05 July 2012 – At an event in London Telefónica Digital today announced a number of significant developments in its strategy for taking Telefónica beyond connectivity. The unit expects to drive annual revenues of approximately €5bn for Telefónica by 2015 with an annual revenue growth rate of 20%, as well as driving considerable additional benefits to Telefónica operations.

Telefónica Digital was created in September 2011 in response to the growing digitisation of the economy and is tasked with seizing new opportunities within services sitting beyond the traditional network connectivity offered by telecommunications operators. Leveraging Telefónica’s core assets in terms of customer base, global reach, local distribution and existing technical expertise, Telefónica Digital is driving incremental revenues across areas ranging from mobile commerce and advertising through to machine-to-machine, eHealth, video & content, digital security and cloud computing.

In providing a strategy update to the financial community, Telefónica Digital today unveiled a number of key new developments, including:

Direct to Bill to drive mobile content monetisation
Telefónica announced that it has secured global framework agreements with Facebook, Google, Microsoft and Research In Motion (RIM) to offer Direct to Bill payments as a means of driving the monetisation of mobile content. Telefónica believes that it can leverage the billing relationship it has with its mobile customers to increase sales of digital goods and services, particularly in Latin America where credit card penetration is low and 60% of the population do not have bank accounts.

Telefónica has started to roll out Direct to Bill in Europe, where it is already proving popular with customers.  In Germany, 400,000 customers per month on average are now making payments for a variety of products and services across different platforms. Telefónica plans to have the capability live in 14 markets globally by year end.

Strategic Partnerships
Telefónica Digital will not only drive innovation across its own footprint, but also globally in partnership with other network operators. Telefónica today unveiled a wide ranging agreement with Etisalat whereby the two companies will jointly develop business opportunities in Machine-to-Machine (M2M), financial services, cloud computing, eHealth, mobile advertising and over-the-top communications. Under the terms of the agreement, Telefónica will jointly work with Etisalat in the acquisition of video content, while Etisalat will also participate in Telefónica’s global device procurement process. The partnership expands Telefónica’s addressable market by 17 countries and 170m customers.

HTML5
Telefónica Digital reiterated its commitment to driving openness in mobile ecosystems and support for Mozilla’s HTML5 platform, which it was recently confirmed will be branded Firefox OS. Through increasing the performance and experience of smartphones at low price points, the initiative is crucial to raising smartphone penetration in developing markets.  Telefónica plans to launch the first devices built to this standard in Brazil in early 2013. Telefónica has been joined by other leading network operators and hardware manufacturers in backing the initiative http://blog.mozilla.org/press/2012/07/mozilla-gains-global-support-for-a-firefox-mobile-os/.

Unlocking the mobile advertising opportunity in Brazil
Telefónica will make a multi million Euros investment to kick start the mobile advertising market in Brazil, using its successful UK O2 Media model as a blueprint. The investment will see a local team put in place to accelerate the deployment of platforms and capabilities in a rapidly expanding overall ad market, currently worth €15 billion*, where mobile advertising is growing faster than Western Europe.
 
'Today we send out a clear message that our digital strategy is on track and delivering,' said Matthew Key, Chairman & CEO of Telefónica Digital. 'We have a clear vision for Telefónica of becoming a credible leader in a range of new services beyond connectivity and we have set in place the right partnerships with key players, as well as building our own capabilities, to help us achieve this. We are already delivering growth levels well in excess of market norms and we are fast becoming materially significant to Telefónica.'

*Source: Group M