's revenue from services in Spain dropped 11.5 percent over the year. According to new figures from the Spanish telecoms regulator CMT, the operator lost 81,000 customers in March alone as consumers shifted away from the traditional operators and instead signed up with mobile virtual network operators (MVNOs).

Meanwhile, as telecoms analyst Benedict Evans pointed out, its SMS volume has halved over the past two years – a trend seen across the mobile industry, thanks in part to the rise in popularity of OTT messaging services such as BlackBerry's BBM, Apple's iMessage and WhatsApp.

The figures from CMT also painted a worrying picture for Movistar, the country's biggest mobile operator. It lost 87,000 subscribers in March and now pulls in around 35 percent market share. In fact, during the first quarter of the year, Movistar lost around 700,000 subscribers and revenue for the same period fell 16.4 percent year on year to €3.26bn.

The company, however, is making moves to address the issue. This week, it began cutting prices on many of its smartphones by between 15 percent and 30 percent. The Samsung Galaxy S4, for example, now costs €639, compared to a previous price of €755.

According to Reuters, Movistar owner Telefonica abandoned handset subsidies last year. While this had a positive impact on the company's bottom line, it made phones more expensive for new customers. In a country where unemployment sits at 27 percent and not everyone is rolling in cash, that now looks like a poor move.

Meanwhile, Movistar's cheaper rivals will also shortly be able to differentiate themselves through the launch of LTE networks. Both Orange and Yoigo, the third and fourth largest mobile operators in Spain, have plans to launch high-speed 4G services this summer.

Yoigo has even said current 3G customers will be able to upgrade to 4G at no extra cost. Movistar and Vodafone are yet to confirm their 4G plans.

Topics: 4G, Mobility, EU

Steve Evans

About Steve Evans

Steve is a freelance journalist based in Madrid, specialising in technology and how it impacts businesses. His previous roles include web editor at Computer Business Review (CBR) and before that staff writer at a magazine that wrote about and sold collectable items.

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