The year 2024 will be historic for Telefónica. It is its centenary, but it is also when it will lose for the first time the category of company with the largest number of customers in Spain, if Brussels approves the merger between Orange and MásMóvil.

For years its president, José María Álvarez-Pallete, has been demanding to be freed from the obligations to which Telefónica is subjected as a former monopoly and dominant operator in the sector. But it has been since the announcement of the merger that it has redoubled its public and underground pressure to advance in this field given the change in market conditions it entails. It remains to be seen whether he will succeed before the stock market earthquake that he is experiencing ends and that the Spanish State through SEPI and the Saudi State with STC sit on its board of directors.

For now, what is clear is that the European Electronic Communications Code regulates the procedure for defining markets and identifying the conditions under which national regulatory authorities can impose specific obligations on operators identified as having significant market power. Telefónica, as a former monopoly and the largest company in the country, is the one that has accumulated all these obligations in Spain for years. Among the obligations is that of handing over its copper and fiber networks giving access to other operators to the homes where it provided service at some point, both voice and broadband. Also give way to wholesalers in their networks and in their exchanges to place their equipment, and provide the universal service and guarantee connection to all users at affordable prices in any location.

The closure of the copper network in the first quarter of 2024 is a release, for obvious reasons. In the case of the fiber network, the argument put forward is that the other operators already have enough deployment to guarantee competition. Although there are different interpretations. “In the regulation of indirect access to fiber, Telefónica will continue to be the only national operator with a network in most areas where the National Markets and Competition Commission (CNMC) considers that the alternatives for the consumer are not enough This would justify maintaining the regulated indirect service regulation for Telefónica. The expansion of rural operators would, on the other hand, promote deregulation”, says Javier Arenzana, partner in charge of KPMG’s Telecommunications in Spain.

Telefónica is already close to a first victory. The CNMC closed last week the public consultation on the review of conditions on the submarine cable routes that connect the Iberian Peninsula with the Canary Islands, in which it recognizes that “the appearance of new submarine cables alternative to Telefónica represents a very large increase significant of the competition in this wholesale market”. If there is no change for six months, it will release Telefónica from ceding these infrastructures.

“The company wants to advance in this line of deregulation. At the appropriate time, the CNMC will analyze the obligations imposed on Telefónica in 2021 and they will likely be subject to modification. With a different market structure, it is necessary to analyze the obligations from another point of view. But from here, you can’t venture what the CNMC will do”, warns Clara Alcaraz, partner in the Regulatory, Administrative and Competition Department of KPMG Advocats, who trusts that “this review will start in the first half of the year it comes”.