Telefónica shares: Price analysis before buying or selling

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ISIN code: ES0178430E18

Ticker: BME: TEF

Index or market: IBEX35

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Elements to consider before selling or buying Telefónica shares

Analysis N°1

Telefónica's takeovers in growth markets are important events for its development and expansion and should therefore be closely monitored.

Analysis N°2

We will also keep a close eye on the evolution of the broadband and pay-TV market in Latin America since Telefónica is particularly well established there and could therefore take advantage of this growth to increase its revenues.

Analysis N°3

Of course, any new offer or brand marketed by Telefónica will be an interesting point of entry into the market, especially if the associated communication strategy is effective.

Analysis N°4

With regard to the Telefónica Group's international activities, the exchange rates between the euro and other international currencies should be monitored. This can influence the company's profits and margins abroad.

Analysis N°5

The company's financial results will also be closely monitored to ensure that the growth recorded in recent years continues and does not show any signs of a significant slowdown.

Analysis N°6

Finally, we will of course follow all the communications and publications concerning the regulations of foreign governments which can sometimes hinder the development of Telefónica's activities in these countries.

Analysis before buying or selling Telefónica shares

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General presentation of Telefónica

The Spanish group Telefónica is the leader in telecommunications in Spain. It offers mainly fixed-line telecommunications services, but also mobile telephony, the provision of communication services and the production and distribution of media content.

Telefónica generates most of its turnover in Spain, but also reaches part of Europe and Latin America.

Photo credits: ©piotrkt/123RF.COM

The major competitors of Telefónica

Knowing the economic environment in which the Telefonica group operates is of course essential if you want to carry out accurate analysis of this stock. We therefore propose to find out who the group's main competitors are at the moment, as well as some information about their activities.

Orange

Firstly, the French group Orange is a telecommunications group with a strong presence in Spain and currently has almost 266 million customers worldwide. The company is the leader or number two in the sector in the majority of the countries in which it is present, including Spain.

Vodafone

Another major competitor to Telefonica is of course Vodafone Plc, a British telecommunications company based in Berkshire. It is also the third largest telephone operator in the world in terms of number of subscribers.

Xfera

Xfera is currently the fourth largest mobile operator in Spain and the most recent one, having been established in 2006 in this market with the Swedish group TeliaSonera as its main shareholder. The network set up by the group covers a large part of the Spanish territory and the company has agreements with other operators such as Movistar for the remaining territories.

Masmovil

Finally, you should also pay attention to the Masmovil group, which is currently the fourth largest telecommunications operator in Spain. It also forms part of the Ibex 35 stock market index. The group offers fixed, mobile and Internet services to residential customers, companies and operators through its main brands

The major partners of Telefónica

Dell

In 2010, the Telefónica Group signed an agreement with the Dell Group for the development of future products and services, including the production of smartphones and tablets.

Vivendi

In 2016, the Telefónica group has signed a partnership with Vivendi to launch services developed by Vivendi, namely WatchMusic and Studio + for Telefónica's mobile customers.

Bouygues Telecom

Also in 2016, Telefónica set up a partnership with the French group Bouygues Telecom through its Business Solutions subsidiary, which has won it a number of key account customers.

Sigfox

In 2017, Telefónica entered into a strategic agreement with Sigfox to massively deploy Sigfox's low-speed, low-power technology in Europe and South America.

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The factors in favour of a rise in the Telefónica share price:

Firstly, of course, we can highlight the fact that the Telefónica Group enjoys an interesting position in the mobile services market. Indeed, at a national level, it is one of the leaders in this market with a strong customer base for many years. The group therefore has a rather solid positioning that should last over time.

In addition, Telefónica can also take advantage of its numerous investments in research and development and its payroll of more than 280,000 people to respond effectively to market demand and needs with increasingly innovative and practical products and services. This enables it to face the competition with confidence.

Geographically, the strategy implemented by Telefónica has given it a good opportunity for expansion. The group operates internationally and is present in more than 25 different countries around the world. This strength is all the more interesting as Telefónica is well established in growing markets such as China and America, while maintaining an interesting position in Europe.

Stock market investors and shareholders are also reassured by the company's financial results. Indeed, the group's finances are stable and the results have been showing long term growth for several years now.

Telefónica also owes its reputation among its customers to its very interesting communication strategy. Indeed, the group is counting on its presence as a sponsor in numerous high-profile sporting events to make itself known and gain visibility. In addition to this, Telefónica also invests heavily in advertising on the various media. As a result of all these efforts, the company now enjoys an excellent brand image and strong popularity.

The factors in favour of a drop in the Telefónica share price:

First of all, the Telefónica group, although it has an interesting presence in China and the rest of the world, seems to have difficulty positioning itself effectively and sustainably in the other emerging markets. In fact, the large competing groups are already well established in these markets and prevent the company from taking a large share of the market.

This brings us to Telefónica's second major weakness, namely competition. In fact, the mobile telephony sector and its services are already saturated by the offers of large competing groups, mainly European and American. The players who compete directly with Telefónica generally benefit from an older presence in the target markets and it is therefore complicated for this company to deal with them.

As you will have understood, and although these two weak points may seem less significant compared to the many strengths mentioned above, they may represent a brake on the group's future growth, which is largely based on its capacity for international expansion. It is therefore essential to take them into account before taking any position on the share price of this asset.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What subsidiaries does the Telefonica group currently own?

The Telefonica group has several subsidiaries in Spain and abroad which allow it to diversify its activities and the markets in which it operates. In particular, it has subsidiaries in the telecommunications sector but also in the media, insurance and even stadiums. The group is thus present in many Latin American countries as well as in some European countries such as Germany, the United Kingdom and of course Spain.

On which financial markets are Telefonica shares listed?

Telefonica shares are currently listed on the continuous market of several Spanish stock exchanges, including Madrid, Barcelona, Bilbao and Valencia. It is also listed on other financial markets, including the Tokyo Stock Exchange, the New York Stock Exchange, the SEAQ International, the London Stock Exchange, Paris, Frankfurt and Lyon. It should also be noted that in 2000, the group's management was one of the first to decide to end stock option programmes.

Who are the largest shareholders in the Telefonica Group?

Currently, the Telefonica Group has many shareholders, including major shareholders such as Banco Bilbao Vizcaya Argentaria with 5.17%, Caixabank with 5.01%, The Vanguard Group with 2.37%, Norges Bank Investment Management with 1.71%, Amundi Asset Management S.A. with 1.52%, BlackRock Fund Advisors with 1.52%, BlackRock Advisors with 0.63% and Invesco Asset Management with 0.59%.

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