Boston, MA -- (SBWIRE) -- 05/21/2014 -- Operators continue to struggle with the dual pressures of economic weakness limiting subscriber spending and 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.

Key Data

- The estimated loss of 232,000 mobile subscribers in Q413 marked a return to the sharp declines reported in the first half of the year.
- 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 Q413, in line with our expectations.

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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.
- In October 2013, incumbent Portugal Telecom announced its intention to merge with Brazilian telecoms operator Oi, in which it holds a 25% stake. BMI believes the synergies between the two companies will benefit the performance of both in their respective markets and the planned cost savings will have significant benefits for launching new services in the Portuguese market, stepping up competition between operators.

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