Spain - Telecoms, IP Networks, Digital Media and Forecasts

Countries covered: Spain This report provides a comprehensive overview of trends and developments in Spain's telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors. Subjects include: Market and industry analyses, trends and developments; Facts, figures and statistics; Industry and regulatory issues; Infrastructure; Major Players, Revenues, Subscribers, ARPU, MoU; Internet, VoIP, IPTV; Mobile Voice and Data Markets; Broadband (FttH, DSL, cable TV, wireless); Convergence and Digital Media; 3G subscriber and mobile ARPU forecasts to 2015; Broadband market forecasts for selective years to 2020. Key developments: Las Palmas completes initial stage of muni WiFi network; consortium develops FttH network in Extremadura; FttH lines breach 100,000; Mobile revenue falls 3.7% in Q2 2011; rise in number portability places pressure on operators; 4G licences in the 80MHz and 2.6GHz band raise ?1.65 billion; regulator proposes 80% cuts in MTRs to 2014; new government pressed to revitalise telecoms sector; Telefónica considers asset sales; telecom revenue falls 4% in Q2 2011; regulator agrees to 6.8% increase in LLU charges; Telefónica eyes Middle East market through deal with Etisalat, develops new organisational structure; new indirect access model to be introduced for 2012; Telefónica planning to invest US$14.6 billion in Brazil to 2014; revised wholesale broadband access regulations for 2012; Carlyle Group buys Telecable Asturias; regulator's market data to September 2011; operator data to Q3 2011. Companies covered in this report include: Movistar, Orange, ONO, Jazztel; Vodafone, Lebara, Lycamobile, Telefónica; Canal+, Prisa TV

Additional Information

Spain’s spectrum auction: raising revenue for the new government and hopes for MNOsBuddeComm’s quarterly publication, Spain - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecoms and digital media sectors in one of Europe’s key markets struggling to overcome larger economic difficulties.

Spain’s telecom market is one of the largest in Europe, accounting for around 4% of GDP and directly employing some 71,000 people. In common with other European countries, the market has been affected by the general economic turmoil, which has hit Spain more harshly than most other regional economies. Government deficit is running at about €117 billion, while deficit as a proportion of GDP is above 11%. Government debt is expected to be running at 86% of GDP during the next two to three years, far higher than the EU limits set under the now-defunct stability and growth pact which requires an annual budget deficit no higher than 3% of GDP and a national debt lower than 60% of GDP. Financial constraints have impacted the government’s ability to fund national telecom infrastructure projects, and have fast-tracked the sale of a range of mobile spectrum bands.

The new Spanish government, headed by Mariano Rajoy’s Center-right People’s Party (PP) - which replaced the seven-year old Socialist government - has not dampened investor concerns about Spain’s economic recovery despite announcing a new round of measures on bank policies, labour reforms and budget austerity. Yields on three-month bonds reached above 5.1% in late 2011, while the country may need €30 billion in new cuts to reach its deficit target for 2012.

The declining value of the telecom market, worth an estimated €38 billion in 2011 and an expected €37.6 billion in 2012, is mainly attributed to the economic crisis which has severely dampened consumer spend in all sectors. The broadband sector was the single area of positive growth until mid-2010, since when revenue from the sector has fallen by between 1.5% and 2.9% per quarter.

Telefónica controls the bulk of national and local infrastructure. Despite almost a decade since the Spanish telecoms sector was deregulated the incumbent serves 82% of direct accesses and thus dominates the fixed-line market. It also accounts for about 55% of the internet market. Fixed-line operators trying to break Telefónica’s hegemony include ONO, Jazztel, Euskaltel and Orange. Only in mobile telephony does Telefónica face significant competition.

The trend towards market consolidation and the entry of the first MVNOs have resulted in several integrated operators providing greater infrastructure competition: two MVNOs also operate in the fixed and broadband market while several cable operators have launched mobile services following the imposition of access obligations in 2006. Alternative operators have invested in cable and LLU while mobile operators are gradually upgrading networks to provide high-speed data services. Prices have fallen as a result of competition, particularly through bundled offers, and intensive number portability.

Key telecom parameters - 2009; 2012
Sector20092012 (e)

Broadband:

Fixed broadband subscribers (million)10.5615.14
Fixed broadband penetration rate22%30%
Mobile broadband subscribers (million)2.84.9

Subscribers to telecoms services:

Fixed-line telephony (million)19.920.1
Mobile phone (million)56.560.3
Mobile SIM penetration (population)116%124%
(Source: BuddeComm)

Market Highlights

Despite pay-DTTV services being a contentious issue in Spain, government approval for it in 2009 has helped broadcasters struggling to secure revenue in the face of competition from other platforms. Mediapro has successfully commercialise the first pay TV channel, Gol TV, since joined by AXN Spain as the country’s second pay-DTTV channel. Pay-HDTV over DTT has also been supported by the provision that new large TV sets must incorporate an HD tuner.Additional frequencies freed up by the digital dividend in the 800MHz band will be auctioned in 2015, following auctions in late 2011. Spectrum in the 2.6GHz band has been offered in line with other European countries, while the refarming of the 900MHz band will enable MNOs to augment their 4G offerings, so alleviating poor broadband connectivity in rural areas.Doubts over a viable mobile TV business model remain, leading to continuing caution among providers. The dramatic fall in the number of subscribers in 2011 coincided with the end of a Movistar promotion, suggesting that consumers remain unwilling to pay for the service.Growth in the fixed-line broadband market continues steadily, at about 6% in 2011. Movistar’s share of the market has fallen in the wake of competition via LLU, though market share from cable services have been stagnant for several years despite higher capacity available based on the EuroDOCSIS 3.0 standard. The fibre market has shown considerable growth following regulatory measures on network access.

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