Business Transformation at Telefónica De España

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Case Details:

Case Code : BSTR256
Case Length : 20 Pages
Period : 1998-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : Telefónica de España
Industry : Telecom and Broadband
Themes: Business Transformation | Corporate Growth Strategies
Countries : Spain

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...


Telefónica de España's plans to enhance its competitiveness involved improving the quality of its services by using practices like Six Sigma and improving process and development of online capabilities. By December 2001, Telefónica de España had a quality system in place, that was in compliance with UNE-EN-ISO 9001: 2000 standards According to del Rey, "Competitors can attract people on price for about three months or so. We try to have the clients for a long period, forever. Quality is our differentiator and over time people realize that our price is more or less the same as that of the competitors. It is our belief and our bet that quality will keep customers with us in the long run."...

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In order to improve commitment, Telefónica de España reorganized the market and customer segments and came up with a set of values to bring forth change in attitude.

Customer Segments
For each of the customer segments - households, SOHO, SMEs and large corporations, Telefónica de España had different products to offer. For basic households, the company offered basic voice services. These accounted for 84% of the total household customers as of 2005. Connected digital households accounted for 14% of the household customers and the services provided for this segment included voice services and medium speed broadband Internet. The services provided for Advanced Digital households included voice along with broadband and digital home services like Imagenio, Internet TV, and video communications...

The Results

In the first year after implementing the business transformation program, Telefónica de España was able to reverse the trend of decreasing EBITDA. The EBITDA, which had been going down from 1997 to 2000, showed a positive trend and began growing by the year 2001. In 1997, EBITDA stood at € 5,537 million. It went down to € 5,251 million in 1998, € 4,958 million in 1999, and to € 4,448 million in the year 2000. In 2001, it grew by 1.9% to € 4,508 million. Telefónica de España attributed the growth to price discounts, new packages, reduction in operating expenses, and tariff increases...


Exhibit I: Telefónica SA - Principal Subsidiaries
Exhibit II: Telefónica De España - Financial Performance
Exhibit III: Telecom Market in Spain
Exhibit IV: Telefónica De España Subsidiaries
Exhibit V: Services Offered by Telefónica De España
Exhibit VI: Telefónica - Corporate Values
Exhibit VII: Telefónica De España - Financial Performance (2001-05)

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