Telefonica App Offers Apple IPhone Users Free Calls

Telefonica SA (TEF), Spain’s dominant telecommunications company, is offering a free mobile communications application for users of Apple Inc. (AAPL)’s iPhone as it tries to stop customers switching to cheaper rivals.

The TU Me app allows free calls and stores data for users online. It will be offered worldwide to users of Apple’s iOS software from today at no cost regardless of the phone operator, Telefonica Digital Chief Commercial Officer Stephen Shurrock said in an interview. The TU Me app will offer communication services including text messages, calls, sharing photos and voice-mail, he said.

Phone companies such as Deutsche Telekom AG (DTE), Vodafone Group Plc and Madrid-based Telefonica are struggling to adapt as customers increasingly use calling software such as Skype or the WhatsApp messaging technology on smartphones. Telefonica is also losing market share and suffering from declining profitability as clients switch to cheaper rivals including Jazztel Plc. (JAZ)

“We certainly see ways to monetize this app with a business model along the lines of Skype,” Shurrock said, declining to say how much revenue it could generate or how many customers may attract this year.

Microsoft Corp.’s Skype is the world’s most popular Internet-calling service, enabling free voice calls over the Web.

Digital Unit

Telefonica fell 0.7 percent to 11.11 euros at 9:15 a.m. in Madrid trading, valuing the company at 50.7 billion euros ($66 billion). Spain’s benchmark IBEX 35 Index dropped 0.8 percent.

TU Me is available for download from the Apple App Store and a version for phones using Google Inc. (GOOG)’s Android will be available in coming weeks, Shurrock said. With TU Me, data is kept online in the so-called cloud, and “interactions are stored in a timeline format, making it easy to view, scroll through and keep a history of conversations,” the company said in a statement.

Last September, Telefonica created a digital unit, with offices in London, Silicon Valley, Tel Aviv, Sao Paulo and Madrid, in order to pull together digital assets including Jajah, the Mountain View, California-based Internet-phone company acquired in 2010.

To contact the reporters on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net;

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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