Yahoo Finance Telefonica's (TEF) O2 & Virgin Media Remove EU Roaming Charges
Telefonica, S.A.’s TEF subsidiary, O2, together with Virgin Media, recently announced that customers will not face any EU (European Union) roaming charges on their mobile networks. This implies that O2 and Virgin Media customers can keep their inclusive roaming in Europe zones so that they can travel and leverage their data and calls just as they would in the United Kingdom.
Unlike O2 and Virgin Media’s decision to remove roaming charges, their rivals EE, Vodafone and Three have expressed their decision to re-impose charges for some customers this year. These three companies intend to charge customers $2.72/day roaming charge in the EU countries. EE, Vodafone and Three are leading telcos in the United Kingdom.
Interestingly, roaming charges were eliminated in 2017 in the EU. However, the benefits were not protected in the Brexit agreement. Generally, an agreement between members of the EU implies that citizens residing in the region can travel freely without incurring any roaming charges. In sync with this, the latest move by Virgin Media-O2 comes as a boon.
Last year, in one of its landmark moves, Telefonica announced the closing of Liberty Global plc’s Virgin Media and Telefonica U.K.’s largest mobile network O2 mega-merger deal. The 50:50 joint venture, valued at approximately £31.4 billion ($44.4 billion), including debt, is touted as a turning point in the history of the U.K.’s telecommunications industry.
The merger is expected to not only mark the launch of a strong mobile competitor in the U.K. market but also generate considerable synergies for Telefonica, with a net present value of £6.2 billion. Telefonica also consolidated three of its global businesses under a single unit — Telefonica Global Solutions.
The move is part of its ongoing transformation process to strengthen international businesses. This segmental rejig will speed up operational execution and maximize synergies with greater flexibility. The Spain-based telco giant is currently on a roll. The company has been making necessary organizational changes to boost its operational momentum.
It struck a major milestone with the creation of a new Strategy and Development department. The new-age organizational structure is considered a significant move in the company’s business roadmap as it prepares to tap lucrative opportunities offered by the fourth industrial revolution with improved efficiencies while accelerating technological transformation in this dynamic environment.
Also, Telefonica divested its non-core mobile phone masts in Europe and Latin America to U.S.-based telecom infrastructure operator — American Tower Corporation. The transaction, worth €7.7 billion euros ($9.41 billion) in cash, is likely to help Telefonica reduce its huge debt burden. The divestment is reportedly the biggest such deal by the company, which expects to book a capital gain of around €3.5 billion, simultaneously trimming its net debt by about €4.6 billion.
Over the past years, the company has invested heavily in the deployment and transformation of its network to provide seamless connectivity with enhanced capacity, speed, coverage and security. With operations across 17 countries, Telefonica is capitalizing on the opportunities in the digital world through several growth strategies to enhance long-term prospects while experiencing healthy traction in the smartphone market.
Telefonica currently has a Zacks Rank #4 (Sell). The tech giant’s shares have gained 1.2% compared with the industry’s growth of 3.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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