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  • EDUARDO FERNÁNDEZ

    eduardfdz

    Madrid

Sunday, August 2, 2020 - 10:43 PM

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Saying that the coronavirus crisis has been positive for telecommunications companies would sound reckless, but certainly the sector has been reinforced in different ways: its scope has been declared an essential service during the state of alarm as if it were water or electricity. , mobile applications have been extended to control contagions, the lines have served to study the restricted mobility of citizens, the network has endured the massive demand of Spaniards during confinement, who else least checks the capacity of their Connections at home, remote mode has definitely entered the workplace and education ... Even the delay in the deployment of 5G can come as a respite for operators who were not going through their most buoyant time to face new million-dollar disbursements.

The gears of this industry, unlike others, have not stopped moving during the pandemic. Telefónica has signed the largest corporate operation in its entire history - to create the leading operator in the United Kingdom - MásMóvil has starred in the most voluminous takeover bid in Spanish history - by KKR, Providence and Cinven - Orange He has changed CEOs for this market -Jean-François Fallacher replaces Laurent Paillassot- and Euskaltel has launched to compete across the country with the Virgin brand and also in full alarm.

"The pandemic has pushed us to a massive digital experience that in our country has developed without relevant incidents on the networks, which has not happened in others, and has served so that citizens can maintain a high level of social and labor relations , educational, and leisure during confinement, "says Roberto Sánchez, Secretary of State for Telecommunications , asked about it by EL MUNDO. "Taking into account the estimates of the fall in GDP for 2020, which range between 9% and 15%, it is evident that no sector escapes a fall of such magnitude, but it is also true that we are dealing with a sector that has enormous opportunities not for the future, but for the present. We have seen this with large companies that have maintained their plans, even in the worst moments of the pandemic, to which must be added the high volume of investments in the digital sector that are taking place at a global level, also fostered by the scenario of low interest rates ", considers Alicia Richart, general director of the employers in the digital sectorES .

From Vodafone , a pioneer operator in the commercial development of 5G within Spain, it is believed that "everything points to the main change that we are going to see in the amount of traffic consumed by the user", according to Ismael Asenjo, general director of technology from Vodafone Spain.

The telecommunications industry is also restarting, like any mobile phone that has undergone an update. "Operators must work to adapt offers to new needs, printing a critical role in the new production model (telemedicine, telework, tele-education, etc.), with investments in fiber and 5G as the great catalysts for change" , predicts Carmen Sánchez-Tenorio, partner in charge of the Telecommunications sector at Deloitte. "There is one thing that will not go backwards: teleworking. Your own productivity is also measurable at a distance and you are going to be able to leave behind so much physical infrastructure , for headquarters and offices that will no longer be so necessary," says Josep Valor, professor at IESE and holder of the Indra Chair in Digital Strategy.

The fiber is cast into the bush

Spain has more households connected by fiber than the sum of all those in France, Germany, Italy and the United Kingdom, but also the country is not badly positioned in the rural presence of that network, with 46.4% coverage in those areas compared to 17.5% of the continental average, according to 2019 data collected by the European Commission. This extension will foreseeably go further, because the headquarters in epicenters of large cities will not concentrate as much activity. The secretary of state warns: "There are changes in the demand models, which will now increasingly move out of urban centers ."

The renunciation of infrastructure goes much further, to the point that operators have come to part with some material assets that do not necessarily have to belong to them. The market has perfected its fragmentation, point by point, from fiber to radio link, so that telecos can afford capital investments in capital goods (Capex) and focus on their real business, voice and, increasingly, the data. "It is essential to always be clear about the core of your business and, in situations like the current one, even more so," recommends Richart.

Reinvent or become cheaper

This will not mean that diversification continues with its scores, in areas such as security, education or finance, see the launch of Orange Bank for Spain. Josep Valor makes an assessment: "Operators cannot be left with only capacity and speed: when you dedicate yourself to a single product, you always end up competing for price . The only solution they have is to sell packages of things that perhaps they would not buy separately ; enter new territories such as entertainment or security. " Indeed, through Movistar, Telefónica has formed joint ventures with Atresmedia, to start an audiovisual production company, and Prosegur, to position itself in the alarm market.

A massive climb

While operators have resigned themselves to selling or sharing infrastructures, other companies in the sector have taken advantage of the vein, such as the Barcelona tower Cellnex, already spread across half of Europe and with a market capitalization that has surpassed that of a multinational company known as Telefónica . "Obviously, infrastructures are crucial, but also very capital-intensive, expensive, so operators have no choice but to pool them. It has been happening for years on the AVE, for example: Telefónica, Orange, Vodafone and MásMóvil operate at 25% of the radio frequency but have agreements to transfer the section to the rest, "Valor says.

Let those cases of understanding not deceive. Competition in the sector has been sharpened to unsuspected limits, and there are already five national operators, the three classic ones, a rising MásMóvil and Euskaltel-Virgin in full takeoff from the north. "Without a doubt, the main problem that most telecommunications operators have faced in the last decade is undoubtedly the decrease in revenues," says Sánchez-Tenorio. José María-Álvarez Pallete, CEO of Telefónica, himself admits that this sector is the most deflationary of all Europeans, as the consumer has internalized calling, messaging or even connecting to the internet as a commodity , and 450 operators coexist in the continent while in the US or China they are counted on the fingers of one hand.

For home and business

Although the rivalry in Spain has fostered low-cost development in recent years , with countless brands that leave little margin for the operators behind it, the connections seem to have increased in value during confinement: "It is possible that, after the pandemic, the number of consumers interested in higher value proposals to ensure quality is increased at a time when traffic demands are multiplied by the confluence of simultaneous uses: teleworking, video streaming, video calls, games ... ", recalls Sánchez . "More than moving towards the low cost market , what we see is a trend towards greater consumer needs of users , without worries, where products such as our unlimited rates are a clear bet," insists Asenjo from Vodafone.

In a country where for years there have been more mobile lines than inhabitants, telecos are increasingly focused on other companies, especially SMEs, which account for 99% of Spanish companies and are pending digitization, now already hopelessly, a challenge for which operators have a lot to offer. "If, before the crisis, process efficiency and the reduction of expenses and time savings were the main advantages, now the mere digitization process and e-commerce have been revealed as true levers for business survival," says Asenjo.

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