Telefonica abandons Spanish operating division

TELEFONICA IS probably the biggest mobile phone sponsor that no one has heard of. As owners of the o2 brand, its largest operating unit, it is responsible for some of the most iconic naming rights deals in Europe and Asia and its appetite shows no sign of abating. What is new in the business is that it has finally bowed to the inevitable and is preparing to axe its Spanish division and fold it into a new digital operation in London. The move represents the biggest shakeup since Telefonica was privatised and will see 2500 staff transfer to the UK capital. The decision reflects poor profitability in Spain where, despite the group’s historic presence, recession has taken its toll. The new unit will invest in a new set of services based around digital advertising, entertainment, financial services and cloud computing, all of which makes sense from London although senior management is thought to be eyeing Germany as the location of its new headquarters.