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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Introduction Contd...

The late 1990s saw Telefonica de España going through a bad financial phase. In 1999-2000, the company's revenues grew by 2.1% but the EBITDA declined by 10.7% to €4,491 million and the operating expenses increased by 11.6% to €5,878 million. The company faced several problems due to difficult market conditions.

The liberalization of the Spanish telecom industry saw the entry of several private players, leading to severe competition for the company.

With growing competition, the call prices fell from c.€ 7.45 per minute in 1999 to c.€ 5.74 per minute in 2000.

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At the same time, the new players entering the market were providing bundled voice and Internet services.

The company was slow to react to the changes mainly due to access deficit and delays in developing and approving the new products. The transformation program, however, helped Telefónica de España to develop customer focus and new, better quality products.

Its market share in fixed telephone, broadband, and Internet connections also showed a marked improvement.

According to Julio Linares (Linares), Executive Chairman, Telefónica de España, "I believe we have changed a lot. Nowadays, the organization is more oriented to results.

Also, we all have understood the need to balance the focus on short-term results with efforts to gradually change our capabilities and attitudes.

Finally, I would highlight the fact that the organization has advanced significantly in its customer orientation and has also become really conscious of efficiency - critical requirements for our current and future success."5...

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5] Josep Isern and Julie Shearn, "Leading Change: An Interview with the Executive Chairman of Telefónica de España,"The McKinsey Quarterly, August 2005.

 

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