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.