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.
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, , News Editor, Light Reading