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BMI View : Operators continue to struggle with the dual pressures of economic weakness limiting subscriber spending as well as market maturity in the mobile sector. The former is a pressure for fixed services also, with operators facing difficulties in encouraging subscribers to upgrade to more expensive services. Data show declines across all segments of the market as Portuguese consumers look to keep their costs down , while operators are expected to continue investing in faster technologies to cater to the demand for more data. Some signs of improvement in mobile ARPUs suggest there may be more opportunities for growth.
The addition of 85,000 mobile subscribers in Q313 did little to counter the sharp losses reported in the first half of the year, but did lead to a small revision in our forecasts for 2014-2017.
Handset 3G subscriptions have proved more robust, with demand driven by consumer appetite for smartphones. Active voice and data subscriptions continue to rise, reaching 3.743mn at the end of Q313.
Broadband subscriptions grew in Q313, in line with our expectations.
Risk / Reward Ratings
Portugal remains at the bottom of our Telecoms Risk/Reward Ratings for Western Europe this quarter, with its difficult economic outlook remaining a key factor in the sector's outlook. Weak financial performances from operators reflect customers continuing to tighten their belts as austerity cuts disposable incomes.
Key Trends & Developments
Zon Multimedia and Optimus' merger completed in August 2013, creating a strong multi-play operator to compete with Portugal Telecom. BMI believes the new company will boost growth, as consumers begin to consider spending more on their telecoms services. Bundled services remain a growth area across Western Europe and should gain traction in the Portuguese telecoms market.
Incumbent Portugal Telecom announced its intention to merge with Brazilian telecoms operator Oi, in which it holds a 25% stake. BMI...