Money Matters at Telefonica Digital
10:50 AM -- Blink and you'll likely miss the latest investment decision at Telefónica SA (NYSE: TEF)'s Digital division, which is on a mission to identify, develop and deliver services and products that ordinarily wouldn't have seen the light of day at a traditional telco. (See Telefónica: A New Breed of Telco.)
To achieve that goal, Telefónica Digital is putting a lot of effort into brokering new partnerships and investing in specialist startups. (See Inside Telefonica's Startup Incubator, Why Gonzalo Martin-Villa Is Kissing Frogs, Telefónica Launches €300M VC Scheme and Telefonica Makes Strategic Investment in Quantenna.)
Its latest financial transaction came to light Wednesday, when Telefónica Digital announced itself as the lead participant in a $25 million series C round of funding for HTML5 mobile applications platform specialist Everything.me (also known as DoAT Media).
Other investors in the round include SingTel Innov8 and Mozilla , a Telefónica Digital partner: The operator is set to launch smartphones running Mozilla's HTML5-based Firefox OS in Brazil. (See Telefónica Bangs Its Digital Drum.)
Everything.me is developing a service delivery platform that, according to the company, enables mobile devices to display the apps that are most relevant to the user's content and services at any one time. Telefónica Digital is excited about a combination of the startup's apps platform and the Firefox OS.
"We are committed to driving greater openness in mobile ecosystems which will in turn spur innovation. This is why we are such strong supporters of Firefox OS. The integration of Everything.me into Firefox OS will add a rich and compelling content experience for customers," stated Carlos Domingo, director of product development and innovation at Telefónica Digital, in the press release announcing the investment. (See Telefonica Holds Key to Digital Model.)
And here's the thing about this and Telefónica Digital's other investments -- it might all come to very little. Or it might spawn a whole new development sector that will provide the operator with great insight into the mobile sector's latest thinking. The Telefónica Digital team doesn't know -- CEO Matthew Key and his team are, to a certain extent, gambling. That's counter-culture to the traditional telco world but de rigeur in the digital space: Telecom companies will need to get used to being nimble and trusting their instincts more often if they're to stand a chance of keeping up with the pack.
But it's not all about risk-taking. Telefónica today announced a joint venture with MasterCard in Brazil to develop mobile payment services in the country, starting with a "pre-paid account accessed via mobile phones alongside a MasterCard card, which will let consumers transfer cash to other people, make in-store purchases, top-up their phones and carry out other financial transactions." (See Telefónica Group & MasterCard Partner to Offer Mobile Phone Payments in Brazil.)
Working with MasterCard on a payments service for Brazilians, many of whom have limited access to financial services, is a much less speculative endeavor than pumping cash into startups, but a classic example of how the Telefónica team is embracing the partnership approach to get new services to market much quicker than they could have done themselves.
Of course, that doesn't guarantee the joint venture's success. But it's another engagement that heightens the sense of urgency within the Digital division, which is attacking many markets simultaneously with the vigor and mindset of a large, enthused, creative startup. And that's just the sort of culture that telcos need to adopt these days.
— Ray Le Maistre, International Managing Editor, Light Reading