Telefonica to halve bills for Spain's unemployed

Telefonica to halve bills for Spain's unemployed

Spanish telecoms operator Telefonica is offering half a million unemployed customers 50 percent off their bills in a bid to keep clients as joblessness in Spain rises fast. Telefonica said on Tuesday it would cut unemployed customers' fixed-line and mobile phone costs by half this year, subject to a maximum cut of 20 euros for each bill. Such discounts are unheard of in other large European economies such as Britain, Germany and France, where the percentage unemployed remains in single figures. Spain has the highest jobless rate of any European Union country at around 15 percent in February, with nearly 3.5 million people out of work following the collapse of a decade-long house building and real-estate boom.

"This is not a move to capture new clients but one to help out those with problems," said Telefonica Chairman Guillermo Ansaldo. Telefonica, Spain's largest telecoms company, could lose up to 100 million euros in sales this year from the discounts, which also apply to newly created small and medium-sized businesses, some analysts said. The company expected a smaller impact from the one-off measures, which last until the end of 2009, to customers who have had both fixed and mobile services for the last six months.

Behind Telefonica's move is also a desire to protect market share as cheaper, virtual operators seek to profit from what is expected to be Spain's worst recession since its 1936-1939 Civil War. "With this offer, Telefonica is ensuring the unemployed continue to spend with them," said one Madrid-based analyst, who asked not to be named. (Reporting by Andrew Hay, Robert Hetz and Sarah Morris, editing by Will Waterman)