During the Q3 FY17 presentation, Telefónica made a strong case for identifying 2018 as the ‘year of digital’ for the Group.

The UNICA transformation programme will feature more and more heavily, with virtualisation projects moving from proof-of-concept deployments and testing towards full implementation. The telco will undoubtedly keep proclaiming its head-start in the field, pushing the point that it has been clearing a path through this new world since 2013 (Telefónicawatch, #85, passim).

New Group Chief Operating Officer (COO) Ángel Vilá noted that end-to-end (E2E) digitalisation is now widespread in the Group, and momentum is building, based on the telco’s internal metrics:

  • E2E digitalisation now encompasses 55% of operational processes (up from 50% at the turn of the year).
  • Around one-fifth of all customer relationships are now managed on a full-stack platform that is more flexible and programmable than traditional systems.
  • Automated big data use is also being more widely deployed to manage customer experience on Telefónica networks.
  • Telefónica emphasised the progress it is making towards all-IP networks, which are expected to be more efficient and reliable, and result in operating cost savings and “optimised” capex.

New platform a leap of faith

Vilá set out a vision of a platform-based business that in the near future will operate a Network Operating System to epitomise the automation, flexibility, and transparency ethos that has driven the telco’s virtualisation strategy.

This vision will, however, be under close scrutiny, and even more may be expected of the company from investors in terms of tangible financial benefits.

To date, virtualisation savings have been made in operating expenditure areas such as customer service and support, and back-office costs. Telefónica has been able to claim a positive impact from increased online interactions, reduced contact centre demand, and improved network reliability.

The primary benefits in capex, from the telco’s perspective, revolve around more targeted spending on where and when to invest in new infrastructure. There have also been savings in relation to being able to shut down, rather than pay to maintain, legacy network assets.

However, the other financially positive element of the digital transformation – generation of new profitable revenue streams – appears more aspirational than actual at the moment.

The first wave of digital services beyond connectivity are still slow burners, despite Telefónica bullishness on transformation:

  • Combined cloud, M2M, video, and security sector revenue of EUR3.9bn was up 4.6% in the first nine months of 2017 compared with a year earlier, but video is still doing most of the heavy lifting.
  • The Security business is continuing to shrink (although, in extenuation, Telefónica appears to be repositioning cybersecurity from a consumer offering to a major enterprise and wholesale business), which negated improvements in cloud and M2M services.

Significant emphasis is being placed on giving more control over services to customers through Telefónica’s AURA cognitive platform, which is expected to encourage more bundling from happy customers. Analysts appeared sceptical, and while Vilá could point to some uplift in spending in Spain through the introduction of flexible converged packages and digitally driven customer experience improvements, it will be important for the Group to ensure it maintains enthusiasm for new services, without falling for its own hype.

Image: Casa de América (Flickr CC BY-NC-ND 2.0).

Table of Contents

EXECUTIVE BRIEF

GROUP

  • Table: Telefónica, selected financial data, Q3 FY17

MANAGEMENT UPDATE

Q3 FY17: Solid performance for first Vilá show [p6]

  • Vilá’s first time in the spotlight as Álvarez-Pallete moves into shadows
  • Table: Telefónica Group, performance by unit, Q3 FY17
  • Decent numbers, with no big surprises

Table: Telefónica Hispanoamérica, performance by country, Q3 FY17

Telefónica living in a digital world [p9]

  • Table: People movement highlights
  • New platform a leap of faith

GLOBAL RESOURCES

5G

5TONIC trumpets ‘successful’ trials with Cohere [p13]IoT

Telefónica still standing by Sigfox [p14]

  • Sigfox hedging against obsolescence
  • LTE Nano takes drone test drive

TIWS

Telefónica complains of vendors invading its territory [p15]UNICA

Blanco on UNICA as Telefónica transformation driver [p16]

  • UNICA progressing well
  • No 5G big bang

Dell EMC highlights UNICA role [p17]

  • Go Ignite startup winners named

AURA

Argentina deploys early AURA iteration as launch nears [p20]

  • DataGran: Wayra-backed firm set to raise $2m
  • Global product to address local needs, and challenges
  • Alonso indicates Argentina AURA plans well advanced

Open Future

Wayra backs O2 Germany data analysis partner [p22]

  • ElevenPaths linked to blockchain security development

Security

ElevenPaths integrates SealSign with Azure Key Vault [p23]

  • Telefónica linked to blockchain data innovation
  • Virtual keys minimise need for specialist hardware

TBS, ElevenPaths unveil Clean Pipes 2.0 [p25]

  • Palo Alto a fellow traveller with ElevenPaths
  • Palo Alto leapfrogs Fortinet on firewall solution
  • Fortinet neither gone nor forgotten

LATIN AMERICA

  • Telefónica ties with CAF

Regional

Telefónica deploys ASSIA GPON solution [p29]

  • Telefónica a participant in several ASSIA investment rounds

Telefónica linked to AT&T assets again [p30]Brazil

Vivo cleared to swap fines for investment commitment [p31]

  • Ruling could spark further investment – Navarro
  • CTR trumps Telefónica in fibre bidding

Ericsson enables Vivo 4G+ drone demo [p33]

  • Future technology preceded by network expansion

Navarro warns on network-sharing limits [p35]Chile

Second security centre launched in Chile [p36]

  • Telefónica calls for Telcel spectrum block

Ecuador

Telefónica adopts Nokia small-cell network [p37]

  • Ecuador follows where Chile and Nokia lead

Mexico

Tutela to provide network quality data to Telefónica [p39]

  • State ups emphasis on consumer rights in telecoms

EUROPE

Germany

O2 Germany and Huawei unveil ‘5G-ready’ antenna [p41]

  • 5G momentum continues to build

ADVA and O2 trumpet optical transmission trials [p44]

  • ADVA follows Coriant in high-speed pilots
  • Telefónica and ADVA expand their relationship

Spain

Movistar+ makes content presence felt at MIPCOM [p45]

  • Decent content costs…
  • … service differentiation may make investment worthwhile
  • Atrium co-op provides money-saving options
  • Table: National Universal Fund contributions, Spain, 2013 and 2014

CNMC extends universal service costs to smaller operators [p47]UK

Mini-exodus near pinnacle of O2 UK [p48]

  • Caretakers named

O2 links with WIG as 4G weaves across Scotland [p49]

  • Aberdeen beats London in small-cell race
  • New mountain masts unveiled

FURTHER READING

INDEX

Index

Symbols

3GPP 13, 14
5Analytics 22
21st Century Fox
Sky plc 46

A

Accenture 15
ADVA Optical Networking 44
AI 20, 21, 22
Alcatel-Lucent 30
Alphabet
Google
Android 32
– – YouTube 22, 32
Google x
Project Loon 38
Altán Redes 37
Altice
Numericable-SFR 30
Altran 17
Amazon 21, 41, 42, 45, 46
Amazon Lockers 41
América Móvil 33, 37
Claro 33
– Telcel 37
Anatel 31, 32
Apple 23
ASSIA 29, 30
Atrium 46
AT&T 13, 30, 37
DirecTV 30
Axtel 37

B

BT Group 47, 48, 49

C

Cablevision 37
CCS 46
Check Point 26
China Mobile 15
CIENA 15
Cisco Systems, Inc 26, 46
CK Hutchison 32, 48
H3G
UK 48
CNMC 47
Cohere Technologies 13
Colt Group 47
Coriant 44
CTR 33
Cujo 20
CyanConnode 48

D

DataGran 21
Dell Technologies 17, 24
Dell EMC 17, 24
– RSA 24, 26
Deutsche Telekom 13, 15, 20, 30, 32, 46
hub
raum 20

E

Ericsson 14, 15, 16, 33, 37, 38, 42
European Telecommunications Standards Institute (ETSI) 15
European Union
European Commission 48
Euskaltel 47

F

Facebook 15, 17, 21
Telecom Infra Project 15
Fidor Bank 42
Fitch, Inc 38
Fortinet 25, 26
Futurecom 33, 35

G

GlaxoSmithKline 36
Gradiant 23, 24
GSM Association (GSMA) 32
Mobile World Congress 20, 32

H

HBO 45, 46
HP, Inc 15
Huawei 13, 15, 16, 33, 37, 41, 42

I

IBM 15
IFEMA 14
IFT (Mexico) 37
Indra 24
Intel 15, 17
iWireless Solutions 46

J

Jazztel 47
Juniper Networks 44

K

KKR 8

L

Liberty Global 30
Virgin Media 46
LinkedIn 21, 48
Lycamobile 47

M

MásMóvil
Yoigo (Xfera) 47
MasterCard 42
McAfee 26
MegaFon 32
Microsoft 17, 23, 24
Mingly China Growth Fund 30

N

NanoLock Security 20
National Basketball Association (NBA) 32
NEC 15
Netflix 45, 46
NFL 38
Nokia 13, 15, 16, 30, 37, 38, 42
NTT 15

O

Oi SA 32
Omnicom Group, Inc
Organic 7
ONO 47
Orange 20, 32, 46, 47
Spain 47

P

Palo Alto Networks 25, 26

Q

Quortus 15

R

R Cable 47
Real Wireless 46
Redeem 48
Regions
APAC
China 15
EMEA
Europe 6, 7, 15, 16, 20, 22, 40, 48
– – Finland 22
– – France 10, 41
– – Germany 16, 20, 22, 36, 41, 42, 44
– – Italy 10, 41
– – Portugal 29
– – Spain 6, 7, 8, 10, 14, 15, 17, 20, 22, 23, 24, 26, 29, 35, 36, 45, 46, 47
– – Sweden 22
– – UK 7, 8, 9, 15, 20, 33, 39, 41, 46, 48, 49
Latin America 6, 7, 14, 20, 28, 29, 30, 35, 36, 38
Argentina 7, 8, 16, 20, 21, 29, 30, 36
– – Brazil 7, 8, 9, 17, 20, 29, 30, 31, 32, 33, 35, 36, 38
– – Chile 8, 9, 20, 29, 33, 35, 36, 37, 38
– – Colombia 8, 9, 16, 21, 29, 30, 35, 36, 45
– – Ecuador 37, 38
– – El Salvador 10
– – Guatemala 10
– – Mexico 8, 9, 30, 35, 37, 38, 39
– – Panama 10
– – Peru 8, 9, 16, 29, 36, 38
– – Venezuela 10, 30, 38
North America
Canada 39, 41
– – USA 13, 17, 36, 38, 41, 48
ReversingLabs 26
Rivetz 23

S

SafeToNet 20
Sandalwood Partners 30
Shell 41
Sigfox 14
Sky plc
The Cloud 46
Smart Meter Implementation Programme (UK) 48
Sofinnova Partners 30
Softbank
Sprint 17
Sparkcognition 20
Sprint Nextel 17
Stanford University 30
Subex Ltd 25
Swisscom 30
Symantec 26

T

Technologies
2.5G 37
– 2G 49
– 3G 37, 49
3.5G 41, 42
4G
LTE 7, 14, 15, 16, 33, 37, 42, 49
– – LTE-A 33
5G 13, 14, 16, 33, 41, 42, 49
– Broadband 29, 31, 35, 41, 44
– Business/Operations Support Systems (BSS/OSS) 16
– Cloud computing 17
– DSL 29
– DWDM 44
– GSM 14, 32
– ICT 24, 44
– IMS 16
– IP 9, 16, 26, 44
– LPWA 14
– LTE-A Pro 42
– M2M 10
– MIMO 13, 33, 41, 42
– NB-IoT 14
– Network functions virtualisation (NFV) 17, 25, 26
– Smart metering 48
– Software defined networking (SDN) 17, 26, 44
– TV 30, 45, 46
– VDSL 30
– WLAN
Wi-Fi 20, 29, 30, 35, 37, 46, 49
Telecom Italia 10
Telefónica Group 6, 8, 13, 15, 17, 20, 24, 29, 32, 35, 36, 42, 45, 47
Associates and investments
Indra Sistemas 24
– – Sigfox 14
– – Telecom Italia 10
Digital services
AURA 10, 20, 21, 35
– – ElevenPaths 23, 25, 26
– – Go Ignite 20
– – M2M 10
– – Open Future 20, 21, 22, 30, 36
– – Synergic Partners 24
– – Telefónica I+D 15, 44
– – Telefónica Ventures 30
– – Terra 32
– – Wayra 21, 22, 36
– – Weve 48
Europe
E-Plus 8
– – Germany 22, 41, 42
– – giffgaff 48
– – O2 9, 22, 41, 42, 44, 46, 48, 49
– – Spain 8, 22, 44, 47
– – Telefónica Deutschland 8, 22, 41, 42, 44
– – UK 9, 46, 48, 49
Executives
Abasolo, Laura 7
– – Alonso, Chema 21, 23, 36
– – Álvarez-Pallete Lopez, José María 6, 29
– – Benatuil, Luis 10
– – Blanco, Enrique 16
– – Corral, Domingo 45
– – de Santos, Eduardo 29
– – Dowd, Ben 48
– – Dunne, Ronan 48
– – Elizondo, Antonio 17
– – Evans, Mark 48
– – Gómez, Alfonso 36
– – Gómez, Irene 21
– – Guardincerri, Eduardo 15
– – Kuhlmeyer, Thorsten 22
– – Liriano, Karl 49
– – Lluch, Jaime 41
– – Lopez, Diego 15
– – Navarro, Eduardo 31, 35
– – Plumb, David 48
– – Tomlinson, Antony 46
– – Turpin, Gareth 48
– – Vidal, Iván 22
– – Vilá, Ángel 6
Ex-executives
Genish, Amos 10
– – Teixeira, Paulo Cesar 33
Global Resources 29
5TONIC 13, 14, 16
– – BRUSA 17
– – Cornerstone Telecommunications Infrastructure 46, 49
– – MAREA 17
– – Telefónica Business Solutions 23, 25, 26
– – Telefónica International Wholesale Services 15
– – Telxius 8, 17
– – UNICA 9, 16, 17
Latin America 29
Brazil 10, 31, 32, 33, 35
– – Chile 33, 35, 36, 38
– – Mexico 37, 38, 39
– – Peru 38
– – USA 23
– – Vivo 31, 32, 33
Movistar+ 22, 45, 46
– Products and services
Fusión 8
– – Movistar+ 22, 45, 46
– – O2 Banking 42
– – pay-TV 9, 10, 20, 30, 45, 46
– – SealSign 23
– – Sinfonier 25
– – SmartID 23
Televisa 37
Telstra 13
Tesco 48
Tesco Mobile 48
Time Warner 30
Toshiba 48
Trustonic 23
Tubecon 22
Tutela Technologies 39
T-Ventures 30

U

United Nations 32

V

Vayyar Imaging 20
Verizon Communications 48
Verizon Wireless 48
Vigo 24
Virgin Group 46
Vivendi SA 10
Vodafone Group 32, 46, 47, 49
Spain 47
– UK 46, 49

Z

Zegona
Telecable 47
ZTE 13, 16, 42

About

About Telefónicawatch

Report: #120
Published: October 2017
Next report: November 2017
For more information visit: Telefónicawatch