Telefonicawatch Report #51 Executive Brief November/December 2010
14 December 2010
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Executive Brief from Telefonicawatch, report #51. Click through for: an Extract from this month’s report; the Report Snapshot; or to contact us for more information about the full 72-page report, this industry standard monthly report service, and ongoing subscription access.
- Telefónica Group released its results for the first nine months of 2010 with solid revenue growth but profit a little short of analyst expectations. The benefits of the diversified global nature of the Group were apparent with Latin America showing continuing growth, and European operations proving themselves competitive in tough markets. [pp.4-25.]
- The economic situation in Spain was a predictable source of attention following the results announcement, where Telefónica is continuing to battle adverse economic conditions. Optimism expressed earlier in the year about the worst of the downturn being passed was tempered somewhat in comments from executives, but the telco appears steeled to ride out the bumps in the road ahead. While analysts worried about weakness in España’s financial numbers, operationally, Telefónica looks to be in better shape than might be expected: the focus now appears to be on holding onto share, and the operator looks to be positioned to benefit quickly when (perhaps if…) consumer spending and confidence start rising meaningfully in the country. [pp.10-14,24-25,33,39.]
- There was continued consternation at the price paid by Telefónica for Vivo, and the fact that the Group is only to hit earnings per share targets for the year because of financial restatements sparked by the high premium paid for control of the Brazilian operator. However, Telefónicawatch considers that the need to integrate operations in Brazil, and Latin America, more widely justifies the high price of acting quickly. Already, plans are underway for a unified research and development facility in the country that will provide new partnering opportunities for companies and research institutes with a regional focus. A new distribution and storage centre for all Telefónica operations opened in Argentina, which is expected to significantly streamline internal logistics, and, should it prove successful, a similar operation in a merged Brazilian player may be on the cards. [pp.9,15-18,40,43.]
- Hosted services and IT solutions for corporations and SMEs are being pushed in Latin America, with Argentina to deliver hosted SAP solutions with Latinware, and planning more SME cloud services over its fixed line network. In Brazil, a SMART portfolio of modular network management services has been announced with an emphasis on managing applications running on infrastructure. Allot Communications is supporting the new service. The mobile based Telefónica business in Mexico is also offering bundled products for SMEs as part of a promotion with bank BBVA Bancomer; and hosted web solutions for SMEs are also being promoted in Peru. [pp.40,41,44,45,46.]
- Telefónica continues to emphasise its social responsibility credentials, with initiatives in one part of its operations increasingly being replicated in other markets. Telefónica Europe’s Think Big programme is highlighting youth initiatives in a similar way to Fundación Telefónica projects in Latin America. O2 UK announced that all profits from its handset recycling scheme are now to be contributed to Think Big programmes. The environmentally aware equipment partnership signed with Nokia earlier in the year came to fruition in Spain with the announcement of new “green” Nokia handsets to be made available on the Movistar network, with a stress on seeing green commitments through to the end of the product life cycle. Telefónica in Spain is also coming close to naming winners for its Ability Awards, which are based on a similar scheme in Ireland. [pp.29,36,60,61.]
- O2 UK is the latest Telefónica unit to launch an international calls minutes bundle using the JAJAH platform acquired earlier in the year. The Europe division is executing its plan to take a share of the international calls market with a VoIP service that can be seen to have simple, clear benefits for the customer, with minimal negative impact on its traditional business. [pp.55-56.]
- Telefónica Group’s acquisition of a 21% stake in Digital+ has been approved by Spanish competition authorities after commitments were made to waive voting rights that meant that majority owner Prisa’s control of the company was not affected. ASSIA, a dynamic spectrum management tools developer, saw investment from Telefónica in its latest EUR15.7m round of funding. [p.27.]
- Acision highlighted a contract to provide policy management solutions for mobile data services in Europe and Latin America. Telefónica is working with mobile platform solutions provider Jasper Wireless on a new M2M connectivity solution, which is expected to provide opportunities for device managers and M2M customers to connect and manage embedded devices, with new consumer products also expected to emerge from the project. An eBook store from Telefónica is expected to launch in Spain in the near future, which could benefit from the Jasper Wireless partnership. [pp.28,38.]
- Telefónica Multinational Solutions, the growing global solutions unit of Telefónica, announced a three year contract with power company Alstom to deliver wireless communications services in Europe and Brazil. 12,000 mobile lines will be switched to Telefónica units as part of the deal. Telefónica also announced a strategic partnership with KPN to support the delivery of global services to multinational corporations. [pp.30,31.]
- Telefónica won several new communications contracts with health services organisations in Spain, but is expected to see increased competition in the Canary Islands as rival Vodafone deploys infrastructure to connect the islands to its network. [pp.32,35.]
- NEC trumpeted a cloud services deal with Telefónica España that will see the vendor provide technology behind virtualised remote desktop and office suite applications offered to the telco’s SME customers. [p.35.]
- While Telefónica in Brazil suggests the use of Vivo as the unified brand in Brazil is set to happen, Group Finance Director and head of strategy Santiago Fernandez Valbuena said the final decision has not yet been made, perhaps indicating that Movistar could be used to tie Brazilian operations in with the rest of the operating units on the continent. [p.41.]
- Network investment of EUR460m is planned for Chile in 2011, with fibre development to be the main driver of spending. [p.44.]
- In Colombia, Movistar is looking to change the way in which it is permitted by telecoms authorities to sell mobile broadband services, bringing an end to the dominance of flat rate tariffs. Movistar Mexico is considering an appeal against mobile termination rate cuts that could see a sharp drop in related income for the unit. [pp.44,45.]
- In Venezuela, the development of Movistar’s 3G network continues to be highlighted, and new mobile mail solutions for customers have been introduced. [p.47.]
- As Tanya Field, O2 UK Mobile Data Director, emphasised the importance of making mobile advertising more attractive to its potential customers, O2 UK announced new trials centred on location based advertising services in partnership with Placecast. NAVTEQ announced promising results from its partnership with O2 on geographically targeted mobile advertising. [pp.48-50,57-59.]
- Nokia Siemens Networks won a security as a service contract with Telefónica O2 Czech Republic. [p.50.]
- O2 Germany is planning to develop and promote its Alice -branded IPTV platform in the country during 2011. The current small customer base has grown by more than 40% in the six months since it came under Telefónica control. [p.52.]
- In Ireland, O2 heralded the launch of the O2 Hotshot Wi Fi hub, which it flagged as a wireless network tool that could work effectively with smart devices without USB functionality, such as Apple’s iPad and iPhone. [p.53.]
- A network status tool has been launched by O2 UK to provide information on the availability of its mobile data networks. Mobile data network contract terms were slashed by O2 Germany. [pp.52,60.]
- O2 UK has been given clearance by Ofcom to re use existing spectrum for 3G services without having to sacrifice any of its allocation. The permission was followed by an announcement of the anticipated timetable for 4G mobile spectrum auctions in the UK, which are scheduled for early 2012, but operators were warned that any further litigation on the subject of spectrum use could de rail the already delayed process. In Germany, LTE “friendly user” trials are to start, with O2 and non O2 customers invited to participate. [pp.51,54-55.]
- France’s Technicolor has been awarded a contract to provide a service gateway for 802.11n wireless access to broadband and Ethernet by O2 UK. Forsk announced it has switched O2 UK’s radio optimisation and planning operations to its Atoll software system. [pp.61-62.]
- Alcatel Lucent and Ericsson highlighted contracts with China Unicom as 3G growth builds steam, and ZTE was singled out for praise by the Chinese operator. Telecom Italia signed a memorandum of understanding that could see it soon work with rivals on a fibre network rollout for Italy, while the EU is looking at the incumbent’s controversial unbundling rate hikes. [pp.64-68.]
About Telefonicawatch
Report: #51
Covering: November-December 2010
Published: December 2010
Next report: January 2011
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