Yoigo's future up in air as TeliaSonera reviews Spanish presence

Yoigo, the fourth operator in Spain, continues to face a somewhat uncertain future after parent company TeliaSonera again said it is considering its options for the Spanish market.

Although the Swedish operator noted that the margin in Spain recovered in the second quarter, it said the Spanish business remains sub-scale with a market share of around 7 per cent. TeliaSonera has a 76.6 per cent stake in Yoigo.

"Competition is fierce, forced by a strong convergence trend that puts pressure on our mobile-only business. Consequently, we are reviewing our future presence in the Spanish market," TeliaSonera said in the presentation of its second-quarter results.

The Nordic operator had previously said during its first-quarter results that it would have to sell Yoigo if the Spanish company is unable to increase its market share.

In the second quarter, Yoigo's net sales dropped by 19.3 per cent to SEK1.8 billion (€195 million/$264 million), while sales in the first six months declined by 16.3 per cent to SEK3.74 billion. Mobile service revenue was down by 10.9 per cent, while equipment revenue almost halved to SEK385 million. The number of mobile subscriptions was just over 4 million at the end of June.

Yoigo has been fighting back against fierce competition from rivals Movistar, Vodafone Spain and Orange Spain, introducing a new range of tariffs including a 1 GB option for €6 and higher inclusive data allowances.

In October last year, the operator signed a deal with Telefónica-owned Movistar that enabled it to offer a converged package of services under the Fusion brand, including mobile and home TV, broadband and phone services. However, it faces competition on convergence from all three players, and is clearly struggling to make headway with a service that carries the same brand as Movistar's own converged offering.

What's more, now that Vodafone Spain has acquired cable operator Ono, and Orange Spain has flagged up its interest in buying more assets in Spain, Yoigo's position looks increasingly vulnerable as a mobile-only player. Orange and Vodafone have both been cited as potential interested parties if Yoigo is put up for sale.

Analysts said Yoigo could fetch €1 billion-€1.5 billion ($1.35-2.03 billion), Reuters reported.

Meanwhile TeliaSonera said group net sales in reported currency declined by 1.2 per cent in the second quarter to SEK25 billion, while EBITDA decreased by 1 per cent to SEK8.8 billion.

The company has recently acquired Tele2's Norwegian business, and said it is also keen to look at potential deals in Denmark.

For more:
- see TeliaSonera's Q2 report
- see this Reuters article

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