2011 Portugal - Telecoms, IP Networks, Digital Media and Forecasts

Portugal’s fibre sector accounting for 75% of all new broadband subscribers

BuddeComm’s half-yearly publication, Portugal - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecoms and digital media sectors in one of Europe’s smaller but progressive markets. It includes data from the regulator’s 2011 yearbook, market data updates for Q4 2011, telcos’ operational and financial data to end-2011 and market developments into 2012.

Economic conditions

Portugal’s mid-sized telecom market provides one of the highest contributions to GDP in the EU, though this has fallen slightly during the last few years, reflecting the general economic malaise. And the stagnation of the sector country is among those in Europe most affected by the crisis. The government’s high proportion of debt to GDP has jeopardised public-funded telecom infrastructure upgrades and placed a greater burden on the private sector to deliver fibre-based infrastructure. The newly elected government has set budget deficit targets to 2015. Spending cuts required to achieve the fiscal overhaul, which are expected to cause Portugal’s economy to contract by 2% in 2012, will affect growth, consumer spend and business investment.

Telecoms overview

Broadband penetration is below the EU average while mobile penetration is among the highest. The incumbent Portugal Telecom has seen its share of the total traffic market (voice and internet) gradually fall in the face of competition, though it retains a dominant share in both the voice and DSL markets. Market revenue is expected to fall slightly to 2013, in line with lower sector investment, as operators face regulatory burdens compounded by consumers spending less on services. Operators have reported declining revenue for several quarters, and little respite is anticipated in the near future. PT has weathered the times better than competitors on the strength of its subsidiaries in Brazil.

Broadband

Vibrant competition in the broadband sector belies the fact that only four operators have about 94% share of the market by subscribers. The three MNOs also offer mobile broadband through their upgraded mobile networks. The number of broadband lines has grown substantially in recent years, and is expected to reach about 7% in 2012. The impressive fibre sector offers among Europe’s fastest services, with ZON Vodafone and Sonaecom providing 360Mb/s downloads, trumped by PT’s 400Mb/s Meo Fibra offer.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Market Highlights 

• Data revenue as a proportion of total mobile revenue continues to grow at 2-4% per year following a number of promotional efforts by operators to increase use of data services and promote wireless broadband solutions. The proportion of non-SMS related data services is also increasing.
• All three MNOs have trialled LTE using 2.6GHz spectrum, a development which will significantly aid broadband connectivity in rural areas in coming years. In March 2012 TMN launched commercial LTE services, offering data at up to 100Mb/s, access to live TV channels through Meo Mobile and to music streaming through MusicBox. The service, was available to about 20% of the population at launch, will reach 90% coverage by the end of 2012 using the company’s 800MHz spectrum allocation.
• Portugal’s market for bundled services and IP broadcasting has a strong base in the country’s broadband network: triple and quad play has become increasingly popular during the last two years as operators’ investment in infrastructure upgrades bear fruit and customers take advantage of faster bandwidth, single billing convenience and cheaper prices resulting from greater competition.
• Portugal has developed an effective nationwide strategy for deploying fibre, involving the cooperation of multiple operators, the government, and public subsidies. As a result, FttX in early 2012 accounted to 10.6% of all broadband connections, compared to 6.1% a year earlier.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Portugal. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.