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Telefónica de España S.A.
Type Public (BMADTEF, BM&F Bovespa:TEFC11, BVL: TEF, Euronext: TEF, NYSETEF, LSE: TDE, Merval: TEF, FWB: TEF, TYO: 9481)
Founded April 19, 1924 (1924-04-19) as Compañía Telefónica Nacional de España
Headquarters Madrid, Spain
Area served Worldwide
Key people César Alierta (Chairman of the board and CEO)
Industry Telecommunications
Products Fixed line and mobile telephony, internet services, digital television
Revenue 57.95 billion (2008)[1]
Operating income €13.87 billion (2008)[1]
Profit €7.592 billion (2008)[1]
Total assets €99.90 billion (2008)[1]
Total equity €17.23 billion (2008)[1]
Employees 251,780 (2008)[1]
Subsidiaries Telefónica de España
Telefónica Móviles
Telefónica O2 Europe
Terra Networks, S.A.
Vivo S.A.
Telesp
Website www.telefonica.com

Telefónica, S.A., (BMADTEF, BM&F Bovespa: TEFC11, BVL: TEF, Euronext: TEF, NYSETEF, LSE: TDE, Merval: TEF, 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: third largest in terms of number of customers (with the acquisition of O2 plc., Movistar and Manx Telecom) only behind China Mobile and Vodafone, and in the top five in market value. They were behind China Mobile, AT&T, and Vodafone in November 2007.

Created in 1924, 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".[2]

Contents

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

Key operations

Telefónica Group world locations

Europe

Spain

Telefónica is the second largest corporation in Spain, behind Grupo Santander.[3] 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.

Telefónica's former headquarters on Gran Vía in Madrid.
New Telefónica's headquarters on Las Tablas in Madrid.

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 O2 Czech Republic.

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.

United Kingdom, Ireland, Germany and Isle of Man

On 26 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, 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.

Italy

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

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

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 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.

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[4]. After the release of sales of broadband internet in late August, ANATEL expects the company's service investments to keep on par with the sales.

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 [5]

Colombia

In 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 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.

Dominican Republic

In 2000, Telefónica acquired a 26.5% stake in TRICOM when it purchased part of the shares Motorola had obtained in 1993.[6]

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. Telefonica in Ecuador is planning to start 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) is upgrading technology to UMTS/HSPA, and will be the last operator to launch commercial services on this technology.

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 television operator Cable Mágico.

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 before Telefónica (of Spain) entered the Puerto Rican market.

Venezuela

Telefonica 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). Telefonica 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, Telefonica USA, Inc. provides services to US based multinational companies that have operations in Latin America and Europe. Telefonica 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.

Asia

China

Telefónica has an 8% stake in China Unicom as of 2009.[7]

Telefonica Multinational Solutions

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

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

Telefonica Commercial Map November 2009.png

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

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:

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 Telefonica 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.

Monopoly

Europe

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,[8] 18 million euro fine, Spanish Telecommunication Market commission, 57 million in 2004 for unfair competition,[9] and 151.9 million euro by European Commission for abusing of its dominant position.[10][11] This last fine is the biggest fine on the history of the European for Defence of the Compentence tribunal imposed to any entity in its whole history. Now Telefonica has in court two more fines, with a value of 793 million euros.[12]

Several consumer groups in Spain have reported unnecessary delays in cancelling Telefonica's ADSL service. These consumer groups also claim that services continue to be billed after being cancelled and that service cancellation requests are ignored.[13] 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.[14] These line cancellation procedures are justified by Telefonica 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.[15] This practice is considered by some to be used by Telefonica in certain areas of Spain where there are few broadband connections.

South America

Telefónica has been continually targeted by most recent governments in South America because of its monopolistic business practices, due to the evidence of bribery and underhanded legal agreements when originally entering the markets in association with corrupt governments.[citation needed]

The problem lies in the fact that these administrations allowed Telefónica enormous latitude in the agreements, effectively giving them the power to operate above the law in some situations (for example, assigning or loaning land lines in Peru; where other companies must go through a lengthy approval process, Telefónica is able to unilaterally add or remove land lines at will). These nations have been attempting to resolve this situation and reach more balanced agreements with the company; however, Telefónica now takes advantage of the transparency and legality of these new governments and is reluctant to give up any powers it gained with the older administrations.[citation needed]

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 Telefonica will seek to push its own content.[16]

References

  1. ^ a b c d e f "Annual Report 2008". Telefónica. http://www.telefonica.com/en/shareholders_investors/pdf/090330_Cuentas_Consolidadas_2008_eng.pdf. Retrieved 2010-02-03. 
  2. ^ European Commissioner for Competition Policy (2007-07-04). "Press conference on Telefónica decision – introductory remarks". Press release. http://www.europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/07/460&format=HTML&aged=0&language=EN&guiLanguage=en. Retrieved 2008-02-18. 
  3. ^ Spanish companies in Fortune Global 500 ranking.
  4. ^ http://oglobo.globo.com/economia/mat/2009/06/22/anatel-suspende-comercializacao-do-speedy-banda-larga-da-telefonica-756446903.asp
  5. ^ http://www.movistar.cl/webMovistar/portals/movistar.portal
  6. ^ DR1. October 12, 2000. Tricom sells 26.5% of its shares to Telefónica de España
  7. ^ China Unicom and Telefónica Enter into a Broad Strategic Alliance and a Mutual Investment Agreement. September 7, 2009.
  8. ^ "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. 
  9. ^ "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. 
  10. ^ urwqeqwenbhewqt6qh171 "Bruselas multa a Telefónica con 151,8 millones de euros por impedir la competencia en ADSL" (in Spanish). http://www.elmundo.es/mundodinero/2007/07/04/economia/1183541551.html?a=f8719527e8e83fd51ccda07c9bd3344a&t=1183547qwfrtdsfasASFYTardwqyryfwef6wqre6fqewvg5rfwyqfewq5e4rqwevtyyeqrw5etfwqgtfrqwefqwevhg5wqetg urwqeqwenbhewqt6qh171. Retrieved 2008-02-18. 
  11. ^ "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. 
  12. ^ "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. 
  13. ^ Telefónica ADSL - Opinión - Un timo, una estafa, un robo, una mentira
  14. ^ Baja en Terra y Telefonica con Burofax completo (con plantilla) - Telefónica - Foros - BandaAncha.st
  15. ^ Gestionando el conocimiento
  16. ^ http://www.eitb.com/news/technology/detail/350113/spanish-telefonica-to-charge-google-yahoo-bing/ Telefonica's CEO to charge Google

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