February 26, 2017 / 7:12 PM / 6 months ago

Telefonica bets on Aura to keep customers sweet

Telefonica's chairman Jose Maria Alvarez-Pallete speaks at Mobile World Congress in Barcelona, Spain, February 26, 2017.Andres Gonzalez

BARCELONA, Spain (Reuters) - Spanish telecoms giant Telefonica announced a new strategy on Sunday promising to give customers back control of their own data with the help of a new digital personal assistant.

The so-called "fourth platform" comes after Telefonica faced questions about its growth strategy last year following a dividend cut and asset disposals to repay debt.

The new app, named "Aura", was developed using Microsoft's artificial-intelligence expertise. It allows users to decide whether or not to share insights generated by their data with third parties such as Facebook or Google.

It can also answer questions about Telefonica services, create and track a request or manage access to the customer's wifi router.

"It's a new way of empowering customers," Chief Executive Jose Maria Alvarez-Pallete told a news conference ahead of the Mobile World Congress annual telecoms fair in Barcelona. "We are offering that the network belongs to them."

NO LONGER A DUMB PIPE

Aura can be used as a phone app and also interacts with Amazon's smart speaker, Echo. It is due to be launched in markets including Spain, Britain and Germany in the coming 12 months, Telefonica said.

Pallete said the company's "fourth platform" was the result of years of infrastructure and technology investments totaling 48 billion euros ($51 billion) over the past five years to transform the business into a digital platform.

Telefonica's chief digital officer, Chema Alonso, speaks at Mobile World Congress in Barcelona, Spain, February 26, 2017.Andres Gonzalez

Telefonica described the fourth platform as the company's brain, sitting on top of physical assets - its network, its IT systems - and finally its products and services.

"Now people can no longer call us a dumb pipe," Pallete told reporters after the presentation.

Details on how Telefonica will make money from the new service were not disclosed. The company said the main objective was to retain existing customers through a better experience.

"Telefonica will need to convince consumers it can add value and is not just providing a vehicle to sell them more services," said Martin Garner, senior analyst at CCS Insight.

"It will also need to earn momentum with developers in what is rapidly becoming a crowded field."

The fourth platform is the latest illustration of telecom companies diversifying away from commoditized core connectivity services into added-value media or internet services.

U.S.-based Verizon was the first to make a bold move into digital with its $4.4 billion acquisition of internet firm AOL two years ago.

Since then, rival AT&T has followed a different but adjacent route, aiming to become a TV and content company by acquiring DirecTV for $67 billion and Time Warner for another $110 billion.

Russian and emerging-market operator Vimpelcom has also committed to breaking away from the old telco model to remake itself as a tech player in messaging apps.

Reporting by Sophie Sassard; editing by Georgina Prodhan and Jason Neely

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