Investment volumes in fibre optic deployment have reached extremely high levels, putting Spain at the forefront of deployment in Europe. However, subcontractors for Movistar, Vodafone and MasOrange are now experiencing a significant slowdown in work, which is putting them in a very difficult situation.
Specialist companies in Spain such as Cobra and Zener, two firms that work as subcontractors for the major operators, are reporting on the problems they are currently facing. While not long ago the situation was very beneficial for both parties, both for the operators and the subcontractors, now that the market has calmed down they are suffering the consequences.
Investments are slowing down
The first half of 2024 is turning out to be very different from what these subcontractors might have expected and has meant that they are faced with reality in a forceful way. In statements to El Independiente, sources familiar with what is happening say that, for example, Telefónica has carried out the suspension of investments since the end of the first quarter of 2024. This, of course, is taking its toll on these companies that depended on orders from these clients to deploy the optical fibre and take it across the length and breadth of Spain.
Due to this situation, companies that offer their deployment services to operators have had to start making layoffs. However, sources who have spoken to El Independiente and who are close to the operators, mention that this is a logical situation. Spanish operators have taken the lead in the deployment of fibre in Europe, which has now materialised in a slowdown in the need to continue doing this work at the same pace as before.
There are more reasons that explain it
Another reason for this change in the pace of orders received by operators is the way in which Orange, Movistar and Vodafone are increasingly collaborating. They no longer invest as much independently, but are open to joining forces so that the investment in network installation ends up being lower. This, of course, has a direct consequence on subcontractors, who find that these alliances directly affect their work quota.
It should not be forgotten that MásMóvil and Orange have already merged and that, just a few hours ago, we even told you how MasOrange is now considering the possibility of creating a strategic alliance with Vodafone in the form of another fibre company. This will lead to the volume of orders from subcontractors continuing to be affected.
Sources who spoke to the newspaper also say that operators have ended up putting on the brakes because they have realised that they have over-invested in the deployment of fibre optics. Although it has meant spending more money, the direct consequence of this high volume of investment has been seen in Spain’s leadership in Europe. With a coverage figure of over 70%, Spain leads ahead of most of the continent’s major powers.
In any case, subcontractors are not going to be left without work immediately, as one might imagine. Right now, although the volume of orders and projects they receive is decreasing, they are still essential for the deployment of fibre connections in rural areas. Their service is also important for extending mobile networks and, on the other hand, we must not forget that Digi wants to have a powerful fibre network of its own. With operators like Digi, these companies that offer their services still have a lot of work ahead of them.
