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Telefonica restructures operations to focus on online business

06 сентября 2011

Spanish telecom giant Telefonica SA Monday said it is restructuring its operations to support the development of its online business and to gain efficiency as surging costs threaten its ambitious profit goals.

Telefonica, a major player in 25 countries stretching from Germany to Chile, and Europe's second-largest telecom firm by market value after the U.K.'s Vodafone PLC, said it will create a new unit, Telefonica Digital, to group its online businesses.

Spain's popular social networking site Tuenti, Internet telephony provider Jajah, Internet portal Terra and other businesses will all be included in the new Telefonica Digital unit.

The creation of Telefonica Digital "seeks to take full advantage of the opportunities that the digital world offers with regards to new products, services and the value chain," Telefonica said in a statement.

Telefonica's move comes as the company, like other big telcos, is struggling to offset the loss of revenue from traditional phone calls by pushing strongly into mobile and high-speed data transfer services. These are used by customers to access the Internet from new devices like tablets and smartphones.

In another major change, Telefonica's underperforming domestic unit, Telefonica Espana, will be absorbed by its Europe unit.

As Telefonica faces rising costs for new equipment supporting these networks, it is also fighting off a comatose economy in Spain, a cash cow during the real estate boom that ended in 2008. Telefonica's Spanish division announced earlier this year it plans to lay off as many as 6,500 employees, or 20% of staff, over coming years to ensure its competitiveness.

Telefonica's revenue in Spain, currently one of the slowest-growing economies in the world, fell 6.6% in the second quarter, while revenue in the rest of Europe dropped 3.5% from the second quarter of 2010. Latin American revenue, in turn, increased 12% during the same comparative period.

In more lucrative markets, including Brazil, Telefonica also faces stiff competition from the likes of Telefonos de Mexico SAB de CV.

As part of the corporate restructuring, Chief Strategy Officer Santiago Fernandez Valbuena will take over Latin American operations. Angel Vila will be in charge of Telefonica's finances and corporate development.

Matthew Key, chairman and chief executive of Telefonica Europe, will lead the new Telefonica Digital unit. He will be replaced by Jose Maria Alvarez Pallete, who was previously in charge of Latin America.

Источник: Total Telecom

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