Telefónica: A New Breed of Telco

6:00 AM -- It's been said for years that traditional telecom operators need to start thinking and behaving differently. But that's a very hard thing for large operations with tens or hundreds of millions of customers (and many investors) to do.

Telefónica SA (NYSE: TEF) appears to have found a solution. While its core business carries on as normal, running fixed and mobile voice and data services, its new offspring, Telefónica Digital, gets to act like an excitable, ambitious young buck (but with a budget and targets). And it seems to be paying off.

The Digital division has 6,000 staff, multiple services units inherited from its parent and annual revenues in excess of €2.4 billion (US$2.95 billion) and growing.

It's investing in startups, developing over-the-top unified communications apps and striking partnerships left, right and center. And it's hiring people from non-traditional IT sectors as well as IP/Internet specialists to work alongside its more traditional telco employees, boosting its Service Provider Information Technology (SPIT) capabilities and bringing together networks and IT staff, an important move for any telco wanting to survive in the digital world. (See The SPIT Manifesto 2.0 and Bridging the Chasm: A Manifesto.)

And it has a different way of monitoring its progress. It doesn't have half or full-year KPIs (key performance indicators) -- it reviews its metrics every four months to see how it's measuring up against its targets, and its senior managers are awarded bonuses based on the number of new products launched.

Not only that. If you meet a group of Telefónica Digital staff, or even just some of the individuals, you can sense the buzz -- there's a real air of expectation, enthusiasm and determination about them, and it's infectious.

Find out more about what Telefónica Digital is doing and with whom by checking out these articles:

— Ray Le Maistre, International Managing Editor, Light Reading

shygye75 12/5/2012 | 5:23:01 PM
re: Telefónica: A New Breed of Telco

Quite a glowing report, Ray. Are you suggesting that Telefonica is the only Tier 1 that "gets it"?

shygye75 12/5/2012 | 5:22:59 PM
re: Telefónica: A New Breed of Telco

It may be that Telefonica has more of a business imperative to pursue this course. Its home market is facing extended hard economic times, and while its expansion into Latin America has been successful, investors don't seem to be supporting the company all that well.

digits 12/5/2012 | 5:22:59 PM
re: Telefónica: A New Breed of Telco

IN terms of putting its money where its mouth is, Telefonica is the one that stands out in terms of commitment, especially to creating a non-traditional telco culture.

Of course a lot of it is shifting existing assets under a new management team but the way it is approaching new product/app/service development is a proof point about 'getting it' -- whether it can maintain the momentum is another issue.

I'm hoping there are others out there with similar plans and there are certainly those that are already doing some of the things Telefonica is doing (funding startups, engaging with developers, creating a new division, employing non-telco staff) but I don't see any others with the breadth of commitment the Spanish operator has shown.

I'd love to hear about any others that are doing the same kind of thing 

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