Telefonica sees signs of turnaround in Spanish business

Reuters News
Posted: Sep 11, 2013 11:37 AM
Telefonica sees signs of turnaround in Spanish business

MADRID (Reuters) - Telecoms group Telefonica expects see an uptick in clients and revenues soon in Spain, which would mark the start of a turnaround in its weak home market.

"We aren't on the path to growth yet but we are close to reversing the trend in clients and revenues," said Luis Miguel Gilperez, head of Telefonica's Spanish division, said at a news conference on Wednesday.

Spain's economy has been in and out of a recession since a housing bubble burst five years ago, causing the unemployment rate to soar to more than 25 percent and shattering consumer confidence. This has put pressure on Telefonica's Spanish business.

Telefonica has lost customers to cheaper rivals in its home market as cash-strapped Spaniards look for the cheapest deals. These rivals include virtual mobile operators (MVNOs), which rent network capacity from mobile companies.

In March, for example, more than half a million Spaniards switched mobile phone provider to take advantage of cheap deals on offer. Telefonica and Vodafone were the biggest losers. Telefonica's market share fell to 35.6 percent in March from 38.6 percent a year before.

Gilperez said the company's new commercial policy, including its bundled "quadplay" package offering fixed line, mobile, internet and television services had helped attract customers and reduce the number of client defections.

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In a year since its launch, 2.8 million people had signed up for the package, known as "Fusion", Gilperez said. The company will increase call and data allowances for Fusion customers in the coming days.

"We expect the pace of new sign-ups to increase significantly with the new tariffs," Gilperez said.

(Reporting by Robert Hetz; Writing by Clare Kane. Editing by Jane Merriman)