Telefónica

Telefónica, S.A., (BMAD: TEF, BM&F Bovespa: TEFC11, BVL: TEF, Euronext: TEF, NYSE: TEF, 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: 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 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".

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
EBITDA	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

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 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.

Telefónica's former headquarters on Gran Vía in Madrid.

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.

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

Telefónica Group world locations

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, 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.

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. 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. 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. 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.

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.