Monday, November 15, 2004

Q3 data points - Spain

My colleague Jacqueline Millan, who covers Southern Europe, makes a couple of interesting observations in her write-up of Telefonica's Q3 results. Firstly, Telefonica was apparently very concerned about PSTN line loss as the end of the quarter neared, and in the last two weeks of September ran a special promotion offering a PSTN line with no connection fee (as they did in Q1 also). If not for the 101k new subs who signed up, sequential line loss in the quarter would have been 0.5%, which is fairly hefty. The other interesting insight is that, while unbundled lines in the Spanish DSL market numbered only 72k at the end of Q3, 80% of these are fully unbundled. This is a major contrast to France, where 20% of DSL lines are unbundled, but only 5% are fully unbundled. My personal takeaway is that, if unbundling gathers significant momentum in Spain at the same proportion of full-to-partial unbundling, the challenges to Telefonica in maintaining stability in the PSTN line base are going to be a lot greater, and the shifts in the DSL market in Spain could be even more dramatic than what we have seen in France. This is definitely one to watch, especially as France Telecom has identified Spain as one of its "axis of unbundling" (my phrase, not theirs) countries.

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