Movistar Spain announced a half-price promotion for several of its postpaid mobile plans as well as a significant discount on one of its primary fiber plans.
Selected new mobile customers will only pay half the standard monthly fee for the first three months of service for the Contrato L, XL and Infinito plans, which include 8GB, 30GB and unlimited data, respectively. For residential broadband subscribers, the price of Movistar’s 600Mbps standalone fiber plan was reduced by 32% from EUR 44.00 (US $44.72) to EUR 29.90 (US $30.39) per month for three months.
At first glance, it would make sense to categorize this offer as a standard short-term discount aimed at locking in a few new customers into premium plans. On deeper review, however, this move is actually further evidence of increasing competition in the Spanish market and a decline in pricing power across all providers.
Movistar’s new promotions are only the latest in a series of aggressive offers and discounts from Spain’s major providers. Recently, Yoigo, Masmovil’s premium brand, announced a 20% discount for new customers lasting for twelve months on mobile plans and six months on convergent plans. In the same week, Orange’s Jazztel brand permanently increased the size of data allowances for all its mobile and convergent plans – significantly increasing the included services while holding prices constant. A few weeks prior, Vodafone Spain lowered prices across all its mobile and convergent plans. At the time it was speculated that this Vodafone move was in response to a different Movistar promotion from early June which added a fourth month of discounted rates for new convergent customers.
As aggressive as these offers have been, there is still reason to hope that the Spanish providers can pull back from the brink. So far, these promotions have largely been short-term and targeted primarily to new customers, so it is easy to envision a scenario where these offers are not renewed, and the market returns to normalcy. That said, if providers continue to flood the market with ever more aggressive price discounts and service increases, this could signal tough times ahead for Spanish telecoms. Once operators start this type of “race to the bottom” pricing strategy, it can be difficult to reverse direction.