The intense competition between phone operators took a small break in 2022. The explosion of low prices almost five years ago has strengthened the company’s changes among customers during these years, reaching a record not seen in the statistics of the sector. Now, data for the first half of the year prepared by the National Commission for Markets and Competition (CNMC) shows a more relaxed scenario. The transfer of customers from one brand to another decreased by 10% compared to last year.
From January to June of this year, there were 3.2 million portability. That is, changes between operators. This figure is still very high, but it is already below the data of recent courses and is close to the records before the low price war, when small companies took on the big companies with low price offers.
There is an exception to this statistic and it is 2020. During the quarantine period, the government restricted phone portability for several months to minimize the need for face-to-face contact and travel. This limited the number of changes during the first half of the year, although it increased dramatically in the following months. In fact, for weeks, historical records were produced at a pace never before seen in the sector.
The telecommunications sector has for years been characterized by pricing pressure exerted by small operators on large operators. This is a fact that is not limited to Spain, but is a widespread situation in Europe. Big companies have seen billions of euros lost in revenue over the years to smaller operators who were willing to develop at low cost, forcing them to compete with second or third brands. This issue has become the subject of the demand for regulatory changes and the promotion of mergers among the major companies in the industry.
Now, data porting points to a reduction in this strong competition. In the sector, they are called to be cautious and not to end the fight that has ruined the accounts of the big companies over the years. Not surprisingly, the retail activity of telecommunications companies closed 2021 with a revenue of 23,115 million euros, the lowest figure in the entire statistical series collected by the CNMC, which dates back to 2005. 1,800 million euros are missing since it is “undervalued”. The boom started in 2018.
However, various sources from the sector consulted admit that there is an “advertising cooldown”. In other words, it is appreciated that the intensity of offers in recent years is not repeated this year, which has led to a decrease in operator changes. These sources attribute it especially to what is called “medium and high cost”, which refers to products that combine several services and have a higher cost than the rest of the operator’s services. In this area, which is of particular interest to large operators, it had fewer shares. The pressure remains, albeit at a lower cost, these sources note.
Mobile portability data is indicative of how the phone sector is evolving and the competitive pressure operators are putting on each other. This is also the business where operators see the emergence of small companies that create a niche in the sector and “steal” customers from them, while they start making their biggest bets in other areas where the margins are higher.
The evolution of the last years shows how the big three companies, Telefónica, Orange and Vodafone, are losing customers based on the small ones. During the first half of this year, the trio lost 430,000 customers. Although the level was intense, as is the case with the porting trend, the large companies in the sector experienced a moderate loss of clients this year. This negative balance also slowed down by 10%. Movistar and Vodafone report less negative evolution than in the same period of 2021 and Orange makes it worse.
Although the large operators lost customers, they were gained by other smaller companies that carved out a niche for themselves in the Spanish telephone and fiber market and fundamentally fought the “low-cost” battle. This is how the company that eventually became the fourth largest operator in the market, MásMóvil, gained in competition. The company also acquires customers based on the acquisition of small territorial operators. Last, Euskaltel, which had the fifth market share in the country. Recently, other firms like Digi have led the biggest growth in the market.
Mobile virtual operators (MVNOs) are basically small telecoms that use infrastructure rental from larger companies to offer their services. Digi is one of them, although there are other names like Adamo or Finetwork that have been gaining popularity in recent years. According to CNMC records, MVNOs gained 368,000 new customers in the first six months of the year. Although they are down on their winning streak over the same period in 2021, this is their second-best record in the competition’s statistical series.
In the next few months, a profound change is expected in the sector in Spain. Orange and MásMóvil are already working on their merger, having finalized the final details of the merger before the summer, which will be the first operator in the sector in some businesses such as mobile telephony. When the two groups, which have set their sights on going public in the future, are combined, the three main brands in the sector will have 94% of mobile lines in Spain. This combined market share even reaches 97% in other businesses such as home internet.
Source: El Diario