Telefónica

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Telefónica S.A.
Image:Telefónica.png
Type	Public (Euronext: TEF, NYSE: TEF, LSE: TDE, FWB: TEF, TYO: 9481)
Founded	1924
Headquarters	Image:Flag of Spain.svg Madrid, Spain
Key people	César Alierta, CEO
Industry	Telecommunications
Products	Communication services
Revenue	Image:Green Arrow Up Darker.svg €52.901 billion (2006)
Operating income	Image:Green Arrow Up Darker.svg €9.421 billion (2006)
Net income	Image:Green Arrow Up Darker.svg €6.233 billion (2006)
Employees	220,000
Subsidiaries	Telefónica de España Telefónica Móviles Telefónica O2 Europe Terra Networks, S.A. Vivo S.A.
Website	www.telefonica.com

Telefónica, S.A., (IBEX-35:TEF, Euronext: TEF, NYSE: TEF, LSE: TDE, FWB: TEF, TYO: 9481) is a Spanish telecommunication company. Operating globally, it is one of the largest fixed-line and mobile telecommunications companies in the world: 2nd in terms of number of clients (with the acquisition of O2 plc., Movistar and Manx Telecom) only behind a Chinese mobile provider, and in the top five in market value. They were behind China Mobile, AT&T, and Vodafone in November 2007.

Created in 1924, until liberalization 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 5th July, 2007, the European Commission ordered Telefónica to pay a record antitrust fine of almost €152 million for activities in the Spanish broadband market that "harmed Spanish consumers, Spanish businesses and the Spanish economy as a whole, and by extension Europe's economy", as said by European Union competition commissioner Neelie Kroes [1].

[edit] Financial Data

**Financial data in millions of euro**
Year	2001	2002	2003	2004	2005	2006
Sales	31 052	28 411	28 399	30 322	37 882	52 901
EBITDA	12 804	11 724	12 600	13 215	15 276	19 126
Net Results	2 106	-5 577	2 203	2 877	4 446	6 233
Net Debt	28 941	22 533	19 235	20 982	33 574	52 145

Source :'OpesC'

[edit] Key operations

[edit] Europe

Image:Telefónica - Gran Vía 28 - Madrid.jpg

Edificio Telefónica on Gran Vía in Madrid.

[edit] Spain

Telefónica is the second largest corporation in Spain. It owns Telefónica de España which is the largest fixed phone and ADSL operator in Spain, Telefónica Moviles the largest mobile phone operator in Spain (under the movistar brand) and Terra Networks, S.A. an internet subsidiary.

[edit] 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 1st, 2006, both companies were merged into one legal entity and renamed Telefónica O2 Czech Republic.

[edit] Slovakia

In summer 2006, Telefónica (Telefónica O2 Slovakia) won the tender for the 3rd mobile phone operator in Slovakia, under the brand O₂. It began providing services on the 2 February 2007, of which the first customers' registration started from the 15 December 2006 under the operation O₂ Jednotka. At the start, it will provide a basic pre-paid service, and in the 2nd quarter of 2007, O2 start contracts.

[edit] United Kingdom, Republic of Ireland, Germany and Isle of Man

On 26th January 2006 Telefónica completed its £17.7 billion (€ 25,7 billion) acquisition of the UK-based operator O₂ which provides mobile phone services in the UK, Republic of Ireland, Germany and Isle of Man (where it also operates a small number of fixed-line services). As part of the takeover deal these services will continue to use the O₂ brand and be based in the UK.

Telefónica is also the owner of Telefónica Deutschland and Telefónica UK, 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..

[edit] Italy

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

[edit] Latin America

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

[edit] Argentina

Telefónica owns Telefónica de Argentina [2] which is the largest fixed-line operation in the country. It provides broadband, local and long distance telephone services in southern part of the country as well as the Great 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.

[edit] 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 jointly owns the Brazilian wireless operator Vivo with Portugal Telecom. 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.

[edit] Chile

In Chile Telefónica owns Telefónica Chile [3], formerly CTC (Compañía de Teléfonos de Chile) which is the biggest fixed-line operator and internet service provider [4] 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.

[edit] Ecuador

After acquiring 100% of OTECEL S.A. (Bellsouth), Telefónica Móviles Ecuador started its operations in October 14, 2004 as Movistar. It offers mobile solutions for the Ecuadorian market and is one of only three mobile operators in Ecuador.

[edit] 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.

Telefónica is the owner of Cable Mágico (Cable Television Operator) Cable Mágico

[edit] Colombia

In April 18, 2006, Telefónica's president Cesar Alierta signs 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 becomes the largest Colombian land-line operator, and also gains an important presence in the local, long-distance and broadband market. The mobile business is run by Telefónica Moviles through the brand movistar. It's unknown what's going to happen with their previous established subsidiary Telefónica Empresas, being most probable a merger with TELECOM. Now the company is known as Telefónica - Telecom.

[edit] Puerto Rico

Telefónica in Puerto Rico has presence through Telefónica Empresas, Telefónica Larga Distancia (TLD) and Atento. There is another "Telefónica" in Puerto Rico: PRT (Puerto Rico Telephone), the main telecommunications provider in the island, wholly owned by América Móvil, sister company of Telmex, the Mexican telco. PRT is popularly and commonly referred as "Telefónica" because for many years it was marketed as: "Nuestra Telefónica" or "Telefónica de Puerto Rico", long time before Telefónica (of Spain) existed worldwide, or entered the Puerto Rican market.

[edit] China

Telefónica has a 9.9% stake in China Netcom as of 2006.^[1]

[edit] Africa

[edit] Morocco

Telefónica also has a stake in the second Moroccan operator , Méditel.

[edit] United States

Based In Miami, Telefonica USA Inc has given Telefónica a presence in the U.S. Opened in 2001, their Miami Key Center hold a storage facility for companies to place servers in a secure environment while giving 99.99% uptime. Locations include, Miami & Boca Raton FL, New York, NY, San Diego CA, Washington D.C, Atlanta GA, and Houston, TX.

[edit] Venezuela

Telefonica offers EvDO-based internet access at low rates from 2004 and owns movistar that is the first, better and larger mobile operator of Venezuela, being in second place movilnet of CANTV (Government). movistar. Telefonica offers in Venezuela EvDO/1x and GSM GPRS networks and its preparing 3G from earlier 2008.

[edit] 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:

JPMorgan Chase: 10.02%
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA): 5.62%
Caixa d'Estalvis i Pensions de Barcelona ("La Caixa"): 5.37%
Citibank: 4.66%
Capital Group: 3.60%

In addition to this, the company held 75% of Dutch TV firm Endemol in shares, although these have been sold to Mediaset in May 2007.

[edit] Sponsorship

Telefónica was a major sponsor of the Renault F1 Team until Fernando Alonso's departure to Vodafone McLaren Mercedes F1 Team. Through its acquisition of O₂, Telefónica also indirectly sponsors the BMW Sauber. F1 Racing estimates these sponsorships amount to $18 million and $15 million respectively.

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

Teléfonica also sponsors Real Zaragoza and as of 13 April 2007, Telefónica is the new sponsor of Valencia CF (both of them are Spanish football teams).

[edit] Business Practices

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On its official website, ([5]) Telefónica states its general business principles as follows:

To be honest and trustworthy in all its dealings, and to keep the commitments it makes.
To protect the confidentiality of company, employee, shareholder, supplier and customer information.
To comply with all applicable national or international laws, rules and regulatory obligations as well as its own internal policies and procedures.
To compete fairly in its own markets, as it believes that consumers and society in general benefit from open and free markets.

As regards, bribery and corruption, Telefónica's business principles state that it will never seek to offer or accept gifts, hospitality, bribes or other inducements to reward or encourage a decision.

The company further says that it will avoid or declare conflicts of interest that may lead to divided personal loyalties.

[edit] Controversy

Telefónica has received several fines due to convictions over unfair competition, abuse of its condition as dominant provider, and antitrust violations through the Commission of Telecomunications, European Commission, and Spanish tribunals. These fines include: 900,000 euro fine, Spanish tribunals^[2], 18 million euro fine, Spanish Telecommunication Market commission, 57 million in 2004 for unfair competition^[3], and 151,9 million euro by European Commission for abusing of its dominant position.^[4] ^[5] This last fine is the biggest fine on the history of the European for Defence of the Compentence tribunal imposed to any entity on his whole history. Now Telefonica has in court two more fines, with a value of 793 million of euros ^[6].

Several consumer groups in Spain have reported unnecessary delays to cancel Telefonica's ADSL service. Those consumer groups also claim that services are billed to them after being canceled. They also claim that cancellations of services are ignored.^[7] This has led Spanish people to organize themselves in consumer groups like "Asociación de Internautas" or user communities like "Bandaancha" in order to defend them from Telefónica's abuses, giving support and help to diverse reclamations against bad practices of Telefónica. Those practices include the complex process to cancel the line.^[8] These procedures to cancel the line are justified by Telefonica as a way of "defending customers against jokes". Anyway, in areas where ADSL lines are scarce, there are also reports of customers that claim to have their service cancelled to give that connection to another customer for unknown reasons despite paying their bills.^[9] This practice is considered by some to be used by Telefonica in certain areas of Spain where there are few broadband connections. That is, when a there are not enough connections for each customer in a certain area, one of the old customers has his connection cancel led in order to give it to a new one.

[edit] References

[edit] External links

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