2012 Portugal - Telecoms, IP Networks, Digital Media and Forecasts

Multi-spectrum auction kick-starts LTE services expansion in Portugal

BuddeComm’s half-yearly publication, Portugal - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Europe’s smaller countries yet having a progressive telecoms market. The report includes the regulator’s market data to Q4 2012; telcos’ operating and financial data to Q4 2012; market developments to April 2013.

Economic background

Portugal’s telecom market provides one of the highest contributions to GDP in the EU. The government’s high proportion of debt to GDP has continued to jeopardise publicly funded telecom infrastructure investment 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 are expected to cause Portugal’s GDP to contract by 3% in 2012, affecting growth, consumer spend and business investment.

Telecom market 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 shrink, though it retains a dominant share in both the voice and DSL markets. Market revenue is expected to continue 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 market

Portugal’s competitive broadband sector is served by a large number of DSL, cable and fibre operators though four of them alone together have a 94% share of subscribers. PT and Sonaecom dominate the fast-emerging FttH market, while the three MNOs also offer mobile broadband. Cable broadband is available to about 85% of the country on average, or 50% of rural areas. Overall subscriber growth remains strong, and though DSL is the principal access technology, in coming years its market share will shrink as customers are migrated to fibre networks: indeed fibre is now accounts for three of every four new customers. 

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.
• Following LTE trials, MNOs now have extensive commercial services in place. High population coverage is having a considerable effect on the availability rural broadband.
• 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.
• An effective nationwide strategy for deploying fibre involves the cooperation of multiple operators, the government, and public subsidies. As a result, FttX accounts for about 75% of all new broadband connections.

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.