Telefonica, S.A. - Company Strategy Report
Telefonica, S.A., based in Spain, is a leading telecommunication operator offering communication, information, and entertainment services and products through its subsidiaries, including Telefonica, Movistar, Vivo and O2. Telefonica plans to focus on expanding its 4G-LTE network coverage across all markets and maintaining a sustainable and profitable supply chain. It also intends to adopt cloud technology to increase efficiency and focus on end-to-end digitalization.
MarketLine’s Premium company strategy reports provide in-depth coverage of the performance and strategies of the world’s leading telecommunication companies. The reports detail company operations in key geographies as well as comprehensive analysis of each company’s growth strategy and financial performance. Furthermore, the reports allow benchmarking company performance through the provision of key performance indicators including: subscriber volumes, subscriber churn, ARPU, and MoU.
Telefonica has a predominant market position due to its acquisitions
Telefonica attained a leading market position in part due to its strategic acquisitions. In April 2003, Telefonica and Portugal Telecom created a joint venture to function in the Brazilian mobile market, and began commercial operations under the name ‘Vivo’. Later in 2015, ‘Telefonica Brasil’ acquired GVT to become the country’s leading telecom operator. Telefonica has demonstrated robust growth in these countries backed by the acquisitions it made in recent years.
The company’s wide geographical presence mitigates country specific risks
In 2016, Telefonica generated 20.5% of its total revenues from Germany, where the company also reported its highest subscriptions growth, which increased at a CAGR of 22.7% during the review period (2012-2016), from 19.3 million in 2012 to 43.6 million in 2016. This is followed by Brazil with 19.8%; the UK with 17.3%; Spain with 13.3%; Venezuela with 12.0%; Argentina with 4.9%; Peru with 4.0%; Chile with 3.5%; Colombia with 2.6%; and the Czech Republic with 2.1%. Telefonica’s wide geographical presence minimizes country specific risks, and exposes the company to growth in the various markets.
Telefonica Spain posted the lowest churn rate out of its operating companies
Telefonica reported the lowest churn rates in Spain, with 21.2% in 2016, followed by O2 UK which posted 23.6%. The low churn rates are primarily due to the company’s launch of innovative bundled services. For instance, the company launched Movistar Fusion - a converged service that offers a long term option with mixed bundle of services, including fixed broadband and TV services.
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