Telefonicawatch Report #50 Executive Brief September/October 2010
10 November 2010
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Executive Brief from Telefonicawatch, report #50. Click through for: an Extract from this month’s report; the Report Snapshot; or to contact us for more information about the full 50-page report, this industry standard monthly report service, and ongoing subscription access.
- TELEFÓNICA GROUP undertook a re organisation of its global management structure, with the most substantial changes taking place at its Latin American business. The new structure of the division is almost a microcosm of the Group as a whole, which is based around a triumvirate of divisions featuring its single biggest market, Spain, European operations in largely mature markets, and its growth engine Latin America. The new Latin American set up sees biggest market Brazil a single unit, another group comprising its well established integrated operating units, and a third group containing the politically challenging, but potentially strong operations, in Mexico and Venezuela. José María Álvarez Pallete will continue to lead the business. At Group level, Santiago Fernandez Valbuena is to have responsibilities for Group Strategy and Direction added to his Finance Director role, while, in Spain, new segmented management is also being introduced. [pp.5-6.]
- Telefónica’s NFC mobile payment trials are said to be progressing well in Sitges, with strong interest and surprisingly high average spend. London has been named by a Telefónica executive as the European city most likely to see the first commercial rollout of the service, although Telefónicawatch notes that a business model making the technology worthwhile for all key participants is yet to emerge. However, in Brazil, a commercial launch by Vivo and Redecard of a mobile payment scheme is thought imminent, with rapid expansion planned. [pp.12-13,38,24.]
- Telefónica Group announced a partnership agreement with Telenor, to offer managed mobility solutions to their multinational customers. [p.7.]
- At the Movilforum event in Madrid, Telefónica highlighted its unified communications and managed mobility services, and claimed it will be the first mega telco to offer a single network for fixed and mobile services. [p.7.]
- Telefónica Group made its first payment to Portugal Telecom for its share in mobile operator Vivo. The EUR4.5bn payment triggered a series of events, including a reshuffle of the Vivo board, Telefónica’s withdrawal from the PT board, and the first slow moves towards integration of Vivo with local fixed line business Telesp. Telefónica estimates that synergies of between EUR3.3bn and EUR4.2bn could be achieved by merging the two operations. The Vivo deal means that Telefónica is now expected to hit its 2010 target for earnings per share. [pp.21-23.]
- Telefónica Group appointed Ferran Adrià, chef and owner of the highly acclaimed El Bulli restaurant, as a brand ambassador, as part of efforts to attract attention through more innovative advertising and marketing efforts. [p.6.]
- Telefónica highlighted its realistic research and development facilities that offer an environment closely resembling the one in which customers will use future digital home products. [p.8.]
- Santiago Valbuena, Group Finance Director, gave a presentation emphasising the Group’s core strengths and potential for growth. As well as talking up the economy of Brazil, he confirmed Telefónica is moving away from flat rate pricing for mobile data, and suggested the rapidly growing market will complement, rather than cannibalise, fixed line broadband services. Telefónica Europe Chief Executive Matthew Key was also upbeat on mobile broadband, claiming a two year head start on the learning curve in the UK market, which can be shared with the entire Group. The Telefónica executive acknowledged that, while the growth of demand for mobile data has been “explosive”, revenue has been “flattish” , but also outlined ways in which O2 intends to optimise this revenue and profit opportunity. The customer base is certainly expected to be there — Key’s Telefónica Europe unit is anticipating adding 20 million mobile broadband customers in the next 30 months. [pp.9,10.]
- TELEFÓNICA ESPAÑA won a contract to provide insurer Mutua Madrileña with converged fixed and mobile communications and data services, and is reported to have landed a data and telephony contract with the University of Alicante. [p.11.]
- In Spain, the national statistics office said that, aside from the impact of cost cutting and company collapses caused by current economic conditions, the fixed line market in Spain is proving relatively resilient. [p.12.]
- Telefónica España trumpeted its rollout plans for up to 42Mbps mobile broadband services in the country, using dual cell HSPA+ technology. The rollout is expected to follow the path of its initial HSPA+ programme, with areas of Barcelona and Madrid the first to benefit. [p.15.]
- Telefónica España is looking for innovative solutions from startup companies in the UK, for deployment in the Spanish market. The company is working with the UK government to identify potential candidates, but will charge its preferred partners Alcatel Lucent, Ericsson, and NSN with managing the relationships, and ensuring service level standards are met. [p.16.]
- Telefónica is launching several Microsoft Windows Phone 7 devices across its territories, and senior management at the telco met with the Microsoft Chief Executive Steve Ballmer. Expansion of the two companies’ strategic partnership was reportedly discussed, with cloud computing and IPTV singled out as having potential for collaboration. [pp.11,17.]
- As part of an effort to boost the use of fixed line telephony, new fixed line tariffs were introduced in Spain with flat rate call costs and inclusive minutes. [p.19.]
- Myriad Group pointed to a EUR55m+ contract with Telefónica, to reassure investors after it lost significant work from Sagem Wireless. OnMobile Global indicated its investment in services for Telefónica in Latin America could reach $75m over two years. Oregan Networks trumpeted an agreement to provide middleware for Telefónica España’s video on demand services. Openwave Systems boasted of a deal to provide mobile traffic monitoring services for Telefónica in Spain. [pp.9,20,19,17.]
- TELEFÓNICA DE ARGENTINA is continuing to foster the growth of an applications development community in the country with a new contest for SME oriented apps. The Argentinean business is also promoting its range of smartphones, which will benefit from any surge in app development. [pp.20,21.]
- In Ecuador and Venezuela, new Movistar branding was introduced. [pp.25,28.]
- Telefónica in Peru highlighted continued improvements in its customer service performance. The Venezuelan operating company is also taking steps to offer enhanced customer service through its contact centres, and with an ombudsman scheme to handle complaints. [pp.27,28.]
- New corporate services based around virtual private networks were introduced by Telefónica in Peru with M2M capabilities highlighted. SME services were trumpeted in Venezuela. [pp.27,29.]
- TELEFÓNICA EUROPE is continuing to build its portfolio of eHealth services with trials taking place in the Czech Republic, and UK programmes continuing to garner attention. [pp.31,33.]
- More than one thousand jobs could go in Germany, as O2 and HanseNet integration gathers pace. O2 Germany called for clarity on the roadmap for mobile termination rate reduction. [pp.31,32.]
- Verbavoice won a contract to provide voice transcription services with O2 Germany. Globalpark is to provide a feedback management platform for O2 UK. [pp.32,34.]
- O2 UK and rival Vodafone UK were blocked from using spectrum licensed for 2G services for 3G. [p.34.]
- O2 UK had mixed fortunes in recent awards presentations, underwhelming at the Broadband Expert Mobile Broadband Awards, but faring better with PC Pro judges. Yankee Group also criticised O2 branding in the mobile broadband sector. [pp.38,39.]
- ASSOCIATES AND INVESTMENTS: China Unicom looks set to exceed a target of ten million 3G subscribers in 2010, and is undertaking another procurement round for network expansion. The future of next generation networks in Italy continues to look uncertain with altnets walking away from talks as officials lean towards Telecom Italia proposals, and contentious unbundling price increases were cleared. Telecom Italia highlighted its “full portfolio” cloud computing platform. [pp.40,41,43,44.]
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