11-28. How important was the EUs directive eliminating national telecommunications monopolies by 1998 in shaping Telefnicas strategy?...

11-28. How important was the EU’s directive eliminating national telecommunications monopolies by 1998 in shaping Telefónica’s strategy? What would the company look like today if Spain were not a member of the European Union? The South American continent emerged as one of the hottest markets in the past two decades as a result of economic policy changes and the region’s growth prospects. Privatization, deregulation, and regional economic integration unshackled the imaginations and energies of the continent’s entrepreneurs and attracted the attention of foreign investors, while surging commodities exports boosted the economies of such countries as Brazil (iron ore), Chile (copper), Bolivia (tin), and Venezuela (oil).

One industry directly impacted by these policy changes is telecommunications. Once the sleepy preserve of inefficient and overstaffed state-owned enterprises, the industry has become a magnet for new firms and new technologies. The most aggressive entrant is Telefónica SA.

Telefónica’s managers knew all too well the problems of state-owned telecommunications monopolists because Telefónica was just such a firm in its former guise as government-

run Telefónica de España. Telefónica de España first obtained its monopoly concession on telephone services in Spain in 1924. Originally privately owned, the company was nationalized in 1945, with the government owning outright 41 percent of the company’s shares.