Telefónicawatch
This release
: #133
February 2019: 80pp
Releases/year: 10+
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EXECUTIVE BRIEF

GROUP

Management Update FY18: Quietly confident Telefónica to build on solid year [p.6]

  • Table: Telefónica Group selected financial data, FY18
  • Digital strength in a virtuous cycle with business sector growth
  • Digitalisation and agility gaining ground
  • Telefónica gets some satisfaction
  • Table: Telefónica Group performance by unit, FY18
  • FY19 guidance: scope for greater competition and investment

Acquisitions and Disposals: Millicom acquires Centroamérica assets [p.13]

  • Data centres also up for grabs

MWC: Microsoft alliance leads Telefónica MWC tech drive [p.17]

  • Azure embedded in Telefónica future
  • Leaders' love-in indicates the potential path of partnership
  • Alonso in the mix
  • Synergic link to latest synergies

MWC initial review: Telefónica's open embrace [p.20]

  • 5G moving towards reality

Suppliers: Industry pushes back on Huawei ban prospect [p.26]

  • Fact-based assessments and new monitoring plans
  • Huawei stands up for itself…
  • Telefónica stands firm

People [p.28]

  • Table: people movements

GLOBAL RESOURCES

5G: LuxCarta joins fixed wireless trial of 5G on mmWave [p.31]

  • Telefónica-backed 5G trial project picks up steam
  • Table: 5G‑EVE participants

Suppliers: Ericsson picks up managed services deal for NOCs [p.35]

  • Ixia to provide network visibility

Deals [p.39]

  • Telefónica Empresas: Hutchison links up to Telefónica MNC charge
  • AWS strengthens Telxius ties with cable deal
  • Telserv links with TIWS

Virtualisation: Telefónica Deutschland hosts latest ONAP proof of concept [p.42]

  • A host at arm's length

DIGITAL SERVICES

Security: AT&T joins security alliance [p.45]

Suppliers: Allot hails Telefónica wins, while trying to change model [p.46]

  • Sandvine in Allot crosshairs

Elevenpaths: OnMobile VAS deal extended in Spain [p.48]

  • Table: Wayra Spain investments during 2018.

LATIN AMERICA

Colombia: Movistar signs up 1.7 million users to VoLTE [p.53]

Mexico: Telefónica Mexico selects Ericsson to deploy SOC [p.55]

EUROPE

Germany: O2 Germany takes action that could delay 5G auction [p.59]

  • Industry solidarity
  • Operators hedge as fourth MNO moves closer to reality
  • 5G carries on regardless…
  • … but what about Huawei?

O2 Banking adds new partner with expanded offering [p.64]

  • Steady progress in European mobile money arena
  • Telefónica talks up accelerating LTE improvements

Spain: Juniper renews Fusión Red role [p.66]

  • Nokia also in on the act
  • Telefónica lends EUR150m for smart phone acquisitions
  • MásMóvil latest to take new wholesale fibre terms

United Kingdom: O2 hit with traffic management warning [p.70]

Vendors see repercussions from Nokia's UK SOC win [p.71]

  • Nokia deal reflects vendor diversification

FURTHER READING

INDEX

Symbols

3GPP 23, 38

A

Acacia Communications 75

Accenture 28

Acciona 15

Advanced 5G Network Infrastructure for Future Internet Public-Private Partnership (5G PPP) 33, 34

Advent 77

AI 17, 18, 19, 20, 25, 35, 36, 50, 51, 74, 75

AlienVault 45

Allot 46, 47, 75

Alphabet

 - Google 16

Amazon 16, 40, 41, 75

 - Amazon Web Services 40, 75

América Móvil 13, 57

 - Claro 57, 76

Apple 16, 53

ASTI 34

AT&T 16, 42, 45, 56, 75, 76

B

Bharti Airtel 15

BNP Paribas 64

British Broadcasting Corporation 76

BT Group 15, 29

 - BT Wholesale 29

Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (Federal Network Agency for Electricity, Gas, Telecommunications, Postal Service and Railways, BNA/BNetzA/RegTP, Germany) 59, 62

C

CaixaBank 67

Canonical 38, 75

Cardinality 71

Cellwize 71

China Mobile 15

China Telecom 15

Cisco Systems, Inc 51, 75

CK Hutchison 9, 39, 75

 - H3G

 - UK 70, 72, 73

CNMC 68

Comcast 49

Comptel 71

D

Deutsche Telekom 15, 16, 22, 42, 61, 63, 77

Drillisch 61, 77

 - Yourfone 61, 77

E

Entel 76

Equinix 14

Ericsson 15, 23, 24, 33, 34, 35, 36, 38, 53, 55, 71, 73, 75, 76

Etisalat 45

European Telecommunications Standards Institute (ETSI) 43

European Union 27, 33, 43, 64, 70

European Commission 25, 33, 74

F

Facebook 22, 38, 40

 - Telecom Infra Project 22, 34, 38

Ficosa 23, 24

Fidor Bank 64

G

Grupo Santander

 - Santander 29

GSM Association

 - GSMA

  --  Mobile Connect 28

GSM Association (GSMA) 15, 22, 26, 27, 61, 74

 - Mobile World Congress 6, 17, 21, 23, 25, 27, 36, 47, 74

H

Hellenic Telecommunication Organization (OTE) 34

HSBC 29

Huawei 15, 26, 27, 36, 53, 55, 56, 63, 71, 74, 77

I

IBM 15, 40

IDC 34

IFT (Mexico) 56

International Monetary Fund (IMF) 10

Ixia 37, 75

J

Juniper Networks 66, 77

L

La Liga 69

LG 53

Liberty Global 51

Lime Micro 38

Linux Foundation 43

LuxCarta 31, 75

M

MásMóvil 68, 77

 - PepePhone 68

 - Yoigo (Xfera) 9, 68

MasterCard 54, 64

McAfee 46

Microsoft 16, 17, 18, 19, 20, 21, 22, 36, 40, 74

 - Azure 17, 18

Millicom 13, 74

Motorola 53

MVNOs 28, 29, 61

N

NEC 42, 43, 75

 - Netcracker 43

Netflix 16, 50, 54, 69

Nokia 15, 34, 36, 53, 55, 56, 66, 71

Nokia Networks 34

O

Ofcom (UK) 70, 73, 77

Omnicom Group, Inc

 - Organic 7, 11

OnMobile 48, 75

OnMobile Global 48, 75

Open Networking Foundation 22, 42, 75

Orange 15, 16, 22, 25, 26, 34, 68, 74

 - Spain 68

Osiptel 57, 76

P

Petrobas 57

Q

Qualcomm 23, 24

R

Raisin 64, 77

Regions

 - APAC

  --  China 15, 36, 63

 - EMEA

  --  Austria 39, 51

  --  Denmark 39

  --  Europe 6, 7, 10, 16, 25, 26, 27, 28, 33, 34, 37, 40, 43, 51, 54, 55, 58, 63, 64, 69, 70, 74, 75, 77

  --  France 12, 26, 33, 34

  --  Germany 10, 16, 28, 31, 43, 51, 56, 59, 61, 62, 63, 64, 65, 71, 75, 77

  --  Greece 33, 34

  --  Ireland 39

  --  Italy 33, 34, 39

  --  Luxembourg 13

  --  Norway 22, 73

  --  Poland 34

  --  Portugal 51

  --  Romania 34, 36, 51

  --  Spain 9, 12, 14, 15, 16, 17, 20, 28, 29, 33, 34, 38, 40, 46, 48, 49, 50, 51, 57, 66, 67, 68, 69, 75, 77

  --  Sweden 33, 39

  --  Switzerland 51

  --  UK 9, 10, 16, 23, 27, 29, 35, 36, 39, 43, 51, 70, 71, 72, 73, 77

 - Latin America 6, 7, 8, 10, 13, 28, 36, 37, 41, 43, 48, 51, 52, 53, 54, 55, 56, 64, 69, 76

  --  Argentina 10, 28, 46, 51, 56, 71

  --  Brazil 10, 12, 16, 18, 28, 37, 43, 46, 48, 51, 54, 56, 57, 64

  --  Central America 10, 13

  --  Chile 10, 40, 51, 54, 56, 71, 76

  --  Colombia 10, 35, 37, 51, 53, 54, 56, 76

  --  Costa Rica 13, 74

  --  Ecuador 10, 35, 56, 57, 76

  --  El Salvador 13

  --  Guatemala 13

  --  Mexico 7, 10, 13, 36, 51, 55, 56, 71, 76

  --  Nicaragua 13, 74

  --  Panama 74

  --  Peru 10, 22, 35, 37, 46, 51, 56, 57, 76

  --  Uruguay 10, 35, 51, 56

  --  Venezuela 10, 51

 - North America

  --  Canada 14

 --  USA 40, 49, 51

Rivetz 47

RootMetrics 72, 77

S

Samsung 15, 31, 53, 62, 75

Sandvine 46, 47

Singtel 45

Sixt 28

SoftBank 45

Sony 15, 53

Subtel (Chile) 54

T

TDLC (Chile) 54

Technologies

 - 2.5G 57

 - 2G 56, 63, 76

 - 3G 53, 54, 56, 70, 73

 - 4G

  --  LTE 26, 38, 53, 54, 55, 63, 65, 72, 73, 75, 76, 77

 - 4K 24

 - 5G 17, 18, 21, 22, 23, 24, 26, 27, 31, 33, 34, 37, 42, 43, 55, 59, 61, 62, 63, 65, 66, 74, 75, 77

 - AI 17, 18, 19, 20, 25, 35, 36, 50, 51, 74, 75

 - Blockchain 75

 - Broadband 8, 22, 38

 - Business/Operations Support Systems (BSS/OSS) 10, 43, 56

 - CrowdCell 38

 - Ethernet 66

 - GSM 15, 22, 26, 61

 - high definition (HD) 69

 - ICT 34, 43, 51

 - IMS 53

 - Internet of Things 28, 49, 50, 66

 - IPTV 8

 - Linux 38, 43

 - NGN 22, 57

 - PaaS (Platform as a Service) 40

 - R&D 34

 - SIM 47

 - Software defined networking (SDN) 22, 42, 43, 75

 - TV 54, 69, 76

 - V2X 24

 - VoLTE 37, 53, 65

 - WLAN

 - Wi-Fi 55, 69

Telecom Italia 12, 34

Telefónica Group 6, 8, 10, 11, 12, 13, 14, 15, 16, 17, 18, 23, 28, 29, 34, 37, 38, 39, 47, 50, 54, 56, 63

 - Associates and investments

  --  Telecom Italia 12, 34

 - Digital services

  --  AURA 18, 19, 36, 41

  --  ElevenPaths 20, 47, 75

  --  LUCA 20

  --  Open Future 49, 50, 51, 75

  --  OTT 41, 54, 56

  --  Synergic Partners 20

  --  Telefónica I+D 34, 50

  --  Telefónica Ventures 50

  --  Tuenti 28

  --  Wanda 69

  --  Wayra 50, 51, 75

 - Europe

  --  E-Plus 61, 65

  --  Germany 10, 28, 59, 61, 62, 63, 64, 65

  --  giffgaff 29

  --  O2 9, 10, 27, 28, 29, 43, 59, 61, 62, 63, 64, 65, 69, 70, 71, 72, 73, 77

  --  Spain 10, 15, 28, 29, 46, 48, 57, 66, 67, 68, 69, 75

  --  Telefónica Consumer Finance 67

  --  Telefónica Deutschland 28, 31, 42, 43, 59, 61, 64, 65, 77

  --  UK 9, 29, 56, 63, 70, 71, 72, 73, 77

 - Executives

  --  Alonso, Chema 20

  --  Álvarez, Cristina 29

  --  Álvarez-Pallete Lopez, José María 8, 15, 17, 18, 19, 20, 21, 25, 74

  --  Andrés Alonso, Ana Casilda 28

  --  Andujar, Pedro 28

  --  Bentley, Clare 29

  --  Blanco, Enrique 19

  --  Carbajo, Cayetano 65

  --  Caro Bernat, Juan Manuel 35

  --  Castro Apablaza, Eduardo 28

  --  Chick, Isabela 28

  --  Duncan, Michael 56

  --  Engelbrecht, Pieter 29

  --  Fernandez, Maria 29

  --  Fernández Miranda, Jorge 28

  --  Gavilán, Javier 37

  --  Gilham, Andy 29

  --  Gruner, Rodrigo 28

  --  Haas, Markus 61

  --  Junge, Alexander 28

  --  Kumar Muthukumarasamy, Dinesh 28

  --  Lea, Bridget 29

  --  Lopez Blanco, Carlos 29

  --  Mata, Joaquin 66

  --  McManus, Derek 73

  --  Morales, Carlos 56

  --  Muñoz, Luisa 34

  --  O7Reilly, Brendan 71

  --  ORRourke, Brendan 29

  --  Oslé, Sergio 49

  --  Sambucetti, Ezequiel 28

  --  Scagnetti, Hugo 28

  --  Uthurralt, Ronald 28

  --  Vardy, Mark 29

  --  Vilá, Ángel 10

  --  Wöllmer, Christoph 28

 - Global Resources

  --  5TONIC 33, 34, 43

  --  MAREA 40, 75

  --  Telefónica Business Solutions 40, 43

  --  Telefónica Empresas 39

  --  Telefónica International Wholesale Services 41, 75

  --  Telxius 40, 75

  --  UNICA 9, 19, 22

 - Latin America 48

  --  Argentina 28

  --  Brazil 10, 43, 48, 54

  --  Chile 28, 54

  --  Colombia 53

  --  Mexico 7, 55, 56, 76

  --  Panama 13

 - Movistar+ 49, 69

 - Products and services

  --  Emoción 48

  --  Fusión 66, 77

  --  Movistar+ 49, 69

  --  Movistar Play 50, 54, 56

  --  Movistar TV 54

  --  O2 Banking 64

  --  pay-TV 8, 18, 54, 56, 69

  --  Ringback tones (RBT) 48

  --  Zuum 54, 64

 - Telefónica Educación Digital 28

 - Telefónica Group 69

Telemundo International Studios 49

Telenor 22, 74

Telserv 41, 75

Tigo 13

Tuenti 28

U

Unilever 15

United Internet 61

 - 1&1 61, 77

UPC 23

V

Vasona Networks 70

Verizon Communications 15, 16

Viettel 57

Vivendi SA 12

Vodafone Group 15, 16, 29, 34, 38, 40, 46, 61, 68, 70, 72, 73, 77

 - Germany 61, 77

 - Spain 68

 - UK 29, 70, 72, 73

Volkswagen Group 15

 - SEAT 23, 24, 74

W

Wanchain 47, 75

Wibson 51

World Economic Forum 15

  • Álvarez-Pallete is maintaining efforts to make the Spanish telco a thought leader in digital transformation as it undergoes its own evolution.
  • Microsoft Azure is becoming a key element of both digital home and customer experience services, and a contributor to Telefónica’s development of virtualised “liquid” infrastructure.
  • 5G is coming, and Telefónica is underlining the network virtualisation work it has already implemented as a key enabler to a smooth rollout and new use cases.

Telefónica Group continued its repositioning towards becoming a communications technology company rather than a traditional telco at Mobile World Congress 2019 (MWC) in Barcelona, through its highest-profile keynotes and demonstrations. The event was not without more traditional link-ups with network technology vendors, promoting the latest evolutions of core infrastructure that will enable next-generation services, but the big picture the Group appeared to want to paint was that step-by-step its business is fundamentally changing.

An alliance with Microsoft was at the core of the Telefónica transformation message, with the two companies linking up on emerging technology, and striving to put themselves at the forefront of a data and artificial intelligence (AI)-based future. MWC also saw a string of 5G use cases being outlined, and continued developments within Telefónica’s platform-based structure, both building on the broader strategy that fostered the operator’s Microsoft partnership.

Azure embedded in Telefónica future

Telefónica Group unveiled a strategic partnership agreement with Microsoft that entails the operator using the Microsoft Azure AI platform to design new services, and was said to be based on earlier collaboration on Telefónica’s cognitive intelligence Fourth Platform (Telefónicawatch, #117).

Azure Cognitive Services, a suite of application programming interfaces (APIs), is being used to develop new customer engagement and business processes, building on its existing integration into the AURA digital assistant. Already in use within Telefónica’s pay-TV services, and in contact centres in Brazil (Telefónicawatch, #132), the partners aim to bring the AURA-based services to all Telefónica’s customer relationship channels in a wider array of markets. Telefónica will also look to deploy AURA Cognitive Services to internal employee and supplier-facing channels.

The Microsoft and Telefónica announcement further alluded to creating new in-home experiences for the operator, which ties with Telefónica’s Living Apps initiative that is built on the idea of ‘Home-as-a-Computer’.

The agreement also covers exploratory work on the potential for AI working alongside other emerging disruptive technologies, such as blockchain and edge computing, and for use cases within 5G. A joint working team is to consider the potential for AI and machine learning in network optimisation and cost-cutting. Specific areas to be considered include applications enabling predictive provisioning, and managing demand capacity.

Microsoft stressed that the research would be undertaken under the terms of Microsoft’s Shared Innovation Initiative, a programme instigated in 2018 intended to provide clarity on research ownership for Microsoft partners (and repair a damaged reputation for the IT vendor as an intellectual property partner).

Under the Shared Innovation Initiative, Microsoft states that any intellectual property that emerges from the partnership will be owned by the partner it is working with, although there will be a requirement that Microsoft is issued a licence to use the technology on Microsoft platforms. The initiative also commits to allowing Microsoft partners reasonably free rein to re-deploy any breakthroughs on platforms other than its own, and a willingness to make any code created available for use in open source environments the partner is licensed to participate in.

While praising Telefónica’s leadership in applying AI to customer engagement transformation, Microsoft said the agreement would see Azure “shape the future of Telefónica’s network”.

Telefónica Group Executive Chairman, José María Álvarez-Pallete, meanwhile, described Telefónica’s vision of “smart, liquid networks” that are well suited to applying AI-based technology and making use of the potential of big data.

The virtualisation and ‘softwarisation’ of the Telefónica network is at the heart of the new strategy, and it has been five years since the unveiling of UNICA at MWC kickstarted the change (Telefónicawatch, #85). In the past five years Enrique Blanco, Group Chief Technology and Information officer, has been a frontline cheerleader (and demanding customer) for virtualisation, although his presence at MWC 2019 was decidedly low-key, with a newer generation of management from within his department taking the spotlight to showcase innovations and the progress on the Group’s journey.

Leaders’ love-in indicates the potential path of partnership

In the wake of the alliance announcement, Álvarez-Pallete, appeared onstage with Satya Nadella, Microsoft Chief Executive, to discuss the two companies’ latest link-up. Álvarez-Pallete and Nadella had a somewhat staged conversation during the presentation, each taking turns to compliment the other’s business and highlight the ways in which they could work together. Despite a slightly artificial air, it appeared clear that Telefónica is fully committed to embracing common goals with the IT giant.

Álvarez-Pallete framed the Microsoft partnership as a meeting of minds, with the partners sharing the same values and vision. The Telefónica Executive Chairman spoke particularly highly of Nadella’s book Hit Refresh, which sets out his views on adapting to an AI-driven technological environment, and the changes he made in the Microsoft model. The two partners can be seen as brought together by the need to adapt to a new world, where their former monopolies are being disrupted and broken down, with both needing to adapt and evolve to maintain their relevance.

The two executives were keen to reinforce the importance of developing AI ethical principles and standards (a key element of Nadella’s book, and a recent focus of Telefónica’s corporate responsibility stance). Álvarez-Pallete recognised that everything that will become possible for companies around AI and big data will not be considered acceptable by society, and the purpose for which it is used will need to be monitored and controlled. The ground rules and principles for this will need to be firmly established at the start of the AI-driven transformation as models and algorithms are being built, which has been a common theme for both companies.

Nadella also echoed comments from Álvarez-Pallete elsewhere on the importance of making AI widely accessible and ensuring that AI should not be a technology that is only in the purview of a handful of global companies.

Two key applications of AI were highlighted by the two leaders: in the home (linking to offerings such as AURA and Living Apps), and in the network and infrastructure, with Álvarez-Pallete talking up how powerful a software-powered “liquid” network could become as an enabler of rapid changes in technology. Nadella also emphasised the opportunity for Microsoft to see computing embedded and distributed throughout cloud-based networks and to the network edge.

Alonso in the mix

During Microsoft and Telefónica’s presentation, the relationship between the two was also talked up by Group Chief Data Officer Chema Alonso, who recalled pitching Telefónica’s platform-based model and particularly its cognitive intelligence plans to Microsoft as it sought partners for its strategy.

On several occasions through MWC, Álvarez-Pallete said in relation to the potential of AI that “with this amount of power comes very big responsibilities”. The phrasing of this sentiment, used to push the development of AI ethics, was initially expressed by philosopher Voltaire, but these days is more usually attributed to Marvel Comics’ Spider-Man. Telefónicawatch suspects that this is perhaps a reflection of the continued growing influence of the pop culture-inspired CDO Alonso in determining the direction and outlook of the Group.

Synergic link to latest synergies

The latest alliance announcement between the two companies also appears to build on an existing agreement in place since 2017 when Synergic Partners, a big data consultancy that Telefónica acquired in 2015 and recently integrated more closely into its LUCA unit (Telefónicawatch, #102, and #131), linked up with Microsoft in Spain. That agreement entailed commitments to collaborate on the development of a portfolio of artificial intelligence and big data solutions on the platform (Telefónicawatch, #118)

ElevenPaths, Telefónica’s cybersecurity unit, was namechecked in the agreement, and it was noted that key employees within ElevenPaths had been trained and certified on cybersecurity offerings from Microsoft.

Image: Telefónica

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