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Charting Smartphone Subsidy Reduction in Spain

by Stephen Entwistle | Aug 09, 2012

We recently did some analysis of the nationwide experiment carried out by mobile network operators (MNOs) in Spain.  When MNOs tried removing the subsidies applied to contract-based smartphones we used PriceTRAX, our online price comparison database to monitor price fluctuations and then our Wireless Operator Strategies team looked at the impact on connection volumes.

Movistar, Vodafone and Yoigo were the frontrunners in this experiment. Orange did not take part, possibly because their subsidies were already lower compared to its competitors.  Download PriceTRAX's latest complimentary extract: Observing Spanish Smartphone Pricing Dynamics: Are Subsidies Changing? for the full story, summary details and the methodology.

Movistar was the first to start removing subsidies on smartphones in Spain, which increased their handset prices by more than €100 in April 2012. Vodafone and Yoigo followed in May, increasing their up-front handset price by 100%.

When these smartphone handset subsidies were removed, it’s no surprise that Movistar’s gross connection volumes took an annual fall of 42%, while Vodafone saw a 36% reduction in Q2 (Source: Wireless Operator Strategies).

The above chart shows that after the initial jump of over €100 in April/May, the average smartphone cost on a contract has since fallen back somewhat suggesting a softening of the MNOs resolve.

If you like to try the PriceTRAX database for yourself CLICK HERE >>>

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