Telefónicawatch
This release
: #131
December 2018: 68pp
Releases/year: 10+
Click for more details of this release

Executive brief

Group

Management Update: Telefónica ups guidance, rediscovers strength [p.6]

  • Table: Telefónica, selected financial data, Q3 FY18
  • NGNs paving the way for continued momentum
  • LatAm proceeds on choppy seas
  • Table: Telefónica Group, performance by unit, Q3 FY18
  • Next phase of transformation: make digital pay

Acquisitions and disposals: Insurance firm sale kicks off latest round of debt reduction [p.13]

  • Telefónica nears Mexico exit…
  • Telefónica hopes to raise more through data centre sales

People [p.15]

  • Navarro goes Global in 2019.
  • Table: people movements

Global Resources

5G: Telefónica promotes Málaga as third 5G city [p.18]

  • 5G: not to be seen in isolation

Partners: Telefónica ties with IBM on blockchain [p.21]

  • VMware trumpets partnership with Telefónica

UNICA: Mavenir jumps on UNICA bandwagon [p.24]

  • Local customisation of a global platform

Digital services

Telefónica unveils AI ethics [p.28]

Digital-identity verification boosts ElevenPaths' ecosystem ambitions [p.30]

LUCA selects Stratio to help customers manage big data use [p.31]

  • Wayra UK forms new incubator programme with Innogy

Latin America

Brazil: TIM and Vivo extend 3G infrastructure-sharing in Brazil [p.36]

  • Telefónica Brasil has high hopes for new government

Mexico: Telefónica México launches mobile advertising offering [p.40]

  • Growing ecosystem of advertising partners
  • Table: LUCA's portfolio of media and advertising services

Europe

Germany: SIAE digs itself in further with O2 Germany deal [p.44]

  • O2 unveils more partners to underpin fixed and mobile services
  • GasLINE another new partner as O2 opens its arms to network alliances
  • Proof in network performance test, with 2019 set to be a big year
  • O2 extends business security solutions with McAfee

Spain: Telefónica, Huawei get pally on President Xi's Spain trip [p.52]

  • Spanish oasis for Huawei
  • Telefónica España claims converged consumer cybersecurity world-first

UK: Ericsson fault banjaxes O2 network [p.58]

  • Headlines highlight O2's '87p' compensation, while Ericsson could be hit for £100m
  • O2 takes Massive step towards London 5G launch
  • O2 UK claims European small-cell fibre first for driverless tech

Further reading

Index

Symbols

3GPP 18
3M 64
21st Century Fox
 - Sky plc 58

A

Advent 14
Aerial Technologies 29, 64
AI 28, 29, 31, 32, 63, 64
Alastria 22
Alphabet
 - Google 56
Altán Redes
 - Red Compartida 42, 64
Altiostar 25
Altran 25
América Móvil 36, 42
 - Claro 36, 39, 42, 64
Analysys Mason 25
Anatel 36
Apple 57
 - iOS 49
 - iPhone 57
Aquto 41
Arqiva 61, 65
AT&T 14, 63

B

Bank of America Corp. 14
Beerides 34
BP 16
BT Group 16, 22, 53, 65
Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (Federal Network Agency for Electricity, Gas, Telecommunications, Postal Service and Railways, BNA/BNetzA/RegTP, Germany) 45

C

Carrier Blockchain Study Group 22
Cerberus 14
China Mobile 37
China Telecom 37
CK Hutchison 16
 - H3G
 - UK 16
CNMC 56
Colt Group 22
Community of Madrid 57
Conadecus 39

D

Datami 40, 41
Dell Technologies
 - VMware 23, 63
Deutsche Telekom 45, 65

E

Enerbrain 34
Energia 64
Entel 39, 42, 64
Ericsson 19, 25, 38, 58, 59, 65
ETNO 10
European Union 12, 19, 45, 51
EVezy 34
EWE TEL 46, 65
ExCel Arena 19

F

Facebook 25
 - Telecom Infra Project 25
Facua 56
FIWARE 19
Forrester 32, 64
Futurecom 37, 38

G

GasLINE 46, 47, 65
Genesys 56
Grupo Catalana Occidente 13, 63
GSM Association (GSMA) 15

H

Havas 40, 41
Hortonworks 32
HP, Inc 26
Huawei 18, 19, 25, 32, 50, 52, 53, 62, 63, 65
Humanising Autonomy 34

I

IBM 21, 22, 63
IFT (Mexico) 42
Innogy 64
innogy SE 33
Intel 29, 64
Intel Capital 29, 64

K

Kibo Ventures 29
KKR 14

L

Liberty Global 14, 45
London Stock Exchange 12

M

MásMóvil
 - Yoigo (Xfera) 56
Mavenir 24, 25, 40, 41, 63
McAfee 49, 50, 54, 65
Merrill Lynch 14
Microsoft 51
Millicom 14, 63
Morgan Stanley 62
Motorola 41
MVNOs 58, 59

N

NET 25
Netflix 42
NETSCOUT 25
NGN Fiber Network 47
Nokia 14, 19, 20, 57, 60, 63
Nuage Networks 14

O

Oi SA 36, 37
Omnicom Group, Inc
 - Organic 7
Omniflow 34
Orange 15, 19, 57
 - Spain 57

P

Parallel Wireless 25
PCCW 22

R

RADCOM 25
Red Hat 25
Regions
 - APAC
   -- Australia 53
   -- China 18, 37, 52, 53, 65
   -- Japan 59
   -- New Zealand 53
 - EMEA
   -- Czech Republic 45
   -- Europe 6, 7, 8, 10, 12, 14, 19, 22, 23, 26, 41, 42, 43, 45, 50, 51, 57, 61, 62, 63, 65
   -- France 41
   -- Germany 15, 16, 24, 25, 33, 38, 44, 45, 46, 47, 48, 49, 50, 51, 53, 65
   -- Ireland 12
   -- Italy 44
   -- Portugal 61
   -- Spain 7, 8, 14, 18, 19, 22, 26, 31, 38, 50, 52, 53, 54, 55, 56, 57, 61, 63, 65
   -- UK 7, 8, 9, 12, 16, 33, 34, 38, 41, 53, 58, 59, 60, 61, 62, 64, 65
 - Latin America 6, 7, 8, 26, 31, 35, 38, 41, 42, 45, 55, 57, 64
   -- Argentina 9, 25, 26, 38, 40, 64
   -- Brazil 8, 9, 15, 16, 26, 36, 37, 38, 40, 41, 64
   -- Central America 8, 9, 13, 14
   -- Chile 9, 26, 39, 42, 64
   -- Colombia 6, 9, 25, 26, 39, 64
   -- Costa Rica 14, 26
   -- Ecuador 9, 26
   -- El Salvador 14, 26
   -- Guatemala 14, 26
   -- Mexico 6, 8, 9, 11, 14, 26, 40, 41, 42, 64
   -- Nicaragua 14, 26
   -- Panama 14, 26
   -- Peru 9, 16, 25, 26, 42, 64
   -- Uruguay 9
   -- Venezuela 9, 16
 - North America
   -- USA 53
Rivetz 22, 30, 64

S

Samsung 26
SIAE Microelettronica 44, 45
Singtel 15
Sodexo 26
Softbank 59
Stratio 31, 32, 64

T

TDLC (Chile) 39, 64
Technolgies
 - QR codes 57
Telecom Italia
 - Telecom Italia Mobile 36
 - TIM Brasil 36
Telefónica Group 6, 9, 10, 11, 12, 13, 14, 15, 16, 20, 24, 28, 29, 31, 36, 38, 52, 57
 - Digital services
   -- AURA 56
   -- Axonix 41
   -- ElevenPaths 22, 30, 49, 50, 54, 64
   -- LUCA 16, 31, 32, 40, 41, 51, 64
   -- M2M 57
   -- Open Future 16, 33, 34
   -- Statiq 41
   -- Synergic Partners 16, 51
   -- Wayra 16, 33, 34, 64
   -- Weve 41
 - Directors
   -- de Paz, Javier 16
   -- Linares, Julio 15, 16
 - Europe
   -- E-Plus 44, 48, 50
   -- Germany 44, 45, 46, 47, 48, 49
   -- Giffgaff 58
   -- O2 8, 16, 44, 45, 46, 47, 48, 49, 50, 57, 58, 59, 60, 61, 62, 65
   -- Spain 8, 9, 16, 19, 54, 55, 56, 57, 65
   -- Telefónica Deutschland 8, 16, 19, 24, 44, 45, 46, 47, 48, 49, 50, 51, 63, 65
   -- Telefónica NEXT 51, 65
   -- UK 16, 58, 59, 60, 61, 62, 65
 - Executives
   -- Abasolo, Laura 6
   -- Álvarez-Pallete Lopez, José María 10, 11, 12, 29, 63
   -- Carbajo, Cayetano 24, 45, 48
   -- Cortez, Pedro 16
   -- Dacre, Andrea 16
   -- De Carvajal, Pablo 16
   -- Dowd, Ben 16
   -- Dupuy de Lome Corchado, Enrique 16
   -- Evans, Mark 58
   -- Gallardo Rico, David 16
   -- Gebara, Christian 15
   -- Gil Lizasoain, Elena 32, 40
   -- Gilpérez López, Luis Miguel 16
   -- Haas, Markus 45
   -- Lappoehn, Jens 51
   -- Larder, Paul 16
   -- Lluch, Jaime 19
   -- Lopez Lozano, Maria Victoria 16
   -- Lösing, Alfons 47
   -- Manzanares, Javier 16
   -- Martín-Villa, Gonzalo 21
   -- Mata, Joaquin 19
   -- McMahon, Alastair 16
   -- Navarro, Eduardo 15, 16, 37
   -- Newton, Tom 16
   -- O'Reilly, Brendan 60
   -- Pérez, Pedro Pablo 30
   -- Plumb, David 16
   -- Rupprecht, Alexander 16, 50
   -- Sanchez de Lerin, Ramiro 16
   -- Stewart, Gary 33
   -- Tharntong, Louise 16
   -- Vilá, Ángel 6
 - Ex-executives
   -- Genish, Amos 15
 - Global Resources
   -- Cornerstone Telecommunications Infrastructure 62
   -- Telefónica Business Solutions 26, 63
   -- Telefónica International Wholesale Services 26, 63
   -- Telxius 13, 14
   -- UNICA 12, 24, 25, 41, 63
 - Latin America
   -- Brazil 8, 15, 16, 36, 37, 38, 40
   -- Mexico 8, 14, 40, 41
   -- Vivo 36, 37, 38, 40, 64
 - Movistar+ 55
 - On The Spot 26
 - Products and services
   -- Fusión 55
   -- Movistar+ 55
   -- Movistar Cloud 55
   -- Movistar Play 9
   -- Movistar TV 39
   -- O2 o 47, 59
 - Telefónica Emisiones 12
Telstra 22
Tesco 58
 - Tesco Mobile 58
Tigo 14
Transport for London 59

U

United Internet 65
United Nations 29

V

Verizon Communications 14
Vitroconnect 46, 47
VMware 23, 63
Vodafone Group 8, 25, 45, 47, 48, 57, 62, 65
 - Germany 45, 47, 48
 - Spain 57
 - UK 62

W

Wegow 56
Wireless Infrastructure Group 61

Z

Zhilabs 26
ZTE 50, 53, 62, 65

  • A previously planned disposal of the non-core Antares business completed after union qualms.
  • Bigger deals in the wings with the sale of Central American assets drawing near.
  • Telxius-style data centre unit also in the offing.

Telefónica divested itself of a non-strategic business, through the sale of its insurance company Antares to Grupo Catalana Occidente for EUR161m. Antares principally provides personal insurance services to Telefónica Group employees and its new owner will manage Telefónica Group policies for the next decade.

The transaction is expected to generate capital gains of around EUR90m for the Group, and reduce net debt by just under EUR30m.

The move fits Telefónica Group’s asset portfolio management policy, which it said is based on “rationalisation, value creation and optimisation of the return on capital employed”.

The deal, which is subject to regulatory approval, will reportedly see 45 Antares staff integrated into Grupo Catalana Occidente’s workforce. The sale of the insurance business had been identified as a possibility in summer 2018, after earlier plans had been shelved in the face of union objections (Telefónicawatch, #128).

At the beginning of November 2018, Telefónica also divested itself of insurance company Antares (Telefónicawatch, #131).

… Telefónica nears Mexico exit…

Press reports in Spain claimed that Telefónica Group is on the verge of completing the sale of its assets in Mexico, with a separate deal to offload its remaining stake in its Telefónica CentroAmérica operating businesses (OBs).

The potential sale of the collective Central American businesses has been mooted for some time as part of debt-reduction and restructuring programmes, with management clear that they are willing to let go of any assets that are not making a sufficient level of return on capital employed (Telefónicawatch, #130, passim).

Investment funds Advent and Cerberus are said to be leading the way in the Telefónica México acquisition, with the Cerberus bid said to be favoured. Meanwhile the other smaller Central American OBs (Costa Rica, El Salvador, Guatemala, Nicaragua and Panama) are thought to be of interest to local operator Millicom, which trades under the Tigo brand, and is controlled by Guatemalan telecoms tycoon Mario López Estrada. Other potential bidders for the 60% stake that Telefónica holds in its CentroAmérica business are said to include AT&T and Liberty Global’s local division.

Reports suggested that the disposals could raise as much as EUR2.5bn for Telefónica, nearer the top of earlier estimates that collectively valued the assets between EUR2bn and EUR2.7bn.

…Telefónica hopes to raise more through data centre sales

Telefónica Group is reported to be in the process of formulating plans to fully or partially sell off its data centre (DC) assets around the word, as part of its ongoing deleveraging strategy. Spanish media reports suggest the Group is taking steps to consolidate 25 DCs, located in Europe and the Americas, under the control of a single business unit valued in the region of EUR1bn. Once created, Telefónica will apparently look to sell all or part, with Bank of America Merrill Lynch handling the monetisation.

It also echoes Telefónica’s earlier debt-reduction move that saw it consolidate control of its infrastructure assets in several markets into Telxius. After plans for a public listing of the towers unit fell through in late-2016, Telefónica sold 40% to investment firm KKR for EUR1.3bn, and earlier in 2018 sold another 10% tranche of the business to the family investment company of retail billionaire Amancio Ortega for EUR380m (Telefónicawatch, #114, #128, passim).

This is a path trodden by other operators recently: US peers AT&T and Verizon have both divested themselves of data centres in the last two years to raise cash.

It has been unclear just how many DCs Telefónica actually has of its own, or the extent to which it differentiates between operational (telco cloud) and customer (enterprise cloud). In 2017, Telefónicawatch (#119) estimated around a dozen DCs in Latin America, including one of three global facilities (Brazil, Spain, and the US). These were supplemented by around 30 third-party ‘extender’ DCs across APAC, Europe and the US. The Group is understood to have been repurposing elements of its central office estate for DC usage. Through its DCs, Telefónica offers cloud-based enterprise services, including hosting servers, digital archiving and business continuity. Earlier in 2018, Telefónica embarked on a partnership with Nokia’s Nuage Networks to overhaul its DC infrastructure in Spain (Telefónicawatch, #127). Other recurrent partners in this area are Huawei (notably in Latin America) and VMware.

Image: Rafael Coelho Salles / Flickr CC BY 2.0

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