Telefónica bought Britain's O2 and then spent a decade trying to sell it
In 2006 Spain's former phone monopoly completed a 17.7 billion pound takeover of O2, the British mobile operator. A later deal to sell it to Li Ka-shing was blocked by European regulators, and Telefónica eventually merged it with Virgin Media in 2021, keeping half the combined company.
The company started in Madrid in 1924 as the National Telephone Company of Spain, with the American firm ITT among its big shareholders. The Spanish state took a 79.6 percent stake by law in 1945, and until the telecoms market opened in 1997 it was the country's only phone operator. It remains Spain's second largest corporation after Santander, trading at home as Movistar, and by 2016 it had built the most extensive fibre-to-the-home network in Europe.
Expansion took it across two continents. It entered Brazil in 1996, bought the São Paulo operator Telesp in 1998, and in 2010 paid 7.5 billion euros for Portugal Telecom's share of the mobile firm Vivo after months of fraught negotiation. In Germany it merged its own operations with O2's local arm and later bought E-Plus, creating the country's largest network by customers. It also acquired the former Czech state operator in 2005, before selling it on to PPF.
The O2 purchase set off a chain of consequences. The Irish business was sold to Hutchison's 3 in 2013. When Li Ka-shing agreed to buy O2 in Britain for around 10.25 billion pounds to merge with Three, the European Commission stopped it in 2016, warning of fewer choices and higher prices. The 31 billion pound Virgin Media tie-up with Liberty Global followed.
Since 2019 it has sold most of its Latin American businesses to concentrate on Spain, Germany, Britain and Brazil. Its shareholder register has become politically sensitive: after Saudi Arabia's STC Group built a 9.9 percent holding in 2023, the Spanish government bought 10 percent through its state holding company SEPI, reflecting Telefónica's role as a national defence supplier.
Source: Telefónica
