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Telefonica’s European ambition

Escrito el 7 noviembre 2005 por Ricardo Pérez Garrido en Telecom

Telefonica’s anouncement this week of its acquisition of O2 (BT’s spin-off four years ago) shows its ambition to compete not only in emerging markets (Latin America – Presentation on Telefonica’s Leadership in Latin America here- and recently China) but also in the european market outside Spain.

The move raises questions about the direction of the company in its strategy to be the european leader in a converging scenario. With more than 116M mobile customers but no broadband presence in UK and Germany is difficult to se how it will help Telefonica’s integration path announced by Cesar Alierta earlier this year as being at the center of their strategic plan towards 2008.

One of the best assets O2 has to offer is its experience in highly competitive markets, where Telefonica had no presence before. A experience that could be key to face increasing competition from Vodafone in Spain and future expansion plans in other european markets. The evolution of technologies that can change competition in mobile devices like WIMAX or the popularization of free WI-FI (initiatives like FON will be common place if they solve regulatory problems) adds aditional pressure.

With revenues of traditional voice services shrinking and growing competition in broadband, learning from hihgly competitive markets (where innovation is taking to the mass market services in the edge of broadband and mobility) sounds like a good option.

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Comentarios

Antonio Vega Velasco 7 noviembre 2005 - 18:38

Let me add more pressure: http://www.elmundo.es/navegante/2005/11/07/empresas/1131365663.html

In any case, we have to admit the buying of O2 is a very good movement by TEF acording to its aim of positioning in “big” markets (UK and Germany). What about a new move into italian or french market?

Regards, A.V.

Ricardo 19 noviembre 2005 - 21:49

France Telecom just entered the Spanish market, and its intention to launch a triple play offer will clearly affect the competitive ladnscape in Telefonica’s home market. Entering one of those markets has some regulatory problems, and its not clear which company could be a good candidate for a new acquisition. What is clear is some sort of major plan in Europe, to follow the strong eurpean presence that others have pursued for years.

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