REGULATORY: Pan operator efforts attract EC suspicion
March 22, 2012
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Following the joyn launch (see seperate report), it emerged that the European Commission (EC) is looking into the activities of the ‘E5′ group (the five largest European mobile players) from an antitrust standpoint, in a move that might not only stymy the inter-operator efforts on RCS development, but also threaten other joint initiatives, such as Deutsche Telekom’s mobile wallet collaboration efforts with rivals (now seeking EC approval).
The Financial Times reported that the EC has demanded information from the GSM Association (GSMA) for the probe, and outlined concerns at a ‘tense and previously undisclosed face-to-face meeting in February [2012]‘. The investigation is said to have commenced in 2011, with an initial focus on the E5 grouping, but moved its attention to the GSMA after January 2012, when the E5 is said to have been disbanded and shifted activity to the association.
The newspaper said the probe’s focus is on whether the operators colluded “to the detriment of third parties and consumers”, not only in service development, but also in discussion of long-mooted bandwidth charges for content providers (Deutsche Telekomwatch, passim).
Stephane Richard, Chief Executive of France Télécom, issued an angry response to the investigation, saying a lawyer attended the operators’ meetings, and notes shared with the Commission. “I find it scandalous that today someone dares to demand an account of these meetings”, he said.
Nevertheless, while it would be astonishing if the E5 grouping has left itself wide open to antitrust investigators, it has for years been blatantly obvious that major mobile players have been synchronising standpoints and thinly-coded messages regarding key industry themes and concerns, as frequently evidenced by chummy keynotes, briefings and announcements at gatherings like Mobile World Congress (MWC).
However, this behaviour is not necessarily anti-competitive, and, in recent years, has been astonishingly ineffective, with little or no progress achieved by increasingly desperate calls to tackle the power of device vendors and activist regulators, or to get internet players to contribute more for data. Recent joint initiatives, such as the Wholesale Applications Community and others that are often fronted by the GSMA, have been most notable by their lack of success. Together, this leads many third parties to mock, rather than fear, operator collaboration and influence — with a gathering of tier-one operator chief executives now seen almost inevitably to mire and doom any joint initiative. Indeed, the prospects for the industry-led RCS and joyn have already been widely derided, while the more nostalgic commentators harp back to the long-ago successes like GSM and SMS, which were often aided by a then more supportive and activist EC.
Assertiveness by the EC might reflect impatience at operators’ constant carping against regulators (repeated remorselessly at nearly every MWC keynote), rather than acceptance of new realities of a mood and industry that has moved on. The Commission could also seek to raise pressure on operators to modernise decaying and disjointed voice and messaging revenue-led business models, to IP-centric, technology- and service- neutral data models.
[Further reference: Telecoms antitrust probe details revealed -- Financial Times, 18 March 2012.]
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Telefónica Digital: financial services roundup, February 2012
March 18, 2012
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Telefónica partners Sybase 365 for mWallet services
Telefónica Digital highlighted a strategic partnership with Sybase 365, Sybase’s mobile commerce subsidiary. The deal is expected to see the businesses work together to provide mobile wallet services supporting the planned launch of Telefónica’s mWallet offerings in Europe and Latin America in the first half of 2012.
“ The mobile wallet lies at the heart of our financial services strategy, and it is crucial that we deliver a strong, simple, and secure user experience to our customers. Sybase 365 is a leader in its field whose expertise will be a key element in helping us bring the best customer experience to market. ” – Joaquín Mata, Head of Financial Services, Telefónica Digital.
Sybase 365 joins a number of major partners for Telefónica in the mobile financial services space. Most recent activity has focused around the partnership with payment technology company Giesecke and Devrient for the development and supply of SIM cards for near-field communications (NFC)-based mobile payment services (Telefónicawatch, 2009.10), and the supply of its Trusted Service Manager technology as underlying platform for NFC services (Telefónicawatch, #61).
Telefónica’s mWallet service is designed to store debit, credit, loyalty, and prepaid cards, and will offer a range of financial services, including payments, peer-to-peer transfers, and a stored value account. NFC capabilities will not be included from the start in all markets, but Sybase’s solution does include support for NFC.
The Sybase deal does not, however, extend to the UK, where Telefónica UK is part of an m-payments joint venture with Everything Everywhere and Vodafone, called Project Oscar (Telefónicawatch, passim).
[Further reference: Telefónica selects Sybase 365 for mobile wallet -- Telefónica, 14 February 2012; Sybase 365 and Telefónica expand mobile financial services with innovative mobile wallet -- Sybase 365, 14 February 2012; Telefónica to launch mobile wallet service by mid-year -- FierceTelecom, 15 February 2012.]
Telefónica ties with Tecnocom for payment processing
Telefónica Digital’s Financial Services division signed a five-year agreement with Tecnocom, a Spanish technology company, for the latter to supply software to support authorisation, card management, payment processing, and routing for Telefónica’s future mobile wallet services. Tecnocom will provide technical assistance to Telefónica in financial services and support for developing future financial services products. The deal initially covers Spain and several Latin American markets.
The Tecnocom agreement adds to a number of Telefónica Digital partnerships around financial services, including with Sybase 365 (see separate report), which will develop the interface for the mobile wallet service. Telefónica has previously announced contracts with payment technology company Giesecke and Devrient for the development and supply of SIM cards for near field communications (NFC)-based mobile payment services (Telefónicawatch, 2009.10), and the supply of its Trusted Service Manager technology as the platform to support NFC services (Telefónicawatch, #61).
Tecnocom, through its subsidiary Getronics, has previously provided management services for Telefónica customers in Spain’s banking sector (Telefónicawatch, 2008.03).
[Further reference: Telefónica elige a Tecnocom para ofrecer su plataforma de procesamiento de medios de pago -- Tecnocom, 27 February 2012.]
Telefónica unveils Wanda brand for MasterCard JV
Telefónica Digital announced its new corporate and consumer brand, Wanda, for its 50:50 joint venture (JV) with MasterCard for the development of mobile financial solutions in Latin America. The company also revealed the executive team that will lead the JV going forward. However, there are still no firm details of launch plans for the service.
Wanda will offer mobile payment services linked to a mobile wallet or prepaid account to enable services such as bill payments, mobile airtime reloads, money transfers, and retail purchases, with the aim of capturing financial services customers among the “unbanked”. The JV will use the tagline “Tu dinero móvil” (“Your mobile money”).
“ The creation of the brand is a key milestone for the MasterCard and Telefónica joint venture in Latin America. Wanda and its newly appointed team are in good shape to continue building the foundation of a strong company that will be focused on offering a complete set of innovative mobile payment solutions, that will give access to financial services to the unbanked population in the region. ” – Joaquin Mata, Global Head of Financial Services , Telefónica Digital.
The company also referenced a global agreement between Wanda and Mobile Payment Solutions (MPS), under which MPS will be responsible for developing and implementing the mobile wallet technology and its services. The companies did not provide any details on MPS on launch, but it appears to be a reference to the partnership between MasterCard and StarHub, which is supporting the Telefónica and MasterCard rollout (Telefónicawatch, #54).
The two companies launched their JV in January 2011 (Telefónicawatch, #52), covering the twelve Latin American countries where Telefónica operates under the Movistar brand, but notably excluding Brazil. In November 2011, the two companies extended the JV to additionally cover Vivo’s 65 million customers in Brazil (Telefónicawatch, #60). However, within the Wanda branding announcement, Brazil has once again been conspicuously omitted.
Wanda team announced
Telefónica announced the following appointments for the team leading the Wanda JV:
- Sergio Regueros was appointed Lead Executive of Wanda. Regueros has worked for Telefónica for seven years in a variety of senior management roles in Latin America and Spain, including Regional Director for Telefónica’s mobile business for northern Latin America (Mexico and Central America), and President of Telefónica Móviles Colombia.
- Wes Rivel was appointed Lead Executive for Finance at Wanda. Rivel has worked at MasterCard for twelve years in a variety of senior business planning, finance, pricing, and risk management roles, including Senior Vice-President of Market Models & Business Strategy, Market Development, for MasterCard Latin America and the Caribbean.
- Marco Sá was appointed Lead Executive for Technology and Operations at Wanda. Sá was formerly Chief of Technology Operations at Mobile Financial Solutions, and previous roles include Chief Administrative Officer at Banco ITAÚ Europa, and Director of Operations & Technology at Citibank Group.
- Pablo Montesano, formerly Telefónica’s Global Director of Financial Services, was appointed as Lead Executive for Sales and Marketing. In his previous role, Montesano led a number of initiatives such as co-branded card programmes, mobile insurance, Movistar’s and O2′s prepaid mobile wallet, near-field communications and payments.
- Rodolfo Durán was named Lead Executive for Strategy at Wanda. He previously served as a Principal for MasterCard Advisors Latin America, MasterCard Worldwide’s consulting arm.
The new company’s Latin American operations will be headquartered in Miami, Florida.
[Further reference: Telefónica and MasterCard's joint venture unveils brand name -- Telefónica, 23 February 2012; MasterCard, Telefónica join forces -- Zacks Investment Research, 27 February 2012.]
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Telefonicawatch Report #63 February 2012 Executive Brief
March 18, 2012
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- Telefónica presented an array of innovative products and solutions at the 2012 Mobile World Congress hosted in Barcelona, in various states of development and commercial viability. The telco is working with web developer Mozilla on the potentially hugely disruptive Open Web Device platform, which is intended to deliver mobile smart devices running on the open web and using HTML5-based applications for all functionality. Qualcomm is also working on the project, with chipsets for devices, and Deutsche Telekom is adding research support. A prototype device was demonstrated, and the partners suggested handsets could cost a tenth of the cost of an Apple iPhone. It was suggested the OWD devices could drive smart device adoption in markets such as Latin America, and, in the longer term, could impact more established smart device markets, building on a broad developer base and applications that will be transferable between platforms and devices. The initiative could be seen threatening the dominance of more established operating systems, such as Apple’s iOS and Google’s Android, and act as an early marker for Telefónica Digital’s innovation aspirations. Telefónicawatch also noted that a JaJah IP telephony app seemed to feature prominently on the prototype MozillaPhone, suggesting a willingness to embrace over-the-top services. [pp.24-26.]
- The run up to MWC also saw a volley of announcements from Telefónica on M2M, and Telefónica Digital is clearly building up to a major assault on this emerging segment. Links with Telit to provide a platform enabling smaller market players to offer M2M solutions at scale were trumpeted, and the participation of China Unicom in M2M management systems flagged, raising the possibility of more alliances with vendors and operators. Telefónica is providing M2M connectivity to General Motors’ subsidiary OnStar, and supporting the offering with a deployment across its own vehicle fleet. [pp.21-23.]
- Also around MWC was a series of announcements from Telefónica on progress in mobile payments. Sybase 365 was heralded as a strategic partner for Telefónica’s upcoming mWallet services, in both Europe and Latin America. Tecnocom also signed to provide support software for payment authorisation around mWallet offerings, which are already under trial in the UK. In Latin America, the financial services joint venture with MasterCard was christened Wanda, and a launch team for service was revealed. [pp.18-20.]
- Telefónica Group released results for the 2011 financial year just days before MWC, and the media hoopla surrounding the industry event gave the telco cover to bury bad news. While headline profit was hit by one-off exceptionals, the underlying business continues to struggle, and is increasingly dependent on Latin America, and, more specifically, Brazil for positive performance that can make a difference at Group level. The FY11 results were the last to be reported under Group’s old divisional structure. Telefónica tried to use the results as a launching point for a recovery, but concerns about financial performance remain, and there is implied scepticism that the Group can reach targets. [pp.4-13.]
- Telefónica massaged down its fiscal guidance for 2012, reducing expectations on margins, and setting revenue growth expectations at the bottom end of mid-term growth forecasts. The measure for the Group’s leverage position was also changed, which went some way to distracting from missing guidance on the debt metric. [pp.6-7.]
- Financial performance in Brazil and Mexico was in the Latin America limelight for very different reasons. Brazil is now presented as an integrated business, with synergies delivering at the top-end of expectations, and to be embracing opportunities to expand into additional in-country regions. Telefónica Mexico continues to resemble a business in turmoil, and efforts undertaken to strengthen the core of the business, including an improved and more clearly defined customer base, so far have only revealing the extent of work that still needs to be done, as shedding customers has done nothing to boost average revenue. [pp.34-36, 39-40, 41-42.]
- Business in Spain continues to suffer, and the company does not expect customer sentiment to improve any time soon, but the telco seemed bullish on the potential for its tariff refresh to stabilise its position, and the focus of recovery will be on improving customer service and the perception of the OpCo. Telefónica in the UK is also making efforts to restore its vitality, after performing a U-turn on its strategy of remaining aloof when there was deemed to be little value present. The operator acknowledged that ignoring low-margin competition was harming the business’s relevance in the wider market, and market share is once again being prioritised over margin enhancement. Telefónica spoke confidently on its Germany business, which has been buoyed by increasing scale with growth driven by a commercial strategy that has proven itself, at a time when sister operating companies in Europe have floundered with defensive posturing. [pp.44-46, 47-48, 53-55, 59-61.]
- Telefónica sold its 13% stake in satellite broadcaster Hispasat to Abertis, raising EUR124m, as it looks to dispose of non-core assets and improve its debt position. There was speculation that a sale of the troubled Irish O2 unit could be on the cards. [pp.14, 15.]
- Building on a previously announced partnership with VMware and Samsung, the imminent Telefónica launch of a new solution called DualPersona was flagged at the MWC. The offering will be Telefónica’s first concerted attempt to deliver ‘bring your own device’ services to enterprise customers, which enable users to have a single device with discrete modes for work and personal use. The offering will form part of the cloud computing service catalogue. The telco also demonstrated fleet mobile device management projects. [pp.20, 27.]
- Telefónica Multinational Solutions confirmed a five-year EUR21m contract with BAE Systems for fixed and mobile voice services across the UK. [p.29.]
- Telefónica demonstrated an LTE network in Barcelona for MWC, showcasing the Alcatel-Lucent lightRadio technology, which is said to offer a cheaper and faster network roll out using compact units and enabling simplified configuration. Telefónica has been an early advocate of the Alcatel-Lucent solution, and a contract in Spain could be worth EUR300m to the vendor. [pp.31-32.]
- Polish operator Polkomtel, a former Vodafone investment, was linked to future membership of Telefónica’s partner programme. [p.33.]
- Ceragon Networks was awarded a contract to provide wireless backhaul systems to Telefónica operating companies in Chile, Panama and Venezuela. In the Latin America region, the telco is partnering Bertelsmann and Grupo Planeto on eBook products, and working with TeleCommunications Systems on navigation services. Telefónica de Argentina awarded Finland’s Comptel a contract to deliver billing solutions. [pp.37-38.]
- O2 Germany looks set to expand availability of its LTE network and launch new tariffs and devices by mid-2012. The company appeared to have fallen somewhat behind its larger rivals on new network rollout, but could be live in over 200 cities and towns by July 2012. [p.49.]
- Telefónica indicated that its new-wave services in growing vertical markets, which have begun to gain footholds in the UK, are to be deployed more extensively across the Group footprint, and there is evidence of this expansion in Europe. In Germany, a new digital marketing service is to be launched, while, in Ireland, mobile money services are to be expanded to the youth market, echoing O2 UK efforts. [pp.50, 52.]
- A youth MVNO with some similarities to UK testbed Giffgaff is also now on the Irish market. In Spain, Telefónica-owned social network Tuenti launched its own MVNO, TuentiMovil, with a data and social connectivity focus. [p.51, 56.]
- Telefónica announced a development of its Frigo personal cloud platform, with a new file-sharing solution. A new self-care mobile applications portal, expected to launch in the Spanish market, also appears to be a further development of the platform, and is being built on HTML5 by Capgemeni’s Backelite business. [pp.19, 56.]
- In the UK, Telefónica launched Flying Start, a new fixed-line voice and broadband service for medium-sized enterprises. BE Broadband, the fixed-line broadband network of Telefónica in the UK, appears to have committed to launching fibre services in conjunction with incumbent BT. The broadband business is losing customers, perhaps as its cutting-edge reputation has slipped, and it has dithered on fibre products strategy. [pp.62, 63.]
- Telecom Italia also posted its full year results, with Latin America providing growth for the Group. Nevertheless, the Italian incumbent still cut its dividend, which will reduce the cash flowing into the Telefónica-backed Telco SpA holding company. [pp.66-67.]
Telefonicawatch Report #63 February 2012 Snapshot
March 18, 2012
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Table of Contents
1 Executive brief
4 Telefónica Group
4 Telefónica Q4/FY11 results
4 Telefónica reports on tough year, but Digital offers hope
4 Profit plunges on exceptional items as Group restructures
4 Record cash flow cold comfort as targets hit through semantic acrobatics
5 Latin America dominance unabated; shrinking Spain still a drag
5 Table 1. Telefónica, selected financial data, Q4 and FY11
5 Telefónica makes peer comparisons, but refuses to name names
5 MTR cuts impact downplayed — in Europe at least
6 Telefónica guidance given another reality check
6 Telefónica has a chance to deliver more now it is promising less
6 Telefónica committed to TI as Telco refinances
7 Circumstances prompt modesty on dividend strategy
7 Accesses pass 300 million, but questions of value remain
7 Financial
8 Table 2. Telefónica Group, customer numbers (’000), Q4 FY11
8 Latin America prepay may be masking a multitude of sins
8 Awards and accreditations
9 Table 3. Telefónica Group, final accesses numbers by division (’000), Q4 FY11
9 Weight of expectations on Telefónica Digital
10 Mobile data monetisation said to be becoming a reality
11 Assumptions on data profitability built on patterns of big spenders
11 SMS significance downplayed as OTT fears linger
11 Bundles immunising against text revenue slump, but is it a long-term cure?
12 Board uncomfortable as difficult questions raised
13 Board exasperated by focus on mast sales
14 Acquisitions and disposals
14 Telefónica sells Hispasat stake for EUR124m
15 Telefónica denies Irish disposal rumours
15 Irish business small and underperforming, but offers transformation benefits
16 Telefónica Digital
16 Conferencing
16 Operators agree videoconferencing standards
16 Collective agreement features notable absentee
16 Mobile World Congress
16 Telefónica focuses on key verticals at MWC
18 Financial services
18 Telefónica partners Sybase 365 for mWallet services
18 Telefónica focuses on key verticals at MWC cont’d…
19 Telefónica ties with Tecnocom for payment processing
19 Telefónica unveils Wanda brand for MasterCard JV
19 Telefónica focuses on key verticals at MWC cont’d…
20 Wanda team announced
20 Telefónica focuses on key verticals at MWC cont’d…
21 M2M
21 Telefónica partners Telit for SME M2M
21 Digital continuing to create small partner ecosystem
21 Associates and investments
22 Unicom joins Telefónica M2M management system
22 BlueVia
23 Telefónica wins M2M deal from OnStar
23 Telefónica to deploy M2M on own car fleet
24 Mobile platforms
24 Telefónica ties with Mozilla new mobile platform
25 Hardware interfaces
25 DT also chipping in development support
25 A sign Telefónica is braced to embrace OTT
26 Taking the fight to Apple and Google
27 Virtualisation
27 Telefónica, VMware prep BYOD tie-up launch
27 NFC
28 Wayra
28 Wayra España ties with Caixa Capital Risc
28 Wayra links with MIT
29 Telefónica Global Resources
29 Devices
29 Device highlights
29 Multinational Solutions
29 Telefónica wins BAE Systems voice contract
31 Networks
31 Telefónica demonstrates LTE network
32 Major win for Alcatel-Lucent
33 Telefónica to complete Barcelona fibre rollout
33 Partner programmes
33 Polkomtel considers partnership with Telefónica
34 Telefónica Latinoamérica
34 Regional
34 FY11: Dominant Brazil still carrying hopes for region
34 Networks
35 Table 4. Telefónica Latinoamérica, revenue and OIBDA by country, Q4 and FY11
35 Commercial activity posing risks for profit
36 Outside Brazil, southern OpCos move start reflecting European patterns
36 Latinoamérica mobile customers papering over cracks for Group
36 Table 5. Telefónica Latinoamérica, customer numbers (’000), Q4 FY11
37 Telefónica picks Ceragon for microwave backhaul
37 Telefónica recruits partners for e-book venture
38 Telefónica partners TCS for LatAm navigation services
38 Argentina
38 Telefónica selects Comptel for mediation platform
39 Brazil
39 FY11: Brazil asset integration complete, time to build
39 Table 6. Telefónica Latinoamérica, Brazil, financial results, Q4 and FY11
39 Mobile grows, but fixed-line stumbles on modest broadband rise
40 Table 7. Telefónica Latinoamérica, Brazil, customer numbers (’000), Q4 FY11
40 Unbundling threat, and opportunity, played down in Brazil
40 El Salvador
40 Telefónica to dispose of fixed interests in El Salvador
40 Colombia
40 Movistar pushed to feature rivals in price promotions
41 Mexico
41 FY11: Mexico still getting its house in order
41 Table 8. Telefónica Latinoamérica, Mexico, financial results, Q4 and FY11
41 Market share dropping, but core may not be strengthening
41 Telefónica backs OECD report
42 Table 9. Telefónica Latinoamérica, Mexico, customer numbers (’000), Q4 FY11
42 Telefónica may face anti-trust investigation
44 Telefónica Europe
44 Q4/FY11 results
44 Telefónica erosion continues in tough conditions
44 Table 10. Telefónica Europe, financial highlights, Q4 and FY11
44 People
45 Customer numbers rise with strong contract performance
45 Table 11. Telefónica Europe, customer numbers (’000), Q4 FY11
45 Germany continues strong form; Ireland still in doldrums
46 Table 12. Telefónica Europe, revenue and OIBDA by country, Q4 and FY11
46 Czech Republic
46 Telefónica abandons broadcast network plans
46 Czech Republic
47 Germany
47 FY11: Telefónica Germany bullish on continued progress
47 Table 13. Telefónica Germany, financial results, Q4 and FY11
47 Telefónica to expand call centres
48 Continued strength in the contract base; fixed-line picture mixed
48 Table 14. Telefónica Germany, customer numbers (’000), Q4 FY11
48 Average data ARPU outstrips prepay
48 Table 15. Telefónica Germany, KPIs, Q4 FY11
49 O2 Germany flags plans for July LTE expansion
50 Telefónica ties with Sapient for digital marketing
50 Deployment of UK-trialled services underway
50 BNA to rule on licence re-issue in 2013
51 Ireland
51 O2 launches “48” youth-targeted MVNO
52 O2 expands O2 Money card to under-18s
52 Slovakia
53 Spain
53 FY11: España taking medicine, but recovery uncertain
53 Table 16. Telefónica España, financial highlights, Q4 and FY11
53 Customers cutting spending but bundles offer hope
53 Telefónica renews MACH deal for fraud protection
54 Fixed telephony still crumbling, and broadband sees bad year
54 Table 17. Telefónica España, customer numbers (’000), Q4 FY11
55 Data still not compensating for total ARPU decline
55 Table 18. Telefónica España, wireless KPIs, Q4 FY11
55 Movistar to refocus on existing customers
56 Telefónica launches TuentiMovil
56 Movistar preps multi-OS self-care portal
57 Telefónica claims success in 3G/Wi-Fi video pilot
59 United Kingdom
59 FY11: UK U-turn on market engagement
59 Table 19. Telefónica UK, financial results, Q4 and FY11
59 United Kingdom
60 Telefónica acts to maintain market relevance
60 Table 20. Telefónica UK, customer numbers (’000), Q4 FY11
60 United Kingdom
61 Modest data revenue rise as customers watch spending
61 Table 21. Telefónica UK, KPIs, Q4 FY11
62 O2 launches “Flying Start” for SMEs
62 Operators’ MTR appeal backfires
63 BE Broadband to use BT fibre
63 BE plans suggest lack of ambition from O2 on UK fibre
64 O2 strategist sets out predictions for 2012
64 O2 trials flexible working
65 O2 drops free access to The Cloud hotspots
66 Associates and investments
66 China Unicom
66 Huawei wins network upgrade contract
66 Telecom Italia
66 LatAm boosts TI results, but dividend to drop
66 China Unicom
66 Telecom Italia
67 Economic environment blamed for dividend reduction
67 TIM set for EUR1.3bn Brazil investment
67 Telecom Italia
68 Index
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Telefónica invests in Joyent for cloud services
February 1, 2012
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Telefónica Digital signed a strategic partnership agreement with Joyent, a cloud services and technologies provider, including an undisclosed strategic equity investment.
The company said the partnership brings together Joyent’s self-developed cloud architecture with Telefónica’s global scale and infrastructure, and will particularly enhance Telefónica’s product offering to small- and medium-size enterprises and small office-home office customers.
The company was keen to emphasise that Joyent’s entire cloud software stack has been developed in-house from scratch, making it cheaper, more efficient, easier to operate, and show better performance than that of other cloud technology providers. Joyent currently has in excess of 12, 000 public cloud customers in the USA. A notable customer of the company, which was founded in 2004, is social network LinkedIn, which uses the Joyent platform for its mobile domain, and other subdomains of the main site. Joyent is also a Dell partner, providing technology with the vendor for a range of cloud software solutions.
“ This investment is further proof of our ambition in the area of cloud services and our strategy of working with the most innovative start-ups. Joyent’s technology fits perfectly with our in-house developed technologies and our cloud services model, and enables us to provide more competitive offerings to a broader range of customer segments. ”
– Matthew Key, Chief Executive, Telefónica Digital.
The strategic investment, made by Telefónica Digital’s Telefónica Ventures division, is the unit’s second investment since the creation of Telefónica Digital in September 2011, and forms part of a $85m (EUR65.3m) funding round for Joyent, led by European group Weather Investment II. In November 2011, the Telefónica division had declared an investment in Quantenna Communications, a specialist in Wi-Fi networking for home entertainment (Telefónicawatch, #60).
Joyent said that, throughout 2012, it will roll out a “collection of seamlessly connected, high-performance public clouds that serve global corporations with consistent computing services on every continent”. In bullish comments apparently designed to garner headlines, David Young, Chief Executive of Joyent, said he has his sights set on Amazon, the world’s largest provider of cloud computing services. He described Amazon’s cloud computing technology as a “junk yard” made up of all sorts of “taped together” technologies.
“ Amazon is the Kodak of the cloud. I don’t want to dump on Amazon, but I just don’t think you can look to a book seller and grocery store for cloud innovation. On the other hand, we’re building a cloud alliance around the globe. ”
– Young.
Telefónica making its presence felt through promised partnerships
On the launch of the Telefónica Digital division, it was stated that the unit would be working to bring flexibility to the telecoms giant through investments and partnerships with companies in emerging new markets and technologies. The Joyent investment is another example of the telco putting up the funds to back claims, and building a network of influence in areas it is targeting for growth.
Cloud services have seen the most headlines so far in terms of partnering, with a deal with start-up FeedHenry also flagged (see separate report), and an agreement to deploy Cisco Systems’ solutions in new offerings being developed for Telefónica’s newest data centre site in Spain (see separate report).
[Further reference: Telefónica boosts cloud capabilities with strategic investment in Joyent, Inc. -- Telefónica, 23 January 2012; Joyent secures $85m in venture funding to fuel global growth and continued innovation -- Joyent, 23 January 2012; Joyent grabs $85M from Weather Investment II, Telefónica to take on Amazon in cloud computing -- Venturebeat, 23 January 2012.]
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Telefonicawatch Report #85 January 2012 Executive Brief
February 1, 2012
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- O2 UK faces a potential backlash and regulatory penalties after being exposed inadvertently passing customers’ mobile phone numbers to all websites visited by its customers while browsing from their handsets. The operator apologised quickly for the error, while acknowledging that it was standard practice to send mobile number details for age verification sites and to support billing for trusted content partners. However, while this explanation fostered continued alarm among the media and customers, the sharing of the data for the company’s loyalty and reward schemes was somewhat brushed under the carpet. This is perhaps understandable because the privacy breach casts doubt on O2′s abilities to act as a reliable bridge linking content providers and businesses with its customer base. It is also a timely reminder of the sensitivity of customer details, as the telco builds its plans to position itself as a financial services provider. [pp.31-32.]
- Telefónica Digital is making its presence felt in the cloud services sector, and announced a partnership with, and strategic investment in, Joyent, a cloud services and technologies provider, with plans to offer the service provider’s cloud architecture to SME and SoHo customers across the Telefónica footprint. The division is also to launch a new cloud-based mobile applications development platform targeting UK enterprise customers, and enable them to create and deploy their own applications through a partnership with Irish startup FeedHenry. On a larger scale, Telefónica flagged the anticipated deployment of Cisco’s new CloudVerse products at its major new data centre in Madrid, which will be used to support a virtual data centre offering for major corporate clients. [pp.9-11.]
- Telefónica España is to participate in the launch of the GSM Association’s RCS-e service in Spain. The rich communications offering is expected to provide enhanced messaging, live video-sharing and file-transfer services, which could be used across Spain’s major mobile networks, and on a range of smart devices. The launch, which will also be supported by France Télécom’s Orange, and Vodafone, is set for the first half of 2012, and likely to be followed later in the year by a launch in Germany. Telefónica is once of five major European telcos backing the re-focused RCS offering, and, while there is considerable scepticism surrounding the future of the platform within the industry, the telco has indicated that it sees potential for RCS-e services to bloom in the emerging Latin American smart device market. [pp.14-15.]
- Telefónica Germany agreed a deal with Deutsche Telekom to use the telco’s fibre infrastructure to boost backhaul capacity, and tackle recent network performance weaknesses. Telefónica previously had a roaming agreement in Germany with the incumbent’s T-Mobile business, which suggests a good working relationship could be maintained between the parties, but the agreement raises questions over the effectiveness of Telefónica’s network investment in recent years. Telefónica Czech Republic, which already partners T-Mobile on network sharing, trumpeted the benefits of its deal, which has seen the roll out of 337 new base stations by each operator in 2011 — with a further 306 expected to be added in 2012. [pp.24, 25-26.]
- As Telefónica Group continues to adapt to the new organisational structure announced in 2011, a new holding company was created for the Spanish and UK elements of Telefónica Digital, and Telefónica Europe restructured its board, reducing the number of directors from fifteen to seven. [p.5.]
- Telefónica Digital confirmed earlier reports that its new headquarters will be at the AirW1 site in the West End of London. The central facility is expected to become a showcase for the division’s emerging capabilities, and the decision to bypass the East End’s nascent Silicon Roundabout suggests the site will be more about deal-making and image-building than a hub for innovation. The Digital division is also searching for a global public relations firm, to help the new business build its reputation and help underscore Telefónica’s credentials in a digital world. [p.8.]
- Telefónica UK’s launch of its O2 Wallet mobile contactless payment application was postponed, as the company took the decision to instead extend internal trials in order to ensure an adequate customer experience. [p.13.]
- Telefónica Digital’s technology incubator programme Wayra signalled its intention to launch within O2 territories, with the appointment of former O2 UK SME head Simon Devonshire as Head of Wayra Europe. [p.16.]
- Telefónica in Latin America agreed a second MVNO deal with Virgin Mobile, which will see the global brand launch services using Movistar networks in Colombia in 2012, as well as Chile. Further Virgin Mobile regional launches are planned in countries such as Mexico and Peru, but whether the network partnership between the companies will also expand is unclear. [p.17.]
- Telefónica signed an agreement with Sony Pictures to distribute the film company’s content via its video-on-demand platforms in Latin America. [p.17.]
- Telefónica in Brazil said that it has now connected one million broadband customers under the federal government’s Plano Nacional de Banda Larga national broadband programme, and intends to expand its PNBL coverage to an additional 71 cities in São Paulo state in 2012, taking the total to 300. Mobile business Vivo trumpeted its progress in rolling out 3G coverage across the country, but nevertheless appears to be falling behind on its schedule. [p.18, 19.]
- Movistar Mexico launched a second-line service, using technology from Movius, a specialist in unified communication solutions. [p.20.]
- Telefónica del Perú paid EUR38m to Sunat, Peru’s tax agency, as part of an ongoing dispute over a claim for over EUR570m in unpaid back taxes. The telco is continuing its legal challenge to the government’s levy, while it also negotiates a licence renewal. [p.22.]
- BNA, the German telecoms authority, cleared Telefónica Germany to expand 800MHz-based services to urban areas in the northern region of Schleswig Holstein. The company has now fulfilled its rural coverage obligations in seven of the country’s 16 states. [p.26.]
- Movistar España launched a mobile television application integrated with RIM’s BlackBerry Messenger social platform, called Imagenio Movistar Móvil, which enables customers to chat and access interactive features while watching TV. The integration of Social TV features could be a boost to mobile TV services, and there are reports the Spanish business may also be overhauling its IPTV offering, through closer partnership with Microsoft. [pp.13, 27-28.]
- Telefónica España successfully concluded testing on DWDM channel speeds of 400Gbps on a live fibre-optic network, although it added that it does not anticipate a commercial launch of the 400Gbps links until 2013 at the earliest. [p.29.]
- Telefónica España, along with mobile rivals, is to face a pricing investigation from CNC, the Spanish competition authority, following a complaint from BT España over high call origination and termination charges. [p.29.]
- Ofcom, the UK telecoms regulator, once again revised the rules of its forthcoming 4G spectrum auction, amid ongoing wrangling over the terms of the sale. This time Telefónica UK is seen as a significant beneficiary of the revision, which saw abandonment of plans to give market leader Everything Everywhere priority access to 800MHz frequencies, and dilution of previous restrictions on the amount of spectrum operators can acquire. The Czech telecoms regulator also gave an early indication of its intentions regarding the forthcoming 800MHz spectrum auction, slated for later in 2012. The ČTÚ said its goals include seeing that 90% of the Czech population have access to 4G services within three years, raising funds for the state, and improving competition, possibly through the entrance of a fourth player. [pp.23, 31-32.]
- Telefónica UK’s O2 Enterprise unit, in partnership with Fiberlink, launched Joined Up People, a new ‘Bring Your Own Device’ mobile management service. O2 Unify, Telefónica UK’s joint venture with IT services provider 2e2, won a three-year contract worth “several million pounds” from Network Rail to refresh the rail operator’s Cisco switch and router estate across 450 sites. [pp.33-34.]
- O2 UK pulled of a coup by winning a contract with Westminster City Council and the Royal Borough of Kensington & Chelsea, to create what it claims will be the largest free wireless hub in Europe, as part of its wider plan to roll out its the O2 wifi service nationwide. O2 beat incumbent provider BT Openzone to secure the deal. [p.35.]
- China Unicom achieved its goal of adding at least 25 million 3G subscribers in 2011. The company hit the target with a month to spare, after adding 3.4 million in November 2011. While the operator is outperforming rivals on adds, it is costing significant sums in handset subsidies as the product portfolio is expanded across a range of price points. [pp.41-42.]
- Telecom Italia Mobile has overtaken Vodafone Italia as mobile market leader, according to the regulator. In Brazil, TI’s mobile unit is also seeing its market share grow, as it focuses on a mobile-only strategy while its rivals (including Vivo) integrate and bundle. [pp.42-43.]
Telefonicawatch Report #62 January 2012 Snapshot
February 1, 2012
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Table of Contents
1 Executive brief
4 Group
4 Financial reports
4 S&P downgrades Telefónica outlook
5 Organisation
5 Telefónica formalises Telefónica Digital structure
5 Telefónica Europe restructures board
5 Financial reports
6 People
6 People movement highlights
7 Devices
7 Device highlights
8 Telefónica Digital
8 Operations
8 Telefónica Digital reveals new London HQ
8 New offices focused on making a big impression
9 Cloud services
9 Telefónica ties with FeedHenry for mobile cloud platform
9 BlueVia
10 Telefónica invests in Joyent for cloud services
11 Telefónica making its presence felt through promised partnerships
11 Telefónica signs up to Cisco CloudVerse
13 IPTV
13 Rumours of Microsoft deal to upgrade Imagenio
13 Mobile commerce
13 O2 Wallet launch postponed as testing continues
14 Rich communications
14 Telefónica and rivals launch RCS-e services
14 Wayra
15 RCS now needs to move beyond annual MWC PR puffery
15 A place for RCS in Telefónica’s growth markets
16 Wayra appoints European head
17 Latinoamérica
17 Regional
17 Movistar and Virgin build LatAm links with Colombia deal
17 Telefónica ties with Sony Pictures for LatAm content
17 Argentina
18 Brazil
18 Telefónica reports one million PNBL subscribers
19 Chile
19 Latest phase of American Tower deal completed
19 Boost for Telefónica as Entel/GTD merger scuppered
20 Costa Rica
20 Telefónica accuses ICE of anti-competitive practices
20 Mexico
20 Telefónica launches second line service with Movius
22 Telefónica calls for regulatory hard line in Mexico
22 Peru
22 Telefónica pays PEN 134m in tax dispute
22 Colombia
22 El Salvador
23 Europe
23 Czech Republic
23 ČTÚ sets out spectrum auction goals
23 Possibility for new player in market mooted
24 O2 Czech Republic: smartphones dominate sales
24 Symbian still dominates, Android closing for O2 Czech Republic
24 O2 praises T-Mobile network-sharing deal
24 Germany
25 Telefónica agrees network-sharing deal with T-Mobile
25 T-Mobile agreement confirms previous hints from O2
26 Operators revive earlier ties, but questions raised over O2 network
26 O2 freed for urban LTE rollout in Schleswig-Holstein
27 Telefónica selects Anite for LTE device testing
27 Spain
27 Movistar brings social mobile TV to BlackBerry
28 Mobile leading social TV drive
28 Telefónica launches universal broadband offer
29 Telefónica tests 400Gbps networks
29 Telefónica España, rivals face MVNO pricing probe
29 Ireland
29 Slovakia
31 United Kingdom
31 O2 faces customer anger over number leaks
31 O2 holds hands up and explains the cause…
32 …but may have brushed significance for loyalty schemes under the carpet
32 Privacy breaches pose risk to relationships, and financial services ambitions
32 O2′s responsiveness may not be enough to end matter
33 O2 launches Joined Up People; picks Fiberlink’s MaaS360
33 Joined Up continues to raise game for Vodafone challenge
34 O2 Unify wins Network Rail contract
34 O2 expands presence in Network Rail, pushing out BT?
35 O2 ties with London councils for free Wi-Fi
36 Ofcom revises 4G auction rules again
37 Rural coverage obligations also to be tweaked
37 EE offered 1.8GHz LTE consolidation, but still seen as main loser
38 Telefónica seen as likely buyer of EE 1.8GHz spectrum
38 Analyst reaction
39 O2 UK appoints new Chief Financial Officer
41 Associates and investments
41 China Unicom
41 Unicom achieves 2011 3G targets
41 China Unicom launches cheaper smartphones
42 Higher end devices still key element in portfolio
42 Telecom Italia
42 TIM Brasil focused on core services
42 Telecom Italia
43 TI takes the lead in mobile subscribers
44 Index
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Telefonicawatch Report #61 December 2011 Executive Brief
January 4, 2012
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- Telefónica Group performed a U-turn on its long-standing dividend policy, announcing a cut to the payment planned for 2012 just weeks after insisting it was not intending to change its approach to shareholder remuneration for next year. The company also revised its 2011 dividend, cutting the cash element and proposing distribution of treasury shares to make up the shortfall. The decision was said to be a response to the mood of the financial community, which been calling for the telco to move to a more sustainable dividend strategy. However, the sudden, and apparently unexpected, decision left many analysts jumpy, and interpreting the dividend cut as a harbinger of more bad news in 2012. Telefónicawatch considers the decision an overdue acknowledgment of new market realities, and one that could unshackle the telco from financial obligations that were starting to hamper commercial operations. [pp.5-8.]
- Giesecke & Devrient was again highlighted as a Telefónica Digital partner, with confirmation of an agreement that will see the payments technology company provide a Europe-wide NFC platform. This latest agreement follows quickly from a partnership focused on remote management of M2M SIM data, and suggests that G&D is positioning itself as a key partner for the new Telefónica unit. Jasper Wireless is also establishing itself for projects relating to M2M monitoring services, with its partnership with Telefónica linked energy consumption measurements and traffic management solutions. [pp.12, 13, 15.]
- Telefónica Digital is continuing to raise the profile of the work it is undertaking in new sectors, and working to establish itself as a home for innovation. As well as trumpeting cloud computing and M2M capabilities, with a view to expanding business into the automotive and power industries, there is evidence of the division’s intent to deliver new services in 2012. The appointment of Daniel Appelquist, a proponent of closer mobile and internet industry links, as Head of Product Management for BlueVia, looks like another indicator; the former Vodafone man expressed a belief that Telefónica could be implementing changes to ‘big telco’ strategy that have long been needed, but whether Telefónica will be able to maintain momentum needed to move beyond cumbersome traditional telecoms practices remains to be seen. [pp.9, 12, 13.]
- Telefónica agreed a sale and leaseback agreement with American Towers, relating to 2, 500 towers on its Mexican network. The agreement is expected to raise around EUR380m for the operator. [p.23.]
- NEC highlighted its role in testing of LTE services that O2 UK is undertaking in London over the coming months. The vendor flagged use of its iPASOLINK technology in the pilot, which has already been part of O2′s small-scale testing in Slough. NEC is also continuing to build its relationship with Telefónica on cloud computing, with the official launch of new services based on its offerings in Argentina. [pp.20, 31.]
- Telefónica in Spain and Microsoft trumpeted an agreement that will see Imagenio IPTV services made available over the Xbox gaming platform, as the operator looks to defend and expand its presence in the home. Telefónica in Brazil is set to be one of the first operating companies to introduce the collaborative service with Microsoft when an international rollout gets underway. Telefónica is also working with Microsoft on new applications for the vendor’s Windows Phone platform. A team from both companies will work on new developments at Telefónica’s Mobility Competence Centre in Spain. [pp.10, 22, 29.]
- Telecom Italia Chairman, Franco Bernabé, declared himself unworried by an upcoming review of the agreement between the owners of TI holding company, Telco SpA. Telefónica holds an indirect 10% stake in TI, through Telco SpA, but is not expected to take any steps to increase this. Bernabé stressed the benefits that both TI and Telefónica have experienced due to Telefónica’s involvement in Telco SpA, which has seen procurement agreements and joint cost-saving initiatives. [pp.4-5.]
- In the Czech Republic, Telefónica completed trials of NFC-based mobile commerce services with local banks and supermarkets. The pilot was deemed a success, and a rollout in 2012 is predicted. The trial found that most purchases were of low value, but could be completed faster than using traditional payment methods. [pp.16-17.]
- Telefónica is to launch high-profile own-branded handsets and tablets from ZTE in Latin America, under the two companies’ strategic alliance for the region. The Movistar ONE smartphone was set to feature in promotional campaigns at Christmas in countries across the region, while the ONE PAD is seeing a limited launch, with plans for wider availability in 2012, as the telco attempts to establish itself in the burgeoning mobile data sector on the continent. [p.18.]
- The Moviltalk push-to-talk service rollout in Latin America continued, with Venezuela the latest country to promote the two-way radio service. [p.24.]
- The O2 More location-based marketing service is to be launched in the Irish market and it was reported in Spain that there are plans to roll out the service in more countries in the future. O2 UK is said to be establishing a new team to manage the Priority Moments marketing and customer loyalty programme. [p.27.]
- In Spain, Telefónica is continuing to overhaul its tariffs, to counter the decline of its traditional customer base, and is working to encourage the bundling of fixed and mobile broadband. [p.30.]
- Movistar España introduced a new mobile application enabling Apple iPhone users to add a virtual second line to their handset. The service is developed by cloud telephony company fonYou, which is offering the application more widely under its own brand. [p.30.]
- O2 UK introduced a new leasing scheme that enables customers to obtain top-end smart devices without upfront payments, on a twelve-month contract. While the deals include ‘free’ data, minutes, and texts, plus handset insurance, it was noted that costs are not particularly attractive when compared to existing contracts where users are entitled to keep the handset at the end of the arrangement. O2 suggested the leasing model would appeal to customers not wanting to commit to a contract longer than a year. [p.33.]
- O2 Health launched its Side By Side remote medical consultation solution, following trials in Scotland. While tested in remote areas, the telco believes it could be equally beneficial to hospitals in urban areas. [p.35.]
- Supermarket chain Tesco is using wireless network services provided by Telefónica UK to provide free Wi-Fi to customers in its larger stores. Telefónica is hoping to build up a Wi-Fi network across the UK, with a focus on retail partners, as it encourages the adoption of location-based marketing. [p.36.]
- China Unicom is renewing efforts to support mobile internet services, through launch of a new partners alliance and an updated Wo-plus operating system. The operator is seeing success in 3G customer acquisition, and is beginning to close the gap on market leader China Mobile. [pp.38-39.]
Telefonicawatch Report #61 December 2011 Snapshot
January 4, 2012
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Table of Contents
1 Executive brief
4 Telefónica Group
4 Associates and investments
4 Bernabè: Telco SpA critical to Telecom Italia recovery
5 Financial reports
5 Telefónica cuts dividend by 14%-plus, adds scrip element
5 Market reality finally beats Telefónica optimism
6 Dividend review latest harsh dose of reality for Telefónica
6 Asset sales remain on the cards, although new dividend policy eases pressure
7 Analyst reaction — more bad news to come?
8 People
8 People movement highlights
9 Telefónica Digital
9 BlueVia
9 Telefónica poaches Applequist for BlueVia
9 Another statement of intent from Telefónica
9 Research & development
10 Telefónica ties with Microsoft for Windows Phone apps
10 Research & development
12 M2M
12 Telefónica eyes automotive, power industries for M2M
13 Lopez showcases new M2M applications
13 Cloud services
13 Telefónica reassures users over cloud security
14 2e2 on O2 partnership for cloud services
15 Mobile commerce
15 Telefónica ties with G&D for NFC platform
16 Telefónica concludes Czech NFC pilot project
16 Trial demonstrates demand in low-value transactions
17 Other O2 NFC trials set to continue
18 Telefónica Latinoamérica
18 Devices
18 Telefónica to launch Movistar ONE across LatAm
18 ONE PAD to follow in 2012
18 Movistar ONE
20 Argentina
20 Telefónica launches Aplicateca cloud services
20 Movistar launches SMS management service
20 More spectrum needed in Argentina claims Telefónica
21 Brazil
21 Telefónica trumpets Brazil integration, fibre uptake
21 Brazil innovation centre highlighted
21 Vivo sees network capacity boost
21 Colombia
22 Telefónica and Microsoft extend Xbox IPTV deal to Brazil
22 Chile
22 GTD/Entel merger will result in extra competition
22 Ecuador
22 Movistar introduces HSPA+ tariffs
23 Mexico
23 Telefónica sells 2, 500 towers to American Tower
24 Venezuela
24 Moviltalk launched in Venezuela
25 Telefónica Europe
25 Germany
25 O2 falls behind Vodafone and DT on LTE rollout
27 Ireland
27 Telefónica expands O2 More to Ireland
28 O2 trumpets O2 Arena marketing success
28 Czech Republic
29 Spain
29 Telefónica ties with Microsoft for new Xbox services
30 Movistar España continues pricing overhaul
30 fonYou brings second line app to iPhone
31 United Kingdom
31 NEC supports London 4G trials
31 Slovakia
32 Ofcom hints at further 4G rollout delays
33 Telefónica introduces O2 Lease scheme for smartphones
33 “The O2” introduces contactless payments, without O2
35 O2 Health launches Side by Side
35 “The O2” introduces contactless payments, without O2 cont’d
36 Part of a wider e-health push
36 Telefónica backing Tesco Wi-Fi service
36 O2 launches O2 International SIM
37 Telefónica selects Cognizant for online support
37 O2 UK selects Lida for direct marketing
38 Associates and investments
38 China Unicom
38 China Unicom launches renewed mobile internet plan
38 Telefónica relationship highlighted among partners
39 Unicom outperforms rivals in 3G adds
40 Index
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Telefónica trumpets Brazil integration, fibre uptake
January 4, 2012
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As 2011 drew to a close, Telefónica in Brazil highlighted the work in integrating its fixed-line and mobile assets in the country in the wake of the Vivo acquisition in 2010 (Telefónicawatch, #48).
Progress in the year was said to include the completion of a new BRL 400m (EUR165m) data centre supporting fixed and mobile operations, the launch of fixed wireless services outside São Paulo (Telefónicawatch, #59), and discounted mobile broadband prices for fixed-line broadband customers.
It was also noted that Telefónica now has more than 50, 000 fixed-line fibre broadband customers. The fibre customer base is up from 11, 500 at the end of 2010, while the footprint of the fibre network has more than doubled to cover one million businesses and homes over the same period. The company is expecting demand to ramp up substantially in the coming three years, with expectations of a consumer customer base of one million by 2015.
Brazil innovation centre highlighted
Telefónica Brasil noted its innovation centre in the country was working on developments around fibre optics and video services, and had secured patents in relation to gesture-based control of devices such as audio and video equipment, and household appliances including blinds and lighting.
[Further reference: Integração Telefônica/Vivo avança em 2011 com ofertas convergentes e outras sinergias (PDF) -- Telefónica, 6 December 2011.]
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