Telefónica, S.A. (TEF): ANSOFF MATRIX [Dec-2025 Updated]

You're looking at Telefónica, S.A.'s (TEF) growth map, and honestly, it's more complex than just rolling out 5G. After two decades analyzing telcos, I can tell you their strategy boils down to four clear, actionable paths laid out in this Ansoff Matrix. We see them pushing hard in existing markets, like aiming to capture an extra 2% share in Spain through aggressive bundling, which is the low-hanging fruit. But the real upside is in developing new digital services under Telefónica Tech or even stepping into adjacent sectors like e-health or renewable energy for true diversification. This framework cuts through the noise, showing you exactly where TEF is placing its near-term bets versus its long-term moonshots, so you can map your own investment thesis against their execution plan.

Telefónica, S.A. (TEF) - Ansoff Matrix: Market Penetration

You're looking at how Telefónica, S.A. (TEF) can deepen its hold in existing markets using current products and services. This is about maximizing volume and revenue from the customer base you already serve in Spain, Brazil, Germany, and the UK.

In Spain, the focus is on aggressive bundling of 5G and fiber services to capture 2% more market share from competitors. The existing 5G population coverage reached 94% in the first half of 2025. Spain saw revenue organically increase by 1.9% in Q2 2025, marking its strongest customer adds since 2018.

For Brazil, the strategy centers on increasing average revenue per user (ARPU) by pushing higher-tier data plans and digital content subscriptions. Telefônica Brasil's Q3 2025 postpaid ARPU rose 3.9% to reach BRL 31.5. The postpaid segment reached 50 million customers, representing a 68% market share.

Churn reduction in Germany is targeted through personalized loyalty rewards and faster customer service response times. O2 contract churn remained stable year on year at a low of 0.9% in Q2 2025. In the same period, Telefónica Germany saw contract mobile net additions increase by 12.1%.

The UK strategy involves launching a price-matching campaign for entry-level mobile plans to win back budget-conscious customers. Telefónica's 5G mobile technology coverage in the United Kingdom reached 78% as of the first half of 2025.

Cross-selling cybersecurity and cloud services from Telefónica Tech to existing large enterprise customers in core markets is a key revenue driver. Telefónica Tech reported revenues of €566 million in Q2 2025, representing year-on-year growth of 12.5%. For the first half of 2025, the unit's revenues reached €1,074 million, up 9.6% compared to 2024. The broader B2B segment across the Group grew by 5.4% in Q1 2025.

Here's a quick look at some of the latest operational metrics across these core areas:

The overall Group confirmed its 2025 financial guidance, expecting year-on-year organic growth in revenues, EBITDA, and EBITDAaL-CapEx. The company confirmed a cash dividend of €0.30 per share for 2025.

The execution of these penetration strategies is supported by the Group's infrastructure scale:

• Total Telefónica accesses reached 349 million.
• Ultra-broadband premises passed totaled over 171 million.
• CapEx for H1 2025 was €2.0 billion.
• Net financial debt declined 5.5% year-over-year to €27.6 billion.

Finance: review Q3 2025 ARPU vs. target for Brazil by next Tuesday.

Telefónica, S.A. (TEF) - Ansoff Matrix: Market Development

Market Development for Telefónica, S.A. (TEF) centers on taking existing, proven services into new geographical territories or new customer segments within existing geographies where the service is new to that specific market. You're looking at expanding the proven success of your core offerings where the infrastructure or digital expertise is already established.

Expand the Telefónica Tech B2B digital services offering into high-growth Latin American markets like Peru and Chile. While Telefónica has recently divested its operations in Peru, selling Telefónica del Perú in April 2025 and booking a €0.66 billion loss on the sale, the B2B segment in the region shows underlying demand. For instance, in Chile, revenues from Data and Technology Solutions for Enterprises grew by 9.5% year-over-year for the January-September 2025 period. This growth trajectory in a core B2B area suggests that even as the overall operating structure shifts, the specialized digital service component has market traction. Telefónica Tech reported revenues of €1,074 million for the first half of 2025, marking a 9.6% increase compared to the first half of 2024.

Monetize excess fiber capacity via wholesale agreements with new Mobile Virtual Network Operators (MVNOs) in Germany. The German market presents a complex picture for wholesale. Revenues for Telefónica Germany decreased by 2.4% to EUR 2.04 billion in the second quarter of 2025, largely due to the migration of 1&1 customers off its network, which was a significant wholesale contract loss. Still, the Group's overall Wholesale revenues were €1,609 million in Q2 2025. Renewing or securing new wholesale agreements is critical to offset such headwinds; for example, the company renewed long-term agreements with key MVNO clients like Freenet in the past, aiming for a significant increase in revenue growth from that specific deal.

Enter the US market with specialized IoT (Internet of Things) connectivity solutions for the automotive sector. This is a pure market development play, moving a specialized service into a new, massive geography. Telefónica Global Solutions positions its eSIM technology to provide the required connectivity framework for the Connected Car Industry. The global Automotive Connectivity Market was estimated to be worth USD 42.0 billion in 2025. Telefónica is already recognized as a key player in the broader IoT connectivity market.

Pilot a low-cost, digital-only mobile brand in a new European country, like Portugal, leveraging existing infrastructure. While specific 2025 data for a new brand in Portugal isn't immediately available, the performance in existing core European markets shows potential for digital-first strategies. Telefónica Deutschland (O2 Germany) saw contract mobile net adds increase by 12.1% in Q2 2025. The Group's overall B2C revenue grew organically by 2.1% in Q2 25, reaching €5,323 million.

Offer Telefónica Infra's fiber deployment expertise as a consulting service to other regional telecom operators in Africa. This leverages internal infrastructure knowledge as a service offering in a new geographic market. The Group is a global leader in fiber, with more than 171 million premises passed with ultra-broadband networks as of the first half of 2025. This deep technical capability is the asset being exported, similar to how Telefónica Tech's digital expertise is being pushed into new sectors.

Here's a look at some relevant segment and market figures for context:

The execution of these market development plays requires careful navigation of regional divestments and competitive pressures. You need to watch the following:

• Chile B2B revenue growth of 9.5% in Jan-Sep 2025.
• Telefónica Tech H1 2025 revenue at €1,074 million.
• Germany Q2 2025 revenue at EUR 2.04 billion.
• Group fiber footprint exceeding 171 million premises passed.
• Confirmed 2025 cash dividend of €0.30 per share.
• Net Financial Debt as of June 30, 2025, was €27,609 million.

Finance: draft the capital allocation plan for Q1 2026 focusing on the US IoT entry by next Tuesday.

Telefónica, S.A. (TEF) - Ansoff Matrix: Product Development

You're looking at how Telefónica, S.A. (TEF) can push new services into its existing core markets-that's Product Development in the Ansoff view. This is where the rubber meets the road for their digital transformation strategy, moving beyond just connectivity.

For industrial clients needing mission-critical connectivity, the focus is on premium, low-latency 5G private networks. Telefónica, S.A. (TEF) already has significant network buildout to support this; as of the first half of 2025, 5G coverage in Spain reached 94% of the population. This existing infrastructure is the base for selling specialized, high-value private network slices to enterprises.

Under the Telefónica Tech umbrella, developing a new suite of AI-driven Big Data analytics tools is a clear growth vector. This segment is showing real momentum. Telefónica Tech reported revenues of €1,074 million for the first half of 2025, marking a 9.6% increase compared to 2024. The second quarter alone saw revenues hit €566 million, a 12.5% year-over-year surge, driven by these NextGen solutions. The B2B segment, where these tools sit, saw organic growth of 5.4% in Q1 2025. Furthermore, high-margin offerings within digital services grew by 31.3% in Q2 2025.

Launching a converged fixed-mobile-TV-security 'quad-play' package with a single bill and guaranteed service level agreements is about maximizing customer lifetime value in the home. While the latest specific uptake numbers for a current offering aren't public, you can look at the historical success of Movistar Fusion, which bundled mobile and broadband and reached 1.5 million subscribers since its launch in September prior to 2013. To be fair, that's old data, but it shows the product concept has proven pulling power in Spain.

Creating a proprietary, secure digital wallet and payment service integrated directly into the mobile application for Spanish users taps into a massive global trend. Globally, the mobile payment market was worth an estimated $121.3 billion in 2025. In 2024, 32% of point-of-sale transactions globally used digital wallets. This move aims to capture a share of that transaction value directly within the Telefónica, S.A. (TEF) ecosystem.

Offering a modular, pay-as-you-go cloud computing service specifically tailored for Small and Medium-sized Enterprises (SMEs) addresses a key market segment. Telefónica Tech explicitly noted it continued to expand its value proposition for SMEs in the first half of 2025. This is a move to capture recurring revenue from smaller businesses needing scalable IT without large upfront capital expenditure.

Here's a quick look at the financial context supporting these product pushes:

These product developments are designed to shift the revenue mix, which is already showing progress:

• Digital services revenue growth in Q2 2025 was 12.5%.
• B2B revenue growth in Q1 2025 was 5.4%.
• High-margin digital offerings grew 31.3% in Q2 2025.
• IoT solutions achieved energy savings up to 30% in pilot lighting management.
• The company confirmed a €0.30 per share cash dividend for 2025.

Finance: draft 13-week cash view by Friday.

Telefónica, S.A. (TEF) - Ansoff Matrix: Diversification

You're looking at how Telefónica, S.A. (TEF) can move beyond its core connectivity business, which saw H1 2025 revenues of €18.0 billion with 1.5% organic growth, confirming its 2025 financial guidance. Diversification, in this context, means taking new services into new markets, which is the most aggressive quadrant of the Ansoff Matrix.

Here's a look at the potential moves and the numbers we see supporting them:

Acquire a majority stake in a European e-health platform to offer remote patient monitoring and telemedicine services.

This taps into the growing digital health trend, which is supported by recent European funding and regulations like the European Union Regulation on the European Health Data Space. Telefónica, S.A. already sees health as a key area for its IoT expansion; its IoT connections grew by 163% year-on-year, largely driven by use cases including health. Telefónica Tech is already providing technology solutions to improve hospital resource use and agility.

• IoT connections across the globe reached over 51 million active connections by the end of Q3 2025.
• Past work involved solutions for remote patient management for chronic conditions, serving over 320,000 users in Spain through a partner.

Invest in a renewable energy generation project to power Telefónica's own data centers, selling excess capacity back to the grid.

This aligns with Telefónica, S.A.'s strong commitment to decarbonization, aiming for net-zero emissions by 2040. For its data centers, 81% of the 361,413 MWh consumed comes from renewable sources. Telefónica, S.A. is also actively involved in large-scale green infrastructure bids, such as leading a consortium for an EU AI Gigafactory in Spain, part of a €20 billion public-private investment. Separately, Telefónica, S.A. secured a €24.5 million, ten-year contract for a Madrid data center that will be powered by renewable energy.

Establish a venture capital fund to invest in early-stage metaverse and Web3 infrastructure companies, securing future partnerships.

Telefónica, S.A. has a clear strategic interest here, with Telefónica Ventures and Wayra actively investing in this space. This is about securing future optionality, as Telefónica Ventures is an LP in 12 venture capital funds globally, including three in Brazil. The company has a dedicated Metaverse Business Unit and is a key validator on the Celo network, supporting transaction validation and network security.

Develop a global satellite-based connectivity service for remote areas, moving beyond terrestrial fiber and 5G networks.

Telefónica Global Solutions (TGS) is already executing this by partnering with Starlink Enterprise, which offers speeds up to 300-350 Mbps download. TGS also signed a framework agreement with stc to develop multi-orbit connectivity (GEO, MEO, LEO) targeting rural connectivity and emergency services. Furthermore, TGS is integrating Sateliot's LEO network with terrestrial NB-IoT to offer seamless 5G IoT connectivity, which is compatible with 3GPP standards.

• TGS is a worldwide partner for Starlink Enterprise solutions.
• Partnership with stc focuses on LEO, MEO, and GEO networks.

Launch a specialized financial technology (fintech) lending product for small businesses in Brazil, leveraging customer data.

Telefónica Brasil is already deep in fintech through its digital platform, Vivo Pay, which operates as a direct credit company (Vivo Pay Sociedade de Crédito S.A.). This ecosystem business is a significant growth driver, accounting for over 10% of Telefónica Brasil's total revenue and growing at more than 20% annually (as of end-2024). The core market performance in Brazil is strong, with Q2 2025 revenue up 7.1% and EBITDA up 8.6% in local currency.

The overall financial discipline is evident, with Telefónica, S.A. maintaining its €0.30 per share cash dividend for 2025. Net financial debt stood at €27.6 billion as of H1 2025.