Portugal Telecommunications Report Q2 2012

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The Q212 update to BMI's Portugal telecommunications market draws on data from the regulator Anacom and operators for the country’s mobile, fixed-line, broadband and pay-TV markets for FY11. This data has led to minor revisions to our forecasts for the country's fixed-line, mobile and broadband markets extended through to 2016. Operator data includes releases from the country’s fixed-line incumbent Portugal Telecom, which also owns the leading mobile operator TMN, Portugal Telecom’s rivals in the mobile market, Vodafone Portugal and Optimus (owned by Portuguese broadband operator Sonaecom) and data from cable operator Grupo Zon. Regulator data includes information from some of the smaller players on the market, including AR Telecom and Onitelecom, as well as pay-TV operator and Cabovisão.

In terms of our forecasts, the mobile market forecast has seen minor downward revisions to overall market growth and 3G subscriber growth. While the mobile market saw subscriber losses in H111 as a result of inactive subscriber discounting by operators, it returned to growth in H211. BMI expects further occasional quarterly subscriber reductions as operators aim to shed low-value inactive subscribers. However we cannot judge how substantial such reductions might be given Portuguese consumers' preference for owning multiple prepaid SIMs. We believe the market supported 17.30mn mobile subscribers at the end of 2011, a figure that is forecast to rise to 17.90mn by 2016. Meanwhile, the 3G forecast has been downgraded following a growth slowdown reported in regulatory data in 2011. We believe this is the result of the challenging macroeconomic environment and we therefore have lowered our forecast for 2012-2013, when BMI’s Country Risk teams expect conditions to remain difficult. We now forecast the number of 3G subscribers to grow from 4.15mn in 2011 to 4.82mn in 2016.

The fixed-line forecast saw only a minor revision this quarter as we maintain our previous assessment of trends in the market of a slowdown and transition to net subscriber losses from 2012. This is a result of the declining impact of converged services on the fixed-line market, which had produced positive growth from 2009 to 2011.

The broadband market trends from 9M11 continued in Q411, according to Anacom data. While fixed broadband subscriptions continued to increase, particularly high capacity connections using fibre and DSL, mobile broadband subscriptions fell sharply in 2011. Looking ahead, we expect competition between Zon and Portugal Telecom through their respective next generation networks and converged service packages, will boost growth. We also expect mobile broadband growth to return in 2012, following the launch of LTE by the three mobile network operators in March 2012. However, the launch may be detrimental to the country’s DSL network as subscribers switch to high capacity wireless broadband.

TMN, Vodafone Portugal and Optimus all launched commercial LTE networks in March 2012 following the 2.6GHz spectrum auction in November 2011. All three operators’ offers includes USB modems with download capacity of 50 or 100Mbps, with prices starting at EUR49.99 a month. However beyond launch, prices strategy differs between operators.

Portugal Telecom is offering customers taking the LTE service, alongside fixed broadband, access to 50 TV channels and its Musicbox service. The incumbent also has an aggressive roll-out schedule, stating that it expects its network to reach 80% population coverage in April 2012. Meanwhile, Optimus plans to make its 4G mobile service available to 80% of the population by YE12, after first being rolled out in Lisbon, Porto and district capitals.

It also offers clients the chance to add an additional device for EUR7.5 a month. Finally, Vodafone has the most conservative strategy, stating it will gradually extend coverage to the rest of the country.

BMI believes there were 3.32mn fixed and mobile broadband subscriptions at the end of 2011, down year-on-year due to the fall in dedicated mobile broadband service usage. With the boost provided by LTE, by 2016, we expect the market to return to growth from 2012 and there to be 4.04mn broadband subscriptions in Portugal, fairly evenly split between fixed and mobile connections, a penetration rate of 37.8%.

3G/4G services, powering mobile broadband platforms, are believed to be driving the broadband market, particularly now that interest in ADSL is on the wane in the fixed access market. Cable continues to grow robustly, but it is fibre that is growing fastest as Portugal Telecom powers ahead with ambitious FTTH investment projects. SHOW LESS READ MORE >

Executive Summary

SWOT Analysis
Portugal Mobile Market SWOT Analysis
Portugal Wireline Market SWOT Analysis
Portugal Political SWOT
Portugal Economic SWOT

Risk/Reward Ratings
Western Europe
Western Europe Risk/Reward Ratings, Q212
Portugal

Industry Forecast Scenario
Mobile
Table: Portugal Telecoms Sector – Mobile – Historical Data & Forecasts
ARPU
Table: Telecoms Sector – Mobile ARPU – Historical Data & Forecasts (EUR)
Fixed Line
Table: Portugal Telecoms Sector – Fixed Line – Historical Data & Forecasts
Internet
Table: Portugal Telecoms Sector – Internet – Historical Data & Forecasts
Market Data Analysis
Mobile
Table: Portuguese Mobile Market, Q411
Table: Portuguese Mobile Market Net Additions, Q310-Q411
Table: Portuguese Blended ARPU, Q409-Q411 (EUR/User/Month)
3G
4G
Table: Mobile Contract Wins
Mobile Operator Data
Table: Portugal Mobile Market Overview
Table: TMN
Table: Vodafone Portugal
Table: Optimus
Mobile Content

Regional Outlook
Table: Smart Meter Race Is On

Country Outlook
Value Added Services
VAS Timeline
Table: VAS Timeline

Fixed Line
Table: Portugal: Growth Of Fixed-Line Accesses (‘000), 2011
Table: Portugal – Operator Market Shares Of Accesses Installed At Customer Request (%)

Internet
Table: Portugal Broadband Market by Technology ('000)
Table: Portugal: Operator Market Shares of Fixed Broadband Customers (%)
Next Generation Networks
WiMAX
LTE
Pay-TV
Table: Portugal Pay-TV Market by Technology ('000)
Leading Pay-TV Operators
Converged Service Operator Tables
Table- Portugal Telecom
Table- Grupo Zon
Table- Sonaecom
Regulatory Environment

Overview
Portugal: Regulatory Bodies And Their Responsibilities
Industry Developments
Competitive Landscape

Key Players
Table: Key Players – Portugal Telecoms Sector
Table: Selected Operators – Financial Indicators
Company Monitor
Vendors' Financial Performance (US$mn), 2009-2010

Operator Profiles
Portugal Telecom
TMN
Vodafone Portugal
Optimus Telecomunicações
Sonaecom

Regional Telecommunications Penetration Overview
Fixed Line
Table: Regional Fixed-Line Penetration Overview
Internet
Table: Regional Broadband Penetration Overview
Mobile
Table: Regional Mobile Penetration Overview

BMI Telecoms Industry Glossary
Table: Telecommunications Glossary Of Terms

BMI Methodology
How We Generate Our Industry Forecasts
Table: Key Indicators For Telecommunications Industry Forecasts
Telecoms Business Environment Ratings

Risk/Reward Ratings Methodology
Table: Ratings Indicators 1
Weighting 1
Table: Weighting Of Indicators 1

Sources 1

- Portugal Telecom
- TMN
- Vodafone Portugal
- Optimus Telecomunicações
- Sonaecom