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Portugal - Mobile Market Insights, Statistics and Forecasts
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Paul Budde Communication Pty Ltd

1. SYNOPSIS
Portugals mobile market is served by a triopoly of MNOs, the incumbents TMN, Vodafone and Optimus. Mobile penetration is above the EU average, while growth has been supported through the popularity of using multiple SIMs. All operators have launched 3G services and have invested in HSPA upgrades, while the launch of services based on LTE is anticipated during 2011 and 2012. The MVNO market remains undeveloped, though network operators have their own low-cost brands and a range of offers tied to commercial enterprises, such as clubs, providing bespoke calling rates. This report profiles Portugals mobile market in 2011, providing statistics on network operators, a review of the key regulatory issues, a snapshot of the consumer market, and an analysis of mobile data services such as SMS, Push-to-Talk and mobile TV. Key developments: Mid-2011 spectrum auction expected to raise 450 million; LTE trials underway across Portugal; mobile TV traffic doubles in 2010; mobile data may reach 45TB in 2011; financial constraints putting pressure on consumer spend for high-end telecom services to 2013; regulators market data for 2010 and data update for Q2 1011; operator data to June 2011. Companies covered include: TMN, Optimus, Vodafone, ZON Multimedia.
2.
OVERVIEW OF PORTUGALS MOBILE MARKET
Portugals mobile market has shown lower growth since in the first half of 2010, a result of market saturation and a high mobile penetration rate. Multiple SIM use remains popular, allowing subscribers to take advantage of lower on-net tariffs. Many Portuguese also have both work and personal mobile phones, while a growing number of households, as elsewhere in Europe, have dropped fixed-line telephony entirely and opted for a mobile-only service in conjunction with free calls through their providers triple-play offers. TMN, Vodafone and Optimus each operate GSM and Third Generation/Universal Mobile Telecommunications Service (3G/UMTS) networks. 3G licences were awarded relatively cheaply in 2001. A fourth 3G licensee, OniWay, left the market at the end of 2002. There are two main Mobile Virtual Network Operators (MVNOs) CTT (Correios de Portugal) and ZON/TV Cabo. During the next two years Portugals economy is expected to be severely constrained by the financial conditions and budget constraints imposed by the European Union (EU) and International Monetary Fund (IMF) as part of the deal for the countrys rescue package. The economy is expected to contract by 2% in 2011 and a further 2% in 2012. The government is obliged to overhaul Portugals public sector and sell-off state-owned stakes in key companies. Unemployment is expected to rise from 11% to 13% by 2013. Belt-tightening among consumers will have a knock-on effect on spending for telecoms services: basic services should be sheltered from these constraints but lower revenue is expected from equipment sales and high-end services.
2.1
MOBILE STATISTICS
Portugals mobile penetration is above the EU average. The proportion of subscribers on prepaid plans continues to fall, but is relatively high by European standards at about 75%.
Copyright Paul Budde Communication Pty Ltd, 2011
Portugal - Mobile Market Insights, Statistics and Forecasts Table 1 Mobile operators, subscribers and annual change Jun 2011 Operator TMN Vodafone Optimus Total
(Source: BuddeComm based on operator data) Note: Total does not include MVNOs.
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System GSM 900/1800 UMTS GSM 900/1800 UMTS GSM 900/1800 UMTS
Launch 10/1992 04/2004 10/1992 02/2004 09/1998 06/2004
Subscribers (million) 7.33 6.05 3.58 16.96
Annual change 0.3% -0.5% 3.4% 1.3%
Table 2 Mobile subscribers and SIM penetration rate (regulator data) 1999 - 2012 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) Subscribers (million) 4.67 6.25 8.46 9.03 9.35 9.92 11.4 11.7 13.1 14.9 15.92 16.47 16.32 16.25 16.15 Penetration 47% 60% 81% 87% 90% 96% 107% 110% 127% 140% 149% 155% 152% 151% 150%
(Source: BuddeComm based on regulator data)
Chart 1 Mobile subscribers and SIM penetration rate (regulator data) 2002 - 2012
The penetration rate takes into account that around 15% of users have two active SIM cards, while about 5% have three or more cards, that some SIM cards used solely for Internet access and data services, and that some active cards are used in machines, equipment and vehicles (mobile payment terminals, alarm equipment, security, telemetry and telematics, etc).
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2.1.1
Operator market shares
TMN, the mobile division of Portugal Telecom (PT), has always led the market and continues to do so by some margin, but both Vodafone has gained market share since 2004 at TMNs expense. Table 3 Mobile operators market share 2004 - 2010 Year 2004 2005 2006 2007 2008 2009 2010 TMN 50.6% 49.0% 47.1% 47.7% 45.8% 43.8% 44.1% Vodafone 32.5% 32.9% 35.7% 35.0% 35.0% 35.7% 38.9% Optimus 16.9% 18.1% 17.2% 17.3% 19.1% 20.5% 15.7%
(Source: BuddeComm based on operator and regulator data) Note: 2010 also includes CTT (0.5% and ZON (0.8%) in total.
Chart 2 Mobile operators market share 2004 - 2010
(Source: BuddeComm based on operator and regulator data) Note: 2010 also includes CTT (0.5% and ZON (0.8%) in total.
3. 3.1
REGULATORY ISSUES SPECTRUM REGULATIONS AND SPECTRUM AUCTIONS
The regulator, ANACOM, has been active on spectrum issues since 2007, launching public consultations on DTTV, Broadband Wireless Access (BWA) in the 3.4-3.8GHz band, and mobile services in both the 450-470MHz and 900/1800MHz bands. In mid-2007 the regulator set out the timing and model for making frequencies available for BWA applications, with the 3400-3600MHz, 3600-3800MHz and 5725-5785MHz bands the most likely candidates. Under the national frequency allocation plan (known as QNAF), all rights of use for frequencies may be transferred, subject to the regulators approval. A general policy on secondary spectrum trading has also been considered, and an internal study on the issue was held in 2008. The regulator repealed the exclusive use of the 900 and 1800MHz bands for GSM, although they are still reserved for mobile services.
3.1.1
GSM licence renewal
The countrys GSM 900/1800 mobile licences were originally issued for 15 years. When the regulator renewed the GSM frequencies used by Vodafone and TMN in 2006 it also reinforced the licensees
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coverage obligations and defined quality of service (QoS) indicators for their data services. The GSM licence held by Optimus expires in 2012.
3.1.2
3G
Licences for 3G mobile services using the UMTS were awarded through a beauty contest in late 2000. The licences comprise 2x15MHz of shared spectrum and 5MHz of non-shared spectrum. Conditions stipulated that 3G networks should cover 20% of the population within one year of operation, 40% within three years and 60% by the fifth year. Compared with some other EU member states, Portugals 3G licensees paid relatively low spectrum fees (100 million each). Three of the licences went to the existing GSM operators: TMN, Vodafone Portugal and Optimus. A fourth licence went to OniWay, the mobile business of the fixed-line operator Oni. However, OniWay wound up its operations at the end of 2002 and its licence was revoked in early 2003. TMN, Vodafone and Optimus requested the allocation of additional frequencies for 3G, and at the end of the year the Ministry for Economic Affairs to them 2x5MHz of additional shared spectrum in the 1920-1980MHZ and 2110-2170MHz bands. Although operators were given until the end of 2001 to roll out the necessary infrastructure and launch services, equipment shortages and technological problems postponed launch to 2004. A UMTS working group (WG-UMTS) was set up in late 2006 to monitor operators compliance with their licence obligations. The WG-UMTS consists of two representatives from the regulator, one from UMIC (Agncia para a Sociedade do Conhecimento, or the Knowledge Society Agency), and one from each 3G operator. Meetings are held with representatives from the Ministry for Public Works, Transport and Communications and for Science, Technology and Higher Education. A Validation Committee was also set up to assess projects by operators and to fund special projects. In early 2009 Mobile Network Operators (MNOs) agreed to amendments to the obligations of their UMTS licenses as part of the governments e-Initiatives programme, aimed at further developing the Information Society in Portugal through promoting mobile broadband.
Table 4 Cumulative ported mobile numbers 2004 - 2012 Year 2009 2010 2011 (e) 2012 (e) Total 3G subscribers (thousand) 5,980 10,500 13,500 15,200 Card/modem users 1,200 1,280 1,350 1,500
3.1.3
3G at 900MHz
Vodafone Portugal trialled 3G calls in late 2006 using the 900MHz frequency band and network equipment from Nortel Networks. Vodafone expected the UMTS 900 system to expand mobile broadband to suburban and rural areas, as well as enhance the coverage and quality of the service for users inside buildings. In 2007 the regulator opened up the 900MHz band for trial 3G services as part of its plans to introduce a more technology-neutral approach to its spectrum policy. It also planned to remove the provision which reserves 900MHz and 1800MHz spectrum for the three incumbent GSM operators. To this end, Vodafone was cleared to launch a wider UMTS 900 trial. The regulator also authorised Optimus to trial UMTS 900 in the GSM extension band. The frequencies were not made available for commercial use.
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3.1.4
450MHz
Following a public consultation on the National Frequency Allocation Plan, the regulator in 2008 launched a tender to award frequencies in the 450MHz band by auction to a new operator. As such, operators that offer mobile services supported in GSM, UMTS and CDMA 450 were excluded. Only one contender presented a bid: RNT (Rede Nacional de Telecomunicaes), which is 85% held by Telephony Holding and 15% by the local loop (WiLL) operator Radiomovel (Zapp). In mid-2008 Radiomovel received permission from the regulator to use its existing 450MHz frequencies to launch VoIP services. Zapp planned to add fixed line and nomadic VoIP services to its range of fixed-wireless Internet services. Radiomovel, the Portuguese subsidiary of Inquam, launched a CDMA2000 1x 450MHz WiLL network in 2004 based on equipment from Huawei Technologies. The Zapp network is the wireless data portion, which was upgraded in 2005 with CDMA2000 1x EV-DO technology, enabling maximum data transmission speeds of 1.4Mb/s (downlink) and 153Kb/s (uplink).
3.1.5
3.4GHz
In late 2007 the regulator started a consultation process relating to licensing BWA frequencies with a view to allocating the 3.4-3.8GHz frequencies (four blocks of 2x28MHz per operator) by auction. It did not intend to allow the participation in the first phase of the auction of operators with significant market power (SMP) in the broadband market, of current mobile operators or of operators already with spectrum within the range. Frequencies in the 3400-3600MHz and 3600-3800MHz bands were auctioned in early 2008. These bands are available for fixed, nomadic and mobile applications (the 5725-5875MHz band is limited to fixed and nomadic). Operators in the 3400-3800MHz band must provide technology-neutral services. In late 2009 the regulator extended WiMAX trials in the 3.4-3.8GHz frequency bands, and also allowed trials to be undertaken in the 2.5GHz and 5.7GHz bands upon request.
3.1.6
2.6GHz and 800MHz
The regulator opened a public consultation on the 2500-2690MHz frequency band in late 2008 to sound out the markets interest in this band for telecom services, taking account of developments at European level. The regulator planned to auction spectrum for LTE services in mid-2011, anticipating that revenue derived for the government could reach 454 million if all lots are sold. Frequency bands to be sold include 450MHz, 800MHz, 900MHz, 1800MHz, 2.1GHz and 2.6GHz bands.
3.2
ROAMING
Optimuss roaming deals give it an international reach to more than 350 operators in 200 countries. An automatic roaming service (prepaid) is available in 90 countries. The operator has the largest international coverage in GPRS and 3G in the country. Particular focus was placed on data services roaming, with international coverage extended through agreements involving GPRS available in about 130 countries and 3G/HSPDA in more than 50 countries. Optimus also provides an OnAir service which allows voice, SMS and data communications on planes. TMN offers roaming services on the networks of 400 mobile operators in 195 countries. Subscribers with 3G/UMTS phones can roam on the networks of 55 operators in 39 countries, while subscribers to the HSPA service can roam on the networks of 19 operators in 18 countries. GPRS roaming agreements reach 183 operators in 99 countries. Roaming on board ships and ferries is also available, with coverage provided by Cingular, Manx Telecom, Telecom Italia, MCP and Vodafone Malta.
Portugal - Mobile Market Insights, Statistics and Forecasts Table 5 Roaming in call traffic volume and messages 2003 - 2011 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 (H1) 119.8 110.9 110.5 126.0 137.9 147.3 144.9 146.1 53.2 Calls Minutes (Million) 256.8 216.7 216.6 248.3 281.8 309.6 306.0 310.7 121.6 Messages 120 138.9 153.7 192.4 240.5 290.3 342.9 419.3 157.2
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(Source: BuddeComm based on regulator data) Note: Data for messages 2003 is estimated
Chart 3 Roaming in call traffic volume and messages 2004 - 2011
(Source: BuddeComm based on regulator data) Note: Data for messages 2003 is estimated
From mid-2007 operators have been bound to the ECs Roaming Regulation, which set maximum tariff charges. These have been extended to 2013. Table 6 European roaming charges 2007 - 2011 Year 2007 2008 2009 2010 2011 49 46 43 39 35 Calls made ( cents) 24 22 19 15 11 Calls received
(Source: BuddeComm based on EC data)
3.2.1
Data roaming
The EC in late 2008 introduced tariff caps on SMS and data roaming within EU countries: from mid2009 the maximum price per message of an intra-EU SMS was set at 0.11. As of mid-2010, MNOs have been obliged to inform customers of their accumulated mobile Internet consumption (expressed in traffic volume or Euros), and to set by default a limit of 50 per month charge for roaming access, though this can be increased by customers. MNOs are also obliged to notify customers when their data roaming use (in financial or traffic volume terms) has reached 80% of the agreed limit. No further roaming is allowed once the limit has been reached without customer consent.
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3.3
MOBILE NUMBER PORTABILITY (MNP)
Mobile number portability was introduced in early 2002, but the facility has not been as popular as in other European markets. One reason may be that most tariff plans offer significant discounts for on-net calls. The introduction of no frills tariff plans in 2005, with similar call charges for on-net and off-net, may in time limit the benefit of cheaper on-net tariffs. The Portuguese mobile market is also characterised by low churn and high customer loyalty, so the number of for mobile numbers is still low: only 56,000 numbers were ported in 2008, and at around 1.4% of all mobile numbers the figure is the fourth lowest in the EU27. Table 7 Cumulative ported mobile numbers 2004 - 2010 Year 2004 2005 2006 2007 2008 2009 2010 45 73 118 172 223 298 376 Numbers ported (thousand)
(Source: BuddeComm based on EC and regulator data)
3.4
MOBILE TERMINATION RATES (MTRS)
Portugal has one of the highest MTRs in the EU. Since 2002 the regulator has brought charges into line with the European average, either through one-off reductions or through a stepped glide path. In 2006 PT launched the Fixo-Mvel Preferido tariff for its fixed-line customers which allows them to choose a mobile network to connect to for 0.15 a minute, then the lowest tariff on the market. All MTRs had converged to a target of 0.11 in late 2006 following the glide path established by the regulator. This rate still remained above the EU average. In 2008 the regulator amended the price control remedies for the voice call termination market, establishing a new glide path to further reduce MTRs, though applying asymmetry to address network effects and traffic imbalances. The regulators glide path saw prices by early 2009 reduced to 0.065 for TMN and Vodafone and 0.078 for Optimus, and by late 2009 Optimuss prices had reached symmetry with the other operators. Further price reductions were instigated from early 2010, leading to a 46% reduction by April 2011. The regulator cited prices in other EU countries (Austria at 0.0251 in 2011, Belgium at 0.0107 in 2013, the UK at 0.0058 euros in 2014) with a view to enforce additional price cuts. Table 8 MTRs 2009 - 2011 Year/month 2009 (Dec) 2010 (Feb) 2010 (Apr) 2010 (Jul) 2010 (Oct) 2010 (Jan) 2011 (Apr) Price () 0.065 0.06 0.055 0.05 0.045 0.04 0.035
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3.5
NETWORK SHARING
In late 2010 Vodafone and Optimus have favoured sharing LTE infrastructure if they were allowed to do so by the regulator. The move would help the operators overcome investment difficulties during the continued economic crisis, and anticipates the auction of 4G spectrum. Both operators already share fibre networks in Lisbon and Oporto.
4. 4.1
MOBILE TECHNOLOGIES DIGITAL
TMN, Portugal Telecoms mobile subsidiary, was one of the first GSM operators in Europe when it launched in 1992. The GSM network of Telecel (now Vodafone) was also launched in 1992. A third GSM 900/1800 licence was awarded in 1997 to Main Road Telecomunicacoes, which began trading as Optimus in the following year. Operators were allowed to install their own infrastructure in 1998, and had to cover 75% of the countrys territory, including three of its six main highways, at the outset of operations. In 2004 Vodafone became the first operator to offer services over Wideband Code Division Multiple Access (WCDMA) in Portugal. In the following May it introduced Vodafone live! over WCDMA. Vodafone live! was discontinued in mid-2009, being replaced with Vodafone 360, a social networkbased set of applications designed to rival the iPhone and handsets using Googles Android software. Vodafone 360 integrates social networks and includes a store of applications that will eventually be available to the companys more than 315 million global customers.
4.2
THIRD GENERATION (3G) MOBILE
Since 2007, growth in the number of mobile subscribers has largely been down to the 3G sector. Vodafone launched a limited 3G service in Lisbon and Oporto in early 2004. The operator had reached all district capitals by the end of 2004. In late 2005 Vodafone, Cisco Systems and Linksys launched a 3G router which enables groups of up to five people to share a WiFi network at speeds of up to 54Mb/s. This solution is targeted at consultancy, construction and media and events companies. The 3G/WiFi router combines the wireless 3G Linksys WRT54G3G router with the Vodafone Mobile Connect Card 3G/GPRS, and allows other equipment such as printers or fax machines to be hooked up through an Ethernet or wireless 802.11g connection. TMN launched 3G services in 2004, initially in Lisbon and Oporto. Optimus also launched 3G in 2004, on a network built by Motorola. The Motorola Horizon 3G base stations provided a future migration path to High-Speed Packet Access (HSPA). By early 2009 Optimus 3G network covered about 85% of the population, of which about 80% was covered with HSPA, offering bandwidths of up to 7.2Mb/s. According to the regulator, mobile phone users eligible to use broadband services (UMTS/HSPA) represented 63.7% of the total active mobile subscriber base at the beginning of 2011, while active users constituted 30.2%. About 31.4% of mobile broadband users access the Internet using cards/modems. Table 9 3G video calls and traffic data 2007 - 2010 Year 2007 2008 2009 2010 Video calls (million) 3.56 4.73 5.37 5.21 Video call traffic (million minutes) 5.84 14.33 21.72 20.09
Portugal - Mobile Market Insights, Statistics and Forecasts Chart 4 3G video calls and traffic data 2007 - 2010
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Table 10 3G subscribers 2007 - 2012 Year 2007 (Mar) 2007 2008 2009 2010 2011 (e) 2012 (e) Total 3G subscribers 2.17 3.07 4.32 5.98 10.49 12.6 14.7 (Million) 0.44 0.87 1.28 2.58 4.08 6.3 9.5 Total active
Chart 5 3G subscribers 2007 - 2012
5. 5.1
MAJOR MOBILE OPERATORS TMN
Portugal Telecoms mobile subsidiary, Telecomunicaes Mveis Nacionais (TMN) is the countrys leading mobile operator. It operates a GSM 900/1800 network which covers mainland Portugal and the islands of the Azores and Madeira. Coverage is also offered outside Portugal through roaming agreements with numerous operators in about 90 countries worldwide. The company launched the worlds first prepaid services in Portugal with Mimo in 1995. It closed its analogue C450 system in 1999.
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10
TMN launched video sharing services in 2005 based on the Nokia IP Multimedia Subsystem (IMS). Video sharing allows 3G mobile users to share a live camera view while speaking on the mobile, and is based on the standardised 3rd Generation Partnership Project (3GPP) and Internet Engineering Task Force (IETF) technologies. In September 2009 TMN launched its own mobile phone application online store, dubbed TMN App Store, as well as a content and online social network accounts aggregator, dubbed Pond. The company also launched a low-cost mobile operator UZO in 2005 to extend its reach into the sector. It also markets a Casa T tariff offering low-cost calls from a customers home. Table 11 TMN ARPU and data percentage 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (Q2) ARPU (/month) 21 20 18.1 16.2 12.6 12.9 Data (proportion of revenue) 13.3% 16.0% 20.4% 23.1% 24.6% 27.8%
(Source: BuddeComm based on company data)
Table 12 TMN subscribers 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (Jun) Subscribers (million) 5.70 6.26 6.94 7.25 7.42 7.33
Table 13 TMN financial data 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (H1) Revenue 1,500 1,540 1,594 1,518 1,387 610 million 659 679 682 674 638 288 EBITDA
Portugal - Mobile Market Insights, Statistics and Forecasts Chart 6 TMN financial data 2006 - 2011
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5.2
VODAFONE
Vodafone is the second largest mobile operator in Portugal. It won its licence as Telecel in 1998 and has invested 200 million rolling out its UMTS network which covered about 85% of the mainland population in 2007 as well as the islands of Madeira, Porto Santo and the Azores. In 2007 Vodafone contracted Ericsson to provide an IMS solution to enable it to expand its fixed-mobile convergence (FMC) services. The move coincided with Vodafones entry into Portugals fixed-line broadband market, and forms part of the companys Mobile Plus strategy. Vodafone launched a low-cost mobile phone service, Vodafone Directo, in 2005. The Internet-only signup service offered cheaper tariffs for calls to fixed and mobile networks and for SMS than an alternative tariff which had no minimum top up fee. In 2006 Vodafone launched its first own-branded handset, the Vodafone 710 3G, designed to blend in with the operators own range of services. The handset, manufactured by Huawei, includes a camera, MP3 player and Bluetooth capability. Table 14 Vodafone Portugal subscribers 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (Jun) Subscribers (million) 4.62 5.11 5.58 5.91 6.12 6.05
Table 15 Vodafone Portugal subscribers, proportion prepaid 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (Jun) Proportion prepaid 79.5% 79.0% 78.5% 80.1% 81.2% 81.0%
Table 16 Vodafone monthly ARPU: prepaid, contract and blended 2005 - 2011 Year (Q4) 2005 13.4 Prepaid Contract (/month) 61.9 Blended 24.0
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Year (Q4) 2006 2007 2008 2009 2010 2011 (Q2) 13.2 13.4 11.3 10.6 9.3 9.4
Prepaid
Contract (/month) 57.8 54.2 45.7 44.4 40.6 39.4
Blended 22.8 22.4 18.8 17.4 15.3 15.1
(Source: BuddeComm based on company data) Note: Q1 is taken to be the quarter to March.
Chart 7 Vodafone monthly ARPU: prepaid, contract and blended 2005 - 2011
(Source: BuddeComm based on company data) Note: Year is for Q4, taken to be the quarter to Dec.
Table 17 Vodafone financial data 2007 - 2011 Year (Mar) 2007 2008 2009 2010 2011 Revenue 926 1,040 1,210 1,227 1,101 EBITDA ( million) 323 373 443 506 455 Profit 195 239 283 329 282
Chart 8 Vodafone financial data (year to Mar) 2007 - 2011
(Source: BuddeComm based on company data) Note: Year is to March.
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13
In late 2008 Vodafone deployed an IEEE 1588v2 solution from Brilliant Telecommunications for its IP-based mobile backhaul network. The operator is migrating its backhaul infrastructure from leased lines to Ethernet. For more information on Vodafone until 2006, see separate archived research report: Vodafone Group plc.
5.3
OPTIMUS
Optimus is the mobile arm of the Sonae Group. In 2006 Sonaecom took over the governments 5.04% stake in Optimus, becoming the sole shareholder in a deal that was part of Sonaecoms business reorganisation to ease its (failed) takeover of Portugal Telecom. Optimus won its GSM licence in 1997 as the Main Road Telecomunicaes consortium, which was comprised of Sonae (45%), E3G (25%), France Telecom (20%), Maxitel (5%) and state-owned public investment bodies (5%). Sonaecom launched a low-cost mobile operator, Rede4, in 2005. Since 2005 the company has focussed on deploying its UMTS network and delivering mobile broadband. By mid-2009 the UMTS network covered about 93% of the population. In 2008 Optimus launched a Next Generation Messaging solution from NeuStar to provide its converged instant messaging (IM) and IP-based services. This enables Optimus to launch its ownbrand IM services which can be accessed from both a PC and a mobile handset. Table 18 Optimus mobile subscribers 2003 - 2011 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Jun) Subscribers (million) 2.30 2.13 2.05 2.60 2.89 3.19 3.43 3.60 3.58
The lower Average Revenue per User (ARPU) in 2007 was mainly due to the 20% fall in operator revenue ARPU caused by the phased reductions in MTRs and reductions in roaming-in tariffs. Table 19 Optimus operational statistics 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (Q2) Data as proportion of revenue 14.4% 17.7% 25.3% 28.1% 32.4% 32.8% Minutes (million/Q4) 116 120 131 132.4 133.9 127.1 ARPU (/quarter) 19.7 18.2 16.1 14.8 13.7 13.0 Proportion prepaid 77.8% 73.1% 69.9% 69.0% 67.1% 66.5%
Portugal - Mobile Market Insights, Statistics and Forecasts Table 20 Optimus EBITDA, capex 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (H1) EBITDA 169.0 154.0 142.0 166.7 185.5 100.8 Capex million 115.0 127.0 245.0 98.7 104.0 31.1
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14
Chart 9 Optimus EBITDA, capex 2006 2011
Table 21 Optimus revenue by type 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 (H1) Customer 406 438 454 461.9 466.5 233.9 Operator million 156 141 134 104.5 91.2 35.6 Total 610 619 629 607.0 592.8 280.3
(Source: BuddeComm based on company data) Note: Total includes other revenue.
Chart 10 Optimus revenue by type 2006 2011
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5.4
ONIWAY EXITS THE MARKET
OniWay won a UMTS/3G licence in 2001 as the only new entrant mobile licensee. Its main investors were Oni (65%) and Norways Telenor (20%). However, despite investing 514 million in the operator, Oni pulled back OniWays 3G plans, blaming increasing and unforeseen economic, financial, technical and commercial factors which prevailed at domestic and European levels. It left the market in late 2002 after shareholders agreed to sell off its assets equally to TMN, Optimus and Vodafone for 50 million each. Vodafone also agreed to purchase all of Oniways shares, giving it the right to use the operators tax credits in 2003 and 2004.
5.5
MOBILE VIRTUAL NETWORK OPERATORS (MVNOS)
The major network operators offer their own low cost brands to tap into this important sector (UZO, Vodafone Directo and Rede 4). Despite the regulator having studied the competition effect which lowcost operations have the market since 2005, the MVNO model has been slow to develop. During 2007 the regulator created a new regulatory framework for MVNOs aimed specifically at the resale sector. The first MVNO was the Portuguese postal company Correios de Portugal (CTT) which launched in mid-2008 on TMNs network. The company markets its services through 1,000 Post Offices across the country. In mid-2008 ZON Multimdia signed a five-year contract with Vodafone Portugal to launch as an MVNO. The service, ZON Mobile, was launched by the end of the year and by the beginning of 2010 the operator had some 59,000 subscribers.
6. 6.1
MOBILE VOICE SERVICES PREPAID
All three operators offer prepaid services, and the majority of subscribers are prepaid. TMN launched the first prepaid scheme, Mimo, in 1995, closely followed by Vodafone. Since 2007 there has been a significant growth in the number of contract subscribers, largely associated with operators endeavouring to increase the contract subscriber base and thus contract ARPU, and consumers signing up to UMTS-based data services, which typically are contract-only. By March 2009 prepaid subscribers accounted for some 73% of all mobile subscribers. Table 22 Mobile prepaid subscribers, proportion prepaid 2003 - 2010 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Jun) Prepaid subscribers (million) 7.36 7.82 9.29 9.77 10.11 11.04 11.59 11.88 11.65 Proportion prepaid 78.7% 78.5% 81.4% 79.9% 78.3% 74.0% 72.7% 72.1% 71.45
Portugal - Mobile Market Insights, Statistics and Forecasts Chart 11 Mobile prepaid subscribers, proportion prepaid 2003 2011
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6.2
FIXED-MOBILE CONVERGENCE (FMC)
The regulator has encouraged competition among the three mobile providers, and although 3G has provided a new element of competition the operators have relative parity in service and price. One area of differentiation relates to fixed-mobile bundled services, in which Vodafone has a lead. The company is a retail reseller of Portugal Telecoms fixed network and can bypass this network by linking with a companys communications infrastructure and connecting the service to its own network through Fixed Wireless Access (FWA) technology, using its 24.5-26.5GHz licence. In areas where it does not have FWA coverage, Vodafone can link a cable or fibre optic connection to its network, and can also offer bundled ADSL and ISDN broadband connections. In 2007 Sonaecom began merging its mobile and fixed-line divisions as part of its move to FMC. The operator has offered its Optimus Home FMC product since late 2005, which allows customers to dispense with monthly line rental. Vodafones Homephone service uses the operators GSM and UMTS frequencies to provide telephony at a fixed location. Vodafone was allocated the number range 2. In mid-2007 Vodafone contracted Alcatel-Lucent to build its broadband service in a bid to develop its FMC services.
7. 7.1
MOBILE MESSAGING SHORT MESSAGE SERVICE (SMS)
SMS is the most popular mobile data product in Portugal, as it is in the rest of Europe. The significant rise in the number of SMS sent since 2007 was partly due to customer participation in the mobile operators promotional campaigns. The average number of SMS messages sent fell to 278 in the fourth quarter of 2010 compared to 287 in the first quarter of the year. Table 23 SMS messages sent annually and annual change 2004 - 2011 Year 2004 2005 2006 2007 2008 2009 2010 2011 (H1) SMS sent (billion) 2.52 4.57 12.45 18.55 23.29 25.47 26.28 13.08 Annual change 8.5% 147.8% 100.8% 49.0% 25.5% 9.6% 5.9% 1.4%
Portugal - Mobile Market Insights, Statistics and Forecasts Chart 12 SMS messages sent annually and annual change 2004 2011
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Premium SMS (PSMS) services were launched in March 2002 with considerable success. Handset customisation services such as logos and ringtones are very popular, as is television voting. There were 35 million premium SMS sent in the second half of 2010, representing 0.3% of all SMS messages. In late 2008 Optimus and TMN signed an agreement to provide interoperability with their mobile instant messaging services. Vodafone joined Optimus and TMN in late 2009.
MULTIMEDIA MESSAGING SERVICE (MMS) Vodafone was the first to introduce MMS in Portugal, launching services in early 2003. TMN released MMS services later the same year. Growth in the number of MMS sent is increasing steadily, though the market remains small. This is in part due to the paucity of suitable handsets. The regulator estimated that during the fourth-quarter of 2010 mobile subscribers with 3G access sent only six MMS messages each, though this was double the number dent a year earlier.
Table 24 MMS sessions 2007 - 2010 Year 2007 2008 2009 2010 2011 (H1) MMS sessions (million) 46.1 76.8 97.3 124.2 70.7
7.2
8.
MOBILE DATA SERVICES
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. Table 25 Mobile internet sessions and traffic 2007 - 2011 Year 2007 2008 2009 2010 2011 (H1) 257 481 674 968 629 Internet sessions (thousand) Internet traffic (GB) 5,066 13,095 18,146 29,900 16,300
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Chart 13 Mobile Internet sessions and traffic 2007 2011
8.1
GENERAL PACKET RADIO SERVICE (GPRS) Vodafone and TMN both launched GPRS facilities in 2003.
PUSH-TO-TALK (PTT) Push-to-Talk over cellular (PoC) transmits voice communication in packet form via GPRS. The service works similarly to a conventional walkie-talkie: a user pushes a button on the mobile phone and is immediately connected to one or more receivers on a buddy list or address book. Participants in the conversation take turns speaking by holding down the push-to-talk button.
Vodafone initially offered its PoC service, called Vodafone Walkie Talkie, in 2005, as did Optimus on a network provided by Motorola.
8.2
HIGH-SPEED PACKET ACCESS (HSPA) HSPA is an enhancement of UMTS which can deliver speeds of up to 14.4Mb/s, though current devices can only process up to 7.2Mb/s. The technology has boosted the uptake of mobile data services such as mobile TV, video streaming and on-demand download.
In 2006 Vodafone launched HSPA on its 3G network to business and residential customers in Lisbon, Cascais, Funchal, Ponta Delgada and urban areas of the Algarve. In the same year Optimus contracted Huawei and Ericsson to build an HSPA network in mainland Portugal, Madeira and the Azores. Ericsson installed its mobile softswitch and IMS solutions to enable Optimus to deliver a range of multimedia services such as weShare which allows users to share media such as pictures and video clips during a voice call. Kanguru offers download speeds of up to 21.6Mb/s and uploads of 5.7Mb/s. TMN also launched HSPA in 2006. The network supports its Mobile TV service of 30 channels.
8.3
8.4
EVOLVED HSPA (HSPA+)
In mid-2009 Optimus launched a commercial service across its networks in Lisbon and Porto based on HSPA+ (providing data at up to 42Mb/s) and using equipment from Huawei and Qualcomm. The deployment uses 64QAM (Quadrature Amplitude Modulation). HSPA+ services are available through the companys Kanguru Xpress 21.6 tariff. The operator planned to expand the service across its
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network progressively. This expansion will be a beneficiary of Sonaecoms planned 500 million infrastructure investment to 2013. Vodafone has also introduced HSPA+ services in Lisbon, using 64QAM technology to provide peak download speeds of 21.6Mb/s and upload speeds of up to 5.7/ Mb/s. Vodafone planned to complete the deployment of HSPA+ Release 8 across its network by mid-2010, aiming to commercially launch the upgrade by year-end. The first compatible USB devices are not expected to be commercially available until year-end 2010, with the first mobile handsets not expected until at least mid-2011. The upgrade is in partnership with Ericsson and Qualcomm, using the Qualcomm MDM8220TM chipset, and will provide data at up to 43.2Mb/s.
8.5
HIGH-SPEED UPLINK PACKET ACCESS (HSUPA)
Vodafone launched an HSUPA-enabled version of its Mobile Connect laptop/PC data card in late 2007, providing upload speeds of up to 1.4 Mb/s, four times faster than the uplink rate currently available on its 3G mobile network. The move came ahead of Vodafones planned upgrade of its WCDMA/HSPA network with HSUPA. The data card also supports maximum download speeds of 7.2Mb/s. The technology was extended to more than 50 cities in the first quarter of 2008.
8.6
LONG-TERM EVOLUTION (LTE)
LTE is the next technical advance from HSPA, and promises to provide data at up to 130Mb/s, though theoretically data at 370Mb/s can be achieved. In early 2010 Optimus contracted ZTE to build a software defined radio (SDR) multi-mode platform, enabling the operator to upgrade its GSM/UMTS networks to LTE. The network rollout will initially cover four regions in central Portugal. Huawei and Optimus in early 2011 achieved LTE downlink speeds of 150Mb/s in a trial using 2.6 GHz spectrum. Uplink speeds were measured at up to 60Mb/s. Huawei had been selected by Optimus in 2010 to modernise its GSM network in 33 regions, having since 2006 delivered to Optimus one of Europes first full-rate HSPA networks. In 2009, Optimus and Huawei launched Optimuss HSPA+ services with data speeds of up to 21Mb/s. Vodafone demonstrated LTE technology in Porta in mid-2010, with a view to launching services by the end of 2011, though this would require the regulator releasing additional radio spectrum in the 2.6GHz band. In mid-2011 TMN trialed LTE in Braga and Cascais following demonstrations in Lisbon and Aveiro in 2010. Initially Huawei provided the base stations, though the latest field trials have used equipment from Nokia Siemens Networks (NSN). Downlink speeds of up to 150Mb/s were recorded.
8.7
MOBILE TV
In late 2006 the regulator granted temporary authorisation to Media Capital to use the 814-822MHz and 542-550MHz frequency bands to trial Digital Video Broadcasting-Terrestrial (DVB-T) and Digital Video Broadcasting-Handheld (DVB-H). Frequencies were not expected to be assigned for DVB-H services until analogue switch-off takes place. In mid-2007 the broadcaster TVI Portugal and Vodafone completed trials of DVB-H consisting of eight live channels using Thomsons SmartVision interactive service platforms and Mobile TV headend products. In 2007 SIC TV, a private broadcaster, contracted Alcatel-Lucent to supply a mobile TV solution, including Media Producer, which will let SIC create mobile TV programs. Vodafone launched mobile TV in 2006. Vodafone Mobile TV offers 32 channels including three national channels. Vodafone Mobile TV offers two subscription plans based on a monthly contract or 24 hours access. Premium channels are charged separately. TVI has also launched the TVI 24-hour channel on the Vodafone Mobile TV service. Optimus has 28 mobile TV channels, and TMN 40 channels.
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Euronews signed distribution deals in late 2005 with Optimus mobile Live TV service. Optimus offers 30 channels, including some in high definition (HD). TMN has 38 channels. The regulator began tracking mobile TV data in 2010. It estimated that there were about 57,400 mobile TV subscribers at the beginning of 2011 (representing only 1.4% of all mobile subscribers. The service had 1.5 million sessions in the last quarter of 2010, corresponding to nine sessions per-user per-month. Table 26 Mobile TV sessions and traffic 2011 Year/quarter 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q2 Sessions (thousand) 1.4 1.57 1.55 1.46 1.28 Traffic (GB) 2.98 5.48 5.59 6.74 7.18
Chart 14 Mobile TV sessions and traffic 2011
8.8
TETRA (TERRESTRIAL TRUNKED RADIO)
In 2006, the government contracted Motorola to implement a nationwide TETRA system, forming part of the SIRESP project for the Portuguese Ministry of Interior. The SIRESP project is an integrated system providing voice, data and video/picture communications for the police, fire and ambulance services, as well as other public safety and civil protection agencies. Other consortium members include PT, Esegur, SLN and Datacomp, which are responsible for the rollout, operations, managed and professional services for the project for 15 years. The first phase of the system was launched in mid-2007, covering Lisbon, Setubal and Madeira, and nationwide rollout was reached by late 2010.
8.9 8.9.1
MOBILE CONTENT AND APPLICATIONS Location-based services
In 2006 the Portuguese National Service for Fire and Civil Protection (SNBPC) signed up to use EGNOS location-based services (LBS). EGNOS is a precursor of Galileo, which will eventually provide navigation and LBS across Europe. It allows SNBPC to locate emergency calls from mobile phones to guide its teams rescue operations. The solution coordinates fire trucks, resources and individual fire fighters.
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The solution was developed as part of SCORE (Service of Coordinated Operational Emergency and Rescue using EGNOS), a European Research and Development Project. Alcatel Alenia Space (AAS) leads a consortium of eight European companies which act as a contractor for the SCORE project. SCORE was launched in 2004 and is managed by the Galileo Joint Undertaking, which is funded by the European Commission (EC). The first satellites of the Galileo fleet have been launched, and the system will eventually provide LBS for most of the eastern hemisphere.
8.9.2
Other developments
In common with developments elsewhere in Europe, Portuguese mobile operators are branching into a range of mobile data services and payment plans geared to encourage consumer use of them. Optimus launched a MiniOpera Internet application in mid-2007, which works on almost all handsets. It changed its access charges to a maximum of 1 per day, which led to substantially increased take up of services by its customers. Optimus also developed the mobile advertising area in 2008, while m-payments was set up with the Telemultibanco application designed to work like traditional ATMs (cash machines). The operator has trialled the system in partnership with SIBS, which owns the Portuguese inter-bank ATM system). The development will enable customers to make use of services such as m-parking and m-ticketing.
9. 9.1
FORECASTS FORECASTS UMTS SUBSCRIBERS 2009 - 2012; 2015
Most investment by Portuguese mobile network operators since 2006 has gone to providing HSPA infrastructure and improving the performance of GSM networks. At the same time, network operators have tried to develop business models which encourage consumer uptake of mobile data services. While the number of mobile broadband subscribers has increased, this has yet to translate into similar mobile data use. This is partly the failure of mobile TV to interest consumers. Strategies which are expected to further develop the market will depend on fixed-rate plans. Growth in the number of GSM subscribers will diminish as operators encourage consumers to migrate to the 3G platform. Table 27 Forecast UMTS subscribers 2009 - 2012; 2015 Year 2009 2010 (e) 2011 (e) 2012 (e) 2015 (e) Subscribers (million) 6.0 10.3 12.5 13.3 16.7
(Source: BuddeComm, forecasts)
9.2
FORECASTS MOBILE ARPU 2005 - 2012; 2015
A characteristic of the Portuguese mobile market since 2007 has been the progressive shift from prepaid to contract subscriptions, as operators try to improve ARPU. Nevertheless, a high proportion of subscribers in Portugal remain as prepaid customers, and all operators have reported a continuing fall in ARPU despite the increased use of data services generally and the greater proportion of non-SMS data. Intense competition among the network operators, together with the development of the nascent MVNO market, continues to put pressure on prices, though customer churn remains low. In addition, ARPU has been affected by termination rate cuts, the EU regulatory intervention on international
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roaming tariffs (the 2007 Roaming Regulation) and, to a lesser extent, MVNO competition. ARPU is likely to recover from 2012 as the greater number of 3G subscribers start to use mobile data services. However, the continuing economic travails will place a break on consumer use of such services for the next few years at least, resulting in a slower increase in ARPU than may otherwise be expected from MNOs efforts in providing the required network capabilities. Table 28 Forecast monthly mobile ARPU 2005 - 2012; 2015 Year 2005 2006 2007 2008 2009 2010 2011 2012 2015 ARPU (/month) 22 21 20 18 16 14 13 13 15
(Source: BuddeComm, forecasts) Note: 2005-2010 are base years.
9.3
NOTES ON SCENARIO FORECASTS
The following notes provide some background to our scenario forecasting methodology: This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band. The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15%-20% around this data. All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.
10.
RELATED REPORTS
For more information on the countrys telecom market, see separate reports: Portugal. For information relating to: Europe from a regional perspective, see: European Overview; Individual European countries, see: Alphabetical listing of European Countries; Technical information relating to the telecommunications industry, see: Telecommunications Technologies Library; Technology - Terminology - Glossary of Abbreviations (free report); Worldwide activities in the telecommunications industry see: Global Overviews.
Copyright Paul Budde Communication Pty Ltd, 2011. All rights reserved.
This material is subject to the laws of copyright and is restricted to registered licence-holders who have entered into a Corporate, a Multi-User or a Single-User licence agreement with Paul Budde Communication Pty Ltd. It is an offence for the licence-holder to make the material available to any unauthorised person, either via e-mail messaging or by placing it on a network. All BuddeComm research reports are intended to provide general information and strategic insights only, and they do not constitute, nor are they intended to constitute, investment advice. BuddeComm and its employees disclaim all and any guarantees, undertakings and warranties, whether express or implied, and shall not be liable for any loss or damage whatsoever, and whether foreseeable or not, arising out of, or in connection with, any use of or reliance on any information, statements, opinions, estimates or forecasts contained in the reports.
Portugal - Mobile Market Insights, Statistics and Forecasts 5385 George Downes Drive, BUCKETTY NSW 2250 AUSTRALIA Telephone: +61 2 4998 8144 Fax: +61 2 4998 8247 Email: pbc@budde.com.au Web: www.budde.com.au
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Portugal - Mobile Market Insights, Statistics and Forecasts

Paul Budde Communication Pty Ltd

Portugal - Mobile Market Insights, Statistics and Forecasts

OVERVIEW OF PORTUGALS MOBILE MARKET

Copyright Paul Budde Communication Pty Ltd, 2011

Launch 10/1992 04/2004 10/1992 02/2004 09/1998 06/2004

Subscribers (million) 7.33 6.05 3.58 16.96

Annual change 0.3% -0.5% 3.4% 1.3%

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

Operator market shares

Chart 2 Mobile operators market share 2004 - 2010

REGULATORY ISSUES SPECTRUM REGULATIONS AND SPECTRUM AUCTIONS

GSM licence renewal

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

2.6GHz and 800MHz

Copyright Paul Budde Communication Pty Ltd, 2011

Chart 3 Roaming in call traffic volume and messages 2004 - 2011

(Source: BuddeComm based on EC data)

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

MOBILE NUMBER PORTABILITY (MNP)

(Source: BuddeComm based on EC and regulator data)

MOBILE TERMINATION RATES (MTRS)

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

MOBILE TECHNOLOGIES DIGITAL

THIRD GENERATION (3G) MOBILE

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2011

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

Chart 5 3G subscribers 2007 - 2012

(Source: BuddeComm based on regulator data)

MAJOR MOBILE OPERATORS TMN

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)

Copyright Paul Budde Communication Pty Ltd, 2011

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

Contract (/month) 57.8 54.2 45.7 44.4 40.6 39.4

Blended 22.8 22.4 18.8 17.4 15.3 15.1

(Source: BuddeComm based on company data)

Chart 8 Vodafone financial data (year to Mar) 2007 - 2011

(Source: BuddeComm based on company data) Note: Year is to March.

Copyright Paul Budde Communication Pty Ltd, 2011

Portugal - Mobile Market Insights, Statistics and Forecasts

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)