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Telefonica - Telecom Italia Merger: New Spanish Empire?
Upcoming Battle of European Telecom Giants?
Boston, MA - February 23, 2010 – Telefonica’s long sought merger with financially challenged Telecom Italia looks set to happen at last. The Strategy Analytics Tariff and Revenue Strategies(TRS) and Wireless Network Strategies(WNS) services have teamed up to analyze this merger, which could create a ‘New Spanish Empire’ of fixed and mobile services--this time leveraging Telefonica’s strengths in Spain and Latin America to expand across Europe.
Sue Rudd, Director of the TRS service, noted, “Should this occur, the merger would increase Telefonica’s revenues by 43%, even after likely divestitures in Brazil and, possibly, Argentina. Broadband subscribers would increase by 55% and traditional telephone lines by over 80%. Mobile revenues would be 31% higher with 35.5 % more mobile subscribers than Telefonica has today.”
The Strategy Analytics report, “Telefonica Telecom Italia Merger - New Spanish Empire? Or Pre-cursor to European Battle of the Giants?” summarizes:
- The scope of this new corporation;
- Telecom Italia gains;
- How this merger could facilitate fixed and mobile investment; and
- Factors that would accelerate the transition to Broadband in Spain and Italy.
Phil Kendall, Director of the Strategy Analytics WNS Service commented “Telefonica has done a pretty good job of managing the merger with O2. Telecom Italia shares the same philosophy on convergence, so there is no clash of cultures there.” He added, “Telefonica has been good at knowing when to force through change and when to leave successful operations/strategies alone.”
The stage is set for a major new Telecom giant with the financial strength to upgrade broadband networks in Italy and Spain, expand its German and UK operations and move into other deregulated EU markets. The merged company revenues will initially outstrip even Orange and Deutsche Telekom.
The new operator is prepared to become a technological leader in Broadband Communications – combining Telecom Italia’s ABB network technology and competitive experience against advanced competitors with Telefonica’s broadband partnerships, network management technology and financial strength.
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