During a keynote presentation at Capacity Latam in March, the CEO of wholesale business at Telefónica Global Solutions, Juan Revilla, presented a slide displaying the myriad of new opportunities presently being explored by carriers.
All of them were familiar to the audience and, indeed, have featured heavily in the pages of Capacity magazine throughout the last 24 months. Yet to see them displayed in their entirety – SDN, security, M2M, Big Data and numerous others – was a powerful statement of intent from a CEO who only assumed his position last December.
Peru-born Revilla has a longstanding career at Telefónica Group, having held many senior-level positions at the company, both in Europe and Latin America. He began his career at the group in 1995 as VP of controlling at Telefónica del Perú. In 2003, he moved into more of an operations-focussed role, acting as CEO of Telefónica del Perú in 2003.
Described as “an experienced international general manager, with a relevant success record in the complex and highly competitive telecoms business”, Revilla has big aspirations for his new role in wholesale: “I was responsible for the entire network and IT for Telefónica in Latin America. This has given me an insight into what operators need, and how we can help them, particularly in terms of developing their retail business,” he says.
In February this year, the company restructured its business, revealing what it described as “a new, totally customer-centred operating model”, designed to “incorporate digital offerings into all of its commercial activity”.
In reality this meant merging the activities of Telefónica Digital, Telefónica Europe and Telefónica Latam into what has been coined as a “Global Corporate Centre”. The move aims to simplify the group’s structure globally, but also comes on the back of its 2013 financial results – it closed last year with €45.4 billion of net debt.
Given that over half of the Telefónica group’s revenues now derive from Latin America, Revilla’s experience and knowledge of the region could be a valuable asset for Telefónica in the coming months. Traditional carrier services, he says, still hold great opportunities in the Latin American market. IP is growing impressively across the region, experiencing double-digit growth in fixed and mobile data traffic.
Revilla also highlights opportunities for the company’s roaming business, with the Latin American market forecast to grow at a CAGR of 20% up until 2015, compared to the global CAGR of 13%.
Despite the influx of new subsea cable systems in the region, operators must continue to invest heavily in international infrastructure to meet growing customer needs, warns Revilla. Successful wholesalers, he adds, will be the ones that continue to cater to those traditional wholesale needs, while transforming their capabilities to monetise the growth of new services.
“I think we need to grow our traditional products – in terms of our capacity, IP and IPX – but it is very important that at the same time, moving forward, we explore new revenues,” says Revilla. “You need that mix of the two.”
First movers in Latam
Telefónica are extremely well positioned to become first movers in a number of service areas in Latin America, with cloud just being one example.
“In the past year, the cloud has been a conversation about our own data, services and capacity,” says Revilla. “But the cloud is now an opportunity for us to go to the market with, and to provide products and services to our clients, from SMBs through to big businesses.”
The company also looks primed for growth in security, where it is able to leverage its cybersecurity service portfolio, launched last December. The solutions target both enterprises and end users, having been designed in-house by Eleven Paths – an independent company launched by Telefónica Digital last June.
The company is led by world-renowned security expert Chema Alonso. “It is amazing how far we have developed in that direction,” comments Revilla.
With 41 of the top 50 most dangerous cities in the world located in Latin America, security solutions could take on an altogether different dimension in the region.
“Security also extends to how you can manage and add safety. Even if you are physically miles away, you can have all the information available to monitor your shop or premises remotely. But in order to have that video capability, you require the right capacity and local access,” he says.
Revilla used to compete as part of a rowing team and remains a keen rower and cyclist in his spare time. He is therefore a big believer in teamwork.
“Working as part of a team is one of my strengths,” he says. “When someone is down and lacking in confidence, you need to be there to pick them up, which helps the whole team.”
Teamwork was certainly needed in order to help meet the considerable telecoms requirements for the forthcoming World Cup, due to kick off in Brazil this June.
“I was part of the team in Vivo that took care of the [World Cup] project, and helped provide all the suppliers and logistics in the network,” he says. “It was exciting to be part of that project. There was a lot of pressure, but in a short period of time we deployed and installed a significant network. It was a lot of fun.”
From a telecoms perspective, he is confident the nation is ready to host the prestigious tournament, and with Spain tipped as one of the favourites to win, he and Telefónica look likely to have further reason to smile in the coming months.
Taking the fight to the OTTs
The Latin America region appears ripe to embrace innovation. One market watcher identified the region’s telecoms operators as being the best at aligning themselves as “lifestyle providers”, successfully tapping into new service areas such as mobile banking, e-health and digital education.
Revilla wholeheartedly agrees: “The local operators here have the advantage that they are able to develop products and services that are, in other parts of the world, being served by OTT players.”
Telefónica are experiencing this first-hand, as their customers in the region react positively to the introduction of new services: “In Brazil, the products are already in the process of early diagnosis. We are seeing a lot of demand for products such as language courses. In fact, even within Telefónica we have a lot of experience with these tools, where a lot of our employees are learning different languages using smartphones via the cloud.”
Likewise, he sees huge potential for e-health across Latin America.
“There is still a need for basic health services in some countries, and no time or money to deploy new infrastructure. E-health can therefore fill a gap in the market,” he says.
The expansion into these new service areas is crucial in maintaining pace with the OTT players. Revilla holds strong views on the damage already inflicted on the industry by the OTT players. He believes deals such as the $19 billion Facebook paid for WhatsApp signify “lost money” for the industry.
With global spend on traditional operator messaging services such as SMS and MMS declining for the first time in 2013, alternative instant messaging services such as WhatsApp have already left a devastating impact on the market.
“That money has already gone from the operators,” he adds. Establishing a revenue-sharing model with OTT players is therefore crucial moving forward. “To be a sustainable business we need to share revenue. It’s not a business when one [OTT players] takes money and the other [the carriers] loses money. The only way for everyone to be happy is to share investment,” he explains.
Revilla believes in a two-pronged approach to counteract the impact of OTTs: growing traditional carrier services, while unearthing new service areas and revenue streams. This is reflected in his long-term hopes and expectations for his new role: “My goal is to help the group deploy new services and products that are able to work across every operational business unit in our landscape. At the same time, it is very important to keep doing the things that we already do well – so investing in the wholesale business in new infrastructure and capacity, in order to be a platform for the new services.”
