NICA

Telefónica

Telefónica, S.A., (, , , , ) is a Spanish telecommunication company. Operating globally, it is one of the largest fixed-line and mobile telecommunications companies in the world: 3rd in terms of number of clients (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, until 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 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.

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'

Key operations

Europe

Spain

Telefónica is the second largest corporation in Spain, only behind Grupo Santander. 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.

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.

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.

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.

Italy

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

Americas

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, Brazil and Peru. See movistar article for complete country list.

Argentina

Telefónica owns Telefónica de Argentina 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.

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.

Chile

In 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.

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.

Dominican Republic

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

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.

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, relaunch mobile operations as movistar in 2005, mobile services was based in 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 time before Telefónica (of Spain) entered the Puerto Rican market.

Venezuela

Telefonica offers EvDO-based Internet access at low rates 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 its preparing 3G from earlier 2008.

United States

Based In Miami, FL, 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 a 7.22% stake in China Netcom as of 2008.

Africa

Morocco

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

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.

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 sponsors the BMW Sauber. F1 Racing estimates these sponsorships amount to $18 million, $15 million and $23 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 the Spanish football teams Real Zaragoza and Valencia CF.

Controversy

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 Telecomunications, European Commission, and Spanish tribunals. These fines include: 900,000 euro fine, Spanish tribunals, 18 million euro fine, Spanish Telecommunication Market commission, 57 million in 2004 for unfair competition, and 151.9 million euro by European Commission for abusing of its dominant position. 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. And is such difficult too stop being a client of them, that it is needed to use specialiced websites such as baja telefónica to be successfull.

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 canceled and that service cancellation requents are ignored. 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 canceling lines. 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 canceled or inexplicably transferred to another customer although they have paid their bills. 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. Most of the administrations which allowed Telefónica entry into South American markets have been unmasked as corrupt and prone to bribery, a situation which, according to investigators, Telefónica took advantage of. To wit, Fujimori in Peru, Menem in Argentina, etc.

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). With the return to democracy, 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 reticent to give up any powers it gained with the older administrations.