Abstract

The case discusses in length about the business transformation initiatives and the successful corporate turnaround reported by Telefónica de España, the leading telecommunications operator in the Spain. Telefónica de España, started off as a state run telephone company with monopoly over the telecommunications market in Spain. The liberalization of the telecom industry in Spain led to competition from new players who were providing several additional services at lower prices. This change in business environment had an adverse affect on Telefónica de España, which experienced dwindling EBITDA margins despite marginal increase in revenues. In 2001, Telefónica de España initiated a business transformation program, through which the company started offering better services to its customers. The company was able to reestablish itself in the Spanish telecom market and its market share in fixed telephone market reached 85% by 2005.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Gain insights into the challenges faced by a leading government-owned telecommunication company in the light of growing competition and rapidly changing business environment
• Understand how Telefónica de España planned and implemented its business transformation program
• Study the importance of process improvement and quality initiatives and the role played by them in business transformation
• Analyze the growing importance of new telecom services like double play and triple play
• The importance of customer orientation in any business transformation program

Keywords

Telefónica De España, Business Transformation Program, Spanish Telecom Industry, Liberalization, Telecom Services, Duopoly, Transformation Modules, Growth, Competitiveness, Commitment, Financial Performance, Service Parameters, Average Revenue Per User, Corporate Values