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ONO’s acquisition by Vodafone and other envisaged mergers are set to change the face of the Spanish telco market, with three large groups – Telefonica, Vodafone and Orange dominating the business.
These three companies now control over 90 per cent of the mobile and broadband business in terms of revenues and 70 to 80 per cent in terms of subs. Other consolidation moves with Orange-Jazztel-Yoigo or between regional cable companies like Euskaltel, R and Telecable or even between virtual mobile operators will mean further consolidation in the telco market.
This will put an end to the fragmented business with tens of small companies in the market following telco liberalisation in 1998.
Consolidation will also mean tough competition amongst the main players in a contracting market. In 2013, the mobile business ended with 51.9 million lines, down 1 million. Fixed broadband only grew 5.7 per cent up to €12.2 million, with optic fibre growing twofold.
The development of FTTH is key in the market. Telefonica already has 600,000 clients. ONO has a network of 45,000 km and 7 million passed homes with hybrid (coaxial and optic) fiber. The purchase deal with ONO could alter the recent agreement between Vodafone and Orange are to extend optic fiber to 6 million homes in 50 cities in four years. Both are now archrivals to be the second largest player after Telefonica in the market.