Portugal Telecommunications Report Q3 2012

The Q312 update to BMI''s Portugal telecommunications market draws on data from the regulator
Anacom and operators for the country’s mobile, fixed-line, broadband and pay-TV markets for March
2012. This data has led to minor revisions to our forecasts for the country''s mobile and fixed-line markets
extended through to 2016, although our broadband forecasts have been left unchanged. Operator data
includes releases from the country’s fixed-line incumbent Portugal Telecom, which also owns the
leading mobile operator TMN, Portugal Telecom’s rivals in the mobile market, Vodafone Portugal and
Optimus (owned by Portuguese broadband operator Sonaecom) and data from cable operator Grupo
Zon. Regulator data includes information from some of the smaller players on the market, including AR
Telecom and Onitelecom, as well as pay-TV operator and Cabovisão.
We saw declines in the mobile market in Q112, with net losses of 69,000 overall in the market. Optimus
and Vodafone Portugal suffered negative growth, and TMN’s net additions were low. Q411 was the first
quarter of growth since Q111, and this quarter’s return to decline indicates the general downward trend
continues. As a result, we have revised down our growth forecasts slightly, however. Demand will remain
muted due to the difficult macroeconomic environment and the high penetration rate. We believe that by
the end of 2012, there will be 17.5mn subscribers, and by 2016 this will have increased modestly to
17.8mn.
The fixed-line market continues to grow, albeit slowly. However, we believe this trend will begin to
reverse in H212, and by 2016, there will be around 4.4mn subscribers in the market, down from 4.54mn
in Q112. There was no change in our broadband market forecasts – we expect there be 4.04mn broadband
subscriptions in 2016.
Q112 has seen a flurry of activity in Portugal''s LTE market, with the country''s three incumbent mobile
operators Portugal Telecom (TMN), Vodafone Portugal and Sonaecom (Optimus) rolling out LTE
networks in time for the distribution of LTE licences by the telecoms regulator, ANACOM, on March 20
2012. The LTE technology will allow the operators to offer high capacity mobile data services.
In terms of market share, TMN consolidated its lead in Q112, increasing its market share by 0.3pps to
43.3%. This is still below the high of 44.2% reached in Q308, however. Its share fell slowly throughout
2009, before recovering marginally in Q409. It then continued to fall in the first nine months of 2010
before recovering slightly in H111, before falling back in H211.
TMN is followed by Vodafone which had a 35.8% market share in Q112, up by 0.3pps y-o-y, but down
slightly by 0.1pps compared with the previous quarter. The two market leaders’ share of subscribers has
frequently changed by marginal amounts over the past three years. Vodafone''s market share has been in
the range of 35.5% to 36.0% for the entire period from Q208-Q112.