Carphone Warehouse the Latest Player in Spanish MVNO Race

U.K.-based leading mobile retailer Carphone Warehouse has signed a mobile virtual network operator (MVNO) deal with Spain's number-three cellco, Amena. A launch date is yet to be announced, and Carphone Warehouse has not confirmed whether the company has already been granted its MVNO licence. Spain currently has 13 MVNO licence holders, with more than 100 applicants for such licences (see Spain: 28 August 2006: Thirteen MVNO Licence Holders in Spain).

Outlook and Implications

• Spain's First MVNO Deals: The Spanish telecoms market regulator, the CMT, awarded the first MVNO licences in May 2005 to a number of operators. These included Sweden's Tele2, the United Kingdom's British Telecom (BT), and leading alternative telco Jazztel. Swedish pan-European operator Tele2 could be Spain’s first MVNO, aiming to launch services by the year-end (see Spain: 27 June 2006: Tele2 Plans MVNO Launch by End-2006). Spanish ISP Ya.com, part of Deutsche Telekom, is involved in advanced MVNO negotiations with leading Spanish mobile operator Telefónica Móviles España; these are likely to see the arrival of T-Mobile brand in Spain (see Spain: 12 September 2006: Ya.com in MVNO Talks with Telefónica Móviles).
  
  Earlier this week, Euskaltel—which operates in the Basque region—signed a domestic roaming agreement with Spain's third-largest mobile operator, Vodafone España. This will enable the company to offer nationwide MVNO services under the Euskaltel Móvil brand and expand its current regional mobile operations via the resale of capacity on Amena's network (see Spain: 11 September 2006: Euskaltel Signs MVNO Deal with Vodafone Spain). Other domestic players poised to enter as MVNOs include Spain's leading alternative telco, Jazztel (which is also negotiating MVNO deal with existing cellcos), leading cable operator ONO (which plans to up-sell mobile services to its 1.9 million-strong customer base), and BT España (see Spain: 30 June 2006: Jazztel in MVNO Negotiations, 29 June 2006: ONO Plans MVNO Launch and 29 May 2006: BT España Plans to Launch MVNO Operations in 2007). Most potential MVNO entrants have existing fixed-line operations in Spain, and the move into the mobile market reflects a trend of adopting integrated telecoms services strategies. Carphone Warehouse is among other potential MVNO entrants without existing telecoms operations but with an extended retail presence, along with Telecor (represented by department store El Corte Ingles) and Carrefour. Carphone Warehouse has a distribution network of 338 stores in Spain at the end of April this year.

• Competition-Focused Regulation: Initially, Spain's existing mobile operators tried to stall MVNO agreements, in an attempt to avoid cannibalisation of their revenues (see Spain: 12 April 2006: Mobile Operators Launch Anti-MVNO Court Appeal). However, the CMT took measures to ensure that the three companies opened their infrastructure up to MVNOs in efforts to boost competition in the mobile market. Under the regulation introduced in January this year, existing cellular operators are obliged to finalise MVNO negotiations within two months of being approached by potential MVNOs. In addition, mobile number portability (MNP), which was introduced in Spain on 1 December 2002, is likely to aid MVNOs.

• MVNOs to Drive Growth: Spain still lacks MVNOs—unlike France, Germany, and the United Kingdom. The mobile market is split among Telefónica Móviles España (on 46.2% of the market at end-2005), Vodafone Spain (29.9%), and Amena (23.9%). Despite SIM-card penetration currently exceeding 100% (43 million mobile users at end-2005), the market has room for a fourth operator as well as MVNOs. Spain is expected see the entrance of the country's fourth mobile operator, Xfera, this December. Xfera expects to roll out its W-CDMA network in seven Spanish cities at launch, covering a quarter of the Spanish population of 41 million. It also has a domestic roaming deal with Spain's number-two cellco, Vodafone España, to offer services in areas where it has not yet built its own infrastructure. Xfera targets at least 600,000 customers by mid-2007, and 2.7 million subscribers, or 5% market share, by 2012 (see Spain: 30 August 2006: Xfera Plans to Launch Mobile Operations in December).
  
  U.S. mobile handset vendor Motorola projects sales of more than 20 million handsets in the Spanish mobile market during 2006, a year-on-year (y/y) increase of 8-10% (see Spain: 24 July 2006:Motorola Expects 8-10% Y/Y Growth in Spanish Mobile Handset Market).

• Carphone Warehouse's MVNO Expansion: The move signalsCarphone Warehouse's push into MVNO expansion in Europe. The company already has a successful MVNO business in France—operated as a joint venture with Virgin Mobile on Orange France's network—and in the United Kingdom, under the Fresh brand (see France: 31 March 2006: EU Approves Virgin Mobile, Carphone Warehouse Deal and 9 July 2004: Orange Signs MVNO Agreement with The Phone House). It also plans similar launches in Belgium and Portugal next. Through its subsidiary The Phone House, Carphone Warehouse last month entered into talks to launch MVNO services in Belgium, planning to “piggyback” on the network of KPN's Belgian unit Base (see Belgium: 9 August 2006:Carphone Warehouse in Talks for Belgian MVNO). It has also reportedly signed a deal with Sonaecom in Portugal to launch an MVNO in co-operation with its mobile unit Optimus (see Portugal: 11 July 2006: Sonaecom Confirms New Strategy for Portugal Telecom, Plan MVNO). Carphone Warehouse's existing MVNO units are joint ventures based on splitting revenues, giving its partners access to its distribution network.

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