Telefónica is looking to growth in 2013, despite a rocky past 12 months that has seen it take serious measures to deal with more than €50bn of debt, its chief operating officer has predicted.
José María Álvarez-Pallete said there was ‘no need’ to sell off its UK business, following rumours O2 UK could be floated on the UK Stock Exchange this year to help Telefónica turn its fortunes around. O2 has taken steps to franchise out its retail business and Telefónica Germany was floated in October, raising €1.45bn.
Álvarez-Pallete (pictured) said the German business was floated because its value was not the sum of its parts. He said: ‘For us it was about crystallising our German business, which was significantly undervalued, and raising money for deleveraging. It was a way of crying out loud that we are a credible player in the German market.’
Despite the continuing travails of the Spanish economy hitting Telefónica, Álvarez-Pallete said the business had been turned around during the past 12 months and next month’s full year results would underline that. He said areas of growth include Latin America, where smartphone penetration of 20% is considerably behind that of Spain’s 65% and the ‘booming’ data market. He said: ‘It’s a question of focusing on the right areas of growth and managing that migration from traditional products to digital products. We see ourselves as a growth company, even in Europe. We are at the core of what is happening and we need to take advantage.’
He said the debate about a pan-European network share (see page 9) raises the question about operators merging within the region to compete with the US. He said Europe needs to have sufficient scale to properly compete, comparing Europe’s 100 operators to the four trading in the US. He said: ‘Whenever there is any major player on the technology landscape and they want to launch something, they will go where they have access to hundreds of millions of customers. If Europe wants to be part of that game, it needs to have scale.’
He added he was ‘very concerned’ about the speed of decision making in the European market. ‘My only concern is the speed of execution, the speed of actions and the speed of approvals.’
Author: Graeme Neill