MADRID (Reuters) - Earnings are falling for Spanish telecoms operators this year as recession drags on and competition heats up, with mobile broadband the only area of growth, the head of Spain’s telecoms watchdog said.
Trends seen last year, which resulted in total revenue for the sector falling 7.2 percent to 35.2 billion euros ($45.9 billion), have continued into 2013, Bernardo Lorenzo said at a presentation on Wednesday of the regulator’s 2012 report.
“Mobile broadband continues to be the only service with growing revenues,” Lorenzo, president of the Telecommunications Market Commission (CMT), said.
While the rest of the sector has been badly hit by Spain’s economic crisis and 27 percent unemployment rate, mobile broadband recorded a 29 percent rise in total revenue to 2.8 billion euros last year.
More than 352,000 people signed up for new fixed broadband connections last year, but the sector’s total revenue dropped by 4.6 percent to 3.7 billion euros, the regulator said.
Mobile is set for another tough year, with Orange, Yoigo (owned by TeliaSonera) and virtual operators, which rent network capacity from established operators, catching up with market leaders Telefonica and Vodafone who are losing clients.
Mobile revenue dropped 16 percent in 2012 to 9.5 billion euros as consumers cut spending, switched to cheaper deals or ditched their mobiles altogether. Last year was the first time that the number of cellphone lines in Spain shrank, dropping by 1.9 million connections.
Internet-based instant messaging services like WhatsApp, which are free after a small initial payment, are proving even more of a challenge for operators this year, Lorenzo said, as clients shun more expensive text messages.
Customers are also switching provider for both mobile and fixed-line services, as operators fight to undercut rivals’ prices. Telefonica, whose market share in broadband dropped to 48.5 percent in 2012 from 49.2 percent the year before, continues to loosen its grip over the market, Lorenzo said.
The company signed a reciprocal deal with Vodafone and Orange on Tuesday, allowing them to access its fiber optic installations, which offer faster broadband speeds.
Lorenzo said the regulator hoped to set prices for access before August. ($1 = 0.7672 euros)
Editing by Sonya Dowsett and David Holmes