Back to top

Image: Bigstock

Telefonica (TEF) Leads Technological Transformation With New Unit

Read MoreHide Full Article

Telefonica, S.A. (TEF - Free Report) has struck a major milestone with the creation of a new Strategy and Development department. The new-age organizational structure is considered to be a significant move in the company’s business roadmap as it prepares itself to tap lucrative opportunities offered by the fourth industrial revolution with improved efficiencies while accelerating technological transformation in this dynamic environment.

The Spain-based tech giant is currently on a roll. The company has been making necessary organizational changes to boost its operational momentum. On the digitization front, the company’s digital business unit, Telefonica Tech, unveiled a next-gen certification service. It is built on TrustOS-managed blockchain platform that will enable companies to validate confidential data related to projects, transactions or digital content with legal support.

It had extended its collaboration with Geprom Connecting Industries to primarily focus on technologies like Internet of Things, Big Data, and artificial intelligence to enhance productivity and reduce operational overheads while facilitating real-time decision making with seamless logistics. Telefonica had also teamed up with Alias Robotics to establish the world’s first robotic cybersecurity laboratory in Munich, Germany. The investment is led by Telefonica’s innovation hub — Wayra.

Debt reduction has always been Telefonica’s top priority. Few months ago, the company had completed the divestment of Telxius’ mobile phone masts in Europe and Latin America to American Tower Corporation (AMT - Free Report) . Further, the mega-merger between Virgin Media and O2 not only marked the launch of a strong mobile competitor in the U.K. market but also generated considerable synergies for Telefonica. The transaction is likely to cut down Telefonica Group’s net debt by nearly €9 billion while facilitating its efforts to upgrade its network to 5G.

Telefonica’s shares have gained 25.9% compared with the industry’s growth of 12.8% in the past year.

Zacks Investment Research
Image Source: Zacks Investment Research

At a time when the majority of organizations are shifting toward automated solutions to meet the market requirements of the future amid constant digital transformation, the latest move to promote the consolidation of the new Telefonica seems to be the call of the hour. The Strategy and Development department will lead the technological transformation process and bring together current leaders from Corporate Strategy, M&A, and Digital Innovation units under a single umbrella.

Mark Evans will be responsible for heading the new unit. Under his leadership, Telefonica gained whopping profits from its O2 business for five consecutive years. Luis Rivera and Juan Azcue will continue to guide Corporate Strategy and M&A segments, respectively. Chema Alonso will lead Innovation, Data, Platforms, and Digital Products & Services.

Apart from accelerating technological transformation, Telefonica’s Strategy and Development department intends to promote further internal efficiencies by capitalizing on big data and artificial intelligence capabilities. With a customer-centric approach, the segment will leverage its strategic vision to promote both organic and inorganic expansion, fueled by the overall growth of the business. This, in turn, will help the unit to generate sustainable profits in the long run.

Zacks Rank & Stocks to Consider

Telefonica has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Otter Tail Corporation (OTTR - Free Report) and IDACORP, Inc. (IDA - Free Report) . While Otter Tail sports a Zacks Rank #1 (Strong Buy), IDACORP carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Otter Tail pulled off a trailing four-quarter earnings surprise of 31.8%, on average.

IDACORP pulled off a trailing four-quarter earnings surprise of 6.4%, on average.