Telefónicawatch, issue 2008.04-05
10 July 2008
GROUP: Telefónica appointed Eduardo Zaplana, previously a senior spokesman for Spain’s Popular Party, to the role of Head of European Relations at the European Commission. It was noted that Zaplana is close to government representatives in many European countries, but most particularly Silvio Berlusconi, the Italian Prime Minister whose influence and business interests can overlap with Telefónica’s activities. [p.3.]
Issue: 2008.04-05
Covering: 1May to 9 July 2008
Published: July 2008
Next issue: August 2008
Delivering valuable insight into the labyrinth that is Spain’s global telco giant. A unique monthly report for the industry.
SUMMARY
GROUP: Telefónica appointed Eduardo Zaplana, previously a senior spokesman for Spain’s Popular Party, to the role of Head of European Relations at the European Commission. It was noted that Zaplana is close to government representatives in many European countries, but most particularly Silvio Berlusconi, the Italian Prime Minister whose influence and business interests can overlap with Telefónica’s activities. [p.3.]
Telefónica signed deals to distribute Apple’s iPhone 3G in 16 countries. Exclusive deals have been won in European markets, now including Spain, and the device will also be offered in twelve Latin American markets, although with competition from América Móvil, which is also offering the device. A global mobile advertising deal was agreed with Amobee, a company in which Telefónica is also an investor, to offer a single platform for a wide range of mobile advertising applications. [pp.5-6.]
A new General Manager, Mario Martin, was appointed to take responsibility for activities in China. Telefónica also indicated it aims to spend around 10% of its procurement budget directly with Chinese vendors, cutting out European middlemen. [p.3,7.]
TELEFÓNICA ESPAÑA: Motorola drew attention to its success in optimising the Movistar España GSM network over the past two years. [p.8.]
The CMT introduced new regulatory requirements that will force Telefónica to offer some access to the physical infrastructure of its next-generation fibre-optic network and provide information on its rollout plans upon ‘reasonable’ request. The regulatory decision is a stop-gap measure until a fuller review of the wholesale broadband market is completed. ‘Naked’ unbundled DSL has rapidly gained users since the beginning of 2008, with Telefónica forced to push promotions to counter the effects of retail connections lost to rivals. [p.9.]
New reduced roaming rates and greater cost transparency were announced by Movistar España ahead of the summer holiday period — and following threats that the European Commission could act on roaming costs. New flat-rate mobile broadband packages were also unveiled. [p.10.]
Microsoft and Telefónica are partnering to develop enterprise collaborative communications solutions. Chinese vendor Huawei opened a new support centre in Spain to provide assistance to Telefónica’s Spanish-speaking units. [p.11.]
LATINOAMÉRICA: Telefónica and the Inter-American Development Bank announced a joint-initiative to launch mobile banking across Latin America, aiming to provide banking services to groups that would otherwise not have access. A global agreement with digital music distributor IODA, which is likely to be targeted principally at Latin American markets, was signed. [pp.15-16.]
In Argentina, Movistar indicated it will introduce a new portfolio of services targeting the corporate market. The Argentinian fixed-line business launched a virtual hosting solution for business. [p.18.]
Telefónica in Brazil outlined plans to roll out a fibre network, with investment of EUR200m planned; Ericsson trumpeted a deal to maintain the infrastructure. However, the operator was concerned that it could be required to separate voice and broadband businesses. [p.19.]
In Argentina, a senior Movistar executive did not rule out the possibility of introducing mobile TV, as pay-per-view and digital video-recording services were launched by Telefónica in Brazil. Telefónica’s Nicaraguan unit withdrew from talks regarding the provision of pay-TV. [pp.18,19,25.]
Vivo completed the mandatory acquisition of shares in operator Telemig, an exercise triggered by its successful bid to take control. The addition of Telemig customers took Vivo’s market share to more than 30%, with the nearest competitor TIM Brasil on less than 26%. [p.20.]
Mobile broadband was identified as a key driver of 3G adoption for Movistar in Chile. [p.21.]
Movistar Ecuador deployed a new mobile payments platform for pre-pay electronic recharge from MoreMagic Solutions. Movistar in Venezuela awarded NewMarket Technology an ICT managed services and licensing contract. [pp.22,27.]
Movistar Mexico continued to make gains on its larger incumbent rival, while its fixed-line counterpart signed an interconnect agreement with Telmex but only after a drawn-out squabble that quickly resumed once provision of interconnect services hit teething problems. Meanwhile, the Chairman of Telefónica in Mexico, former government minister Francisco Gil Díaz, is set to be investigated by a congressional audit committee for alleged favouritism towards Telefónica during his time in office. [pp.23-24.]
Movistar Panama switched off its CDMA network after migrating customers to GSM.
In Peru, the migration to per-second billing for fixed-line customers continued, but further reductions in the cost of tariffs were ruled out by the company’s President. [p.25-26.]
O2 EUROPE: With O2 UK set to launch the new iPhone 3G, handset subsidies and significantly lower prices than the 2G version were promoted. The company offered free iPhone upgrades to existing users, and is to provide ways for 2G handsets to be legitimately passed on to other customers. A pre-pay iPhone is expected towards the end of the year, but is likely to require mobile data bolt-on subscriptions to be used effectively. O2 Ireland continued to be criticised for high iPhone pricing. [pp.28-29,36.]
New data and SMS roaming deals were announced across O2′s footprint, but EU Commissioner Viviane Reding indicated that not enough has been done to generally reduce these prices across Europe. [pp.31,34,39.]
Telefónica O2 Czech Republic completed a EUR170m sale and leaseback deal for a portion of its real estate. New mobile tariffs featuring free calls and texts were launched in the Czech Republic, using similar branding to O2 Germany offerings. [pp.30-31.]
The launch of a new call service, offering free minutes in exchange for listening to recorded advertising messages, was deemed a success by Telefónica O2 Czech Republic. The 100,000 customer milestone was reported to be nearing for the O2 TV IPTV service. [p.32.]
O2 Germany deployed eleven anti-spam solutions across its mobile portals. Telefónica Deutschland is trialling video-on-demand technology from SeaChange International. Mobile handsets capable of receiving digital terrestrial television were launched in Germany. [pp.33-34.]
O2′s Group Chief Executive Matthew Key drew attention to the success of contract tariffs with just one month’s notice period, in promoting migration to contract accounts from pre-pay services. O2 Clear, a similar SIM-only offering to the UK’s successful Simplicity tariff, was launched in Ireland. [pp.35,39.]
The O2 Broadband service was taken nationwide in the UK with off-network services provided by BT. Under a separate agreement, BT is offering access to its BT Openzone Wi-Fi hotspots to O2 customers. The UK fixed-line incumbent is also providing managed network solutions to O2 under a five-year deal. [pp.37-39.]
ASSOCIATES & INVESTMENTS: Telefónica Chairman César Alierta said he believed the Group was well-placed to raise its stake in China Unicom to 10%, with the company expected to reach this level of investment by the end of 2009. Telefónica is to hold a 3% stake in China Unicom following its merger with China Netcom, which is a part of Chinese market reforms. Portugal Telecom saw falling profits, but with results at the top end of expectations. A new strategic plan was unveiled, which will see PT expand its IPTV efforts, hold on to Vivo, and look at African expansion. Telefónica was linked with an acquisition of Sogecable’s Digital+ pay-TV business, after it unexpectedly sold its existing minority stake in Sogecable to majority-shareholder Prisa. Telecom Italia commenced job cuts as cost-saving programmes got underway. The Italian incumbent looks to have agreed a sale of its French ISP Alice, and is looking at expansion in Germany. It may also increase its interests in Argentina, despite resistance from its joint-venture partners. [pp.43-50.]
RESULTS: Telefónica announced Q1 FY08 results that demonstrated robust organic growth, but did see doubts emerge about the future, in the wake of the current credit crunch and macroeconomic woes. [pp.51-69.]
EXTRACT
GLOBAL PARTNERSHIPS
Telefónica to distribute iPhone 3G in 16 countries
Telefónica announced that it signed a deal with Apple to distribute the iPhone 3G in Spain, the Czech Republic, and a further twelve Latin American countries, bringing the total number of markets in which it sells the device to 16.
In addition to offering 3G connectivity, the new iPhone includes features aimed at the business market including Microsoft Exchange synchronised push-email, and other enterprise applications. The device also has GPS localisation functions.
” The iPhone has changed the way people communicate and access content on the move. It has already proved hugely popular in the UK and Ireland, and we’re delighted that we can now offer the same benefits to our customers in Spain, Latin America, and the Czech Republic. The 16 countries in which we are the carrier of iPhone have a combined addressable market of more than 500 million people — making Telefónica one of the leading global distributors of this revolutionary device. ”
– César Alierta, Chairman and Chief Executive, Telefónica.
The new Latin American countries covered by the new agreement are: Argentina, Brazil, Colombia, Chile, Ecuador, El Salvador, Guatemala, Nicaragua, Panama, Peru, Uruguay, and Venezuela.
Telefónica’s principal rival in Latin America, América Móvil, is also to offer the iPhone 3G in all the markets in which it is present across the continent, including Argentina, Brazil, Chile, Colombia, Peru, and Venezuela.
[Telefónica, Associated Press, 11 June 2008.]
Telefónica agrees global mobile ad deal with Amobee
Telefónica announced the launch of a single global platform for advertising across all mobile channels, based on the Ad Server technical platform from Amobee Media Systems.
The Ad Server platform will provide a single point of contact for agencies and advertisers, with Telefónica claiming that it is now the only company that can support advertising across WAP, games, video, messaging, and other in-built applications with a single platform.
The centralised server is expected to offer precise contextual and behavioural targeting on all handsets for non-voice-related applications and services. Telefónica operating businesses will retain control of the solution and have access to customer data, localisation features, behavioural profiles, and the opt-in database.
The deployment of Ad Server is initially to be rolled out by the end of 2008 in Spain and the UK in Europe, and Colombia and Mexico in Latin America, with the remaining operating companies to begin using the service in 2009.
Telefónica is an investor in Amobee Media, following its most recent round of venture funding; and rival operator Vodafone is also a stakeholder in the Israel-based advertising business (Telefónicawatch, 2008.01).
” The key to successful mobile advertising is doing it in a contextual and non-intrusive way, which our global opt-in ad-serving solution enables us to do. The benefits of a common vendor across the Telefónica Group are that we are able to truly look at a common architecture that will drive cost savings for design and testing as well as reduce deployment times. “
” We believe we are accelerating the uptake of mobile advertising in all Telefónica mobile businesses across Europe and Latin America, and will generate revenue from mobile advertising well beyond WAP and mobile internet. ”
– Julio Linares, Chief Operating Officer, Telefónica
” Winning the global Telefónica business is a huge vote of confidence for Amobee. Mobile is the next mass medium, delivering reach and relevancy that blows away traditional media formats. With over 170 million mobile users globally, Telefónica is setting a new standard for how advertisers reach their target audiences. ”
– Zohar Lekovitz, Chief Executive of Amobee Media Systems.
[Telefónica, 27 June 2008.]
Telefónica plans to spend EUR1bn with Chinese suppliers
There were reports that Telefónica Group is planning to spend up to EUR1bn in the near future on equipment sourced directly from Chinese vendors.
According to reports of an industry conference hosted by China Netcom, in which Telefónica holds a 7.2% stake, there are ten categories of equipment that the Spanish telco is looking to buy from China, in direct deals that would obviate the use of resellers.
The level of spending with Chinese vendors is expected to rise to around 10% of Telefónica’s global procurement budget, which currently stands at around EUR30bn.
Telefónica is thought to be in talks with around 50 Chinese suppliers at the moment, according to unnamed sources in the media.
” Usually Telefónica purchases indirectly from China with middlemen taking a large cut. This is why it is looking to purchase directly. However, many Chinese companies are not ready for direct international business. For example, they don’t have product introductions in English. Such hurdles could cause many problems in these direct deals. ”
– Anonymous source quoted by China Telecom Weekly.
Telefónica reportedly intends to establish a test centre in China to help with the purchasing process.
According to unsourced reports, Telefónica has spent EUR400m with resellers of Chinese equipment so far in 2008.
[China Telecom Weekly, 13 June 2008; China Knowledge Press, WirelessEurope, 16 June 2008.]
Servinform installs new systems to support Telefónica
The Servinform Group, a transactional print market service provider, announced it had installed new KODAK VERSAMARK printing systems in Spain, and that the first major customer to benefit from the equipment will be Telefónica’s mobile business in the country.
Using the Servinform equipment, Movistar is to create 20 million A4 pages of full digital colour customer communications per month.
[Servinform Group, 14 May 2008.]
TABLE OF CONTENTS
3 Telefónica Group
3 Appointments;
Brokers’ reports
4 Associates and investments
5 Financial reports;
Global partnerships;
Strategy
7 Community;
Research and development
8 Telefónica de España
8 iPhone; Network
10 Tariffs and pricing; Tariffs and promotions; Broadband
11 Partners 12 Legal
13 Regulatory 14 Competitors
15 Telefónica Latinoamérica
15 Regional developments;
Regional partnerships
17 Regional competition
18 Argentina 19 Brazil
20 Vivo 21 Chile
22 Colombia; Equador
23 Mexico
25 Nicaragua; Panama; Peru
26 Terra 27 Venezuela
28 Telefónica O2 Europe
28 Appointments; iPhone
30 Czech Republic
31 Slovakia 33 Germany
35 Ireland 37 United Kingdom
43 Associates and investments
43 China Netcom
45 Portugal Telecom
47 Sogecable
48 Telecom Italia
51 Telefónica Q1 Results
70 INDEX
INDEX
Symbols
4th Screen Advertising, 40
A
Advanced Digital Broadcast, 15
Airwave Safety Communications Ltd, 65, 66
Alcatel-Lucent, 44, 46
América Móvil, 5, 14, 17, 19, 20, 22, 24, 25, 64
Claro, 20, 25
Porta, 22
Slim, Carlos, 14, 24, 47
Telcel, 24
American Express, 68
Anatel, 19, 20
Apax, 47, 48, 49
Apple, 5, 8, 29, 48
iPhone, 5, 8, 28, 29, 35, 36, 38, 40, 48
Avantel, 23
Avanzit, 16
Navento, 16
B
Banco Bilbao Vizcaya Argentaria, 21, 68
Bank of Spain, 69
Bertelsmann, 4
BNP Paribas, 3
Bohemia Real Estate Investment, 30
Brasil Telecom, 19, 20
BT Group, 37, 38, 40, 41
Openzone, 38
C
Caja Madrid, 21
Call In Europe, 38
Carphone Warehouse, 29
China Mobile, 43, 44
China Netcom, 7, 43, 44
Chunjiang, Zhang, 43
China Telecom, 7, 11, 43, 44
China TieTong, 43
Citigroup, 30
Cloud, The, 38
CMT, 8, 9, 10, 13
CNC (Spain), 12
Conatel, 22, 27
D
Daiwa, 69
Datamonitor, 7, 50
Deutsche Telekom, 51, 69
T-Mobile, 30, 34, 41
E
eBay, 40
eleven GmbH, 33
Entel, 50
Ericsson, 6, 19
Estaciones Terrenas Satelitales, 25
European Union, 6, 39
European Commission, 3
European Court of Justice, 41
F
FNMT, 12
Fodetel (Ecuador), 23
Fossati family, 4
France Télécom, 45, 47, 51, 69
Orange, 6, 8, 12, 13, 41
G
Ghana Telecom, 46
Globo, 19
Goldman Sachs, 47
Google, 26
Grupo Santander
Santander, 21
Grupo Werthein, 49
H
Hansenet, 49
HBO, 32
High Tech Computer Corp. (HTC), 27
HSBC, 47, 68
Huawei, 11
Hutchison Whampoa, 41
H3G
UK, 41
I
IDC, 38
Iliad, 49
Independent Online Distribution Alliance, 16
Inter-American Development Bank, 15
Ipse, 4
ITV
ITV2, 38
L
LAN, 68
LG, 32, 34
Lycos, 4
M
Match.com, 26
Mediapro, 47
Mediaset, 3
Berlusconi, Silvio, 3
Merck, 68
Microsoft, 5, 11, 27, 32, 46
Moneysupermarket.com, 39
MoreMagic Solutions, 22
Morgan Stanley, 20
Motorola, 8, 37
N
NewMarket Technology, 27
News Corporation, 47
NII Holdings, Inc., 24
Nextel Mexico, 24
Nokia, 6, 22
Novatel, 40
Novatel Wireless, 40
O
Ofcom (UK), 37, 38, 41, 42
Olympic Games
Beijing (2008), 26
Open Mobile, 7
Opera, 34
Oracle, 27
Osiptel, 25
Ovum, 69
P
Permira, 47
Portugal Telecom, 45, 46
Portugal Telecom, Bava, Zeinal, 46
Prisa, 47
R
RedVoiss, 21
Regions
EMEA
Czech Republic, 5, 8, 30, 31, 32, 55, 56, 65
Europe, 3, 6, 10, 15, 28, 30, 38, 39, 41, 45, 48, 51, 53, 54, 55, 56, 57, 65, 66, 67, 69
France, 3, 41, 45, 47, 49, 51, 69
Germany, 3, 33, 34, 35, 39, 49, 55, 67
Ireland, 5, 8, 35, 36, 39, 65
Italy, 3, 4, 14, 20, 48, 49
Portugal, 45, 46
Slovakia, 31
Spain, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 22, 23, 41, 46, 47, 54, 55, 58, 61, 68, 69
UK, 5, 6, 8, 15, 28, 33, 35, 36, 37, 38, 39, 40, 41, 45, 56, 65, 69
Latin America, 3, 5, 6, 8, 11, 14, 15, 16, 17, 19, 21, 22, 26, 50, 55, 57, 64, 69
Argentina, 5, 18, 48, 49, 55, 56, 63, 68
Bolivia, 50
Brazil, 5, 14, 17, 19, 20, 45, 46, 48, 54, 55, 56, 62, 63, 64, 68
Central America, 55
Chile, 5, 21, 54, 55, 56, 64, 68
Colombia, 5, 6, 22, 55, 56, 63, 64
Ecuador, 5, 22, 23, 25
El Salvador, 5, 56
Guatemala, 5, 56
Mexico, 6, 14, 17, 23, 24, 47, 54, 55, 56, 62, 63, 64, 68
Nicaragua, 5, 25, 56
Panama, 5, 25
Peru, 5, 25, 26, 55, 56, 63, 64, 68
Uruguay, 5, 56
Venezuela, 5, 27, 55, 56, 62
Research in Motion, 38
Research In Motion, 20
BlackBerry, 20, 38
RKM Solutions, 27
S
Samsung, 34, 37
Sapo, 20
SeaChange International, 34
Senatel (Ecuador), 23
Servinform Group, 7
Sofora, 49
Sogecable, 14, 47
Sony, 22, 26, 40
Sony BMG, 26, 40
Sony Ericsson, 22
Standard and Poor’s, 3
Superservicios, 22
Supertel, 23
T
Technologies
2G, 28, 36, 41, 48
CDMA, 25, 43
Edge, 38
3G, 4, 5, 8, 15, 18, 21, 22, 28, 29, 36, 37, 38, 41, 44, 48, 62
HSUPA, 40
ADSL, 8, 9, 10, 55, 58, 59
Broadband, 6, 8, 10, 11, 13, 19, 21, 34, 36, 37, 38, 39, 40, 42, 46, 49, 55, 57, 58, 59, 60, 62, 63, 65, 67
DSL, 9, 34
DVB-T, 34
Ethernet, 40
GSM, 8, 15, 23, 25, 43, 62
ICT, 11, 15, 16
IP, 21, 34, 58
IPTV, 18, 46, 47
MMS, 18, 31
Mobile TV, 18
NGN, 9, 44
P2P, 61
PSTN, 60
SIM, 25, 28, 35, 39
SMS, 10, 30, 31, 39, 61
TDMA, 25, 45
TD-SCDMA, 44
VoD, 34
WLAN
Wi-Fi, 28, 38
Telecom Italia, 3, 4, 14, 20, 48, 49, 50
Alice, 49
Bernabe, Franco, 4, 48, 50
Entel, 50
Lambarri, Carlos, 49
Parazzini, Enrico, 50
Patuano, Marco, 50
TIM Brasil, 14, 20, 46
Telefónica Group, 3, 5, 6, 7, 51, 54, 56, 57, 62
Associates and investments
Amobee, 6
China Netcom, 7, 43, 44
Kyte, 33
Lycos Europe, 4
Portugal Telecom, 45, 46
Sogecable, 14, 47
Telecom Italia, 3, 4, 14, 20, 48, 49, 50
China Unicom, 43, 44
Atento, 52, 68
España, 8, 10, 11, 13, 52, 54, 56, 57, 58, 59, 60, 61
Movistar, 8, 10, 12
Executives
Abril, Luis, 41
Alierta, César, 3, 4, 5, 8, 15, 23, 41, 43, 47
Anglada, Salvador, 30
Cowdry, Sally, 28, 37
Devaney, Damian, 35
Dunne, Ronan, 28, 38
Erskine, Peter, 28
Fernández Valbuena, Santiago, 9, 53, 57, 62, 64, 66
Flögel, Oliver, 21
Goldenberg, Horacio, 18
Hong, Chen, 44
Karas, Jan, 32
Key, Matthew, 15, 39, 65
Linares, Julio, 6
Manzanares, Javier, 26
Martin, Mario, 3
Ponce Gil, Bautista, 18
Sartorius, Mauricio, 3
Staaf, Erik, 28
Zaplana, Eduardo, 3, 28
Fundación Telefónica, 5
Latinoamérica, 3, 15, 16, 52, 54, 56, 57, 62, 63
Argentina, 18, 49, 53, 54
Brazil, 19, 23, 53, 54
Chile, 18, 21, 22, 53, 54, 68
Colombia, 22, 53, 54
Mexico, 23, 24, 53, 54
Peru, 25, 26, 53, 54
Telefónica International Wholesale Services, 23, 53, 54
Uruguay, 53, 54
Venezuela, 27
Móviles, 18, 53, 54, 68
Ecuador, 53, 54
Uruguay, 53, 54
Venezuela, 53, 54
Movistar, 7, 8, 10, 12, 17, 18, 21, 22, 23, 24, 25, 27, 49
Argentina, 18, 49
Chile, 18, 21, 22
Mexico, 23, 24
Peru, 25
Venezuela, 27
O2 Europe, 8, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 52, 53, 54, 65, 66, 69
Be Un limited (UK), 37
Czech Republic, 28, 30, 31, 32, 33, 54
Fonic, 65
Germany, 31, 33, 34, 65, 66
Ireland, 28, 35, 36
Kvido, 32
O2 Broadband, 42
O2 Clear, 35
O2 Group, 33
O2 TV, 32
Slovakia, 31
Telefónica Deutschland, 34
UK, 28, 29, 36, 37, 38, 39, 40, 41, 42, 52, 53, 54, 65
Products and services
DUO, 10
Imagenio, 47
O2 Mobile Broadband, 40
O2 Simplicity, 39
Speedy (Latinoamérica), 19
Terra, 26
Teléfonos de México (Telmex), 14, 17, 23, 24
Telemar
Oi, 19, 20
TeliaSonera, 47
Time Warner
AOL, 4
U
UniOne, 27
United Internet, 4
V
Versatel, 49
Vivendi Universal, 47
SFR
Neuf Cegetel, 49
Vivo Participações, 20, 45, 46, 53, 54, 55, 62, 64
Telemig Celular (Brazil), 20
Vodafone Group, 6, 12, 34, 41, 45, 46, 48
VTR, 68
Y
Ya.com, 13
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