1. Fixed market revenues account for ~3€ Billion, of which Fixed line revenues comprise 55%. Yet the fixed line contribution is declining by -6.7% GAGR from 2007-2009.
2. Broadband fuels fixed revenue growth by stimulating line numbers and revenues by over 10% CAGR in the last 3 years.
3. Future broadband growth potential remains positive with the possibility of providing BB service to the 3.9 Million PC-equipped Spanish households with only dial-up or no internet access.
4. Decreases in Telefónica’s wholesale prices resulting from regulation, has allowed for the faster proliferation of higher speed connections by making them more affordable to end customer. Wholesale price reductions have reached up to 74% in some cases, yet have not fully been translated into customer savings. The price decreases have thus allowed operators to capitalize on revenue generation through cheaper offers and better margins from lower costs.

We will soon deliver our yearly broker report on the telecommunications situation in Spain, but I wanted to publish an executive summary of it and highlight some interesting facts and insights with our blog readers so that you can clearly understand the fixed and broadband market situation:

Vodafone (VOD) and T-Mobile (DT) held on to their combined 70 percent share of service revenues in Q1, despite considerable efforts by E-Plus (PLUS) and O2 to win market share. E-Plus was again the one to show the strongest annual growth, mainly in the prepaid segment, helping to increase its share of service revenues by 0.7 percent point to 15.3 percent in Q1. T-Mobile’s market share increased 0.4 percent point to 35.8 percent, while Vodafone lost 1.2 points to 34.5 percent. O2 showed a small increase of 0.2 percent point, good for 14.5 percent of services revenues in the quarter.

In the last years, it has been constantly suggested at different forums that operators should greatly reduce their international roaming tariffs, including those for voice services and data transmission. As such, top-tier operators should be willing to provide preferential services for all international operators. Depending on the scenario, international roaming can be categorized in two ways. The first concerns roaming between a single transnational group network (Zain’s One network or Vodafone’s Passport) and the second across different group networks, which is the case I would like to mention in this post.

Vivo has continued to make every effort to be the best option among all the mobile telephone operators in Brazil, thus enabling people to connect themselves each time for longer, at any time, in any place. This is how Vivo has managed to ensure sustainable results and reaffirm its market leader position.

A sale of Zain’s African networks would be a surprising move as the operator has only recently completed rebranding the networks following the Celtel acquisition. There would be some countries that would “suffer” from this sale, such as Zain Nigeria that would have to be rebranded again despite having changed names several times in recent years, from Econet to Vodacom, then V-mobile, then Celtel and finally to Zain.

In mobile, 62% of the promotions were for prepaid plans, and 52% were intended primarily to win new clients; 77% encouraged an increase in the consumption of telephone minutes, but price reductions potentially hurt revenues per user (ARPU) in 59% of the cases. The promotions were responded by competitors in 77% of the studied cases.

• Net service revenue reached BRL 3.6 billion, up by 21.4 percent over the same quarter last year.
• EBITDA jumped by 25.2 percent to BRL 1.2 billion, with the EBITDA margin reaching 29.9 percent in the quarter, up by 1.0 percentage points versus the same period last year.
• The net profit for the quarter amounted to BRL 123.5 million, growing 26.5 percent compared with the same quarter in 2008.
• The operator reached 45.6 million customers at the end of March, adding some 696,000 customers in the first quarter. The number GSM/UMTS users increased to more than 33.3 million and its mobile data and VAS revenue grew 29 percent year-on year to 12.1 percent of the net service revenue.
• Vivo’s ARPU decreased by 8.5 percent to BRL 27 compared with the first quarter of 2008.

This apparent good news reveals the leadership of this operator in the Brazilian market, as its competitors are suffering a significantly worse quarter (as can be downloaded here and here). The market itself is showing a recession impact, with forecast estimations that will be difficult to achieve this year. Having said this, and after reading the results, it might seem that Vivo shows a good performance when compared to competitors, but we believe there’s been a bad performance when compared to forecasts.