Telefonica have been illegally ripping off customers in Spain for a decade. They got a huge fine from the EU for that. The core Spanish business is close to meltdown in cash flow terms, due to the Euro and the fact nobody trusts them (or wants to use them) now.
The South American business units are quite literally on dodgy ground - eg Argentina - and can't be relied on. Repsol (Spanish oil company) being the poster child for "you can't trust the South Americans".
The Chinese and far-east stuff is being sold off now in something of a firesale.
So the UK may well be the best performing in terms of ROI but the money is required to keep the other businesses (just) afloat.
All the UK cash for the next few years (if they last that long) is allocated to 4G/LTE backhaul/basestations - the so-called "new" network Be/Be Usergroup keep going on about.
Telefonica can't compete with BT/Virgin/Sky/TalkTalk on fixed landline products - they didn't make that much of an impact in the "good times". In fact every single person I know who's on O2 (not Be) is there because they got a discount due to being an existing mobile customer.
Edit - the reason they can't compete is quite simple, all the above companies have a USP :
1) BT - incumbent, sets the agenda in a lot of ways. Eg - FTTC vs FTTP. Massive economies of scale;
2) Virgin - faster speeds than ADSL/VDSL, Tivo box, TV (even if some is bought from Sky) etc;
3) Sky - TV, not much more needs to be said there, Sky want to be able to supply TV as standard without the dish and it'll happen;
4) TalkTalk - good coverage of LLU, cheap as very cheap chips.
They simply don't have the money to throw at the landline business with its wafer-thin margins, so their only option is to attempt to retain customers with 4G/LTE broadband. They can also rent some 4G/LTE backhaul to other mobile operators to increase revenue.
Telefonica have had "issues" for years now which they didn't bother dealing with when credit was cheap. A perfect storm (much of it self-inflicted) has engulfed the company and I don't think they'll recover from it.