The Telefónica Group in 2003

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The Telefónica Group in 2003 The Telefónica Group in 2003 A LEADER ON THE SPANISH AND PORTUGUESE-SPEAKING MARKETS, INTEGRATING GLOBAL COMMUNICATION SOLUTIONS, FOCUSING ON THE CUSTOMER AS THE CENTRE OF ITS ACTIVITY AND COMMITTED TO THE SOCIETY IN WHICH IT OPERATES A GROUP LEADER ON THE SPANISH market, adapting itself to the needs of each AND PORTUGUESE-SPEAKING MARKETS local society. Secondly, because it is the only operator that is incumbent in all the countries Telefónica is a world leader in the relevant to its business. And thirdly, because the telecommunications sector and the reference contribution to the gross operating margin operator in the Spanish and Portuguese- from markets different from its country of speaking markets. Its customer base now origin is the greatest among the major numbers close to 100 million customers, out of telecommunications companies in the world. a potential market of 500 million people. Telefónica is a leader in terms of the size of its A GLOBAL AND INTEGRATED activity.The Group is present on three continents, TELECOMMUNICATION SOLUTIONS OPERATOR performing significant operations in 15 countries, and it has activity of some kind in another 40 Over the last few years, the Telefónica Group countries.Through this presence,Telefónica has has concentrated on telecommunications, its over 43 million fixed lines and 55 million mobile core business, reinforcing its presence in fixed telephone lines. , Over 148,000 professionals work and mobile telephony.This is the reason why it in the Group to carry out this activity. has divested some non-strategic assets in 2003. Telefónica is also the leader on the financial As a result, the new business model is geared to markets. In February 2004 Telefónica was the satisfying the communication needs of all its sixth operator in the world in terms of stock customers, from the clear vocation of service exchange capitalisation and ranked fifth on the that has always characterised the group. EuroStoxx50. Over 1.6 million shareholders trust the management and profitability of the The businesses of the Telefónica Group are Company, backing this leadership. organised around the following lines of activity and subsidiaries: Telefónica is an operator committed to Latin America.The Group has had a stable presence in • Fixed line telephony and corporate services, in the region over the last 14 years, having invested Spain and Latin America, where these activities nearly 65,000 million dollars in infrastructure and are performed, respectively, by Telefónica de acquisitions. In 2003,Telefónica is the reference España and Telefónica Latinoamérica. operator in Brazil, Argentina, Chile and Peru, and is already developing significant operations in • Mobile telephony, in Spain, Latin America Puerto Rico, Colombia, Mexico and Venezuela, and the Mediterranean Basin; this business among other countries in the region. Spanish- line is managed by Telefónica Móviles. speaking markets account for 62% of the Group’s customers, while 36% are in Portuguese-speaking • Internet, in Spain and Latin America, Terra markets.The Telefónica Group has attained the Lycos centres its activity on providing highest market share in the region, reaching 25 Internet access services, and content: million fixed lines, and 35 million mobile websites, online advertising, etc. customers; furthermore, it offers integrated communication solutions for businesses. • Other telecommunication businesses, including Telefónica Contenidos, grouping the Telefónica is a multidomestic operator for production and content diffusion businesses in different reasons. First, because its offerings in Spain, Latin America, the United States, and each country consider the singularities of the part of Europe;TPI (Telefónica Publicidad e 006 Telefónica, S.A. Corporate Responsibility Annual Report 2003 RANKING BY STOCK EXCHANGE CAPITALISATION OF TELECOMMUNICATIONS COMPANIES (FIXED, MOBILE AND DATA) (Data at the close of period 2003) 200,000 150,000 100,000 50,000 0 SBC NT&T Telstra Naktel Verizon Vodafone Swisscom Bell South Telefónica TeliaSonera NTTDoCoMo China Mobile Telecom Italia Telecom AT&T Wireless AT&T British Telecom British France Telecom France Singapur Telecom Singapur Deutsche Telekom Deutsche Telefónica Móviles Telefónica Telecom Italia Mobile Telecom Información), the guides and directories common construction and reciprocal synergies publishing businesses in Spain and Latin among the business lines. America; and Atento, which manages contact center services through multi-channel platforms, in Spain, Latin America and Morocco. A GROUP THAT PLACES ITS CUSTOMERS AT THE CENTRE OF ITS ACTIVITY Together with these lines of activity, the Group has a series of subsidiaries and institutions that In 2003,Telefónica modified its operating support core business activities. These include: structure in order to place customers at the Telefónica I+D, the subsidiary that channels the centre of its activity.The objective was to innovation of new products, services and transform the Group into a more commercial applications; Fundación Telefónica, responsible organisation; from product oriented companies for driving the social and cultural action of the to an integrated Group that satisfies its Group to benefit underprivileged sectors in the customers’ global communication needs. countries where it operates; Fonditel and Antares, financial institutions of insurance, To that end,Telefónica has identified four major investment and pension funds. commercial segments to organise and reinforce its commercial activity: Individuals, Households, Furthermore, there is a Corporate Centre, SMEs and Corporations and Administrations. responsible for defining global strategy and With this segmentation,Telefónica aims to corporate policies, management of common satisfy the needs of the customers in a activities, and generation of support policies. personalised manner, to meet their This integrated corporate structure aims for expectations. Corporate Responsibility Annual Report 2003 Telefónica, S.A. 007 This is a twofold model based on two main A GROUP WITH A VISION IN MOVEMENT drivers: growth in the main businesses such as broadband and mobiles; and development in Telefónica has a specific vision: it wishes to fixed telephony in Latin America. become “the operator trusted by all those who approach it: customers, employees, shareholders The challenge facing Telefónica, through the and society at large”. Such confidence comes commercial offer of the companies forming the from honouring the commitments acquired, Group, is to transform technology into and doing so in proximity and nearness. accessible solutions and services that provide customers with clear and relevant benefits. It is Confidence is shown in specific commitments. therefore essential to have detailed knowledge First, the group has acquired a commitment to of the customers’ real needs, to keep ahead with corporate governance and transparency. In this innovative solutions adapted to their sense, the Group has published in 2003 its second expectations;, and to fulfil the commitments Corporate Governance Report. In compliance with acquired to build a relation based on confidence. the Spanish law,Telefónica has extended this report to all its listed subsidiaries, emphasising the operating procedures of the governing bodies BROADBAND AND MOBILITY: THE FUTURE and management of the Group. During 2003, the Group has advanced in the Secondly, the Group also has a commitment to two main areas that shape the new generation corporate responsibility. In 2003, the Group of products for the coming years. First published its second annual report, a report that broadband (ADSL) both in the home and in has also been published by its listed companies. companies, opens up new possibilities of This commitment, in addition to covering growth in making solutions, content and effective management of the business, involves applications. Secondly, the mobile third a commitment to the workplace, respect for the generation (UMTS) that creates new environment, greater social integration and possibilities of mobile data services. cohesion, and opportunities for its suppliers, partners, etc. In the longer term, a commitment Broadband is one of the main driving forces of to create wealth and development in the growth of the Company. In 2003, the Group had societies where Telefónica operates. 2.7 million ADSL customers. Telefónica is betting on broadband, setting the benchmark in Thirdly, the Group has the commitment to Europe, with 1.6 million connections in Spain, corporate solidarity. In this sense,Telefónica 266,526 in Germany and 769,680 in Latin strongly backs the underprivileged sectors of America. society. The importance of ADSL to the Group lies in its Fundación Telefónica is responsible for capacity to create new services and applications channelling social and cultural action in Spain, for the customers. Brazil, Argentina, Chile, Peru and Morocco. In 2003, more than 14 million people benefited On the one hand, Imagenio allows value-added directly from the social and cultural content and services to enter homes, through programmes organised by the Company. One of television based on ADSL technology. Likewise, the key points of Fundación Telefónica is to ease Wi-Fi technology, provides wireless high speed access to education in the different societies Internet access, allowing customers flexible, where it works. Fundación Telefónica, the mobile connection. company itself, and the solidarity of its 008 Telefónica, S.A. Corporate Responsibility
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