Telefónica Pursues 4G-for-the-Masses Strategy

Having just agreed to sell its O2-branded UK business to Hutchison Whampoa for £10.25 billion ($15.2 billion), Spain's Telefónica has been all over the news this week. (See Telefónica Seals $15.2B O2 Sale to Hutchison.)

That deal would allow Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) to merge its Three UK subsidiary with O2 and create the UK's biggest mobile operator by customer numbers -- "would" because a transaction that will leave the UK with just three mobile network operators could prove unacceptable to competition-keen regulatory authorities. Even if regulators bless the marriage, Telefónica and Hutchison reckon the approvals process could take another year.

In the meantime, Telefónica remains heavily focused on the rollout of 4G services -- not only in the UK but also in its other big European markets of Spain and Germany. In that regard, of course, Telefónica is no different from any other large European mobile operator. But it has appeared to be a less attention-seeking investor in 4G than many of its chief rivals.

Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel here on Light Reading.

As our special report shows, that does not mean Telefónica has any guilty network secrets. Ian Miller, Telefónica's director of radio access technology, and Mike Smith, its head of global LTE activities, look disparagingly on some of the bandwidth boasts their competitors have made. Their strategy involves ensuring that as many customers as possible can benefit from a 4G service that is reliable and satisfactory. Carrier aggregation, advanced MIMO and VoLTE all figure in Telefónica's 4G plans, but the operator has a different perspective from others on the benefits such technologies will (or will not) bring. (Read Telefónica Aims High With Low-Band 4G Focus in the Prime Reading section of Light Reading.)

Following earlier sales of subsidiaries in the Czech Republic and Ireland, and the acquisition of E-Plus in Germany, Telefónica is primed for an assault on its core markets and plans to channel more into capital expenditure this year than last. It will be hoping its distinctive approach to 4G pays dividends. (See Telefónica Upbeat Despite Slump in Profits.)

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

mendyk 3/30/2015 | 9:51:45 AM
Re: Too oligopolistic Hence the qualifying "just about every" mobile market. But the overall point is that mobile network operators need a certain level of business (market share) to run a profitable business. MVNOs are a different story.
SachinEE 3/30/2015 | 3:38:54 AM
Re: Too oligopolistic @mendyk: absolutely correct. Coming within the TOP 3 is a good thing unless you have fixated on getting all of your consumers to rely on your networks, but you must have that kind of supportability on ur networks.
SachinEE 3/30/2015 | 3:37:40 AM
Re: Too oligopolistic EU will have to take this deal positively, but it may believe the merger could impact competition.

All of these, currently the UK's smallest operator, has a history of disrupting the market with low prices, roaming offers and 4G at no extra cost. Should it become the largest operator, the need for such aggressive tactics would be less. 
nasimson 3/29/2015 | 3:49:43 PM
Re: Too oligopolistic > While having more than three operators seems preferable for consumers,
> economically it simply doesn't pay to be Number 4. That's the case in just
> about every mobile market.

 @Mendyk: Not so in every mobile market. In India even number fours are doing quite OK in most circles.
mendyk 3/27/2015 | 12:51:33 PM
Re: Too oligopolistic While having more than three operators seems preferable for consumers, economically it simply doesn't pay to be Number 4. That's the case in just about every mobile market.
nasimson 3/27/2015 | 12:22:38 PM
Too oligopolistic Three operators are too few for the UK and Scotland market. It will not be in the interest of customers as the market will turn too oligopolistic. Why is it exiting the market?
Sign In