Telefonica sets up digital arm in UK

Telefonica, the parent company of O2, is set for a major restructuring which will include setting up a new digital operation in the UK.

The giant mobile operator yesterday announced a significant overhaul of its operations. This will include the creation of Telefonica Digital in London.

The operation, which will have offices in Madrid, São Paulo and Silicon Valley, will comprise 2,500 employees – about 1 per cent of its total workforce – and be headed up by Matthew Key, currently head of Telefonica Europe.

The business will include its research and development team and will explore potential opportunities for digital growth . This will include developing and acquiring new services and products, with a spokesman adding that it would focus "on new business streams".

The spokesman added that while the business was based in the UK to be "close to the investment community, it also shows the importance of the UK to the business".

The Telefonica overhaul, announced by executive chairman and chief executive Cesar Alierta, will also include streamlining its regional businesses from three to two, with its home market of Spain included as part of its European arm for the first time.

The moves follow months of debate over company strategy to "lay the foundations" for its position in the digital world.