Telecom giant Telefonica (News - Alert) S.A. has renewed its network contract with Spanish cable TV service provider Ono for another two and a half years. The terms of the MVNO deal were not disclosed.

Ono, a budget provider that offers triple-play services, has been riding the Telefonica network since 2007 to provide a mobility component to its wares. The renewal comes as Ono is now fast gaining ground on its competition in a market friendly to its low-cost value proposition: Spain has a 27 percent unemployment rate.

For Telefonica, Europe’s largest communications provider, wireless is becoming more and more important as it continues to lose wireline subs in its home market. It also has a need to fund its mobile broadband investments; it has steadily upgraded its 3G mobile infrastructure to HSPA+, and is beginning to roll out LTE services in urban areas.

Reuters (News - Alert) reported that Banco Sabadell analysts said in a note to clients that “conditions of the contract could have been changed to be more favorable to Telefonica due to increased data traffic and investment the company needs to put into a new 4G network.”

MVNOs continue to be a popular way to bring more money onto the network while avoiding customer acquisition costs. Mobile network operators (MNO) host more than a thousand cellular service providers worldwide, according to Wireless Intelligence. As of May 2012, the count stood at 812 MVNOs and 224 MNO sub-brands.

MVNOs are most prevalent in mature markets where market penetration has surpassed 100 percent. Europe is home to two-thirds of global MVNOs, followed by Asia-Pacific (125 MVNOs) and North America (90 MVNOs). By contrast, Wireless Intelligence noted, regulatory measures have held back the growth of MVNOs in markets such as the Middle East and Latin America.