Telefónica will be free to exploit its submarine cable network in Spain Economy

Telefónica will be free to exploit its submarine cable network in Spain. The National Commission for Markets and Competition (CNMC) will in 2024 liberalize roads on which the former monopoly still has some access obligations. This market has already been largely liberalized, with the exception of nine underwater routes linking the small islands of the Balearic and Canary archipelagos to the larger islands, and those linking Ceuta and Melilla to the peninsula.

Telefónica will be free to exploit its submarine cable network in Spain. The National Commission for Markets and Competition (CNMC) will in 2024 liberalize roads on which the former monopoly still has some access obligations. This market has already been largely liberalized, with the exception of nine underwater routes linking the smaller islands of the Balearic and Canary archipelagos to the larger ones, and those linking Ceuta and Melilla to the peninsula.

CNMC has confirmed that in these areas there have been significant deployments of new generation broadband networks, especially fibre. In fact, the penetration rate of NGN in many of these regions is higher than the national average.

On all routes, except La Gomera-El Hierro, new replacement cables of Telefónica have been deployed or are scheduled to be deployed by different companies and institutions (Canalink, Reintel, GTD, Autonomous City of Melilla). Experience in the four already liberalized submarine routes (Peninsula – Mallorca, Mallorca – Ibiza, Peninsula – Canary Islands and Gran Canaria – Tenerife) shows that the appearance of new alternative submarine cables to those of Telefonica represents a very noticeable increase in competition in this area. Wholesale market, according to the regulator.

The deregulation proposal put forward by the CNMC has been submitted to public consultation, which ends on December 17. If this position is maintained, after examining the claims of the response, the CNMC will propose to liberalize these nine routes and withdraw Telefónica’s current commitments within six months from the entry into force of the final decision.

Submarine cable networks are one of Telefónica’s main assets, although almost all of this infrastructure is concentrated in Telxius, a 70% and 30% owned subsidiary of the telecommunications company, and Pontegadia, the investment company of Amancio Ortega.

The Telxius network covers more than 100,000 km of submarine and terrestrial fiber, including eight next-generation submarine systems: Marea, Brusa, Dunant, Tannat, Junior, Mistral, Tikal and Firmina. It also has an international IP Tier 1 network (AS 12956) that provides direct Internet connectivity to major operators and ISPs.

Last November, the Spanish company announced its joining of the Firmina submarine cable system, powered by Alphabet (Google), which will connect the East Coast of the United States with Las Toninas (Argentina), with additional mooring points in Praia Grande (Brazil). Santos (Brazil) and Punta del Este (Uruguay). Earlier this year, it announced an agreement with America Movil to deploy Tikal, a new high-capacity submarine cable to connect Central America and the United States.

It is also involved, among other projects, in the installation of Medusa, the longest submarine cable in the Mediterranean. Its length is 8,700 kilometers, and will connect North Africa and Southern Europe, in addition to many Mediterranean islands to the continent. In the case of Spain, there will be three points of contact: Zahara de los Atunes, Torreguadiaro and Barcelona. The first section of this infrastructure could begin operating in 2025, linking Lisbon with Barcelona and Marseille.

The operator headed by José María Álvarez Ballete wants to monetize these infrastructures. After the sale of mobile towers to American Tower in 2021 for $7.7 billion, submarine cables became Telxius’ main asset. This subsidiary investigated the direct sale of this network in 2020 and 2021, and entrusted the process to several investment banks, but it did not find suitable offers.

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