Telefonica Wholesales U.S. Mobility from Verizon

Event Summary

July 6, 2010 - Telefonica and Verizon Global Wholesale sign deal for Telefonica to offer “white label” mobility service to MNC customers in the U.S. Verizon Global Wholesale’s Mobility Service includes wireless voice, text messaging, broadband packages, with a choice between per minute and per megabyte bulk pricing, and bundled voice and data plan pricing options along with a suite of BlackBerry solutions. The agreement also provides technical expertise in sales and support with an inventory of handsets and aircards.

Quick Take

Analytical Summary

• Current Perspective: Moderate on Telefonica’s deal with Verizon Global Wholesale to offer mobile services in the U.S. on a white-label basis, as it will help Telefonica to offer more of an end-to-end solution for its multinational customer (MNCs) that have operations in the U.S.. A wholesaled service (especially one based on CDMA) does not provide as much control or customer choice as a facilities-based offer, but global operators traditionally expand their footprint through these kinds of relationships; they make more sense than trying to own network assets in regions where domestic carriers are entrenched, and should provide MNCs with more affordable cross-country mobile access by reducing roaming tariffs.

• Vendor Importance: Moderate to Telefonica as it is intent on strengthening its already compelling managed mobility proposition to MNCs that may be headquartered in Europe or Latin America but need mobile access in the U.S. As the operator does not have its own network in the U.S., it is a logical step to provide a mobility offer through a wholesale relationship with a leading provider. The addition of a mobility service could also help Telefonica win deals with U.S. MNCs (especially Verizon customers) that have extensive operations in Latin America.

• Market Impact: Moderate on other global operators that offer mobility services to MNCs, as Telefonica is highly differentiated due to its extensive Latin American footprint; the likelihood of a Latin American company having operations or frequent traveling requirements in the U.S. is high. The deal with Verizon will strengthen Telefonica’s capabilities for this set of MNCs, important both in expanding service to its existing customer base and in bidding for potential MNC business against competitive operators.

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