Spanish giant unveils strategic initiatives that will help it transform into a new breed of communications service provider

July 5, 2012

3 Min Read
Telefónica Bangs Its Digital Drum

The Digital division of Telefónica SA (NYSE: TEF) has unveiled a number of developments and partnerships designed to generate new revenues, meet the needs of its smartphone-savvy international customer base and accelerate the operator's transformation into a communications services company more in tune with today's market.

The division, formed less than a year ago, believes it can achieve annual revenues of €5 billion (US$6.2 billion) by 2015 -- more than double the €2.4 billion ($3 billion) generated in 2011 -- from initiatives that leverage the carrier's Service Provider Information Technology (SPIT) assets (particularly its billing/charging capabilities), industry relationships and the new Firefox OS (mobile operating system). (See Telefónica's Looking Trendy.)

Here's a snapshot of today's announcements:

  • Telefónica Digital has struck global "Direct to Bill" agreements with Facebook , Google (Nasdaq: GOOG), Microsoft Corp. (Nasdaq: MSFT) and BlackBerry to enable Telefónica customers to buy content and services from those partners using their mobile accounts. The operator believes this could prove very popular in Latin America, where, according to Telefónica, "credit card penetration is low and 60 percent of the population do not have bank accounts."

    The Direct to Bill option is already available in Europe, with an average 400,000 customers per month in Germany using their mobile accounts to purchase a range of goods and services. Telefónica plans to offer Direct to Bill capabilities in 14 markets by the end of 2012.

  • It has forged a strategic partnership with Etisalat that extends Telefónica's reach into 17 new countries (in Africa, Asia/Pacific and the Middle East). The two operators plan to "jointly develop business opportunities in Machine-to-Machine (M2M), financial services, cloud computing, eHealth, mobile advertising and over-the-top [OTT] communications." Etisalat, which set up its own digital division earlier this year, will participate in Telefónica's global device procurement process and the duo will jointly purchase video content. The two operators already know each other well, having brokered a general partnership a year ago. (See Telefonica Teams Up With Etisalat.)

  • Telefónica Digital detailed its commitment to Mozilla 's HTML5 platform (aka Firefox OS). Telefónica believes the deployment of this OS will help smartphone manufacturers develop low-cost devices that can boost smartphone penetration in developing markets. The operator plans to launch smartphones running the Firefox OS in Brazil (where it currently has more than 75 million mobile customers) in 2013. Etisalat is among the other operators also supporting the Firefox OS. (See Operator-Backed Firefox OS Gives HTML5 a Boost.)

  • Telefónica Digital is to set up a mobile advertising team in Brazil, pledging "a multi-million Euros investment." The operator believes that the mobile advertising market is already growing faster in Brazil than it is in Western Europe.

    For more on Telefónica Digital:

    • Telefonica Goes OTT With Acme Packet

    • Telefónica Digital Gets Smart

    • Telefónica Invests in Payments Partner

    • Telefónica to Hatch Startups

    • Telefónica Picks FeedHenry Mobile App Platform

    • Telefonica Makes Strategic Investment in Quantenna

    • Telefonica Holds Key to Digital Model

    • Telefonica Restructures, Creates New Units

    — Ray Le Maistre, International Managing Editor, Light Reading

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