Telefónica

Telefónica S.A.

Type	Sociedad Anónima
Traded as	BMAD: TEF, Euronext: TFA, NYSE: TEF, LSE: TDE, FWB: TNE5, TYO: 9481, BVL: TEF, MERVAL: TEF
Industry	Telecommunications
Predecessor	Compañía Telefónica Nacional de España (CTNE)
Founded	19 April 1924 (1924-04-19) (CTNE)
Headquarters	Madrid, Spain
Area served	Worldwide
Key people	César Alierta (Chairman and CEO)
Products	Fixed line and mobile telephony, Internet services, digital television
Revenue	€60.74 billion (2010)[1]
Operating income	€16.47 billion (2010)[1]
Profit	€10.17 billion (2010)[1]
Total assets	€129.78 billion (end 2010)[1]
Total equity	€31.68 billion (end 2010)[1]
Employees	269,050 (average, 2010)[1]
Subsidiaries	Telefónica Europe, Telefónica de España, Telefónica Móviles, Telefônica Brasil, Terra Networks, Vivo S.A.
Website	telefonica.com

Telefónica, S.A. is a Spanish broadband and telecommunications provider in Europe and Latin America. Operating globally, it is the third largest provider in the world. The company is the former public monopoly of telecommunications in Spain.

History

Created in 1924^[2], as Compañía Telefónica Nacional de España (CTNE), until the liberalisation of the telecom market in 1997, Telefónica was the only telephone operator in Spain and still holds a dominant position (over 75% in 2004). Since 1997, the Spanish government has privatised its interest in the company. On 5 July 2007, the European Commission ordered Telefónica to pay a record antitrust fine of almost €152 million for activities in the Spanish broadband market which, according to European Union competition commissioner Neelie Kroes, "harmed Spanish consumers, Spanish businesses and the Spanish economy as a whole, and by extension Europe's economy".^[3]

Current operations

A map highlighting Telefónica's global operations.

  Telefónica operating countries

  Telefónica's partners and affiliates

Europe

Czech Republic

Main article: Telefónica Czech Republic

In 2005, Telefónica bought Český Telecom (Czech Telecom), the former state-owned Czech phone operator which still dominates the Czech fixed-line market. As part of this deal Telefónica also gained its 100% subsidiary Eurotel, one of three mobile phone operators in the Czech Republic. Starting July 1, 2006, both companies were merged into one legal entity and renamed Telefónica Czech Republic.

Germany and Isle of Man

Main articles: Telefónica Germany and Manx Telecom

On 26 January 2006 Telefónica completed its £17.7 billion (€ 25.7 billion) acquisition of the UK-based operator O2 which provided mobile phone services in the UK, Ireland, Germany and Isle of Man (Uniquely to the O2 group Manx Telecom also offered fixed-line services). Manx Telecom was sold by Telefónica O2 in June 2010.

Telefónica is also the parent of O2 in the UK and Germany, two alternative IP carriers which provide of the merger of two ISPs, Telefónica subsidiaries, 'mediaWays' and 'HighwayOne' merged in January 2003, purchased by Telefónica in 2001 and February 2002 respectively.

Since it's acquisition of O2, Telefónica have merged their German operations (Telefónica Deutschland and O2 Germany) into a single business.

Ireland

Main article: Telefónica Ireland

On 31 October 2005 (2005-10-31), it was announced that Telefónica had began proceedings to takeover O2 Ireland's parent company, O2 plc. The takeover was approved by shareholders. In Ireland, Telefónica is the 2nd largest mobile phone operator, operating a GSM and high-speed HSPA+ wireless broadband network to residential and business customers through its "O2" brand. Telefónica Ireland also provide fixed broadband to business customers.

Italy

In April 2007, Telefónica enters in the newco Telco, which holds the 23% of Telecom Italia.

Today Telefónica owns 46,179% of Telco that owns 22,477% of Telecom Italia.

Slovakia

Main article: Telefónica O2 Slovakia

In summer of 2006, Telefónica (Telefónica O2 Slovakia) won the tender to be the 3rd mobile phone operator in Slovakia, under the brand O₂. It began providing services on the 2 February 2007 under the name O₂ Jednotka. In the beginning, it only provided a prepaid service but in the 2nd quarter of 2007, it started selling contract phones.

Spain

New Telefónica's headquarters on Las Tablas in Madrid.

Telefónica is the second largest corporation in Spain, behind Grupo Santander.^[4] It owns Telefónica de España which is the largest fixed phone and ADSL operator in Spain, Telefónica Móviles, the largest mobile phone operator in Spain (under the Movistar brand), and Terra Networks, S.A., an Internet subsidiary.

United Kingdom

Main article: Telefónica UK

On 31 October 2005 (2005-10-31), O2 agreed to be taken over by Telefónica, with a cash offer of £17.7 billion, or £2 per share.^[5] According to the merger announcement, O2 retained its name and continued to be based in the United Kingdom, keeping both the brand and the management team. The merger became unconditional on 23 January 2006 (2006-01-23). O2 is now a wholly owned subsidiary of Telefónica.

Americas

Telefónica operates the Movistar mobile phone brand throughout Latin America. In Mexico it occupies a distant second place and it is the largest in Chile, Venezuela, Brazil and Peru. See movistar article for a complete country list.

Argentina

Telefónica owns Telefónica de Argentina which is the largest fixed-line operator in the country. It provides broadband, local and long distance telephone services in southern part of the country as well as the Greater Buenos Aires area. The Telefónica Group has been in the country since 1990. The mobile business is run by Telefónica Móviles through Movistar, a local subsidiary.

Brazil

Telefónica's largest fixed-line operation in Latin America is in São Paulo where it provides broadband, local and long distance telephone services in the aforementioned state, which alone represents the highest GDP of South America. It also owns a majority stake in the Brazilian mobile operator Vivo, having agreed on July 28, 2010 to buy Portugal Telecom's stake in the firm for €7.5 billion, after increasing its original offer by €1.8bn over three months of incident-rich negotiations.^[6] The Telefónica group has been in the country since 1996 when it acquired CRT, a fixed-line and mobile operator in the southern part of the country. The landline division is currently part of Brasil Telecom. Telefónica is the parent of Telecomunicações de São Paulo S.A.

In 2009, after four big "blackouts" on Telefónica's broadband "Speedy", ANATEL ordered Telefónica to stop sales of its broadband service until improvements were made on the infrastructure to provide better quality service.^[7] After the release of sales of broadband internet in August 2009, ANATEL expects the company's service investments to keep on par with the sales. On 24 July 2010 Telefónica announced that the number of Speedy subscribers had passed the 3 million mark.

Chile

Telefónica owns Telefónica Chile, formerly CTC (Compañía de Teléfonos de Chile) which is the biggest fixed-line operator and internet service provider in the country. The Telefónica Group has been in the country since 1989. The mobile business is run by Telefónica Móviles through a local subsidiary. On October 25 of 2009, Telefónica Chile changed its name to Movistar, including cellphone, landline, satellite TV and internet^[8]

Colombia

On April 18, 2006, Telefónica's president Cesar Alierta signed an agreement with the Colombian government to buy 50% and one share of the state-owned communications company, Colombia Telecomunicaciones (TELECOM). With this sale, Telefónica became the largest Colombian land-line operator, and also gained an important presence in the local, long-distance and broadband market. The mobile business is run by Telefónica Móviles through the brand movistar. It is unknown what will happen with their previous established subsidiary Telefónica Empresas, being most probable a merger with TELECOM. Now the company is known as Telefónica - Telecom.

Costa Rica

Telefonica signed a contract for 15 years (extendable for 10 additional years) on 12 May, 2011 with the government of Costa Rica. It is expected to start operations on 2011 under its Movistar branding.

Dominican Republic

In 2000, Telefónica acquired a 26.5% stake in TRICOM when it purchased part of the shares Motorola had obtained in 1993.^[9]

Ecuador

After acquiring 100% of OTECEL S.A. (Bellsouth), Telefónica Móviles Ecuador started its operations on October 14, 2004 as Movistar. It offers mobile solutions for the Ecuadorian market and is one of only three mobile operators in Ecuador. Telefónica in Ecuador has started offering 3G service from the second half of 2009.

Guatemala

After acquiring 100% of Paysandú S.A., Telefónica Guatemala Centro América started its operations in 1998 as Telefónica Movistar and just Telefónica for landlines. In 2004, acquired 100% of BellSouth Guatemala, relaunching mobile operations as movistar in 2005, with mobile services based on CDMA technology, in 2004 as Telefónica Movistar launch national service with GSM/GPRS technology, and CDMA 1x EV-DO for data. It offers mobile solutions for the Guatemalan market and is one of only three mobile operators in Guatemala, international operator as Millicom (TIGO) and América Móvil (Claro). Telefónica Móviles Guatemala (renamed in 2005) offers services on UMTS/HSPA since June 2009, and it was the last operator to launch commercial services on this technology, with coverage in all mayor cities.

Panama

Telefonica started its operations in Panama in 2004 as Telefonica acquired 100% of Bellsouth Panama. Since then it has operated using the name Movistar for mobile services. It migrated from CDMA technology used by Bellsouth to GSM 850. It also offers 3G using UMTS 850 and UMTS 1900. The company also offers land lines.

Peru

The Telefónica Group has been in the country since 1994 and owns the largest fixed-line operator in the country. The local subsidiary offers local, long distance and broadband services nationwide. The mobile business is run by Telefónica Móviles through a local subsidiary. The mobile telephone business goes by the name Movistar and competes with major provider Claro. Their main offices are located in Santa Beatriz on Av. Arequipa 1155.

Starting January 2011, Telefónica operates in the market under the Movistar brand.

Puerto Rico

Telefónica in Puerto Rico has presence through Telefónica Empresas, Telefónica Larga Distancia - TLD, Telefónica International Wholesale Services - TIWS (formerly Emergia) and Atento. Telefónica Moviles, through its Movistar brand, had presence in Puerto Rico until mid 2007 that they sold the Puerto Rico network to a private equity group who renamed it Open Mobile.

Venezuela

Telefónica offers EvDO-based Internet access at low rates^{[citation needed]} from 2004 and owns movistar, the first and larger mobile operator of Venezuela, being in second place movilnet of CANTV (Government). Telefónica offers in Venezuela EvDO/1x and GSM GPRS networks and in December 2008 launched its UMTS network.^{[citation needed]}

United States

Based in Miami, Florida, Telefónica USA, Inc. provides services to US based multinational companies that have operations in Latin America and Europe. Telefónica USA also operates the Key Center, a category 5 data center in Miami, from where the company supports Business Continuity and IT services for Enterprise customers in South Florida.

Canada

Asia

China

In 2009, China Unicom agreed a $1Bn cross-holding with Telefonica.^[10] In January 2011, the two partners agreed a further $500M tie-up in each other, which following completion in late 2011, Telefonica will hold a 9.7% stake in China Unicom, while China Unicom will own 1.4% of the Spanish firm.^[11]

Telefónica Multinational Solutions

The firm provides fixed and mobile telecommunications and IT services to large multinational corporations through its Telefónica Multinational Solutions unit.

Customers: Telefónica lists, among other, the following as existing customers: DPDHL, Inditex, Scottish Power, BBVA, BMW, Endesa and FCC.

Full Network Operations: Argentina, Brazil, Chile, Colombia, Czech Republic, Ecuador, El Salvador, Germany, Guatemala, Ireland, Mexico, Nicaragua, Panama, Peru, Puerto Rico, Slovakia, Spain, United Kingdom, Uruguay and Venezuela

Commercial and Operational offices with Network Infrastructure: Austria, Belgium, Bulgaria, Denmark, Estonia, France, Greece, Hungary, Italy, Netherlands, Poland, Portugal, Romania, Sweden, Switzerland and USA

Network Points of Presence: Finland, Latvia, Lithuania, Norway and Slovenia

Strategic and Industry alliances: China, Italy and Portugal

Financial data

Financial data in millions of euro

Year	2001	2002	2003	2004	2005	2006	2007	2008
Sales	31 052	28 411	28 399	30 322	37 882	52 901	56 441	57 946
OIBDA	12 804	11 724	12 600	13 215	15 276	19 126	22 824	22 919
Net Results	2 106	-5 577	2 203	2 877	4 446	6 233	8 906	7 592
Net Debt	28 941	22 533	19 235	20 982	33 574	52 145

Source :'OpesC'

Quarterly Report Jan - Dec 2008 - page 9

Ownership

Telefónica is a publicly owned company. It is estimated that a large part of its stock is owned by capital investment funds. Major stockholders include:

• Banco Bilbao Vizcaya Argentaria, S.A. (BBVA): 14.961%
• Caixa d'Estalvis i Pensions de Barcelona ("La Caixa"): 5.442%
• Criteria Caixacorp 5.019%

In addition to this, the company held 75% of Dutch TV firm Endemol in shares, although these have been sold in May 2007 to Edam Acquisition, jointly and equally owned by Cyrte Fund II B.V.; Mediacinco Cartera S.L., which is a newly incorporated entity owned by Mediaset S.p.A. and its quoted subsidiary Gestevision Telecinco S.A.; and GS Capital Partners.

Sponsorship

Telefónica was a major sponsor of the Renault F1 Team until Fernando Alonso's departure to Vodafone McLaren Mercedes F1 Team and Formula 1 Gran Premio De España Telefónica. Through its acquisition of O₂, Telefónica also indirectly sponsored the BMW Sauber. F1 Racing estimates these sponsorships amount to $18 million, $15 million and $23 million respectively. In Ireland, O2 are the main sponsors of the Irish Rugby Union Team.

They also sponsored the Ford Focus WRC during the 2000 season. The sponsorship said Telefónica Movistar on it and the stickers were on the front bumper, the rear 3-quarters and the rear spoiler.

Teléfonica also sponsors the Spanish football teams Real Zaragoza and Valencia CF.

Teléfonica was also a major sponsor of one of Suzuki's racing teams in MotoGP in the early 2000s. They have, however, ceased sponsoring a motorcycle racing team in MotoGP.

From 2011, they are to sponsor the cycling team previously known as Caisse d'Epargne, under the name Team Movistar.

Monopoly

Europe

Telefónica's former headquarters on Gran Vía in Madrid.

Telefónica has received several fines due to convictions over unfair competition, abuse of its position as dominant provider, and antitrust violations through the Commission of Telecommunications, European Commission, and Spanish tribunals. These fines include: 900,000 euro fine, Spanish tribunals,^[12] 18 million euro fine, Spanish Telecommunication Market commission, 57 million in 2004 for unfair competition,^[13] and 151.9 million euro by European Commission for abusing of its dominant position.^[14][15] Now Telefónica has in court two more fines, with a value of 793 million euros.^[16]

Several consumer groups in Spain have reported unnecessary delays in cancelling Telefónica's ADSL service. These consumer groups also claim that services continue to be billed after being cancelled and that service cancellation requests are ignored.^[17] This has led Spanish people to organize themselves in consumer groups such as the "Asociación de Internautas" and user communities like "Bandaancha" in order to defend themselves from Telefónica's abuses, and to give support and help to each other in their various complaints about Telefónica's unfair practices.

The practices are claimed to include the complex process involved in cancelling lines.^[18] These line cancellation procedures are justified by Telefónica as a way of "defending customers against hoaxes". Furthermore, in areas where ADSL lines are scarce, there are also reports of customers who claim to have had their service cancelled or inexplicably transferred to another customer although they have paid their bills.^[19] This practice is considered by some to be used by Telefónica in certain areas of Spain where there are few broadband connections.

Positions on Network neutrality

Main article: Network neutrality

In February 2010, Telefónica CEO Cesar Alierta expressed in a meeting at Bilbao, Spain that his company intends to charge Google and other search engines for the use of their network. Alierta complained that such search engines were benefiting from the platform without contributing to the company's expenses and that such a trend will change in the near future. Additionally he said that Telefónica will seek to push its own content.^[20]

References

1. ^ ^{a b c d e f} "Annual Results 2010". Telefónica. http://www.telefonica.com/en/shareholders_investors/pdf/rdos10t4-eng.pdf. Retrieved 4 April 2011. 
2. ^ Garcia Algarra, Javier (2010). "The American influence in Telefónica's public relations strategy during the 20's and 30's", IEEE HISTELCON 2010
3. ^ "Press conference on Telefónica decision – introductory remarks" (Press release). European Commissioner for Competition Policy. 2007-07-04. http://www.europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/07/460&format=HTML&aged=0&language=EN&guiLanguage=en. Retrieved 2008-02-18. 
4. ^ Spanish companies in Fortune Global 500 ranking.
5. ^ "Telefonica bids £18 billion for U.K.'s O2". BBC News. 31 October 2005 (2005-10-31). http://news.bbc.co.uk/1/hi/business/4391754.stm. Retrieved 25 April 2010 (2010-04-25). 
6. ^ Minder, Raphael (28 July 2010). "Telefónica Wins Full Control of Brazil Phone Venture". The New York Times. http://www.nytimes.com/2010/07/29/technology/29vivo.html. Retrieved 31 July 2010. 
7. ^ Oglobo.oglobo.com
8. ^ Movistar.cl
9. ^ DR1. October 12, 2000. Tricom sells 26.5% of its shares to Telefónica de España
10. ^ China Unicom and Telefónica Enter into a Broad Strategic Alliance and a Mutual Investment Agreement. September 7, 2009.
11. ^ "Telefonica and China Unicom strengthen ties". BBC News. 23 January 2011. http://www.bbc.co.uk/news/business-12261887. Retrieved 23 January 2011. 
12. ^ "Confirman la multa de 900.000 euros a Telefónica por una denuncia de la Asociación de Internautas" (in Spanish). http://www.internautas.org/html/3969.html. Retrieved 2008-02-18. 
13. ^ "Competencia multa a Telefónica con 57 millones por abuso de posición dominante - elmundo.es economía" (in Spanish). http://www.elmundo.es/mundodinero/2004/04/06/Noti20040406123833.html. Retrieved 2008-02-18. 
14. ^ urwqeqwenbhewqt6qh171 "Bruselas multa a Telefónica con 151,8 millones de euros por impedir la competencia en ADSL" (in Spanish). elmundo.es. http://www.elmundo.es/mundodinero/2007/07/04/economia/1183541551.html?a=f8719527e8e83fd51ccda07c9bd3344a&t=1183547qwfrtdsfasASFYTardwqyryfwef6wqre6fqewvg5rfwyqfewq5e4rqwevtyyeqrw5etfwqgtfrqwefqwevhg5wqetg urwqeqwenbhewqt6qh171. Retrieved 2008-02-18. 
15. ^ "Telefonica Profit Doubles; Annual Forecasts Raised (Update5)". Bloomberg.com. http://www.bloomberg.com/apps/news?pid=20601087&sid=asY.PoddtAnk&refer=home. Retrieved 2008-02-18. 
16. ^ "Jazztel presenta dos nuevas demandas contra Telefónica por 793 millones" (in Spanish). ADSL 4 EVER.COM. http://www.adsl4ever.com/noticias/277/. Retrieved 2008-02-18. 
17. ^ Telefónica ADSL - Opinión - Un timo, una estafa, un robo, una mentira
18. ^ Baja en Terra y Telefonica con Burofax completo (con plantilla) - Telefónica - Foros - BandaAncha.st
19. ^ Gestionando el conocimiento
20. ^ Telefonica's CEO to charge Google

Further reading

• Telecomunicações de São Paulo
• Telefónica de España
• Telefónica Europe
• Telefónica Móviles
• Terra Networks
• Tesco Mobile
• Vivo S.A.

External links

• Official website
• Yahoo! - Telefónica, SA Company Profile

Companies portal