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Telefonica (TEF) Arm to Spur Cloud Service With Quantum Technology

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Zacks Equity Research
·4 min read
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With the emergence of dynamic technological innovations, strategies like “cloud-first” and “go-to-cloud” are proving to be advantageous in streamlining business processes. In sync with this, Telefonica, S.A.’s TEF subsidiary, Telefonica Tech, recently joined forces with two companies — Quside and Qrypt — to leverage the benefits of quantum technology.

As part of the collaboration, Quside is responsible for generating high-performance quantum random numbers supported by Qrypt’s Entropy-as-a-Service (EaaS) solution. This combination will then be incorporated in Telefonica Tech’s Virtual Data Centers (VDC) cloud offering. The innovative technology is currently in a testing phase, post which it is expected to go into production in a few months’ time.

The partnership will not only aid VDC customers to enhance their business operations but also reinforce Telefonica Tech’s efforts for the deployment of robust security features on the back of new-age quantum technologies. Apparently, it is estimated that a considerable portion of amount allocated for enterprise applications will be spent on cloud services by 2023.

Notably, Telefonica Tech is responsible for managing security, cloud and IoT/Big Data businesses with utmost agility. The segment manages these three businesses under a single umbrella to not only accelerate revenue generation but also facilitate the entry of new partners for lucrative business opportunities. The unit is expected to yield revenues of more than €2,000 million in 2022. Its VDC platform is primarily known for optimizing businesses on the back of automation and cloud computing technologies.

Quside is a Barcelona-based startup that manufactures its proprietary quantum random number generator to deliver customized solutions that improves security across various connected devices. In today’s data-driven society, the confidentiality of crucial information is always under the constant threat of malicious attacks. In order to overcome such challenges, the company works closely with key players across different markets to develop best-in-class quantum technologies. Qrypt is a New York-based company that produces cryptographic quantum security solutions to safeguard vital data amid rising cyberespionage.

With extensive number of use cases, the synergies created from quantum random number generators and EaaS architectures have proved to be highly beneficial for enhancing data security in software-defined networks along with randomization for financial and gaming applications.

On the grounds of such solid validation, Telefonica Tech’s customers are encouraged to adopt advanced quantum technologies that provide top-notch network security on the back of superior VDC cloud service. Nevertheless, the deal seems to be the call of the hour with the importance of quantum solutions taking precedence over archaic technologies to cater to the accretive requirements for high-quality random numbers among enterprise customers.

Telefonica provides a comprehensive suite of service platforms for fast go-to-market launches. Its IoT connectivity platform has been designed to address dynamic business requirements and enable a cost-effective solution to improve business productivity.

Over the past years, the Spanish company has invested heavily in the deployment and transformation of its network to provide seamless connectivity with enhanced capacity, speed, coverage and security. With operations across 17 countries, the Spanish telecom company is capitalizing on the opportunities in the digital world through several growth strategies to enhance long-term prospects, while experiencing healthy traction in the smartphone market.

Telefonica currently has a Zacks Rank #4 (Sell). Shares of the company have declined 5.5% compared with the industry’s fall of 1.9% in the past three months.

Some better-ranked stocks in the broader industry are Telstra Corporation Limited TLSYY, Avista Corporation AVA and Korea Electric Power Corporation KEP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Telstra has a long-term earnings growth expectation of 8.4%.

Avista has a long-term earnings growth expectation of 6.9%.

Korea Electric Power has a long-term earnings growth expectation of 5%.

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