Telefonica, based in Madrid, Spain, is the third largest mobile telephone company in the world by customer accesses, with 182 million subscriber lines to its services, and has coverage in Europe and thirteen Latin American countries. In addition, the company offers broadband internet access and television service. 
Telefonica faces increasing obstacles to growth in Spain, long considered its dominant market. Spain has a wireless penetration rate of 111%, which is the number of wireless subscriptions divided by population. In addition, Telefonica has faced increasing competition as a result of France Telecom S.A. (FTE) acquiring Deutsche Telekom AG (DT)'s internet business, as well as the largest Spanish cable TV operator pushing its own internet and phone services. .
The company has rights to provide coverage for the IPhone in 16 countries, which have contributed to sales growth and offset decreases in Average Revenue Per User (ARPU), since iPhone contracts typically have 30% higher ARPU than other phones. 
Telefonica places a large emphasis on innovation and research and development. The company has launched Open Movilforum, an open source platform that allows developers to access services on Telefonica's network and incorporate them into their applications, which management hopes will lower churn by keeping customers from switching to other carriers. The company has invested in Amobee, a mobile advertising solutions business; GestureTek, a user recognition and interface innovator; and Kyte, a multimedia social networking business. 
In 2009, TEF incurred a net loss of $3.3 billion on total revenues of $56.7 billion. This represents an 18.2% increase in net loss on a 2.1 decrease in revenues from 2008, when the company lost $2.8 billion on revenues of $57.9 billion.
Telefonica has a regional, integrated management model organized around three geographic areas, with each area in charge of the business with its borders.
Telefonica historically has been the leading telecommunications company in Spain by customer accesses. However, the wireless penetration rate, which is the total number of wireless subscribers in a country divided by its population, has reached 111% in this country. Such a high penetration rate means the wireless growth outlook is bleak.  Competition in Spain has increased as a result of France Telecom S.A. (FTE) acquiring Deutsche Telekom AG (DT)'s internet business and the largest cable TV operator pushing its own internet and phone services.  Overall, Spain's Gross Domestic Product is dropping, in part due to the global economic downturn, and the country has cut roaming tariffs, allowing customers of Telefonica's competitors to more easily use their phones in Spain.
By region, Latin America is the firm's primary growth driver, generating revenues almost matching that from Spain. Privatization of telecommunication in most Latin American countries had lead to rapid growth in mobile and long distance telephone services.  Throughout Central and South America, Telefonica is using its commercial strength in the mobile business to grow its fixed-line telephone and broadband business.  Telefonica is able to capitalize on countries with poor infrastructure by jumping into new technologies such as 3G data networks, VoIP, and WiMAX, saving the cost of infrastructure upgrades.
Telefonica started selling iPhones in November 2007 as the exclusive dealer and service provider in the UK. Like AT&T in the United States, the exclusive contract has the potential to drive expansion of Telefonica's wireless customer base. The company announced in June 2008 that it will distribute the iPhone in 12 Latin American countries and the Czech Republic, in addition to the UK, Ireland, and Spain.  However, Telefonica only has the exclusive right to provide service for the iPhone in the UK, Ireland, and Spain.  
As a multinational telecommunications company, Telefonica is subject to strict regulation in many of the countries in which it operates.  Regulatory policies in many countries favor increased competition in the fixed line, broadband, and mobile service industries. Because Telefonica holds a high market share in many of the countries in which it operates, it is negatively affected by rules designed to foster competition and antitrust action.
Telefonica is the third largest wireless phone operator in the world behind Vodafone AirTouch Public Limited Company (VOD) and China Mobile (Hong Kong) (CHL). In Latin America, Telefonica competes predominantly with America Movil, S.A.B. de C.V. (AMX) in the mobile phone market.