(Image Credit: iStockPhoto/gerenme)
Spanish telecommunications giant Telefónica appears to be refocusing its efforts on its home market, even as reports suggest it may seek an exit from the UK. According to statements by Telefónica Spain president Luis Miguel Gilpérez, the company plans to boost its top broadband tier from the current 100 Mbps to 300 Mbps, with the upgrade expected before the summer.
Although the plans have not been officially confirmed, Spanish media report that customers on packages currently capped at 100 Mbps would be upgraded to theoretical maximum speeds of 300 Mbps. Similarly, customers on packages limited to 10 Mbps would see their maximum theoretical speeds rise to around 30 Mbps.
These capacity upgrades come amid regulatory and market developments in Spain. Last year, the Spanish telecoms regulator, Comisión Nacional de los Mercados y la Competencia (CNMC), proposed rules that would require Telefónica to grant competitors access to its fiber network at regulated wholesale rates, similar to the access it already provides to its ADSL infrastructure.
Telefónica continues to own the “last mile” of copper network infrastructure despite market liberalization in 1998. That arrangement resembles the situation in the UK, where Openreach—created as a BT subsidiary after regulatory intervention by Ofcom—provides equal access for rival telephone and internet service providers to BT’s copper and fiber network.
The broader telecoms market is showing signs of recovery after years of falling prices, and improving revenues are encouraging operators to invest in network upgrades like those Telefónica is pursuing in Spain. Telefónica currently operates in 21 countries and reported group revenues of €50.38 billion for the last calendar year.
In the UK, Telefónica operates under the O2 brand, which it acquired from BT in 2005 for £18 billion. UK revenues for Telefónica have fluctuated but showed improvement recently: revenues in the UK rose 2.4 percent to €1.6 billion last year. That performance was supported by a seven percent increase in post-paid mobile customers and higher average revenue per user (ARPU) among customers on 4G LTE plans.
Operational changes and better monetization helped as well. For example, O2’s commercial leadership focused on initiatives that reduced revenue leakage and improved results—efforts that delivered notable savings and helped stabilize the business.
Despite progress on revenue, Telefónica carries substantial debt. To reduce leverage, the company has explored asset sales, including negotiations to sell O2 UK to Hutchison Whampoa, owner of Three UK. Such a transaction would create a larger challenger in the UK market and could reshape competitive dynamics, especially amid talks of potential consolidation among major players such as BT and EE.
Do you think these speed upgrades will help Telefónica compete more effectively with its rivals? Let us know in the comments.