Telefonica to Increase Minutes and Data

Telefonica will increase the volume of data and voice minutes included in its Spanish prepaid mobile bundles, starting in mid-September, according to a report. The company operates in Spain under the Movistar brand.

From 15 September, the cheapest Movistar monthly tariff of €10.00 (US $11.76) will offer 40 minutes of calls and 7 GB of data, up from 20 minutes and 4 GB. The intermediate tariff of €15.00 ($17.63) will offer 100 minutes of calls and 15 GB of data, up from 40 minutes and 7 GB. The top monthly bundle of €20.00 (US $23.51) will offer 150 minutes of calls and 25 GB of data, up from 80 minutes and 15 GB.

Telefonica, which last month launched a €5.00 (US $5.88) a month youth-oriented prepaid tariff, had 1.01 million prepaid lines as of 30 June, down 19.5 percent from a year earlier, compared to 15.28 million postpaid clients. 

In Spain, which was severely affected by Covid-19 this past spring, has experienced vigorous growth in the budget-oriented segment of the mobile market. Prepaid tariffs, having lower cost and less commitment, tend to appeal to budget-minded consumers.

Telefonica (Movistar) primarily operates in the postpaid market in that country, but its prepaid business has seen a fairly steep decline (almost 20 percent) compared to this time last year, measured in terms of number of lines in use. The pandemic has actually increased demand for prepaid service, due to the heavy economic impact and its effect on customers’ budgets. So, the fact that Telefonica has slipped in this sector is almost certainly due to the presence of effective competition from rival operators, including MVNOs.

So, Telefonica’s move to double or nearly double its allowance of voice and data on its existing prepaid plans is a significant attempt to meet this competition head-on and claim a bigger proportion of the growing budget-oriented market. These offers should prove effective to some extent, but there are still better deals available in Spain. For example, the low-cost MVNO Lycamobile offers 150 minutes (plus an extra 150 on-net minutes) and 40 GB of data for €20.00 month; for the same price Movistar offers 150 minutes and only 25 GB of data. The increases in allowances plus the new youth plan should help Telefonica be more competitive in the Spanish market as it now is, but the operator may have to offer even more to narrow the gap.

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Telecom Italia Launches Offer Targeting MVNO Customers

Telecom Italia has launched a new offer called TIM Supreme 50 Giga, with 50 GB of 4G/LTE data at speeds of up to 150 Mbps, plus unlimited calls, for €5.99 (US $6.61) a month, according to a report. The offer is available at TIM-affiliated stores for users who switch to the operator’s service from a range of MVNOs including Iliad, Fastweb Mobile, PosteMobile and CoopVoce. Customers of LycaMobile, Vodafone’s Ho.Mobile and TIM’s own MVNO brand Kena Mobile are not eligible. A new SIM card costs €10.00 (US $11.04) and the activation fee is €12.00 (US $13.25).

TIM’s Supreme 50 Giga package is an aggressively low-priced offer that clearly takes aim at Italy’s MVNOs. A generous serving of high-speed data on a proven-quantity network, with unlimited voice calls, is certainly a bargain at €5.99 a month, and this is definitely a valid strategy with which a major MNO could reclaim some market share from small budget-minded competitors. Whether it ends up being a true MVNO-killer, however, may depend on several factors other than price and quality of service.

For one thing, MVNO customers are likely to be averse to contracts. If the Supreme 50 Giga requires a commitment of any kind, that could be off-putting for some of these users. The fact that it is postpaid rather than prepaid, as appears to be the case, could also be an impediment, although if there is no long-term commitment, that could make it more palatable for those who are used to pay-as-you-go.

It should be noted that in addition to not cannibalizing its own MVNO brand, Kena, TIM is also keeping its hands off its rival among the major MNOs, Vodafone, as well as LycaMobile, a massive worldwide MVNO brand. The operator is not trying to declare war, only to launch a salvo against some local targets that it feels are vulnerable. 

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