Telefonica’s Tuenti Social Site Plans Growth Outside Spain

Bloomberg Business week
May 27, 2011
By Manuel Baigorri and Matthew Campbell

(Adds mobile-phone service in sixth paragraph.)

May 27 (Bloomberg) — Tuenti, Spain’s second-most popular social networking site, plans to open to foreign users in the five-year-old company’s first attempt to grow outside its home country.

The by-invitation only site of 11 million users, owned by Telefonica SA, will begin accepting registrations from outside Spain as early as next week, founder and Chief Executive Officer Zaryn Dentzel said in an interview. The Madrid-based company intends to hire 100 engineers this year, adding to its workforce of 226, he said.

“There’s a lot that’s going to happen in social networking and this is just the beginning,” said the 27-year-old American, a native of Santa Barbara, California, who started Tuenti in 2006. “Before we really wanted to focus just on this market. It was almost kind of an obsessive focus.”

Regional rivals to Facebook Inc., the world’s largest social-networking site, are holding their own even as the Palo Alto, California-based company weighs new offerings like movies and music. VKontakte, a Russian site part-owned by Group Ltd., remains that country’s most popular site, a feat also accomplished by local sites in Japan and China.

Facebook attracted about 22.5 million unique visitors in Spain in April, compared with about 16 million for Tuenti, according to figures from comScore Inc. The seven-year-old American site has more than 500 million users worldwide and is open to any Internet user, while Tuenti requires an invitation from an existing member.

Mobile Push

Tuenti, which stands for “your entity” in Spanish, is also starting its own mobile virtual network operator called Tu. The service is currently being tested by a small set of users and built into the social network.

The social network is “obsessively focused” on developing mobile offerings, Dentzel said.

“Tuenti had a bigger impact in the beginning but now I use more Facebook,” said Nieves Merino, a 23-year-old student of industrial engineering who has accounts on both sites. “Most of my friends started with Tuenti, which was more popular three years ago but now people start to try Facebook more and I kind of like it better.”

Madrid-based Telefonica, Europe’s second-biggest phone company, bought a majority stake in Tuenti last August with a 70 million euro ($99 million) investment.

Global Plans

In the longer term, Tuenti will use the presence of Telefonica, which operates in countries including the U.K., Germany, and Latin America to extend its reach beyond Spain.

“The reason that we did the deal with Telefonica was to give us the support and resources of a partner that would allow us to be a global player,” Dentzel said. “It’s absolutely a priority,” he said.

Social media efforts by telecommunications companies have sometimes struggled to gain traction. Vodafone Group Plc’s 360, an Internet address book that integrates data from other social media applications, had less than a million users last year. When the head of the 360 project quit last September, he wasn’t replaced.

Telefonica shares climbed 0.5 percent to 16.66 euros at 9:51 a.m. in Madrid trading, giving the company a market value of 76 billion euros.