Telefonica unveiled a new strategy for 2010-2012. Under the name bravo!, the strategy is based on the four pillars customer focus, an integrated services offering, new platforms and a common culture. To start with customer focus, this seems obvious, but given the financial crisis, not really. One can only applaud that the company chooses for 'customer satisfaction' rather than the ususal 'shareholder value' (even though Telefonica regularly talks up its high dividend yield). The second pillar is an integrated offering. This suggests that Telefonica wants to offer a quad-play across all its 25 markets. As that's already the case in most countries where it operates, this target does not imply any big changes. Similarly, the last pillar targeting a "common culture" across the group implies little change, saying only that the company wants to present a good image.
The third pillar, new platforms, is somewhat vague, but can be connected to comments from chairman Cesar Alierta in the press release over "digital connectivity from advanced platforms", "new sources of growth and business models", "individuals, homes and businesses are becoming ever more digital", "new applications and services from different sectors (...) and through alliances with third parties", "customers will have more devices, all connected (…) the domination of smart phones will play a key role." This hints at the developments in IP, bandwidth, machine-to-machine, connected devices and convergence, all quickly suceeding each other - trends that Telefonica clearly does not want to miss.
Telefonica also gives some interesting numbers in its statement:
- Spending on communications is expected to grow 20 percent from 2010 to 2015 to 4.2 percent of all consumer spending. Telefonica does not give any figures on the current wallet-share for communications, but growth of 20 percent over the five-year period comes out at an average 3.7 percent increase per year.
- Telefonica expects annual growth of 1-4 percent. We can assume these means sales, at an average 2.5 percent per year. Alierta adds to that: "We are a growth company".
- The number of customers is expected to reach 320 million by the end of 2012, from 265 million now (in 25 countries), giving the company a market share of around 30 percent. This implies annual growth in customer numbers of around 6.5 percent.
So all together, Telefonia expects growth in the customer base of 6.5 percent, sales growth of 2.5 percent and market growth of 3.7 percent. This brings us to the conclusion that the revenue per customer will fall and Telefonica will underperform the market growth. (Calling itself a 'growth company' is strange, given the growth barely surpasses inflation). Declining revenue per customer is connected to the continuous erosion in prices, but underperforming the market (really losing market share) is remarkably hunble. This is all connected to the rise of 'third parties', mentioned by Alierta. Newcomers such as Google and Apple are building positions on the teleocm market and taking a piece of the pie. So it's only positive to see Telefonica taking the realistic view, and focusing on alliances with these 'third parties'.
