Telefonica cuts devices to boost earnings
Telefonica cuts devices to boost earnings
Jonathan Browning and Manuel Baigorri |
November 04, 2011
BusinessWeek
Telefonica SA said a planned cut in the number of mobile devices it offers will boost earnings following a reorganization of Europe’s second-largest telephone company.
Telefonica, which formed a new digital unit in September to manage partnerships with U.S. technology companies including Apple Inc. and Google Inc., aims to cut the range of handsets on offer to less than 100 from about 240 currently, said Matthew Key, who runs the division. The move will have a positive impact on earnings, Jose Maria Alvarez-Pallete, head of the operator’s European operations, said.
The company will purchase devices centrally based on Key’s recommendations, following Newbury, England-based Vodafone Group Plc, the world’s biggest mobile-phone carrier, which already buys most handsets at group level. Madrid-based Telefonica, which owns the O2 brand, has revamped regional businesses and shuffled managers to focus on Latin American growth amid falling revenue and profit in Spain.
When managers discussed forming the Internet unit, “there was a dawning reality that this was a necessity,” Key said at an event in London this week. The company’s decision to narrow its range of handsets contrasts with the proliferation of devices in the fast-expanding smartphone and tablet market. Apple sold more than four million iPhone 4S devices in its first three days while Samsung Electronics became the largest smartphone vendor in the last quarter with its focus on Google’s Android software. Nokia last month introduced devices running Microsoft Corp.’s Windows Phone in what may be its last chance to regain market share.
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