Telefónicawatch
This release
: #135
May 2019: 60pp
Releases/year: 10+
Click for more details of this release

EXECUTIVE BRIEF

GROUP

Management Update [p.6]

  • Telefónica progress continues, with a little turbulence
  • Table: Telefónica, selected financial data, Q1 FY19

Corporate Responsibility [p.8]

  • Financial highlights: margins suffer, but efficiency improvements anticipated
  • Region by region: European strength and Latin America recovery
  • Table: Telefónica Group, performance by unit, Q1 FY19
  • Operational developments: 10G fibre and the value of bundling

Acquisitions & Disposals: Data centre sale raises EUR550m [p.11]

  • Table: Telefónica's offloaded data centre locations

People [p.13]

  • Table: People movements

GLOBAL RESOURCES

Suppliers: Telefónica extends work with Amdocs in LatAm [p.16]

Telefónica Empresas: Telefónica wins IoT connectivity deal with Schindler [p.17]

  • Empresas push into Spanish health services [p.18]

DIGITAL SERVICES

AI: Benjamins on Telefónica's AI ethics and data development [p.20]

  • Transferable skills proving an AI challenge
  • Internal uses and external business cases
  • Social applications could be big business
  • Guarding against misuse of AI, from the start

Cybersecurity: Telefónica launches IoT Cybersecurity Unit with Subex [p.26]

  • Subex watching out for traffic

WAYRA [p.28]

  • Table: Round-up of Wayra investments' recent activity

LATIN AMERICA

Brazil [p.31]

  • Empresas lands BRL 500m state contract
  • Ezentis renews contract with Telefónica|Vivo

Chile [p.34]

  • Idemia awarded verification contract

Colombia [p.35]

  • IBM and Telefónica collaborate on automation
  • Movistar Ads reaches Colombia

Peru [p.38]

  • Tecnotree beds down in Peru

EUROPE

Germany: O2 to help Vodafone take Liberty with wholesale deal [p.41]

  • Arrangement to boost O2 firepower, but is not unfettered
  • DT unhappy with plans, Liberty delighted

O2 goes OTT for TV, again [p.43]

  • Second coming of O2 TV

Spain: Telefónica demos potential of IP Fusión upgrade [p.46]

  • Huawei in the mesh

Movistar intensifies premium approach [p.47]

  • Broadening the television base
  • Chasing unicorns

UK: O2 addresses patchy coverage with WIG [p.50]

  • Relationship non-exclusive

Ofcom imposes more openness on O2 and industry [p.52]

O2 UK targets health sector contracts with new tariffs [p.53]

5G [p.54]

  • O2's 5G network to support autonomous vehicle testing
  • Table: AutoAir partners, May 2019

FURTHER READING

INDEX

SYMBOLS

21st Century Fox

 - Sky plc 10, 44

A

Accenture 28

Aena 13

AI 20, 21, 23, 24, 25, 28, 55

Airspan Networks 54

Alcatel-Lucent 46

Allianz SE 57

Alphabet

 - Google 25, 43, 49

Amazon 14, 43, 49

 - Amazon Web Services 14

Amdocs 16, 55

América Móvil 38

Anschutz Entertainment Group (AEG) 28

 - O2 Arena 28

Apple 37

Arqiva 51

Asavie Technologies 53

Asterion Industrial Partners 11, 55

Atkins Engineering 54

AT&T 25

B

Blu Wireless 54

BMW 28

BT Group 10

Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (Federal Network Agency for Electricity, Gas, Telecommunications, Postal Service and Railways, BNA/BNetzA/RegTP, Germany) 45

Burda 44

C

Celestia Technologies 54

Check Point 39, 53

CNMC 49

D

Dell Technologies

 - RSA 39

 - VMware 18, 39, 53

Deutsche Telekom 25, 41, 42, 57

Diageo 28

E

EA 49

Ericsson 32, 49

EsalqTec 32

European Union 23, 41, 43

 - European Commission 41, 42

Exaring AG 44

 - Waipu.tv 43, 44

ExCel Arena 51

EXFO 46

Ezentis 33

F

Forrester 24

Fortinet 39

Fortumo 49, 57

Futura Networks 13

G

Gameloft 49

Grupo Ezentis 33

Grupo Santander

 - Santander 28

H

HBO 32

HM Hospitales 18

Huawei 46, 49, 51

I

IBM 35, 39, 53, 56

IDEMIA 34, 56

innogy SE 28

Intragov (Brazil) 31

Ixia 39

J

JD.com 12

K

KPMG 35

L

Liberty Global 41, 42, 57

 - Virgin Media 10

Liverpool FC 51

M

McLaren Applied Technologies 54

Microsoft 25

N

National Health Service (UK) 53

Nokia 49

O

Ofcom (UK) 51, 52, 57

Omnicom Group, Inc

 - Organic 7, 8

Oracle 28

Orange 25

Osiptel 39

OT-Morpho (now IDEMIA) 34

Oxbotica 54

Q

Quirónsalud Group 18

Quortus 54

R

Radware 18

Raízen 32

Ranking Digital Rights 25

Rappi 37, 56

Regions

 - APAC

  --  China 12, 55

 - EMEA

  --  Europe 7, 9, 14, 18, 23, 24, 27, 29, 34, 40, 41, 42, 43, 48, 51, 57

  --  Germany 8, 9, 28, 41, 42, 44, 45, 57

  --  Ireland 14

  --  Portugal 14

  --  Spain 7, 8, 9, 10, 12, 18, 22, 25, 28, 33, 39, 46, 47, 48, 49, 57

  --  Switzerland 17

  --  UK 6, 8, 9, 10, 14, 28, 50, 51, 52, 53, 54, 57

 - Latin America 7, 8, 9, 13, 16, 27, 29, 30, 33, 34, 37, 38, 56

  --  Argentina 9, 12, 13, 16, 33, 55, 56

  --  Brazil 7, 8, 9, 10, 12, 28, 29, 31, 32, 33, 38, 39, 56

  --  Central America 9

  --  Chile 9, 12, 16, 33, 34, 37, 55, 56

  --  Colombia 9, 28, 33, 35, 36, 37, 56

  --  Ecuador 9

  --  Guatemala 9

  --  Mexico 9, 12, 21, 28, 33, 36, 39, 56

  --  Peru 9, 12, 14, 28, 33, 38, 39, 56

  --  Uruguay 9

  --  Venezuela 9

 - North America

  --  Canada 14

  --  USA 12, 32

   ---   SEC 32, 56

Royal KPN 12

S

Samsung 32

SAP 28

ScaleUp Hub 28

Schindler 17, 55

Sodexo 13

Spotify 49

Subex Ltd 26, 27

Symantec 39

T

Technologies

 - 3G

  --  3.5G 51

 - 4G

  --  LTE 9, 32, 33, 45, 56, 57

 - 5G 9, 10, 45, 46, 49, 51, 54, 57

 - ADSL 49

 - AI 20, 21, 23, 24, 25, 28, 55

 - Augmented reality (AR) 49

 - Broadband 9, 37, 41, 42, 43, 45, 47, 49, 57

 - Business/Operations Support Systems (BSS/OSS) 26, 38

 - Cloud computing 14

 - eSIM 34, 45

 - high definition (HD) 54

 - ICT 31

 - Internet of Things 14, 17, 26, 28, 29, 32, 55

 - IP 46

 - IPTV 10, 44

 - LPWA 33

 - M2M 33, 34, 45, 56

 - MPLS 31

 - NB-IoT 32, 33

 - NGN 51

 - SIM 34, 45, 53

 - Smart City 22

 - SMS 32, 36

 - TV 22, 43, 48, 57

 - WLAN

 - Wi-Fi 28, 36

Tecnotree 38, 56

Telefónica Group 6, 7, 9, 10, 11, 12, 16, 18, 20, 24, 25, 27, 28, 29, 33, 51

 - Associates and investments

  --  China Unicom 12, 55

 - Digital services

  --  AURA 25

  --  ElevenPaths 26, 27, 39

  --  Health 53, 57

  --  LUCA 12, 20, 22, 24, 29, 36

  --  M2M 33, 34, 45, 56

  --  Mobile commerce 49

  --  Open Future 13

  --  OTT 28, 43, 44, 47, 48

  --  Smart Steps 12, 22

  --  Wayra 14, 28

 - Europe

  --  E-Plus 12

  --  Germany 10, 41, 42, 43, 45, 57

  --  giffgaff 14

  --  O2 9, 10, 14, 28, 41, 42, 43, 44, 45, 50, 51, 52, 53, 54, 57

  --  Spain 9, 10, 46, 47, 48, 49, 57

  --  Telefónica Deutschland 9, 12, 14, 41, 43, 45, 57

  --  UK 9, 14, 28, 50, 51, 52, 53, 54

 - Executives

  --  Abasolo, Laura 8

  --  Alonso, Chema 24

  --  Álvarez-Pallete Lopez, José María 7, 25

  --  Bartz, Mateus 13

  --  Bendito García, Yolanda 13

  --  Benjamins, Richard 20

  --  Blanco, Enrique 16

  --  Carrillo, Alberto 13

  --  García-Mon, Antonio 13

  --  Gayo, Emilio 48

  --  Gil Lizasoain, Elena 24

  --  González, Mauricio 14

  --  Grottoli, Rafael 13

  --  Hill, Gary 14

  --  Juménez Larraz, Manuel 13

  --  Keller, Markus 14

  --  Luz Medrano, María 13

  --  Medici, Luiz 13

  --  Mooney, Ben 14

  --  Navarro, Eduardo 29

  --  O'Connor, James 14

  --  Pérez, Pedro Pablo 27

  --  Remy, Stephane 14

  --  Ruperez, Ignacio 13

  --  Serrao, Walter 13

  --  Sousa, Valter 14

  --  Thurand, Marcus 45

  --  Tonkin, Hamish 14

  --  Vilá, Ángel 48

 - Ex-executives

  --  Sanfelice, Ricardo 13

  - Fundación Telefónica 13

 - Global Resources

  --  Telefónica Business Solutions 17

  --  Telefónica Empresas 8, 17, 18, 55

  --  Telxius 9, 18, 55

 - Latin America

  --  Brazil 13, 28, 32, 33, 38, 39, 56

  --  Chile 37, 56

  --  Colombia 36, 37

  --  Mexico 14, 21, 39

  --  Peru 56

  --  Vivo 13, 31, 32, 56

 - Products and services

  --  Fusión 46, 47

  --  Movistar Series 48

  --  O2 Health 53, 57

  --  O2 TV 43, 44, 57

  --  pay-TV 9, 10, 41, 42, 43, 47, 48, 52

  --  Telefónica Educación Digital 13

Tesco 14

 - Tesco Mobile 14

TheVentureCity 28

Thomson 28

U

United Nations 29

Unitymedia 41

University of Surrey 54

 - 5G Innovation Centre 54

V

Ver.di 45

Verizon Communications 25

Vodafone Group 14, 25, 41, 42, 49, 54, 57

W

Wireless Infrastructure Group 50, 57

World Bank 23

  • Telefónica confident in the flexibility of its AI approach for adapting to local requirements while maintaining Group standards and expectations.
  • Commercialisation of Telefónica’s data analytics and AI capabilities gathering steam through LUCA projects with public sector bodies and multinational customers.
  • Baked-in ‘ethics by design’ is seen as fundamental to developing viable internal and external services that will endure in the face of ongoing challenges and concerns surrounding the technology.

Richard Benjamins, Data and Artificial Intelligence (AI) Ambassador for Telefónica Group, gave a presentation at FutureNet World in London, and outlined how AI alongside network automation is creating new digital business models for the telco.

Benjamins highlighted the role AI can play in making constructive use of the flood of data available to business and operators thanks to the availability of current levels of affordable processing power. He also stressed the development of new machine learning techniques such as deep learning, which is being examined by Telefónica, as contributing to the rise of AI.

Despite the potential for AI, Benjamins stressed that leveraging AI remains a challenge, and highlighted the risks of relying on emerging services without a clear approach to standards and ethics.

Transferable skills proving an AI challenge

While upbeat on the potential of applying AI to big data to create a more efficient and effective business, Benjamins acknowledged the complexity of rolling out solutions and capturing the efficiency that the technology promises.

“You need to have sufficient quality data to be able to execute on some use cases, so we started to define what data we need to capture in the coming years — a roadmap for data sourcing. But it is separated, in the legacy systems, in many silos, so although you have the data, it’s not so easy to access it. We moved down, trying to break silos and then we started to become data-driven, where we use data and machine learning for our overall important decisions.” — Benjamins.

Benjamins noted that Telefónica had faced problems in replicating the deployment of data analytics systems across its footprint, based on the idiosyncrasies of local operating systems and practices, with the data recorded and accessed in different ways in different countries. He suggested that in the early days of attempting to introduce a data-based application in one country based on experience in another provided minimal efficiency savings as “instead of going from, let’s say, six months to two months, we went from six months to five and a half months, and then five months.”

To make accessing and using the data more effective, Benjamins referred to the Group’s work on a unified reference model (URM — Telefónicawatch, #121). “It’s a data model across the group, and it’s free to every country, every operating division for the systems they have, but they have to expose data in a certain format so it becomes available”, he said.

The development of the URM is expected to enable operating businesses to replicate use cases from other operating businesses more effectively, reducing a timeframe of five months to two months on the second deployment, for example. “That’s a big, big advantage”, according to Benjamins, and the reason why the URM is being used for all initiatives related to big data and AI.

Creating the URM has not been without its challenges, however. Separately, at TM Forum’s Digital Transformation World held in May 2019, Daniel Vaughan, Chief Data Officer at Telefónica México, discussed the goals of the URM project and the practical difficulties experienced at operating business level.

Vaughan’s perspective on the merits of URM echoed those of Benjamins, although he detailed the painful lessons learned as local operations adjusted to centralised requirements. This entailed making calls on the use cases best suited to URM, managing the complexity of ensuring that local data is consistent with global Group standards, and ensuring moving quickly did not come at a cost to core Group values on service provision and data governance.

According to Vaughan, patience and persistence have begun providing his local operating business with efficiency benefits, and URM adoption is building a virtuous circle of knowledge and systems sharing across the Group’s operating businesses. A fuller report on Vaughan’s experience of URM in Mexico will feature in a future Telefónicawatch.

Internal uses and external business cases

Internally within Telefónica, data is used to manage the customer lifecycle, understand the value of customers, reduce churn and optimise pricing. For instance, as well as knowing what device a customer has, the company seeks to understand how they use it, so it can target appropriate marketing and make recommendations when they are eligible for a new device. Telefónica also uses customers’ data to make recommendations for its TV programmes.

Going beyond applications for personalised customer service, Benjamins noted the potential impact of using this data — in an anonymised and aggregated form — for both internal planning, and for supporting decision-making for external customers.

As with any operator, Telefónica receives a constant flow of information from active handsets recording how they move from antenna to antenna. Once processed, this data is said to generate “a kind of proxy for human activity and that has a lot of value for business,” according to Benjamins.

Internally, Benjamins highlighted data analytics’ role in planning network deployment, and to look at footfall in shops and town centres to work out the best sites and layouts for Telefónica’s stores.

Commercially, he highlighted projects based on LUCA‘s portfolio of solutions, including Smart Steps, LUCA Transit and LUCA Store (Telefónicawatch, #121).

For the full article, including details of specific case studies and further analysis, subscribe to access to the full May release of Telefónicawatch.

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