Telefonica Leads Europe in Move to Converged Services
The company is now set for improving margins and returns on capital.
Telefonica (TEF) is the incumbent telephone operator in Spain and one of two dominant operators in Latin America along with America Movil (AMX)/(AMOV). Thanks to its acquisition of E-Plus in Germany, it is the largest wireless operator by number of subscribers in the country. It is also the second-largest wireless operator in the United Kingdom.
Beyond its size, which provides Telefonica with scale by spreading its fixed costs over a large number of subscribers, we like the company’s move into converged services, bundling fixed-line services with broadband, pay television, and wireless telephony. The company has been the leader in this movement, which positions it well to benefit from this momentum-building trend.
Allan C. Nichols does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.