Telefónica launches Tech and Infra units amid Latam spin-off

Telefónica launches Tech and Infra units amid Latam spin-off

28 November 2019 | Natalie Bannerman

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Telefónica chairman & CEO José María Álvarez-Pallete has unveiled a bold new company strategy to spin off company assets and prepare for industry 4.0.

As part of this ambitious undertaking, Álvarez-Pallete says that the company is to spin off its businesses in Hispanoamérica. According to him this is due to the changing conditions of these markets that have had an impact on the company’s businesses. Over recent years it has actively reduced its contributions in these regions for various reasons including; macro and regulatory environment, greater competitive pressure, insufficient scale or volatility of currencies.

A new era begins today. Those were the words at the start of Álvarez-Pallete’s circa 2000-word letter detailing his plans for the company amid a sea of industry and societal change.

“The fourth revolution is indisputably a technological revolution, but it is also a social revolution that will alter our immediate future,” said Álvarez-Pallete. “Companies that do not understand that the world is changing, socially, technologically and economically, are destined to disappear.”

Contained within said letter, Álvarez-Pallete detailed his action plan centred about three key goal. Firstly to ‘prioritise the markets where we can be relevant and grow with a long-term sustainable model.’ Second, ‘to promote opportunities with the greatest potential for growth, while at the same time leveraging the value of our infrastructure’.  And lastly, ‘to increase agility and efficiency.’

Speaking about the reason for these particular goals, Álvarez-Pallete added: “We envision a company of telecom business units that have the best networks, fully digitalised and are benchmarks in efficiency. We envision a company with cutting-edge technology units that compete face-to-face with the best in the world and grow vigorously, taking advantage of the opportunities that this revolution opens up for us.”We envision a company that can attract and motivate its people, and that fulfils its social mission and helps to build a better, fairer and more sustainable world, where technology is at the service of people and not the other way around.”

In order to meet these objectives, and recently approved by the company’s board of directors, Álvarez-Pallete is ushering a new 5-point plan based on 5 key decisions:

  1. To prioritise Spain, Brazil, the UK and Germany, as key markets. These have been identified as large markets, with growth potential and where Telefónica is going to focus its investments.  



  2. The aforementioned operational spin-off of its businesses in Hispanoamérica. The changing market conditions has resulted in Telefónica adopting a new operations model that will now be managed as an autonomous unit with a dedicated team.



  3. The launch of Telefónica Tech, a newly created unit for the B2B segment focused on cybersecurity, IoT and Big Data, and cloud. Telefónica Tech will integrate the global units currently dedicated to the development and provision of these services.



  4. Creation of Telefónica Infra, a new unit that will encompass the company’s existing stakes in telecommunications infrastructure vehicles. It will leverage the strength of Telxius and which Telefónica has a 50.01% stake in, as the first asset of this new unit. It will develop towers, distributed antenna systems, data centres (including Edge), greenfield fibre projects and subsea cables, to name a few.



  5. And lastly, evolve its operating model to increase agility, speed up execution and maximise synergies between all Telefónica units. In order to be simple, transparent and agile with customers, Telefónica says that “we must simplify ourselves first.”

Álvarez-Pallete concluded; “It is impossible to predict the future, but I am convinced that the best way to predict it is to create it. Today, we begin to write the future of Telefónica.”