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Summary

Telefonica and Bouygues Telecom have announced a joint venture, Telefonica Global Solutions France (TGSF), to serve the French MNC market. The organization is built on the foundation of the strategic alliance signed in 2011 between Telefonica and Bouygues. This earlier alliance was broad, covering roaming, devices, joint procurement, as well as providing a basis for less formal “cooperation” in addressing the large corporate sector. The two service providers are now meeting with some success in MNC sector, and as a result have decided to invest in a more formal joint approach. TGSF has its own dedicated marketing and sales resources targeted to sell both Telefonica communication services (outside France) and Bouygues’ communication services (within France). However, TGSF will now own the relationship with MNC clients, providing relevant services from each of the joint constituent service providers.

Growing where others are struggling

Ovum is aware that some other global service providers are meeting with difficulties as they try to maintain business with, and sell more to, their French clients. France, like most of the Eurozone, has been in the grips of fiscal austerity, which has caused corporate investments to decline. In the midst of this, however, Telefonica and Bouygues have seen their joint efforts to sell to MNCs pay off. Because France is home to many of the world’s most important MNCs, TGSF therefore presents a very real threat to its competitors. It is not a market that can be ignored.

Ovum had the opportunity to speak in depth with Telefonica Global Solutions France, and believes that there are several important factors that increase the chances of it succeeding, as well as posing a more important threat to its competitors.

  • First, this is not a completely new organization, in the sense that since the foundation partnership agreement in 2011, the two parties have been carefully working together to build joint operational infrastructure and to also identify key resources, building a joint team that has already been working in client-facing and delivery roles. This is not a “build it and they will come” JV.

  • Second, Ovum understands that TGSF already has a solid book of business among the top French MNCs, many of which are very well known brands on a global basis. Many of these clients are net-new for both Telefonica and Bouygues, so the JV has not been given an initial boost through the mere transfer of client relationships from the constituent partners.

  • Third, Ovum believes French MNCs are looking for viable global service provider alternatives beyond the incumbents. Although France itself may not be growing, the focus of the JV is on supporting French MNCs with global requirements. Without Telefonica’s assets, it would not have been possible for Bouygues to easily address these opportunities, and without Bouygues’ relationships in France, Telefonica would have had to make a standing start to build them.

Ovum understands that there is an initial service focus on mobile, along with Telefonica’s digital offers. Bouygues has a very strong reputation in France for the reach of its 4G network. This means it is likely that TGSF will initially win more new mobile-oriented business than fixed, but we expect fixed and associated “digital services” to be sold into its growing French base in the medium term, once the relationships between TGSF and its clients mature. This poses yet another threat to incumbents in the market.

As both industry-watchers and enterprises know, the key to a good working relationship is governance, and many partnerships between global and regional telcos fail on this front. Ovum has not had the opportunity to conduct research on the inner workings of the joint venture, but key executives we spoke to have stressed that there already exist strong governance frameworks for sales through to delivery and service. The fact that Ovum has learned of several key joint net-new MNC clients with blue-chip pedigrees makes Telefonica’s and Bouygues’ claims credible. This is good news for French MNCs looking for another credible global strategic provider.

Appendix

Further reading

Cloud Strategy Snapshot: Telefonica, TE0005-000697 (March 2015)

Author

Evan Kirchheimer, Practice Leader, Enterprise Services

evan.kirchheimer@ovum.com

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