* Fixed line providers gain 344,000 mobile customers in Q1
* Seen growing further in competitive market
* Traditional operators not worried about expansion
By Clare Kane
MADRID, April 18 Spanish fixed line telecoms
providers are gaining a bigger share of the country's shrinking
mobile market as cash-strapped consumers switch to bundled
packages offering mobile, internet and other services, data seen
by Reuters showed.
Broadband specialist Jazztel and cable operator ONO
gained more mobile customers than any other company in the first
quarter of 2013, according to the figures, which are regularly
collated but unpublished by the industry.
Jazztel, which will enter Spain's blue-chip IBEX 35
index next week, poached 208,850 clients from other operators in
the first three months of the year, while private equity-owned
ONO added 135,201.
Both are mobile virtual network operators (MVNO) which means
they rent network capacity from other mobile providers.
In the same period, former monopoly Telefonica and
no. 2 player Vodafone together lost more than half a million
customers to rivals. Telefonica's market share fell to 36
percent in January from 40 percent the year before.
Lluis Borrell, partner at consultancy Analysys Mason, said
Telefonica's bundled offer launched last October
signalled a shift to convergence in the Spanish market that
would give firms offering multiple services an edge.
"I see a good position for the combination of someone like a
strong cable operator with a MVNO," he said.
Virtual operators have only been active in Spain since 2006,
after the European Commission recommended in 2003 that countries
open up telecoms markets to more competition.
But they grew their mobile market share to over 9 percent
from 6.5 percent in the 12 months to January 2013. Jazztel
estimates it will have between 2.3 and 2.5 million mobile
clients by 2017 compared with 343,000 at end-2012.
The increasingly competitive mobile market has been
shrinking since 2009 and is expected to contract further.
"This could potentially have very long legs indeed, you only
need to look at the UK market for an example of how durable that
can be," said John Delaney, director of mobile research for
Europe at market research firm IDC.
Cable-based Virgin Media, which has focused on selling
mobile as part of bundled packages, has a contract customer base
of 1.7 million compared with under 500,000 clients five years
ago and is Britain's no.5 player with 3 million mobile clients
According to Jazztel, 25 percent of broadband connections in
Spain will be part of convergent offers this year, increasing to
60 percent in 2015, mirroring a similar trend across Europe.
ONO said last week that its mobile client base had grown 160
percent over the last 12 months to over 500,000 customers, while
Jazztel's mobile customer base grew 140 percent in 2012.
The major attraction of virtual operators, especially in a
market like Spain with a 26 percent unemployment rate, is their
low prices. However, there is a limit to how far MVNOs, which
usually operate with low margins, can undercut competitors.
Spain's telecoms watchdog said contracts between MVNOs and
the operators whose network they use were private. However, in
some countries operators usually stipulate how far virtual
operators can drop prices.
Traditional operators say they are unconcerned by rivals'
rapid growth. Jazztel and ONO together have about 1.5 percent of
Spain's mobile market.
Sources at former monopoly Telefonica said it was "totally
competitive and offers similar prices to any other operator, but
with the advantage of being a fully integrated operator".
No. 4 player Yoigo said: "In no way can MVNOs
substitute MNOs which make heavy investments in networks and
technology which take time to turn profitable and without which
MVNOs would not even exist."