vision 2013 - telcom asia industry insights - presentation 20121228vfinal

7/30/2019 Vision 2013 - Telcom Asia Industry Insights - Presentation 20121228vfinal

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The information is strictly linked to the oral comments which were made at its presentation, and may only be used

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is strictly forbidden and may be unlawful.

Vision 2013: Key Trends,Challenges, andOpportunities

Telecom Asia 2013 Insights Summit

Kuala Lumpur, 29th Nov 2012


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Contents

About Value Partners

Key trends, challenges and opportunities in 2013

Q&A


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Value Partners: a global management consultancy

An international playerHeadquartered in Milan, with offices in 10 countries,

including double-digit growth rate markets

A strong team of professionals

25 partners, ~250 professionals, 23 nationalities

An excellent track recordConstant growth over the last 18 years

A large and loyal customer baseOver 350 client served in the past three years, 60% of

which have been with us for over 8 years

The first to successfully integrate business andIT expertise


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Our TMT practice has advised the leading TMTorganizations regulators and investors around the world

Telecoms clients Media clients Investment clients in TMT

SouthernCapital
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In Asia Pacific, we have an extensive client base withpresence in all major markets

Selected Asia Pacific clients

Hong Kong

ChinaJapan

Taiwan

Singapore

Vietnam

Philippines

New Zealand

Macau

India

Nepal

Indonesia

Thailand

MalaysiaSri Lanka

Australia

Office

Bangladesh
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Value Partners TMT practice has assisted operatorsacross the entire operator lifecycle

Strategy

MarketingdistributionandCustomercare

Network & IT

Organizationand Others

License bidding support

Entry strategy definition

(regional vs. national,

positioning, ...)

Business planning

Launch commercial plandefinition and implementation

support

Distribution and customer

care dimensioning and

footprint definition

Launch portfolio definition

VAS operational model

implementation (e.g. revenue

share, delivery platform)

Network architecture andeconomic guidelines definition

Support in the definition of

CRM, provisioning,

assurance, billing processes

and systems

Organization and process

definition and dimensioning

Regional expansion strategy

definition

Due diligence and

acquisition support

Post merger integration

Multi channel strategy Customer segmentation and

CRM strategy

Shock campaign

implementation

Services and offers

roadmap definition

CRM and Marketing

campaign management

Assessment and support ofthe end-to-end IT

operational model

Definition of infrastructure

integration plan

Service center development

Performance Monitoring

Dashboards

Organizational restructuring

Technological migration/

evolution strategy (CDMA vs.

GSM; UMTS vs. WCDMA)

Convergence strategy definition

(FM; Media + Telecom)

Support in launch or innovativetariff plan (e.g. micro

segmented, convergence)

Development of VoIP offer

Launch of multimedia

innovative services (e.g. user

generates content)

Integration of fixed-mobile

customer care processes and

systems

Technological (GSM/CDMA)overlay support

Definition of Infrastructure

convergence plan

IT evolution roadmap based on

business objectives

Regulatory strategy, planning

and lobbying

Business model review (e.g.

complete network outsourcing)

New revenue streams

identification (e.g. MVNO,

analysis; launch media

company,...)

Brand management strategy Tariff plan portfolio review and

customer base migration

Client lifecycle management

strategy

Sophisticated loyalty program

Churn and number portability

management program

Customer Care innovation with

Human Digital Assistant

Network/IT outsourcingstrategy

Network infrastructure sharing

with other operators

Infrastructure optimization

support

Business processes

outsourcing

Antifraud/revenue assurance

processes

Start-up Growth andconsolidation Technologicalevolution Valueextraction

Selected Asia Pacific clients


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Contents



Q&A


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Going forward, the forces re-shaping the globaltelecommunications value chain are expected to intensify

Margin squeeze oncore telco business

Forces reshapingtelecommunications

Traditional andOTT voice &

SMScompetition

threat

Rise of internet ofthings

Paradigm shiftfrom walk &

talk to sit &

play

1

2

4

3


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Deploying LTE has been one of the ways to keep up withdata demands and deal with pricing pressures

Source: Value Partners/Telecom Asia perspectiveLTE: What happened and whats next; Press reports, LTE Maps, operator websites

LTE has already been commercially deployed by morethan 50 operators

in more than 30 countries

with another 300 operators planning to launch LTE

services in next 2-3 years

Commercial LTE deployment

Planned/In trial countries

Top 15 LTE operators bysubscriber base

NON EXHAUSTIVEGlobal LTE deployments as at June 2012


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Taking a closer look at the LTE first movers show revealsome interesting observations and lessons

Source: Value Partners/TelecomAsia perspectiveLTE: What happened and whats next, Informa, press reports, LTE Maps, Value Partners analysis

Top LTE operators by subscriber base

Ranking Operator LTE Subscribers(000) LTE subs as %of total subs Network coverage Bands

Jun-12 Dec-11 Jun-12 Dec-11 Jun-12 Dec-11 Jun-12 Dec-11 Jun-12 Dec-11

1 1 Verizon Wireless 10,900 5,330 9.7% 4.9% 67% population 50% population 700MHz 700MHz

2 5 SK Telecom 2,933 500 10.8% 1.9% Nationwide coverage Capital city, Seoul 800 MHz

1800 MHz

800 MHz

1800 MHz

3 3 AT&T Mobility

USA

2,838 747 2.7% 0.7% 24% population 20% population 700 MHz

1.7/2.1 GHz (AWS)

700 MHz

1.7/2.1 GHz (AWS)

4 2 NTT DoCoMo 2,736 1,139 4.5% 1.9% 30% population, 70% by end

2012

30% population 1.5GHz 1.5GHz

5 4 LG U+ 2,040 557 20.6% 5.9% Nationwide coverage 82 cities 1800 MHz 1800 MHz

6 N.A. KT Corp 863 N.A. 5.0% N.A. Nationwide coverage N.A. 1800 MHz N.A.7 5 Metro PCS 743 500 8.0% 5.3% 14 metropolitan areas 14 metropolitan areas 1.7/2.1 GHz (AWS) 1.7/2.1 GHz (AWS)

8 11 Rogers Wireless

Communications

600 20 6.4% 0.2% 35% residential areas, 60%

population by end 2012

8 million or 24% population 1.7/2.1 GHz (AWS) 1.7/2.1 GHz (AWS)

9 7 Telstra 383 100 2.6% 0.8% 100 regional and metropolitan

centres

80 regional and metropolitan

centres

1800 MHz 1800MHz

10 N.A. Yota 350 N.A. 100.0% N.A. 3 cities, 5 cities by Sept 2012 N.A 2.6 GHz 2.6 GHz

11 9 Bell Wireless

Affiliates

224 50 3.0% 0.7% 16 million or 48% population 8 million or 24% population 1.7/2.1 GHz (AWS)

2.6 GHz

1.7/2.1 GHz (AWS)

12 8 Vodafone D2 193 88 0.6% 0.3% 40% pop coverage 1,500 municipalities at end of

May 2011

800MHz 800MHz

13 11 TeliaSoneraSweden 150 20 2.3% 0.3% 61% population 161 cities around Sweden 800 MHz 2.6 GHz 2.6 GHz

14 10 T-Mobile

Germany

85 47 0.2% 0.1% 50 cities, 1,800 rural areas 1,800 rural areas 800 MHz

1800 MHz

800 MHz

15 14 Tele2 Sweden 70 6 1.9% 0.2% 60% population 30% population 800 MHz

1800 MHz

2.6 GHz

2.6 GHz

17 13 Polkomtel 60 10 0.4% 0.1% 28% population 22% population 1800 MHz 1800 MHz

19 14 T-Mobile Austria 20 6 0.5% 0.1% 12% population 7% population 2.6 GHz 2.6 GHz

21 14 Telia Denmark 15 6 1.0% 0.4% 75% population 60% population 2.6 GHz 2.6 GHz

Observation 1:

Very very rapidadoption from 9m to25m subs in just 6months

Observation 2:

Very very fast networkrollout possiblenationwide coveragein 6 mths in Korea

Observation 3:

League leaders using lowerbands 700-800MHz and1800MHz; even earlydeployments on 2.6GHz areadding lower bands


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Successful LTE first-movers have incorporated volume-based pricing plans to drive LTE adoption whilstmanaging network usage

Source: Value Partners/TelecomAsia perspectiveLTE: What happened and whats next, Informa, press reports, Value Partners analysis

Commercial LTE offering from LTE first-movers

Tariffstructure

LTE priced at premium most European operators and positioned as

extension to current mobile internet offering

Volume-based pricing with no differentiation between 3G or LTE andbucket plans American and Korean operators - access to LTE speedsis purely dependent on the subscriber device and network coverage

LTE as value-added service for a flat fee M1 in Singapore withvolume cap applied across both 3G and LTE

Service is currently being offeredFREEto new iPhone 5 subscribers

Serviceoffering

Monetization but at expense

of slower take-up

Key factor in driving LTE

adoption US and Korean

operators most successful

Leverage LTE hype while

managing user expectation

of imperfect technology

Mainly data/dongle offering most operators with faster speeds asmain selling point

Bundled with exclusive contentSKTs T freemium offering whereattractive content, e.g., Korean dramas, apps, music, etc, is given free

with LTE plans

Simplest and most straight-

forward

Killer application in driving

adoption15% of SKTs newcustomers cite T freemium as

reason for taking up LTE

Devices

Mainly data/dongle offering most European operators with limited

handset offerings

Wide variety of handset and tablet offerings Verizon Wireless with~20 LTE smartphones and ~10 LTE tablets at similar price points to

3G phones

Killer device i.e., iPhone 5 and the new iPad

Simplest and most straight-

forward; may be due tofrequency limitations

Attractive, highly desirable

and/or affordable handsets

and tablets device not longer

barrier to adoption

Operators with strong take-up are those who offer at least 2 of the 3 elements non-premium tariff +attractive device (US operators) or non-premium tariff + attractive content (Korean operators)


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Trends of declining ARPU & EBITDA margins are becomingapparent as markets saturate and competition intensifies

Source: WCIS+, Value Partners analysis

Declining ARPU trend as markets saturates Declining EBITDA % as competition intensifiesARPU as % of Dec 2010 ARPU EBITDA margin as % of Dec 2010 EBITDA margin

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

Dec 10 Mar 11 Jun 11 Sep 11Dec 11Mar 12 Jun 12 Sep 12

3 Indonesia Indosat Axis Telkomsel

XL Axiata MobileOne SingTel StarHub

Celcom DiGi Maxis Globe

Smart AIS DTAC True Move

65%

75%

85%

95%

105%

115%

Dec 10 Mar 11 Jun 11 Sep 11Dec 11 Mar 12 Jun 12 Sep 12

Telkomsel XL Axiata MobileOne Celcom

DiGi AIS DTAC


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with market leaders in several markets showing signsof declining MOU


Declining MOU trend in market leaders

Total MOU as % of Dec 2010 ARPU

70%

80%

90%

100%

110%

120%

130%

Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12

Indosat Telkomsel MobileOne SingTel StarHub

Celcom DiGi Maxis AIS DTAC


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SingTel is attempting to diversify into mobileadvertising, m-commerce and digital services

Source: Company reports, news clippings, Value Partners analysis

Case studySingTels strategies to seek alternative revenues streams

Enter mobile advertisingby acquiring capability and realestate

- acquired Amobee (mobile advertising agency), Pixable (onlinephoto aggregator) and invested in 2359 Media (rich mediacreative agency)

Enter m-commerce/payments space starting with m-remittance and further developing NFC

- launched mRemitin collaboration with Globes GCASHtargeting Filipino workers in Singapore

- part of consortium to launch nation-wide NFC-based mobilepayment system in Singapore

- mobile wallet virtual holder for cards, coupons, etc - beingdeveloped

Acquire and develop digital services and content

- developed and launched a number ofconsumer digitalservices deF!nd (concierge), skoob (ebook), IloveDeals(app aggregating credit card offers), Amped (music service),Loop & Meet (events site), etc

- acquired Hungrygowhere (food review site) to strengthencontent on InSing.com portal


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while Telefonica is focusing on identifying anddeveloping innovative services with the target ofachieving EUR 5bn of digital revenues by 2015

Case studyTelefonicas strategies to seek alternative revenues streams


Focus on Digital Services and bringing innovative productsand services to market in eight key sectors

- Financial services digital wallets,digital remittances, micro credits &

insurance

- Advertising mobile advertising,location-based services, loyalty

schemes/offers

- Video & Media IPTV, OTT video,CDNs, Terra

- Cloud virtual data centres, SaaS,BPaaS

- M2M transport, utilities, smartindustry, smart cities

- eHealth remote patientmonitoring, tele-consultation, tele-

care, demand and access

management

- Security managed securityservices, clean pipes, mobile & PC

security

- Applications BlueVia, WAC

Invest in or acquire innovative digital services companies

Leverage Venture Capital to seeks out and invest in the best up-

and-coming technology companies and identify tomorrowsopportunities

Has Innovation and R&D arm to connect, develop and deliver thebest digital products for Telefnica

Global digital mediacompany and contentproducer servingHispanic community

Developer APIand SDK provider

IP Telephonysolutionscompany

Spanish socialcommunicationsplatform

Wholesale distribution ofpay TV and internet,exclusive and distinctivecontent production, andthe sale of advertising

UK-based MVNO;pioneered conceptof member-help-member

SIM-only low-costnetwork targeting18-22 year olds inIreland


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16

The variety and volume of internet access devices isexpected to grow exponentially and customers aremoving from walk & talk to sit & play


0

100

200

300

400

500600

700

800

900

2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F 2017F

4G

3G

2G

No.ofmobilesubscriptionsin

ASEAN

(million)

10% 12% 18% 26% 38%7%5%4%2%% 3G+4G

subscriptions 51% 63% 74%

From basic phones andservices

Talking and texting on the goMinimal time spent on device

to feature and

smartphones

Getting info and casual gamingSome time on device time filler

to super smart phones, tablets

and rich content

Watching movies, playing action gamesSignificant leisure time on devices


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17

Philippines SMART has successfully facilitated theemergence of smartphone experience by introducing itsown branded low-cost smartphones

Case study SMART Communications

Netphone product is offered through 2 mobile devices -

Innovative suite of applications under SmartNet brand

The Worlds first Operator-Managed Smartphonewith Wholesale Applications Community (WAC)

widgets

SMART will be able to control mobile user experience

by managing its suite of SMART-branded

embedded software and applications

Allows SMART todrive new services and businessmodels by monetizing WAC widgets,

and offer the same software-managed userexperience across different device price points andmobile platforms, including Android and Brew MP

Netphone 701

OS: Android Froyo 2.2

Qualcomm chipset

Price: PHP 9,900

Samsung Galaxy Y

OS: Android 2.3

Gingerbread

Price: PHP 4,990 through

SMART rewards

As at end 2011, SMARThas sold more than 100KNetphones, making it thebest- and fastest-selling

phone in the companys

history

Customer value proposition

Innovative product features- Easy to use SMART centre

Customer Service Assistant at a

click

- Netphone Messengerfreemessaging and FX Messagingemotive messaging

- Free messenger services to chaton Facebook and Yahoo

- Cloud storage for storing contacts,music, media, etc.

- Browsing features to save from

unintended browsing charges

- Integrated twitter and Facebookaccess through MyGroups portal



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18

while Thailands 3G first mover bundles attractivecontent and applications to maintain its lead over thecompetition

Case study True Move H

Music downloadservice with latestThai and intl pop

Certain tracks

available free to Hsubscribers

Local andinternational channelsfrom True Visions

H subscribers canwatch in HDi for free

Movie-on-Demandservice offering Thai

and international

content

H subscribers get 30free movies a month

Travel review site

Include socialelements - celebrityforum and photo

sharing forum

Local news andcelebrity gossipsite

Include socialelements share anews story forum

Streaming servicefor local radiostations

H subscribers get significantly moreprivileges than regular subscribers



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19

M2M connections within Asia Pacific is expected to grownearly twice as fast as globally...

Projected M2M Connections in APACProjected M2M Connections in selectedAsian countries

Source: Frost and Sullivan, Value Partners analysis

2010 2011 2012 2013 2014 2015

Others

India

Indonesia

Malaysia

Australia

South Korea

Japan

China

117

21

29

42

61

85

CAGR

+41%

0.5

2.3

2011 2015

0.5

2.4

2011 2015

0.5

2.7

2011 2015

Millions Millions

+50% +40% +48%

Driven byTelematics, m-Payments, Tracking

and mHealth

Driven byTelematics, m-Payments and

mHealth

Driven byTelematics,Remote Monitoring,

M-Payments, and

mHealth


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20

primarily driven by smart grid, vehicle telematics,consumer connectivity and bespoke applications

39% 41% 40% 40% 38% 37%

24% 23% 22% 20% 18% 17%

4% 4% 5%6% 7% 9%

4% 5% 5% 5% 5% 5%

4% 5% 5%

5% 4% 4%

7% 8% 7% 7% 7% 7%

5%5%

5% 5%4% 4%

12% 10% 12% 14% 16% 16%

2010 2011 2012 2013 2014 2015

11721 29 42 61 85100% =

Millions

POS/Payment

Security

Remote Monitoring

Track and TraceConnectivity (Consumer)

Vehicle Telematics

Smart Grid

Others*

*Others include remote medical consultation, content and customized applications that do not fall under the categories

Source: Frost and Sullivan, Value Partners analysis

Connecteddevicesexpected to

grow faster thanaverage

VehicleTelematicsandSmart Gridstillbulk of

connections although

growing moreslowly thanaverage

New bespokeM2Mapplicationsare expected toemerge


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M2M is about collaborating to bring appropriatesolutions to the market

Source: NSN, Deutsche Telekom, Current Analysis, Value Partners analysis

+

EE and NSN partner to bringwireless vending machines to theUK using NSNs Vend Me

application

Customized applicationcombiningPOS, telematics, fleetmanagement, and smartadvertising

Partnership combines expertise

Revenue Flow

Customer

Service Flow

SystemIntegrators

ServiceProviders

DeviceVendors

ServiceEnablers

M2M Marketplace

Deutsche Telekom provides a different kind ofconnectivity through its M2M Marketplace

M2M Marketplace connects M2M players

across the value chain and customers to theseplayers

Also acts as a channel for Deutsche Telekom toprovide SIMs

Brings additional revenue stream throughmarketplace subscriptions

Possible through combined efforts ofdifferent members

Sprint in the US alsooffers the same withtheir CollaborationCentre

Recent developments in M2M


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22

more examples of M2M collaborations closer to home

Source: Operators, Current Analysis, Value Partners analysis

Recent developments in M2M (2/2)

Maxis launched Maxis Managed M2M in Feb 2011, the first inMalaysia

Partnered with KiddyTrack to launch child locator service inOct 2011

Web-based self service platform allows bulk SIM customersto log in and manage M2M solutions (device or subscription)

Application Programming Interface (API) for developingcustom business applications

Obtained deals in payphone management, ATM connectivitymanagement, location-based services and fleet managementthrough the platform

M2M

XL Axiata has been active in the M2M and cloudspace by partnering with leading international M2Mand cloud players to bring M2M and cloud services toIndonesia

Wide press coverage creates awareness and drawsbusinesses to XLs M2M offering

Targeted to draw 500,000 subscribers by year end


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Given the high complexity of the value chain, operatorshave adopted a variety of business models

Source: Current Analysis, Operators, Value Partners analysis

Proprietarydelivery platform

Spin-off SBU

Coordination witha 3rd party

Developed and launched its own service delivery platform in 2010

Formed a dedicated M2M focussed team, helping Vodafone to establishposition as the likely go-to-provider of M2M services in EU

Offerspecial tariffs with in-country local pricing within EU 27 countries andsome countries in AP and Africa

Created out of Telenor Sweden M2M BU Telenor Connexion focuses on

international M2M market

Operates a dedicated core network for switching subsequently sold toEricsson and Telenor Connexion is now a pure service provider

Beyondrevenues from data traffic, it chargesprofessional fees arounddesign, test and management of customers products

Exclusive agreement with Jasper Wireless to use its platform capabilities in

Australia, focusing on revenues from transport of M2M data alone

Partnered with Jasper Wireless for its connected device platform and offerslow cost single SIM connectivity with global coverage

Partnerships with Jasper Wireless and regional operators to offer seamlessservices across the region, providing services like data analytics andadvisory

Clearly emerging as a globalM2M partner and alliance

1


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The world is changing - what does it mean for ASEANtelecoms?

Source: Operators, Value Partners analysis

How can technology be usedto reduce bandwidth burden without

hurting revenue? How can LTE be positioned to best extract value from the customerand ourselves to be ahead of the competition?

Defending againstmargin squeeze

What otheralternative revenue streams are worth pursuing?

How should these capabilities be acquired? In-house

development, acquisition or incubation?

Defending againsteroding revenues

from OTT andcompetition

What needs to be offered to customers in terms ofcontent /services and devices to ensure an engaging experience?

How can a seamless always-on anytime anywhere service bedelivered? And with appropriate QoS at reasonable cost?

Preparing for Sit &Play

How best to play in the M2M space? Which part of the value chain?What competencies are needed?

How should these capabilities be acquired? In-house / acquire /partner?

Preparing for theRise of the Internetof Things

4

3 2


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What are the opportunities in 2013? - Some possible ideas

1. Seize the LTE opportunity to re-price data Buildthe foundations for better yield and profitability

1

1. Embrace 3rd-party/OTT services partner them,complement them, integrate them and own them

1. Use Big Data data-directed decision-making toimprove internal efficiency and as revenue stream

2

3


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Contents



Q&A

SIN-AXTne-111115-P27


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Contact information

www.valuepartners.com

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vision 2013 - telcom asia industry insights - presentation 20121228vfinal

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