Spain’s Fixed and Mobile Markets Receive Competitive Kick

France Telecom (FT) has fulfilled its long-term aim of entering the Spanish mobile market with the recent purchase of 80% stake in Amena, Auna’s mobile arm.  Also of note, on August 1, 2005, a consortium headed by telco Ono and Providence Equity Partners acquired Auna’s fixed-line voice and Internet business unit. Both deals are pending regulatory approval, but there is little concern of either being overturned. While Auna’s sale is good news for its investors, it will prove problematic for its Spanish competitors. Competitive dynamics in Spain’s fixed and mobile markets are likely to receive a boost, forcing Auna’s competitors to devise new and more aggressive strategies to defend their market share. 

FT’s acquisition of Amena will threaten Telefónica’s reign over Spain’s fixed telecoms sector. FT plans to incorporate Amena into its existing operations in the country, which include basic telephony and Internet services from Wanadoo.  As such, FT will be able to offer service bundles, which may prove to be effective in capturing subscribers. FT has bet on an integrated services model as one of its key strategies for acquiring and maintaining customers. Indeed, one of the reasons why FT decided to invest in Spain and has remained out of countries like Germany and Italy is that in Spain it can actually implement this integrated business model.

Telefónica, through its Movistar mobile arm, is also the leader of the cellular market, with a 48 percent market share.  With respective market shares of 28 percent and 24 percent, rivals Vodafone and Amena are trailing far behind.  Nonetheless, Vodafone has been making more progress than Amena in closing the market share gap due to its more sophisticated service plans and value-added services (VAS).  As it stands, Pyramid Research expects Vodafone to increase its market share to 30 percent and Amena to decrease its market share to 22 percent by YE2009.  However, with Amena now under FT’s control, the operator can expect to see its position in the Spanish market improve.  Amena, which is set to adopt the Orange brand before the end of 2005, will have access to the resources of its parent company.  In addition, it can capitalize on the know-how of FT’s mobile subsidiaries across Europe, adopting their most successful services and marketing strategies as well as benefit from their partnerships, not only with equipment vendors but also with content providers and other industry and non-industry players.

After FT failed 2000 attempt to obtain one of the UMTS licenses being auctioned in 2000, they established fixed operations in Spain and remained focused on the revenue growth potential of the Spanish mobile market as well as the strengthening of its pan-europe mobile presence. Finally, with its acquisition of Amena, Orange will increase its points of presence in Europe to six countries, including France and the United Kingdom, and will add over 9m subscribers to its nearly 45m-strong customer base, becoming one of the largest players in the continent. This position significantly increases its bargaining power and its strength vis-à-vis its competitors in every country in which it operates.