business plan for 2004 - EDP

2 TELECOMMUNICATIONS
>> 2.1 Global Framework
2003 was marked by the slowdown of economic activity
that had been felt since 2002, with an inevitable impact on
the telecommunications sector, particularly sensitive to
the economic cycle.
Against a background influenced by efforts to reduce
costs and to increase operating efficiency, implemented
by most economic agents, the ONI Group maintained its
growth, achieving consolidated revenues of more than
€310 million, about 25% more than in 2002.
The Group’s environment both in Portugal and in Spain
continued to be extremely adverse, and the barriers
imposed by regulatory questions have been maintained,
preventing any real competition. The main difficulties
have to do with access to the local loop and also with the
costs of interconnection with the networks of the
incumbents, whose tariffs are among the highest in
Europe.
2003 was also influenced by the conclusion of the process
of termination of the business of ONI Way and by the
exercise of the sale option on the whole of the company’s
share capital.
>> 2.2 Organisation and Business of the ONI
Group
During 2003 and in the wake of the concentration of the
group’s activity on the fixed business, the Group’s
structure was reorganised and now has the following
business composition:
ONI
Telecom
ONI Group
Comunitel Ucall
ONI
Multimédia
Portugal
Regulatory Evolution
The evolution of the regulatory framework of the
industry in Portugal was influenced in 2003 by the
process of transposition and implementation of the new
regulatory framework of the European Union, which
should have come into force in the various Member States
on July 25, and, in Portugal, by the start to the duties of
the Competition Authority and by the need for ongoing
intervention by the sector regulator (ANACOM).
As far as the fixed networks are concerned, there
continued to exist a clearly insufficient degree of
competition, reflected in the maintenance or even increase
(as in the case of services supported on ADSL technology)
of the market share of the incumbent operator, which
continues to hold about 90% of telephone traffic and 95%
of direct accesses, having increased its broadband market
share to about 80%.
The incumbent operator therefore continued to benefit
from the situation, strange in European terms, of holding
at the same time the basic telecommunications network
and the principal cable TV network, which was not
subject to any structural measure, nor were its negative
effects even reduced by an approach to best European
practice in terms of conditions of access to the basic
network.
The main aspect to remember as far as the legislative
framework is concerned has naturally to do with the
delay seen in Portugal to the process of transposition of
the new Community framework, which, despite the fact
that it involved no public hearing, contrary to what was
seen in other countries, was approved by the Assembly of
the Republic only in December, with its publication
consequently postponed to 2004.
Notwithstanding the activity of the regulator during 2003
and in previous years, there continued to be several
constraints of a legal and regulatory nature that
significantly conditioned the development of real
competition in the fixed network services market. In most
cases they were recurrent issues that have not yet been
subject to any deliberation.