Telefonica has announced a major organisational restructure following a meeting of its board of directors. The company’s 5-point plan to generate more than EUR 2 billion a year in additional revenues from 2022 onwards involves prioritising its four key markets of Spain, Brazil, Germany and the UK, carrying out an “operational spin-off” of its Latin American business and setting up a subsidiary for its cloud, cybersecurity and Internet of Things (IoT) businesses called Telefonica Tech and another for its infrastructure assets called Telefonica Infra.
Focus on 4 key markets
In a a letter addressed to the company’s shareholders, the Telefonica chairman Jose Maria Alvarez-Pallete described the plan, which is also intended to bring about a two percentage point increase in operating cash flow margin by 2022, as “undoubtedly the most important one… since I became chairman of Telefonica”. He said the plan is to “reinvent” the company and concentrate resources in its four main markets, which already account for 80 percent of revenues, OIBDA and operating cash flow.
'Operational spin-off' of LatAm businesses
The “operational spin-off” of its Latin American business (apart from Brazil) into the Telefonica Hispam unit includes a strategic review “with the double objective of modulating the exposure to the region, while creating the conditions to maximise its value via growth, consolidation and possible corporate transactions.” Alvarez Pallete went on to explain that “the particular conditions in these markets have had an impact on the business, reducing its contribution in recent years for different reasons and despite the enormous efforts of our local teams.” The new unit will be headed by Alfonso Gomez, currently responsible for Hispam Norte, who will report to the company’s Chief Finance and Control Officer Laura Abasolo.
Launch of 'Telefonica Tech'
Telefonica also announced the creation of two new units to boost growth and attract investors. The first, dubbed Telefonica Tech, is designed to bring together digital businesses with high growth potential and will initially focus on cybersecurity, IoT / Big Data and cloud computing, with the company confirming that it’s open to acquisitions to complement the portfolio. Telefonica Tech is expected to generate more than EUR 2 billion in additional revenues by 2022 and will be headed by Jose Cerdan, currently Global Head of the company’s B2B segment.
Creation of 'Telefonica Infra'
The second new unit, dubbed Telefonica Infra, will hold the group’s shareholdings in communications towers and other telecommunications infrastructure vehicles, providing services to other operators and incorporating partners. It will have Telefonica’s 50.01 percent stake in existing infrastructure unit Telxius as its main asset. “Through Telefonica Infra, Telefonica seeks to highlight the value a unique portfolio of assets, focusing on the development and monetisation of towers, DAS, data centres… greenfield fibre projects or submarine cables, among others,” said the company, adding that it will take an open approach to agreements and shareholder structures (majority or minority) with a view to finding the best partner for each type of asset. The CEO of Telefonica Infra will be Guillermo Ansaldo, currently head of Global Resources.
Management restructure
Finally, Telefonica said the new company structure will entail an organisational overhaul that will see Mariano de Beer and Bernardo Quinn leaving their management positions, with COO Angel Vila overseeing the new Infra and Tech units as well as three other business units (Technology and Architecture, headed by Enrique Blanco, Digital Consumer, headed by Chema Alonso, and Business Solutions, headed by Jose Cerdan), with more changes to be announced in due course.
