Telefónica Digital unveils new strategy, partners with Facebook and Google

Telefónica's Digital unit set an ambitious revenue target of €5 billion by 2015 as it revealed a new strategy to include high-level partnerships, operator billing and mobile advertising.

Key

The global framework agreements the company signed with Facebook, Google, Microsoft and Research In Motion  to provide operator billing as a means of driving the monetisation of mobile content are key pillars of the new strategy.

Telefónica has already started to deploy its Direct to Bill service, but this latest move would appear more focused on Latin America where credit card penetration is low and 60 per cent of the population do not have bank accounts.

"We think the potential here is really significant because this enables some of the really big internet businesses to connect far more directly with our customers from a monetisation perspective," Telefónica Digital CEO Matthew Key said at an investor conference in London, according to Reuters.  aKey also notedt hat  the service is already live in Germany and will be in 14 more markets by the end of the year.

Key also referenced the growing success of its in-house developed communications app, Tu Me, which has 250,000 users and helps tie users into the company's network.

"Tu Me was the first over-the-top communications product that any core telco has developed," he said. "Why have we done this? Fundamentally it's about the customer relationship."

Commenting on how the Digital division would work with Telefónica operating units, Key told the Financial Times: "We need to stay flexible. There is interdependence between us and the operating businesses. They need the capability and the new markets we are creating. And they are our main sales channel. The overall aim is to go beyond connectivity into new value chains in the digital space."

The Telefónica executive added that the company wants to mimic its m-advertising business that is already generating £100 million in revenue annually in the U.K. across the region, alongside mobile health and security monitoring operations already established in Europe.

However, Key emphasised there were limits to where it might acquire firms. "We are clear about what we are good at and it's not hardware," he told the FT. "We also don't want to be the next Facebook or Google. That game is over. We will partner [with]  the relevant people and compete with them as well. We don't believe you can own the ecosystem from end to end, which is a very different approach."

Other areas where the unit will become involved are with a new smartphone operating system based on Mozilla's HTML5 platform, called Firefox OS, with the first handsets using the software to be launched in early 2013. The company also announced the formation of an m-advertising business in Brazil, and a partnership with Abu Dhabi-based Etisalat in areas such as financial services, cloud computing and mobile advertising.

For more:
- see this release
- see this Reuters article
- see this Financial Times article (reg. req.)

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