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Telefonica seeks to address competition and customer churn with new combinations featuring Netflix

Strategic Highlights
Published: 2020-03-30

Spanish incumbent Telefonica sustained to aggressively push their convergent offers with new product combinations in 2019, especially highlighting subscription video on-demand (SVoD) offers in their bundled offers. In particular, Telefonica started to include Netflix in some of their Fusion product bundles, as well as access to original contents in its Movistar+ TV service. While this is the case, InfoCom’s analysis through its Quarterly Fixed Access Lines monitoring suggests that this seems to have a marginal impact to the operator's fixed access lines* during the period as it even experienced a slightly higher line loss rate in 2019 relative to the previous years (2019: ~4% decline versus 2018: ~2%; 2017: ~1%).

InfoCom believes that this development is propelled mainly by two factors: The first is the continuing fixed voice churn partly due to customer migration to mobile services, and secondly, the tight market competition from major alternative operators are luring some customers away from the incumbent. Note that MasMovil, Orange, and Vodafone are also quite aggressive in pushing for their convergent offers, especially highlighting high-speed (FTTH) broadband and TV contents aside from fixed voice service – with some even offering hefty subscription discounts and additional content access (e.g. some of Orange’s quadruple play offers even include Amazon Prime Video aside from Netflix).

Overall, the total access lines among Western European incumbents stood at 95.7m in 2019, a decline of around 4% YoY as per InfoCom monitoring.

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Published: 2020-03-30





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