Telecoms Industry Outlook 2015

A look at the where the sector is heading

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Informa Telecoms & Media/Ovum Research

Please note: although much of the information in this presentation

is drawn from the Ovum resources and analysis, for clarity and
training purposes, we are using indicative figures only

Agenda
Industry Outlook 2015
A 30 minute Snapshot

2015 Current Industry

Position

2015 The Changing Telco

Customer

Broadband Forecasts

Telco Strategy Big Picture

Telco Strategy Technologies

Digital Services, B2B, Big Data,

and Innovation

2015 Current Industry Position

All material is Copyright Informa Telecoms & Media

AT&T
Verizon
NTT
China Mobile
Deutsche Telekom
SoftBank
Vodafone
Telefonica
Comcast
America Movil
China Telecom
Orange
China Unicom
KDDI Corporation
Sprint
BT
Telecom Italia
Telstra
KT Corp
Time Warner Cable
VimpelCom
Telenor Group
SK Telecom
Bharti Airtel
Telia Sonera
Etisalat
MTN
Singapore Telecom
Swisscom
STC
MTS
KPN
Hutchison - Telecoms
Ooredoo
Vodacom
Axiata
Millicom
Turkcell
Telekom Austria
OTE
Zain
Tele2
Global Telecom
Portugal Telecom

Revenue ($bn)

5
20

15
2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

25

4Q12

30

3Q12

35

2Q12

Benchmarking: Total revenue

Total revenue, 2Q14

Industry total revenue

390

380

370

360

350

340

10

6
KPN

Tele2

VimpelCom

MTS

50%

Telekom Austria

OTE

Ooredoo

Telstra

Telia Sonera

China Unicom

Swisscom

NTT

KDDI Corporation

KT Corp

Time Warner Cable

Comcast

America Movil

Vodacom

China Telecom

MTN

Millicom

SoftBank

Total revenue YoY growth

Benchmarking: Total revenue

YoY growth
Total revenue year-on-year growth, 2Q14

150%

100%

Industry
total
revenue
YoY growth
=
2.1%

0%

-50%

-100%

Etisalat
Telstra
MTN
Singapore Telecom
Global Telecom
MTS
Portugal Telecom
Zain
Ooredoo
VimpelCom
Telecom Italia
STC
China Mobile
Swisscom
Vodacom
Axiata
OTE
Telenor Group
Time Warner Cable
Comcast
Bharti Airtel
Millicom
BT
America Movil
Telia Sonera
Telefonica
China Unicom
KDDI Corporation
Orange
AT&T
Telekom Austria
Turkcell
Verizon
Vodafone
China Telecom
SoftBank
NTT
SK Telecom
Deutsche Telekom
KPN
Tele2
Sprint
Hutchison - Telecoms
KT Corp

EBITDA margin
50%

45%

7
15%

10%
Industry
EBITDA
margin
= 32.5%

40%
2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

40%

3Q12

EBITDA margin, 2Q14

2Q12

Benchmarking: EBITDA margin

Industry EBITDA margin

35%

30%

25%

35%

30%

25%

20%

Translates to an Average margin

of 14.6% for Net Income

5%

0%

Cellular Markets are Saturated

Source: Ericsson Mobility Report February 2014

& Churn: Typically 20% - 60% p.a.

8

Cellular ARPU Forecast (per month) Selected

Revenue Mix is Changing

Source: Informa Telecoms & Media WCDM

10

Global data traffic growth forecast

Source: Ericsson Mobility Report

11

2015 The Changing Telco Customer

All material is Copyright Informa Telecoms & Media

Convergence is Mainstream

The Connected-Home Platform

Current Model

Home security
PC

TV

IPTV
TV

Value-Added
Services

Connected
Home

Mobile phone

Health
PC

Tablet, laptop
Music
Mobile devices
(phone, tablet)

Source: Informa Telecoms & Media

13

PC

WCDM Last Year Headline Figures

World Q3 2013

WCDM - World Cellular Data Metrics (Informa Telecoms & Media)

14

WCDM Current Headline Figures

World Q3 2014

WCDM - World Cellular Data Metrics (Informa Telecoms & Media)

15

Customer Experience - Content and OTT

16

The customer experience is

increasingly defined by
Content and OTT Services

Operators essentially
provide:

Traditional Telco
Services (Voice, SMS,
Internet Access)

Connectivity to Content
& OTT

The Smartphone Market is Booming

100

2500

Smart phone share of

total sales (%)

Sales volume (m)

90
2000

1500

1000

80
70
60
50
40
30
20

500

10
0

0
2012

2013

2014

Basic phones

2016

2017

2018

2012

Smart phones

2013

2014

2015

Basic phones

2016

2017

Smart phones

80% of handsets sold worldwide will be smartphones by 2065

Wide variation of smartphones as a percentage of total connections:

17

2015

India 9%
Africa 11%
Western Europe 35%
US 48%
Source: Informa Telecoms & Media

2018

Whats in the cloud?

Tablets
Smart Phones

Collaboration
Communications

Content
Finance
Monitoring

Database

Queue

Storage

Mail

Identity

Network

Desktops
18

Laptops

What is the Role of Operators?

19

Broadband Forecasts

All material is Copyright Informa Telecoms & Media

Global broadband forecasts

7.5 billion broadband connections globally by 2018, the

majority of which will be mobile broadband

8,000,000,000
7,000,000,000
6,000,000,000
5,000,000,000

Satellite (general)
4,000,000,000

Mobile broadband
Fixed broadband

3,000,000,000
2,000,000,000
1,000,000,000
2012

21

2013

2014

2015

2016

2017

2018

Fixed broadband networks

xDSL continue to dominate, FTTx ramping up

1,200,000,000

1,000,000,000
Fixed (unspecified technologies)
800,000,000

Powerline
Ethernet inc UTP/FTP
Cable Modem

600,000,000

xDSL
FTTx

400,000,000

WiMAX
Fixed wireless broadband

200,000,000

2012

2013

Source: Informa Telecoms & Media

22

2014

2015

2016

2017

2018

Mobile broadband networks

HSPA remains the dominant MBB technology

Source: Informa Telecoms & Media

Source: GSM Suppliers Association

23

Telco Strategy Big Picture

All material is Copyright Informa Telecoms & Media

Telecoms Strategies Main Issues

Increasing/maintaining revenues and

margins
Convergence
Maintaining competitive advantage
through:

Dealing with OTT Players

Partnerships
Mergers/Acquisitions
Protecting voice revenues whilst starting
the migration to VoIP
Loyalty
Minimising Costs

25

Connection Speed
Price/Quality
Value-Add
Device

Infrastructure Sharing
Outsourcing/insourcing

Global Value of Telecoms & Digital Media

End user
expenditure on
digital products
and services

Figures
Released
2008 & 2013

Source:
Informa Telecoms
& Media

26

Total
US $1,821 Billion

Total
US $2,378 Billion

Compound Annual Growth Rate 5yrs to 2013

Source:
Informa Telecoms
& Media

27

Challenges: Survey

N>2000

28

Partnerships are of Increasing Importance

Direct value creation
Attract new customers
Boost uptake of new technology (LTE)
Upsell data plans
Indirect value creation*
Increase in brand value
Reduce acquisition costs
Reduce churn
Operators are looking to monetise:
Connectivity
Billing Capability
QoS / Policy Control
Retail / Advertising Footprint
Large Customer Base
Customer Data
Security Mechanisms
29

Example: Vodafone in
the UK partners with
Sky Sports and Spotify
for its 4G offering.

UK Mergers - Operators

30

Telco Strategy Technologies

All material is Copyright Informa Telecoms & Media

Where will Growth Come From - Technologies

32

Source: Informa Telecoms & Media

Which Application(s) are Driving You to LTE?

1.2%
1.2%

3.1%

Video Services

10.4%

Peer to Peer File

Sharing
Web Browsing

6.1%
2.5%

Audio Streaming
75.5%

Social Networks
App Downloads

33

LTE Advanced

34

Deployments Continue
Carrier Aggregation most activity
Limited number of user devices

Benefits of WiFi

N>2000

35

Total RAN Capacity Density Small Cells

36

Source: Informa Telecoms & Media

Digital Services, B2B and Innovation

All material is Copyright Informa Telecoms & Media

Digital services and business models

OTT
voice
Musi
c

OTT messaging
TV and
video

Game
s

B2B2C wholesale

B2C

B2B

Commerce (incl) carrier

billing
Payments, financial services, insurance

B2B
offers
Advertisin Big
g
data
Clou Securit
revenue
growth
d
y
enablement

B2C offers
revenue
Consumer cloud &
storage
protection
Connected
home

M2M and Internet of Things

Healthcar Transportatio Educatio

n
e
n
Retai Public sector
Automotive
l
38

Digital Service Categories

39

Who gets the value?

2-3% of mobile operator
revenues in 2012, rising to
3-4% in 2013

Third parties will

capture more
than 80% of total
digital revenues

40

Source: Informa Telecoms & Media

Defining the Internet of Things

Source: Ovum

The Internet of Things (IoT) is expected to encompass billions of devices by 2020, with a market set to be
worth trillions of dollars in revenue, but for the moment, take-up remains limited
A key barrier to growth is the limited interoperability between devices and ecosystems
A number of connection ecosystems are being created:
Qualcomm is championing its project: AllJoyn
Panasonic and smartphone maker Xiaomi: AllSeen Alliance
Intel ,Dell, Samsung, and Broadcom : the Open Interconnect Consortium.

41

Global M2M connections by vertical

35,000,000
Business Services

30,000,000

Education

Energy & utilities

25,000,000
Finance & insurance
20,000,000
Goverment

15,000,000

Healthcare

Manufacturing
10,000,000
Retail & wholesale
5,000,000
Transport

2012

42

2013

2014

2015

2016

2017

2018

2019

Other

Impact of OTT IoT attached devices

43

Proliferation of OTT attached-devices, new usage patterns created

by RF/Bluetooth/Cellular/WiFi/LAN IoT
Impact on network signalling: can carriers monetise OTT IoT?

Big Data Analytics - Usage Cases

Marketing Analytics

Customer Care & CEM

Operational Efficiency

Data Monetisation

44

Source: Informa Telecoms & Media

Summary

All material is Copyright Informa Telecoms & Media

Module Summary

46

A digital world things are changing!

Facts and figures huge growth & video
dominates traffic
The changing role of the telco in the Internet era
telcos are accepting their redefined role
Making sense of new opportunities in the evolving
digital economy telco as enabler
The customer view they experience telecoms
through their device
Telco strategies
Fixed connectivity
Mobile connectivity (2G to 4G LTE),
partnerships and enabling 3rd parties
Business models and partnerships things are
getting interesting B2B is important, Innovation
is key

Thanks for Attending

All material is Copyright Informa Telecoms & Media

Telecoms Academy - Our Programmes

Informa Telecoms Academy

48

University Accredited Programmes

Classroom, Live on Web, On-Line
Learning Modules, Business Simulations,
Virtual Campus, Assessments
Public & Customer-Specific

School of Telecoms Management

Postgraduate Certificate in Advanced

Telecoms Management

Advanced Telecoms Management

Series

Telecoms Mini MBA

Commercial, Leadership & Marketing

in Telecoms

School of Advanced Communications

Technologies

Telecom s Foundation Programmes

Technologies Explained

In-depth Engineering Training

Distance Learning Diploma Programmes

www.telecomsacademy.com
email: [email protected]
General & In-house Training:+44 (0) 207 017 4144