Telefonicawatch Report #58 September 2011 Executive Brief
19 October 2011
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- Telefónica Group confirmed a second tier of management for its new restructured global organisation, with the new Telefónica Digital business drawing heavily on Telefónica Europe executives, as well as including personnel from Latin America and Spain. Suggestions in the media of a significant shift in control of the telco away from Madrid appear somewhat exaggerated, however. Álvarez-Pallete, new head of Telefónica Europe, is joined by another senior Telefónica Latinoamérica executive, Luis Miguel Gilperez, the new Telefónica España Chief Executive. Gilperez is credited with leading much of the integration work of Telefónica’s operations in Brazil, following the 2010 Vivo deal — skills that may be drawn upon as the Group melds its European OpCos into a single division. Spanish press reports hinted at the priorities of the expanded division, with claims that Álvarez-Pallete will be focusing on raising margins at the Group’s O2 operations. Overall, reaction to Telefónica’s decision to transform its management organisation was positive, with little to change Telefónicawatch‘s initial assessment. Hopes for the future appear to rest on Telefónica Digital, while Global Resources and Telefónica Europe will be pressed to improve efficiency in order to defend declining traditional business. [pp.4-9, 20.]
- Telefónica Group launched a new content delivery network platform, the Telefónica Global Delivery Network, which is to provide high-capacity transport for content and service provider customers internationally. The platform initially launched in Argentina and Spain, with plans to roll out in Brazil, Colombia, Chile, Mexico, and Venezuela in Latin America, and Germany and the UK in Europe. [p.16.]
- In Europe, Telefónica’s continued efforts to integrate operations, now being championed by Telefónica Global Resources, have prompted a joint project between Telefónica in the Czech Republic and Germany on network management. The initiative will see monitoring of fixed-line networks in Germany managed in the Czech Republic, while Telefónica Germany will manage Czech and Slovak mobile networks alongside its own. [p.16.]
- Telefónica España trumped rivals with the announcement of a pre-commercial LTE service to be offered to large corporate customers in major hubs across the country. The service is to be built on Alcatel-Lucent technology and, by 2012, is expected to be offering 100Mbps download speeds. While there are no compatible handsets yet available for the service, the telco is offering high-speed connections for data cards to customers signing for a EUR45-per-month mobile internet tariff. The announcement prompted similar service launches from the telco’s competitors. [pp.22-23.]
- In Colombia, there are signs that the fixed-line and mobile operations of Telefónica may be more closely integrated. The country’s government is still a significant shareholder in the fixed-line business, and a merging of interests would entail significant capital investment by both parties, but substantially strengthen the telco’s product portfolio. There would also be potential for Telefónica to make better use of tax credits relating to its struggling fixed-line business in the country. [p.38.]
- Senior figures from BlueVia, Telefónica Digital’s applications platform, toured technology hubs in the USA, on a mission to inform IT and developer communities about the capabilities of the Telefónica platform, and global scale of the business. During the event, BlueVia presented alongside partners including Amobee, Boku, and Microsoft. [p.11.]
- Telefónica in Chile held a month-long promotional event to support its Innova entrepreneurship and innovation programme, which is being positioned as a possible model for innovation across the Group. The similar, but newer, Wayra accelerator and incubator programme, held calls for start-up ideas in Argentina and Peru that closed in September 2011, with Brazil, Chile, Ecuador, and Venezuela expected to look for investment targets before the year is out. [p.10, 11.]
- Telefónica signed an agreement with Masternaut to jointly develop and market telematics-enabled fleet management services, as part of Telefónica Digital’s drive to build a market for M2M services. [p.13.]
- Julio Linares gave a speech trumpeting the importance of new digital technologies to build on the European Community’s plans for widespread high-speed broadband coverage across the continent within the next five-to-eight years. As the Group was implementing its reorganisation, the Chief Operating Officer heralded technologies that fall under the remit of Telefónica Digital — underlining questions as to the role of the Telefónica Group number-two executive in the revised management team. [p.14.]
- O2 Media, the UK-based mobile advertising unit, claimed to have boosted its customer base from 2.5 million to more than six million in around three months, on the way to a year-end goal of ten million users of the opt-in advertising solution, which is an important element of Telefónica Digital plans. Efforts to create an industry-wide open platform for mobile commerce in the UK are being hampered slightly by protests from non-participant Hutchison 3 UK, which is claiming it has been deliberately excluded, and pointing the finger at O2 UK as being chiefly responsible for this state of affairs. [pp.10, 32.]
- Telefónica Czech Republic is continuing its 3G network rollout, which has now reached 61% of the population. Rolling out 4G services is still some way off, however, with auctions of digital dividend spectrum apparently delayed further into 2012. The UK is facing similar delays, with signs that the regulator’s schedule for auctions will be thrown off by discussions with the operators on the fairness of the proposed auction. [pp.17, 18, 30.]
- In Germany, more progress is being made on LTE services, with the operator promoting its 4G coverage as an alternative to fixed-line broadband offerings — reflecting a trend building across the continent. [p.19.]
- Tony Hanway was named as the new Chief Executive of Telefónica Ireland when Stephen Shurrock, after less than a year in the position, moved to a new role in Telefónica Digital. [p.20.]
- In Spain, regulator the CMT published market statistics showing Telefónica had shed more than two percentage points of market share for both broadband and mobile services in the past year, which could explain the decision by Movistar España to offer a heavily discounted broadband connection to customers maintaining an active mobile account with the company. Despite the ongoing price-cutting promotional efforts, senior Telefónica executives claimed unconvincingly that the market is not seeing a price war. [pp.24-26.]
- Redknee, a software development company, won a contract to provide Telefónica in Spain with pricing-analysis solutions to sit on the telco’s billing platform. The deal builds on an earlier agreement between Redknee and Telefónica in Ireland. Jacada saw its customer service software deployed at Telefónica in the UK. [pp.28, 29.]
- Telefónica in Argentina launched a new Unified Communications suite offering hosted IP communications solutions in partnership with Siemens Enterprise Communications. The Argentinian operator also launched a new mobile platform to support subscription management for customers, and to promote content. [p.36.]
- Paulo Cesar Teixeira was named as the new Chief Executive of Telefónica in Brazil. The former Vivo executive had recently been charged with managing Consumer operations for the integrated Brazilian telco. [p.20.]
- A network licence dispute in Peru is continuing, with the government looking to establish an independent valuation for the Telefónica licence up for renewal. In Ecuador, short-term licences are to be awarded to address spectrum shortages, ahead of longer term auction plans. In Venezuela, authorities have halted Telefónica plans to implement new price rises, claiming it is acting unfairly. The telco insists it has upheld the terms of its licence. [pp.39-40.]
- Telefónica and Nokia’s partnership promoting “eco” handsets spread to Peru, after earlier launch in Spain. [p.42.]
- China Unicom is continuing to develop mobile payment platforms in the local emerging market with an agreement with Trunkbow. In Italy, Telecom Italia is among the four participants in the country’s 4G spectrum auctions. The Italian incumbent is also upping its investment in fixed-line networks in Brazil, enhancing its competitive position in the country. [pp.43-45.]
About Telefonicawatch
Report: #58
Covering: September 2011
Published: October 2011
Next report: October 2011
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