telephones

   The Compañía Telefónica de España S.A. is Spain's largest single company by turnover and the biggest employer by a considerable margin. It has long been a favourite with investors. The state has a 20 percent shareholding and the remainder is in the hands of institutional shareholders (including the major banks) and tens of thousands of small investors. Because of EU rules, Telefónica had to lose its monopoly, and a second fixed-line telecommunications company, Retevisión, was set up in 1997, with investment from the Italian telecoms company Stet. In view of the complete liberalization of the telecommunications market planned for late 1998, and the inevitable increase in competition (which already existed in certain areas such as mobile phones and data transmission), Telefónica made large investments in the upgrade and extension of its services by introducing digital exchanges and fibre optic cables, and drastically reduced the waiting list for new lines. The traditional price structure, with expensive trunk and international calls subsidizing cheap local calls, was reviewed, and the new tariff system is expected to bring charges more into line with those of other operators. With under 50 telephones per 100 inhabitants in Spain (compared to between 60 and 70 in France or Germany) there is considerable scope for growth. The mobile phone market, with less than half a million subscribers in the mid-1990s (compared to six million in the UK), has shown very rapid expansion, rising to an estimated 14 percent in 1998, with market penetration reaching EU levels. A number of consortia, of which Airtel is the best known (made up of Airtouch, BT and two Spanish banks), are active in this area as well as in that of data transmission. For its part, Telefónica, through its international arm, Tisa, has turned to the potentially lucrative Latin American market and is the biggest foreign operator there, an activity that makes an important contribution to the company's healthy profits. In 1997, Telefónica bought out the state's 23.8 percent holding in Tisa, and acquired complete control of the subsidiary. It also owns 30.8 percent of the telecommunications undertaking in Colombia, and 43.6 percent of its Chilean counterpart.

   Further reading

   - Chislett, W. (1998) Spain: The Central Hispano Handbook, Madrid: Central Hispano (see pp. 66–9 for a succinct account of Telefónica's development).

   C. A. LONGHURST