clients ditch mobile phones in Spain

Spanish mobile phone firms lost a quarter of a million clients in May, led by customers ditching the biggest players Telefonica and Vodafone after the two cut smartphone subsidies, the country's telecoms regulator said on Friday. The figures indicated a slowdown in client losses in crisis-hit Spain after a record 380,000 customers cancelled mobile phone lines in April, though Telefonica remained the firm facing the biggest exodus, with more than 200,000 lines dropped. "We remain concerned about the near-term Spanish wireless trends given the ability for customers to change usage on per minutebased tariffs in a weak macro environment," Deutsche Bank analyst Keval Khiroya said following the data release. Mobile firms have struggled in Spain, once a booming market, where an economic slump has left almost one in four unemployed. The government announced a further round of cuts this week in a bid to slash $80 billion from the country's deficit. "Reduced activity was also noticeable in switches from one provider to another, with 329,200 changes recorded in May, a considerably lower figure than the half a million switches registered at the end of 2011," the Telcommuni-cations Market Commission (CMT) said in a statement. Telefonica and Vodafone, with almost 70 per cent market share between them, have suffered huge drops in client numbers since they decided to use Spain as a dry run for a new business model that cuts subsidies for smartphones. France Telecom's Orange gained 22,859 new phone lines in May, benefiting from its decision to continue subsidizing handsets for clients. "The savings achieved in 2012 from cutting handset subsidies for new customers to Telefonica (potentially up to around $620 million) are likely to be re-invested given Orange did not follow Telefonica and Vodafone's lead," Goldman Sachs telecom analysts said in a recent note to clients. Yoigo, with around 5 per cent market share, reversed its fortunes in May and lost 7,000 mobile clients. Teliasonera is selling the operator in a $1.2 billion plus deal that could attract tycoon Carlos Slim, Vodafone and France Telecom as bidders. Spain's telecom sector had a total turnover of $47 billion in 2011, the CMT said on Tuesday, 4.6 per cent less than in 2010. Broadband connections remained a bright spot for the sector, however, with 32,000 new lines added in May. Telefonica registered its second month of gains in this area.