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Xfera 3G UTMS Network, Spain




Key Data


Xfera is the fourth Spanish mobile operator and a subsidiary of TeliaSonera. In 2006 the company was awarded the fourth 3G licence in Spain provided they could guarantee population coverage of 26% by the end of 2006 (requirements made by the Ministry of Industry).

In August 2006 the company reached an agreement with Ericsson for the supply of radio, network and service equipment plus all installation services for this equipment to ensure the launching of 3G mobile telephone operations before the end of 2006.

"The company was awarded the fourth 3G licence in Spain provided they could guarantee population coverage of 26% by the end of 2006."

Johan Andsjo, President of Xfera said: "This agreement with Ericsson is our first milestone since we re-launched the project in June. Also, we have reached the agreement before the planned deadline and in line with the estimated investments made in our strategic plan."

Xfera already has an existing contract (worth €250m) with Ericsson for 450 nodes and both agreements in total include the technical resources needed for 2,000 sites, which encompass population coverage of 40% with Xfera's own quality network. Additionally, there is an option for a further 1,500 sites during a three year period.

XFERA UMTS NETWORK LAUNCH

The company was able to launch commercially at the end of 2006 due to a successful UMTS (W-CDMA) network coverage in seven of the largest cities and a comprehensive roaming agreement with Vodafone to allow Xfera subscribers to use their 2G GSM network.

Xfera is owned by TeliaSonera, with an ownership share of 76.6%. ACS, the building and services group, has a share of 17%, FCC has a 3.4% share and Telvent holds a 3% share. The French company Vivendi Universal sold its 26% stake in Xfera in 2003 for €1 in order to get out of a commitment to spend nearly €900m on infrastructure development for the network.

MOBILE SERVICE INVESTMENT

Xfera plans to invest €1.3bn (US$1.7bn) in rolling out mobile services over the next five years. The owners of the company decided in October 2006 to launch the commercial service in the second week of December under the new brand Yoigo (which is Spanish for 'I hear'). The new name was chosen to reflect the simplicity in rates and ease of use of their services.

They started with a single type of tariff that made no distinctions between the number you called or the time when you placed the call: 12 cents/minute at any time, any destiny in Spain. At launch in December 2006 Xfera's network covered a quarter of the Spanish population of 41 million.

XFERA'S 3G HISTORY

Xfera was awarded one of four Spanish UMTS licences in 2000. Spain's 3G licence holders were obligated to offer next-generation services on a commercial basis by end-2004. However, Xfera failed to launch 3G services in accordance with the UMTS licence requirements, owing to a lack of investment (particularly by Vivendi). The telecoms market regulator (CMT) then extended Xfera's deadline until mid-2007, with the threat of revoking the licence if this was not met.

By mid-2006 the shareholders had already laid out €530m with very little to show for it, then Teliasonera became the major share holder and injected new capital into the company and it was saved. The network has now been launched.

SPANISH MOBILE MARKET COMPETITION

Xfera is now moving into the Spanish mobile market and will compete against Telefónica Móviles España, Vodafone Spain and Amena. Telefónica Móviles España is the largest player, controlling 46.2% of the market at end-2005, followed by Vodafone Spain on 29.9% and Amena on 23.9%.

Despite SIM-card penetration currently exceeding 100%, the market has room for a fourth operator. Xfera targets at least 600,000 customers by mid-2007 and 2.7 million subscribers, or 5% market share, by 2012.

"Xfera targets at least 600,000 customers by mid-2007 and 2.7 million subscribers, or 5% market share, by 2012."

Spain's first 3G services were launched by Telefónica Móviles España and Vodafone Spain in May 2004, and Amena followed in October that year. However, 3G penetration remains low in Spain. In addition, Vodafone Spain and Amena commercially launched HSDPA technology in June 2006. The former offers HSDPA services in eight major Spanish cities, including Barcelona, Madrid and Valencia, while Amena's offering covers five cities. In this case Xfera may well find it a tough market, particularly with mobile virtual network operators entering the Spanish market for the first time and being likely to drive call charges down.