It is war. Orange has waited no longer than five days to respond to Movistar in a price war that has caught on among the main Spanish cell phone operators.
Price changes have been severe since Movistar lowered its most competitive rate to a fixed price of 6 cents in a new service plan called Tarifa 6. Vodafone was quick to respond and renovated its business strategy for its prepaid clients by offering the most competitive prices in this sector.
Orange´s strategy has been to wait and see and yesterday it matched Movistar´s Tarifa 6 plan, but countered by offering text messages for six cents, compared to Movistar´s rate of 15 cents. The new plan is called Orange Básico 6 and is designed for customers looking to save and simplify their mobile communications. Sources at the company explain that the new prices will be available after June 13. Until then, Orange´s most budget-friendly plans are the same as Ardilla´s at 8 cents per minute.
Movistar´s contracts will be for six months and customers will have to use a minimum of 6 cents. The subsidiary of the Spanish company Telefónica won the game against Orange last week, considering that Movistar provided 250 minutes of free incoming calls on Saturdays and Sundays while Orange did not. Moreover, Movistar is letting its Tarifa 6 users to add up minutes for later use, something that Orange isn?t considering for Básico 6.
Defensive Strategies
In reaction to Movistar, Vodafone and Orange respond to a shared objective of the three biggest players in the sector: stop customers from going to low-price phone operators. According to the latest statistics from the Committee of Telecommunications Market (CTM), last April Movistar and Vodafone lost a total of 51,460 and 28,223 mobiles lines, respectively. Orange signed up a sum total of about 23.239 customers, a push that ended up especially good for Yoigo and all other virtual mobile device operators.
Edited in English by Brandon Dyches and Jose L. de Haro (for comments contact: joseluisdeharo@eleconomista.es)
