Masmovil outperforms Spanish mobile market, grows share to 9%

Thursday 19 October 2017 | 15:50 CET | Background
Spain’s fourth mobile network operator Masmovil posted strong results in the second quarter of 2017 and increased its market share to almost 9 percent of mobile service revenues, according to the latest figures from Telecompaper.  While MasMovil remains the smallest player in the mobile market, its spectacular growth path through a string of acquisitions (most importantly MNO Yoigo) suggests it is may be able to succeed where Telia, the previous owner of the fourth operator in Spain, failed.  

Masmovil 8.7% of total Spanish SIMs in Q2 2017

Masmovil has transformed from MVNO to an integrated telco through a targeted merger and acquisitions strategy. It has already acquired and successfully integrated more than 10 companies in the last 36 months. It also has been building its own LTE network in several cities and has acquired fixed broadband assets from Orange. According to the latest results, it achieved proforma growth of 14 percent on an annual basis in Q2 for a total mobile base of 4.55 million, including all of its mobile brands –Yoigo, Pepephone, Llamaya and Masmovil. Based on a total of 52.1 million mobile SIMs in Spain at the end of Q2, MasMovil had 8.7 percent of all Spanish mobile customers, according to the latest figures from Telecompaper. All other MNOs lost share during the period. 

Consolidation in Spain following the economic recession has seen the formation of three fixed and mobile giants: the incumbent operator Telefonica, Vodafone Spain after its Ono buy, and Orange Spain, which also owns fixed operator Jazztel. These three players had 91.1 percent of the total mobile service revenue in Q2 2017, down from 93.5 percent in the same quarter a year ago (before Masmovil’s takeovers). 

Masmovil 8.9% of total mobile service revenues in Q2 2017

Overall, the Spanish mobile market showed a continued recovery in Q2 2017, with service revenue up 2.7 percent year-on-year to a total of EUR 2.5 billion in past quarter. Masmovil’s share of revenues rose to 8.9 percent, compared to 6.5 percent for Yoigo in same period last year (previous to the acquisition of Masmovil).   The operator Yoigo suffered from its inability to offer converged services, which have been the key trend on the Spanish market in terms of promotional offers and winning over customers. The big operators attract customers with discounted bundles of fixed, mobile and TV services, supported by extensive fibre network roll-outs and investments in content in recent years. More recently the focus has shifted to monetising these investments, resulting in price increases for bundled offers.  

Convergence key

The question remains whether MasMovil, after an exponential rise from just a tiny MVNO a few years ago, will be able to build on its acquired assets and start growing more organically. Masmovil seems to be in better position than Yoigo, with its focus on competitive pricing across different brands, ability to upsell its mobile base with a convergent product, a growing fixed base and fixed assets and the ability to reduce its cost base via lower roaming cost and synergies. 

According to Masmovil, the increasing dominance of convergent offers - around 70 percent of Spanish households subscribe to a mobile/fixed bundle - underlines the opportunity for the group. Masmovil aims to increase the number of homes served by fibre to 10 million by the end of 2017, an increase of 33 percent from the end of June. This is driven by an expansion in Masmovil’s own network footprint and the growing number of available homes under wholesale access agreements with other operators. 

Masmovil now offers convergent bundles under all three of its major brands. Masmovil also sees the growing number of over-the-top platforms changing the way video content is consumed, which impacts the telco’s 4P business model (voice, mobile, fixed broadband and video content). According to the regulator CNMC, more than 10 percent of Spanish users of audiovisual content chose to contract OTT services (+35% vs 2015), and the company expects this share to continue growing. Therefore, the group is defining its TV strategy, which is expected to go live before the end of the year, according to Pablo Freire Chief Strategy Officer of Masmovil.

The above figures are based on Telecompaper’s database on the Spanish mobile market, which is available for purchase. For more information, click here.

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