Telefonica partners Spanish bank in online venture

NEWS Spanish telecom giant, Telefonica, and Spanish bank, BBVA (Banco Bilbao-Vizcaya Argentaria) are joining up to create a FF955.6m (£89.7m) Internet banking venture. BBVA, the second biggest financial group in Latin America, will gain a 9 to 10 per cent share in the Spanish telco. The Spanish bank also benefits from a 40 per cent stake in ecommerce arm, Telefonica B2B. Chris Lewis, analyst at the Yankee Group, said the deal showed Telefonica's desperate need to add to its revenue stream. He said: "You need to think of Telefonica's end game, and given the current market situation, they are worried that BBVA could get into bed with someone else at a time when it [Telefonica] needs to add value in vertical markets as it fends off competition or threats to its basic revenue stream." Under the terms of the deal, Telefonica benefits from a 3 per cent share in BBVA and a 49 per cent share in Uno-e, the Spanish bank's Internet branch. The telco said it would use its new-found resources to bolster its own Internet service, Terra Networks. Customers of Telefonica will also gain in the long term by access to any future ecommerce services developed by BBVA. "Telefonica is trying to tie people in so they can generate traffic in any direction towards Telefonica," said Lewis. In a statement, the two companies said they would also work to develop Hispasat, a Spanish satellite communications company. José Villalonga, president of Telefonica, will become vice president of BBVA while the telco gains two VPs from the Spanish bank. Lewis said the deal highlighted a trend towards online banking. "The banks do find that things are changing rapidly. In this deal, for example, BBVA have found that it needs an up-to-date technologically advanced partner rather than having to buy-in technology all the time. This used to be called outsourcing, but now it is more of a partnership."