Telefonica - Spain's Telefonica

1 – Telefonica was originally established in the 1920s as a typical state owned Telecommunications Company until the 1990s. After being established, the Spanish government chose to make the company private and removed the Spanish telecommunications market. Unfortunately, this caused a reduction in the work force, technology enhancement and the focus of driving up profits and shareholder value. These changed led Telefonica to look for further growth in its success and profits allowing them to explore the idea of starting to expand globally.

2- Telefonica was in search for growth after being privatized. Their initial focus was to expand far beyond into Latin American countries. Just as the Spanish telecommunications market was deregulated, Latin America was also experiencing a form of deregulation and privatization across their region. Latin America was Telefonica’s perfect fit. The region shared a common language and had similar cultural and historical ties to Spain. Although Latin America had decades of slow growth, their markets began to grow rapidly causing an increase in rate and usage of traditional fixed line telecommunication services, mobile phones and internet connections. As other countries started to see growth opportunities in Latin America, Telefonica was beat by America Movil by fifty nine million wireless subscribers across Latin America. It was clear to see that a price competition was beginning to emerge between the two very successful companies. Telefonica then began to set its attention on to Latin America’s neighboring countries in Europe. Europe had an agreement with national telecommunications companies that they would not invade each other’s markets, already making hard for a smooth expansion. In 2005, this agreement began to break down when France Telecom decided to enter Spain, purchasing the country’s second largest mobile carrier behind Telefonica. So many other operations made it a bit difficult for the expansion to go global....