Pandemic stalls Telefónica’s alarm JV launch

Results presented by Prosegur, the global security services group partnering Telefónica on a new security alarm joint venture in Spain, indicated that the new service had been slow to get off the ground as a commercial launch collided with the COVID‑19 crisis. However, despite the difficult start, management appeared confident that the business targeting the under‑served Spanish home alarm market could pull off a fast recovery.

Alarms and surprises

Prosegur said the new JV, Movistar Prosegur Alarmas (MPA), started trading in Spain on 1 March 2020, just as the pandemic began to hit the country, “and therefore has not been able to fully produce its initial sales forecast”. For the weeks following the launch, the economic blows that accompanied lockdown meant that local management were battling the consequences of small businesses closing, putting customer retention and churn rates under pressure.

According to Prosegur senior management, more constructive commercial activity could not begin in earnest until mid‑June, and its own retail operation was not working at full capacity until late‑July 2020 after the first quarter of operations had closed.

Nevertheless, Prosegur anticipates that the level of new connections secured by the JV may be three times the level that the group has traditionally reported. The security business does not break down its net adds in the alarm sector by country or region, but added 29,000 customers across its global alarms division in 2019, to reach a base of 578,000 customers. Of the Prosegur base, around 210,000 (37%) are in Spain and now form part of MPA.

Prior to the Prosegur report, Telefónica was also upbeat, albeit a little more vague, on its interpretation of the launch of the new service at its results presentation, giving little indication of the difficulties faced. COO Ángel Vilá said MPA was “getting very good traction” as part of a wider drive in Spain to introduce new services that can benefit from its connectivity strengths, while the impact of lockdown was not addressed by the telco, except as the backdrop to the achievement of launching any service at all.

Telefónica is selling the MPA offering at €45‑per‑month, reflecting the higher average revenue per user that the smart platform service is reported to attract compared to Prosegur’s other alarm systems. Prosegur indicated that when including the MPA base, its ARPU for the Alarms sector rises to €39-per-month from €33‑per‑month without it.