Spanish Ditch Mobile Phones in Record Numbers

Recession-hit Spaniards ditched mobile phone lines in record numbers in October, with the two biggest operators continuing to hemorrhage market share to smaller rivals offering subsidies on handsets.

Spain, where there are more mobile phones than people, has been hit by a slump that has left one-in-four unemployed and led to a falling number of active phones. Some 486,000 phones were cut off in October, telecoms regulator CMT said on Monday.

Movistar - Telefonica's mobile operator - lost 284,000 lines in October, while Vodafone , the second-biggest player, shed 278,000 customers, CMT said.

The figures showed a 3.8 percent year-on-year drop in mobile phone numbers as the country battles sky-high unemployment and its second recession in three years.

"The mobile sector in Spain is not recovering. This marks nine consecutive months of falls ... Yoigo and virtual mobile operators are gaining clients but they cannot compensate for the losses at Movistar, Vodafone and Orange ," CMT said.

Churn

A mobile price war has heated up in recent months after Telefonica and Vodafone's market share slipped since their decision to stop subsiding smartphones in the spring.

Almost 2 million Movistar lines have been cut off since March when it stopped subsidies, according to CMT monthly data. The debt-laden company introduced new bundled offers in October in a bid to retain market share.

When Telefonica reported results in November it said 430,000 customers had signed up to its "Fusion" package which offers television, broadband, fixed line and mobile.

Orange and Vodafone have introduced similar offers and Vodafone also decided to reintroduce handset subsidies in November. CMT said, overall, 475,000 people switched to a rival operator in October.

Telefonica had 37 percent of the market in October, down from 40 percent a year earlier, while Vodafone's share dipped to 27 percent from 28 percent.

Orange, the third-biggest player and which did not scrap subsidies, saw its market share rise to 21 percent from 20 p e rcent in the year to October. It lost 14,870 lines on the month.

Separately on Monday, Dutch telecoms firm KPN said Orange would buy its small Spanish virtual operator Simyo, gaining almost 380,000 clients and taking Orange's total number of customers to 12.2 million. Orange plans to keep Simyo as a low-cost operator and will not change tariffs.

There was good news for Spain's fourth biggest operator, TeliaSonera's Yoigo. Yoigo, up for sale, gained 12,490 lines in October.

The successful sale of Simyo could smooth the way for France Telecom to acquire Yoigo. The firm slashed prices in November and said it would offer the cheapest call rate in Spain from December.