Telefónica may sell stakes in many units
To reduce debt burden with cost cutting and divestments, but will invest in Digital unit, including new NFC services
Published: 5 December, 2011
READ MORE: M&A | Spain | Telefonica | NFC
Telefónica is likely to step up its plans to offload non-core businesses and seek growth through its new Digital division, with the latest activity revolving around the fashionable NFC mobile payments technology. The Spanish telco is struggling to reduce its huge debt burden of €55bn, especially as the eurozone crisis has raised the interest rates on that debt, and to shift its business towards higher growth Latin American and digital services units, at the expense of wireline and Europe.
According to The Financial Times, the operator is considering the sale of stakes in its Brazilian and Czech subsidiaries, and could also sell off its shares of Portugal Telecom, Zon Multimedia, Hispasa and Amper. The possible divestments will complement a major cost cutting program in core divisions, but funds will be invested in new growth businesses, mainly within the UK-based Digital company, which includes content, web services, new devices and other activities which span multiple screens.
Its latest initiative is to introduce NFC-based mobile wallet services across Europe over the next few months. The Spanish carrier has chosen German payment and banking specialist Giesecke & Devrient (G&D) to provide a Europe-wide trusted service management (TSM) system as well as other services such as over the air transfer and personalization of NFC applications. G&D will also manage the lifecycle of Telefónica's NFC application platform, supply some of its SIM cards.
"This new NFC management platform on Telefónica's network will also be made available to third party service providers, including financial institutions, transit operators and loyalty partners," the operator said a statement. Joaquín Mata, global head of financial services at Telefónica Digital, said: "The final goal for Telefónica is to build an open NFC ecosystem ensuring interoperability and offering service providers a friendly environment to deliver NFC services reaching a large number of mobile subscribers." This mirrors a similar strategy by Orange to drive a pan-European NFC business, though the French giant's plan is more inclusive of rival cellcos as it aims to seize the steering wheel for m-payments evolution before Google and Apple get to the European NFC market.
Telefónica is already involved in various NFC and m-commerce trials and ventures, such as a Spanish pilot with RIM of a BlackBerry m-wallet, and participation in the UK's controversial NFC joint venture between its O2 unit and competitors Vodafone and Everything Everywhere. The UK's fourth cellco, 3UK, is threatening antitrust action, claiming it was deliberately excluded from the initiative as the big three try to weaken its business.
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