Thursday, February 02, 2006

TELEFÓNICA - Conquistadores Of The 21st Century permanent link   1 comments
With their latest takeover, British mobile phone company O2 for roughly 26 billion Euros ($31.5 billion), chairman César Alierta intends to create the largest communication empire in the world. And nothing is too expensive to reach that goal.
The O2 acquisition secures a magnificent starting point in the lucrative british, irish and german mobile phone market. On their way to the European top, the German Telekom/T-Mobile is probably the only serious competition.
In Latin America, the conquistadores of modern times are already the champions, occupying the highest peaks of the Andes, blue and green is everywhere. Telefónica is dominating the telecommunication landscape in Brasil, Argentina, and Peru. Here in Incaland they have already taken a stranglehold on local and long-distance services, Internet access and cable TV with a monopolistic strategy. In his 5 1/2 year tenure, Alierta also succeeded in enlarging his enterprise into the largest mobile phone supplier in South America.
But the always ambitous "Julius Caesar", so his nickname, wants more. Telefónica wants to rise to the world's "best and largest integrated telecommunication supplier". Business insiders and analysts say he has a knack for always doing the right thing at the right moment. When the market asked for restructuring, he did the necessary adjustments. When the market was growing, he went on an expansion course.
Outside of Spain's borders however, faith and trust in the tight-lipped, taciturn man from Zaragoza is less distinctive. The aquisition of 10 mobile phone providers from US giant 'Bell South' in Central- and South America gave Telefónica pole position in many countries, inlcuding Venezuela, Uruguay, Ecuador and Nicaragua. Almost half of the conquistadores' revenue is generated in South America. This guarantees growth but is also risky. High fluctuating exchange rates, political instability and inflation puts a strain on the company's yearly outcome and made the financial markets sneeze.
A nuicance for Alierta because it has the effect of a chock block for a any sustainable increase of Telefónica's enterprise value.

I for one am looking forward for some competition here. Competition is healthy, is innovative and keeps prices low. Paying almost $40 monthly for a snail-paced 350kbps Internet connection is pretty steep for the "average José" and the service sucks.
At least the emergence of Skype, which I use for all long-distance calls, balances the cost a little.



1 Comments:

At 2/02/2006 07:58:00 PM, Blogger De Luis wrote...

Nice article lobo loco

Yes compared to Europe you get a very slow internet line for too much money in Peru. Well outgoing Internet bandwidth from Peru cost money but it doesn’t justify this difference. Telefonica really needs some competition because at this moment there prices are ridicules. I get 10 times more bandwidth for the same price here. I really hope Wimax is going to blow them away….

 

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