Boston, MA -- (SBWIRE) -- 11/25/2013 -- Having reached maturity, there is little prospect of more growth to be had in the Portuguese mobile market, leaving broadband as the only real opportunity in the industry. However, ongoing economic woes continue to put pressure on consumer wallets and encourage them to cut down spending on nonessentials.

The fluctuating subscriber numbers are as much a result of the market's maturity as it is the performance of the economy. It will be difficult to upgrade subscribers to higher tariffs and more spending on value-added services. Broadband, both fixed and mobile, offers most growth potential, but upgrade opportunities will continue to be poor.

Key Data

- The mobile market shrank again in Q213, finishing the quarter with 17.1mn subscribers but we expect growth to pick up in the second half of the year.
- Handset 3G subscriptions have proved more robust, with demand driven by consumer appetite for smartphones. Active voice and data subscriptions increased 6% year on year (y-o-y) to 3.545mn at the end of Q213.
- Total fixed-line subscriptions fell for another quarter, finishing Q213 with 2.126mn subscribers, down 4.6% over the year.

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Risk Reward Ratings

Portugal remains at the bottom of our Risk/Reward Ratings this quarter, with its difficult economic outlook remaining a key factor in the country's outlook. Weak financial performances from operators reflect customers continuing to tighten their belts as austerity cuts disposable incomes.

Key Trends & Developments

The Portuguese Competition Authority formally approved the merger between Zon Multimedia and Optimus. The approval was subject to certain conditions such as the extension of a network sharing pact between Optimus and Vodafone Portugal, and an agreement by Optimus not to charge its fibre-to-thehome (FTTH) customers a network disconnection charge for a period of six months.

Sonae exercised an option to buy France-based telecoms operator Orange's 20% stake in Portuguese telecoms operator Sonaecom. Sonae already holds a 53.17% stake in Sonaecom. The move will allow the Portuguese operator to raise its stake in Sonaecom to almost 74%. Sonae is buying the stake for EUR113.5mn (US$150.74mn).

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