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Telefonica, Alcatel-Lucent Tie Up

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Spanish telecom company Telefonica, S.A. (TEF) has reportedly tied up with Alcatel-Lucent, S.A. (ALU) for developing its 4G LTE network infrastructure. However, the terms of the deal remain undisclosed.

Per the deal, Alcatel-Lucent will be responsible for installing 8,000 4G LTE base stations in Western Europe for Telefonica. We believe the new investment would solidify Telefonica’s 4G presence in Europe and support growth going forward.

According to reports, the new deal represents one of the largest LTE development contract following China Mobile (CHL) 4G network infrastructure contracts to local suppliers Huawei and ZTE.  Telefonica is making significant progress in terms of  LTE deployments.

The company launched the 4G Long-Term Evolution (:LTE) network in several rural areas in Germany, using the 800 MHz and 2.6 GHz frequency bands. The company is further working to deploy LTE services in urban areas, with Hamburg being the first followed by Berlin and the Ruhr.

Further, Telefonica is also taking initiatives to adopt new technologies like Voice over LTE (VoLTE) that would allow call transfers between LTE and 3G mobile networks with seamless connectivity. This platform is going through several technological experiments in Germany as the company plans to deploy it soon.

Going forward, the company is also forming strategic alliances so at to increase its market penetration. Moreover, Telefonica Digital acquired TokBox – the leading video communications platform – last year. This acquisition improved Telefonica’s core business of communications, which has a goal to generate digital revenues of €5 billion by 2015.

Additionally, in Feb 2013, the company’s digital wing collaborated with Pinsight Media, powered by Sprint Corp. (S) to provide advertising services across the U.S. Latin America and Europe that will strengthen Telefonica’s global reach.

Further, in Apr 2013, the company announced its partnership with AirWatch, theU.S.based provider of enterprise-grade mobile device management, for delivering Security Mobile Device Management (SMDM) services for enterprises. All these opportunities will help Telefonica to outperform in the global market.

Telefonica currently has a Zacks Rank #3 (Hold).

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