Spain’s three mobile operators Telefónica Móviles™, Vodafone and Amena collectively signed up more than 850,000 new subscribers in the first three months of 2004, to boost the country’s total user base to 38.35 million and cellular penetration to a colossal 95.35%. Spain’s seemingly voracious appetite for wireless services belies earlier assertions that the only way to avoid market stagnation was through the successful introduction of UMTS. The 3G launch deadline has already been pushed back twice and it now seems unlikely that an official date will be set at all, which many fear could lead to an even longer delay in the rollout of the technology. In February 2004 the EC asked Madrid to ease the terms of its 3G licences and called into question the validity of some of the conditions attached to the concessions. Spanish newspaper Cinco Dias reported that the EC’s Enterprise and Information Society Commissioner Erkki Liikanen had written a letter to the Spanish Minister for Science and Technology, Juan Costa Climent, to request the withdrawal of requirements relating to job creation and EUR3 billion investment in research and development. The EC has also demanded that the government cancel the UMTS rollout guarantees imposed on the operators.
Despite the problems surrounding 3G, in the first quarter of 2004 Amena attracted an additional 312,000 2G users while Vodafone and TM reported gains of 258,000 and 278,000 respectively. By the start of April TM was the market leader with 19.94 million customers, a market share of 51.99%, ahead of Vodafone with 9.93 million (25.89%) and Amena on 8.48 million (22.11%). TM in particular claims to have put a difficult year behind it. Having recorded a net loss of EUR3.72 billion in 2002 after it wrote off the cost of its failed 3G ventures in Italy, Austria, Switzerland and Germany, the Group celebrated a return to black in 2003, with a net profit of EUR1.61 billion. Moreover, operating revenue rose by 10% to EUR10.07 billion, and EBITDA climbed 19.5% to EUR4.46 billion. In its domestic market TM saw its customer base rise by 7%, of which 40.3% were contract customers – up more than five percentage points on the previous year – reflecting the company’s successful attempt to capture more of Spain’s higher spending customers.
Buoyed by its performance in the 2G arena, in January this year TM selected Ericsson and Siemens to supply radio access equipment for the second phase of its 3G network rollout. It plans to have between 7,000 and 8,000 3G base stations in place by the start of 2005 and currently has 3G coverage in 52 cities in Spain, having installed 1,100 base stations in phase one. The cellco launched a pre-commercial 3G service – Oficin@ Movistar UMTS – in October 2003, the first operator in the country to do so. Meanwhile, in July 2003 Spanish 3G licence holder Xfera was reported to be in talks with infrastructure construction company Albertis with a view to cooperating on the rollout of its 3G network. Since Vivendi walked away from Xfera in 2002, the cellco’s remaining shareholders – TeliaSonera and ACS – have been negotiating with Spanish regulators to only build infrastructure in the cities of Madrid and Barcelona.