Telefonica, a state-owned national telecommunications monopoly established in the 1920s, made many changes in the political and economic environment that allowed it to begin expand globally. One of these changes was the privatization of Telefonica by the Spanish government in the 1990s. Economically, they could keep their expenses low and get more revenue, which would generate more profits. The Spanish government has also deregulated the Spanish telecommunications market. This allowed for a reduction in the workforce, growth in new technologies, and an increase in shareholder value of the company. As Telefonica looked for a place to expand, it discovered that Latin America was a perfect fit. It was a great place to settle because they had a better chance of succeeding than anywhere else in the world. Indeed, Latin America knew the Spanish language and its culture, while having rich historical roots with them. There was also high demand for telecommunications services, which was a perfect fit for Telefoinica. Telefonica initially focused on Latin America because it was looking for growth and expansion. Latin America has also seen a rapid move toward deregulation and privatization across the region. This therefore makes it a target market for the Spanish Telefonica to expand its telecommunications services. They also had a resemblance in improving their market, language and culture. Latin American markets were growing rapidly, increasing the adoption rate and usage of not only traditional fixed-line telecommunications services, but also mobile phones and Internet connections. Telefonica was slower to expand in Europe because there was an implicit agreement among national telecommunications companies that they would not invade their respective markets. Even though Spain is a member of the European Union, Telefonica thought it would be better to expand outside of Europe. Eventually, in 2005, this agreement was broken when France Telecom entered Spain by purchasing Amena, the country's second mobile operator. This then led Telefonica to expand into other European markets, buying Britain's largest mobile operator, O2. This allowed Telefonica to become the second largest mobile operator in the world. Telefonica had used acquisitions rather than new businesses as an entry strategy. Indeed, if you start from scratch, it will be very difficult to generate profits. It would take Telefonica many years just to build up a customer base..