Telefonica sent a ripple through the industry last month when it signed an estimated €350 million five-year deal to provide fixed and mobile enterprise services to Deutsche Post Worldwide Net, owner of DHL. That agreement alone was not remarkable, but seen as a part of a bigger plan to make inroads into the global enterprise services space it will give some operators serious cause for concern.
Until now, the world’s fifth largest and most profitable operator—according to Total Telecom’s Global 100—has had a surprisingly low profile in the multinational enterprise market. But this deal firmly signals the Spanish incumbent’s intent to be recognised as a major enterprise player over the next two years.
“It’s a strategic move for Telefonica. We clearly decided we want to pursue [multinational companies],” says Michael Hayes, head of multinational corporate business at Telefonica O2 UK.
Telefonica will focus on trying to win business in Europe, and in particular in the UK and Germany. But it will face tough competition in a sector dominated by a roll call of big hitters: Orange Business Services, AT&T, T-Systems, BT Global Services and Verizon.
“We see Europe as key for MNCs, because of the size of our footprint and because of the size of the MNC market in Europe, which is the largest outside of the US,” says Hayes. “The UK and Germany are very strong: we estimate the two countries are home to over 50% of MNC HQs in Europe.”
Telefonica has been quietly laying the foundations of its MNC business since it bought mobile operator O2 in 2005. “Around two years ago we decided to look at fixed and mobile convergence and how to leverage the Latin American presence,” says Hayes. In so doing the company identified what Hayes describes as “beachhead accounts” that would give the operator credibility in the enterprise services space.
Telefonica/O2 viewed Deutsche Post as just such a “beachhead” account and spent over a year working to conclude the deal, says Hayes. The new agreement will see Telefonica supply over 100,000 ...