Spain - Q4 2006 Market Update

The fourth quarter of 2006 was an interesting one for the Spanish market, as it saw the first new mobile network launch since that of Amena (now Orange Espana) in January 1999. TeliaSonera's "Yoigo" (Xfera Moviles as was) managed to a attract a total of 24k customers to its service by the end of 2006 after a month of operations, claiming 3.6% of the net additions in Q4 2006 and a market share of 0.052% by the end of the period.

There was not much to trouble the three incumbent operators in the first 31 days of operation, therefore, but then again no one really expected there to be.

The readings from the barometer at the end of March and throughout 2007 will be of much more interest in charting the course of the new entrant and its strategy. Among the most avid followers of progress will be watchers of Hutchison 3G, until now the only pure-3G new entrant in any European market (excepting Telefonica's Quam in Germany, which lasted less than a year in business during which time it only resold 2G capacity, never actually launching its own network).

The total mobile customer base in Spain, including Yoigo's 24k, increased to 46.339m at the end of December 2006 - equivalent to 114.6 mobile connections for every head of population. Net additions in the fourth quarter, however, were the lowest recorded since Q3 2004, with only 669k net new connections, against an average of over 1m for the first three quarters of the year.

The result is even more surprising since both Telefonica Moviles (TEM) and Orange enjoyed their strongest quarter of the year in Q4 2006. The briefest of glances at the figures reveals that the culprit was Vodafone, which added 0.44m new connections on a registered basis in Q4 2006 only to suffer a net loss of 58k at the active level, as the activity level declined from an extraordinarily high 98.5% in Q3 2006 to a more "normal" 95.1% in the final quarter. The third quarter activity rate looks of a decidedly flash-in-the-pan nature, reducing inactive numbers from 864k at the end of June to just 210k at the end of September. Perhaps the drop was associated with a clean-up of the customer base by Vodafone in Spain, but, if it was, the effect was short-lived, as the inactive ranks swelled to over 700k again by the end of the year.

The turbulence at Vodafone saw the number two operator lose 0.5pp of the 0.7pp of market share it had gained in the third quarter in the fourth quarter. As a result, third-placed Orange regained its losses to recover the 20.0% share of the market it held at the end of June, whilst TEM gained almost half of its third quarter losses back - at the expense of Vodafone and, to a small extent, Yoigo. Year on year, however, Vodafone was the clear winner, improving its share of the customer market from 29.1% to 29.7% at the expense of both of its sizeable rivals. The difference in performance is clear when looking at annual growth, which was 11.2% at Vodafone, against 7.8% and 7.9% respectively at TEM and Orange, and in excess of the resulting 8.9% market average.

This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World. To download a sample issue of the Briefing in PDF format, please click here. For more information including full subscription pricing, please visit The Mobile World"

Posted to the site on 8th March 2007