TeliaSonera Steps Up Price War in Spain to Take On Telefonica
TeliaSonera Steps Up Price War in Spain, Take On Telefonica
Linus Hook/Bloomberg
TeliaSonera, Sweden’s biggest phone company, holds a 77 percent stake in Yoigo and has said the unit is now integral to its strategy after previously putting it up for sale.
TeliaSonera, Sweden’s biggest phone company, holds a 77 percent stake in Yoigo and has said the unit is now integral to its strategy after previously putting it up for sale. Photographer: Linus Hook/Bloomberg
April 6 (Bloomberg) -- Johan Andsjo, chief executive officer of TeliaSonera AB's Spanish mobile-phone unit Yoigo, talks about the company's growth strategy. Andsjo spoke yesterday with Bloomberg's Manuel Baigorri in Madrid. (Source: Bloomberg)
Yoigo, the Spanish mobile-phone unit of Sweden’s TeliaSonera AB (TLSN), is aiming for more than 3 million customers this year by attracting clients with low prices, Chief Executive Officer Johan Andsjo said.
“We have already started a price war,” Andsjo said in an interview yesterday at his office in Madrid, where the company is based. “Spain is still the most expensive European country in terms of rates and it’s obvious that amid the current macroeconomic crisis people switch operators to save money.”
Yoigo targets a 10 percent market share in 2015, up from 4.3 percent in February, Andsjo said. Yoigo aims for positive cash flow this year and will open 100 stores during the first half, he said. There were 55 million mobile customers in Spain in February and Telefonica SA (TEF), Spain’s biggest phone company, had more than 41 percent of the market through its Movistar unit, according to the country’s phone regulator.
Yoigo was the mobile operator with the biggest increase in clients swapping providers while keeping their old phone numbers in February. It had a net gain of 35,867 customers, while Movistar was the biggest loser with a net 42,623 decline.
Yoigo, which was founded in 2006, had 2.3 million customers last year and during the first three months of 2011 it grew “at a similar pace to a year earlier,” the 38-year-old executive said. Last year’s sales climbed 46 percent to 5.98 billion Swedish kronor ($948 million) as Yoigo added 777,000 customers, the company said. The company, which charges at little as 4 cents a minute for calls, has more than 1,000 stores in Spain.
Sustainable Growth
The strategy for growth is “sustainable” in the long term because it’s based in cheap prices, the executive said. Yoigo also wants to expand mobile data usage, and expects its revenue from this service to grow 200 percent this year through the use of wireless modems and smartphones, he said.
Yoigo will increase coverage from 67 percent of Spain’s population to 74 percent and boost speed to 21 megabits per second, the executive said, declining to say how much the company plans to invest this year.
TeliaSonera, Sweden’s biggest phone company, holds a 77 percent stake in Yoigo and has said the unit is now integral to its strategy after previously putting it up for sale.
TeliaSonera’s change of heart “is due to our good results,” Andsjo said. “They now understand and clearly see that we’re making a positive contribution to the group.”
Spectrum Auction
Yoigo and TeliaSonera save money by sharing procurement for items such as terminals and antennas, Andsjo said.
Other shareholders in Yoigo are Actividades de Construccion & Servicios SA, which holds a 17 percent stake, Fomento de Construcciones & Contratas SA with 3.4 percent and Telvent GIT SA (TLVT) with 3 percent.
“The situation among shareholders is very stable because we’re accomplishing our goals,” Andsjo said.
Yoigo plans to acquire more spectrum as Spain’s government prepares to sell as many as 26 blocks to provide more data capacity to mobile-phone operators, in transactions that may raise as much as 2 billion euros ($2.8 billion).
“Our shareholders have already shown an interest in investing,” he said, declining to say how much spectrum they plan to secure and how much they’ll spend. “We want to continue being the fastest-growing phone operator in the market both in customers and revenues.”
The Spanish bandwidth will be distributed mainly through auctions, the Industry Ministry said April 1. Telefonica and Vodafone Group Plc (VOD), the market leaders, will be restricted from some of the frequency allocations in an effort to promote competition, it said.
France Telecom SA (FTE)’s Orange unit had more than 20 percent of the mobile market in February and Vodafone Group Plc had 29 percent.
To contact the reporter on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net
To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net
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