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Telefonica’s Movistar + Ups Spanish Pay TV Growth by 28% in 2018

MADRID —  Telefonica, the European telecom which has made the largest bet on content over the last two years, saw a 6% year-in-year growth in pay TV customers in Spain, the country where that drive is most noticeable, Telefonica confirmed on a Thursday conference call, walking analysts through its full-year 2018 results.

Net subscriber additions for 2018, the first full year of releases for Movistar + Original Series, was up 55,000 for the fourth quarter of 2018 and 244,000 for the full year, 28% up on 2017’s growth of 199,000 new subs. Total Movistar + pay TV customers in Spain now stands at 4.1 million.

At €89 ($101.5), convergent ARPU was up compared to the third quarter, despite the launch of an cheaper 02 quad play offer., and increased 4.3% year-on-year, Telefonica stated in its results.

Telefonica’s pay TV subscriber growth reflects investment in sports, original series and original content. “Growth comes from the combination of them on a single platform “ said María Rua Aguete, IHS Markit executive director, Media, Service Providers & Platforms, noting that after a Barcelona-Real Madrid Clásico soccer match last November, the most popular content on Movistar + in 2018 was a Movistar + Original Series, and a Movistar + Netflix carriage deal which kicked in Dec. 12 was “highly positive.”

Movistar + backing of high-end series, has been seen seen lately in “The Pier,” a Mipcom world premiere screening from “La Casa de Papel” creators Alex Pina and Esther Martínez Lobato, the November release of period comedy “Arde Madrid,” and an upcoming Season 2 of large-scale historical action thriller “The Plague.”

All that also forms part on of a focus on “high-value” customers, Telefonica COO Angel Vilá said on the conference call.

“The focus on the continuous improvement of services’ value, quality and differentiation led to a notable increase in net additions in 2018, particularly in higher-value services, said Rua Aguete, highlighting an uptick in retail fibre of 517,000 accesses, up 22% year-on-year, 1.2 million new mobile contract in Spain, up 33%; and a notable increase of 673,000 wholesale fibre accesses, a 28% year-on-year rise.

Convergent customers now account for 91% of the TV base (up 4%, YOY), 88% of broadband customers  (up 2%), and 84% of mobile contract customers (up 5%) in the consumer market, she added.

Content of course comes at a price, especially when it comes to UEFA Champions League and Europa League, where Telefonica recognized that its new deal for 2019-20 through 2021-22 rights would cost €360 million ($420 million) each Champions League and Europa League season, a net cost “up just 5%.”

It would look in part to offset costs by not bidding for less popular sports than soccer, Angel Vilá said on Thursday.

That of course creates market opportunities for competitors. SVOD service DAZN will see its official launch in Spain on Feb. 27, already sporting rights in Spain to MotoGP races and the Premiere League from 2019-20.

New OTT or pay TV players traditionally have an uphill battle impacting hugely dominant incumbents in the pay TV sphere. But it looks like the excitement around sports at least in Spain will not just be on screen.

UEFA Champions League - Barcelona v Chelsea, Spain - 15 Mar 2018

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