Spanish mobile market stabilises in Q2, 4th operator still in question

Monday 26 October 2015 | 12:05 CET | Background

The Spanish mobile market appears to be entering slightly more stable waters, after the approved mergers of Ono and Vodafone, and Jazztel and Orange. According to the latest figures from Telecompaper's database, mobile service revenues in Spain showed the smallest annual drop in three years in Q2 2015. The market appears likely to continue with four network operators for the time being, as even if Yoigo is sold, MasMovil is quickly growing to become a new challenger. 

Drop in service revenues slows to 3.2%

The pressure from the weak economy and shift to lower-cost providers over the past two years appears to be relenting. Total mobile service revenues in Spain declined by just 3.2 percent year-on-year to EUR 2.4 billion in Q2 2015, according to Telecompaper’s research. After double-digit declines from Q3 2013 until Q3 2014, the market is showing signs of stabilising. The impact of the price war on convergent offers and the effects of the last MTR cut have become less in recent quarters. 

Telecompaper’s recent EU benchmark report shows that mobile prices in Spain are stabilising, or at least falling at a slower rate. The report compares the median monthly TCO (total cost of ownership) for mobile service plans, including monthly fees, promotions and connection costs. The graphs below show the development of the median TCO of SIM-only plans as well as plans offered in combination with a high-end smartphone. Spain showed a strong drop in median TCO for plans with more than 1,000 minutes and more than 2GB per month compared to Q1 2014. However, in the past six months the drop in prices appears to be coming to a halt.

Orange losing revenue share to Vodafone, Yoigo remains smallest and most fragile

In Q2 2015, mainly Orange showed a drop in revenue share compared to a year earlier, according to Telecompaper’s figures. Vodafone kept its revenues relatively stable over the past year (only declining by around 1 percent annually), helped by its takeover of cable operator Ono. In contrast Orange, which in Q3 2015 finally completed the takeover of Jazztel , showed the largest annual drop of all Spanish MNOs, keeping it in third place on the market. 

Spain's fourth mobile network operator, Yoigo remains small, with just over 6.3 percent of service revenues. The company is still trying to shake up the market. CEO Eduardo Taulet said at a press conference following the Q3 results that the company will bring back its popular Sinfin (Unlimited) with 20GB tariff, probably in time for the year-end holiday campaign. Taulet acknowledged that the company’s decision to drop the Sinfin tariff, replacing it with a bundle offering 8GB of data, had led to a 15 percent drop in Sinfin subscribers. Launched in March, Sinfin was touted as a first in the Spanish marketplace, including unlimited calls and 20GB of mobile data at 4G speeds for EUR 23.20 per month for the first six months and EUR 29 thereafter.
Taulet also commented on rumours that Yoigo’s parent company TeliaSonera was resurrecting plans to sell its Spanish unit. He ruled out the possibility that MasMovil could eventually acquire Yoigo in a deal worth up to EUR 500 million. “MasMovil is a tenth of what Yoigo is,” he said, adding that he was in favour of dialogue with MasMovil but that a sale wasn’t “viable”. He also expressed doubts about MasMovil’s ability to take over from Yoigo as Spain's fourth mobile operator. "It isn’t the fourth operator and never will be because it lacks a mobile licence and frequencies,” he said.

Yoigo’s position remains fragile though, amid the pressure to consolidate already seen in other markets with four players, such as Germany, France and the UK.

Yoigo expressed earlier interest in acquiring fixed and mobile assets from Orange, which the company needs to divest in order to comply with the EC's approval of its takeover of Jazztel. However, Yoigo has now backed out, saying 95 percent of the assets for sale are based on DSL, a technology that will soon be “obsolete” and does not guarantee the operator's ability to offer competitive, convergent services in the long term. At the end it was MasMovil who acquired certain fixed network assets

MasMovil to become 4th Spanish operator?

MasMovil already has its own LTE network covering 191 municipalities in 26 Spanish provinces, including all major cities, as well as a MVNO agreement with Orange which it recently extended until the end of 2020. It also secured access to Orange's 4G network, thanks to an order from the regulator.

Recently, MasMovil reported revenues of EUR 59.0 million in the first half of the year, a nearly fivefold increase from the EUR 12.1 million in the year-earlier period. Its H1 EBITDA came to EUR 2.8 million, compared to EUR 1.2 million a year ago, but its net profit halved to EUR 290,000 from EUR 586,000 in H1 2014. The company said it expects full-year revenues to come in at EUR 146.3 million and its full-year EBITDA to be in the region of EUR 11.5 million.

MasMovil also announced that it was continuing with its aggressive mergers and acquisitions strategy, saying it had agreed to acquire a 50.1 percent stake in its rival MVNO YouMobile for EUR 1.25 million. YouMobile uses the Orange Spain network and targets Chinese residents in Spain.

MasMovil has acquired the operators Neo, Embou, UppMobile and Happy Movil, among others over the past year. In part thanks to its M&A strategy, MasMovil increased its mobile customer base to 400,000 by the end of June, some 35 percent more than a year earlier. In terms of market share, MasMovil had less than 1 percent at the end of Q2 2015, while Yoigo had almost 7 percent.

The above figures are based on Telecompaper’s database on the Spanish mobile market, which is available for purchase. The two graphs with TCO information are based on our Q3 2015 EU Benchmark report. For more information, click here.

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