The deal marks a near-term softening of competitive lines in the market as Sogecable DTH subscribers gain access to Telefónica’s IPTV packages while Telefónica’s Imagenio IPTV households will receive DTH product offers.

In addition to exchanging reach into each other's customer bases, the deal will grant the firms increased leverage in content license negotiations. The agreement indicates Sogecable will lead joint content buying initiatives and thereby become a content supplier to Telefónica.

The agreement is non-exclusive and expires after four years. Kagan analysis indicates the agreement is aimed at jumpstarting Sogecable’s hybrid DTH/IP service while boosting consumer interest in Telefónica’s Imagenio platform. Both DTH and IPTV platforms in Spain face immediate threats from digital cable and future competition from emerging pay-DTT systems.