welcome and introduction: key challenges for … and introduction: key challenges for operators in...

MENA Summit 2013: Enabling innovation, driving profitability Analysys Mason Limited 2013

Welcome and introduction: key challenges for operators in the next 5 years

MENA Summit 2013:

Enabling innovation, driving profitability

6 November 2013

EVENT PARTNERS:

Welcome and introduction:

key challenges for operators

in the next 5 years

Fiona Glennon


Welcome and introduction: key challenges for operators in the next 5 years 2

09:1509:45 Welcome and introduction: key challenges for operators in the next

5 years

Presenter: Fiona Glennon, Managing Director, Analysys Mason Research

09:4510:30 Connected consumers in 2013 and beyond how device take-up

and network evolution drives service change, and the outlook for the

MENA region

Presenters: Ronan de Renesse, Principal Analyst, Mobile Consumer Research, and

Karim Yaici, Analyst, The Middle East and Africa

10:3011:15 Building a profitable network to deliver exceptional customer

experience: LTE strategies

Presenter: Franck Chevalier, Manager, Analysys Mason Consulting

11:1511:45 Break

11:4512:30 Addressing cost and customer experience transformation challenges

for Middle Eastern operators

Presenter: Erik Almqvist, Partner, Global Head of Operational Consulting

Agenda for the day [1]



12:3013:15 Breakout streams choose one to attend:

Customer experience management: developments, opportunities, and

supporting technology and software strategies

The operator strikes back: how service providers can counter the OTT

threat and maximise revenue opportunities from OTT services

13:1514.15 Lunch

14:1515:00 Industry panel: Successful service provider strategies in the age of LTE

and new digital services

Moderator: Erik Almqvist, Partner, Global Head of Operational Consulting

15:0015:45 The big data business model opportunity and key success factors

Presenter: Justin van der Lande, Senior Analyst, Analytics Software Strategies

15:4516:15 Break




16:1517:00 Breakout streams choose one to attend:

Mobile Internet trends in MENA: results from our survey

The impact of real-time network analytics on making faster, more

informed business decisions

17:0017:15 Round-up: summary of the day

Presenter: Fiona Glennon, Managing Director, Analysys Mason Research

17:1519:15 Drinks and canaps




Global telecoms market outlook

Five key challenges for telecoms operators

Key implications



Telecoms revenue will grow more slowly during 20132018: fewer expansion opportunities, falling prices

6

Global telecoms retail revenue by service

0

200

400

600

800

1000

1200

1400

1600

18002009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Reta

il re

venue (

US

D b

illio

n)

Business networkservices

Fixed broadband andIPTV

Fixed voice andnarrowband

M2M

Mobile broadband

Mobile handset data

Mobile messaging

Mobile voice



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300

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Mobile handset data will drive growth, M2M will grow fastest, core voice and messaging services decline

7

Global telecoms retail revenue growth by service (USD billion), 20122018



Emerging AsiaPacific will overtake Western Europe by 2018, while MENA revenue will grow at 4.6% CAGR

8

Retail revenue CAGRs by region, 20122018 Retail revenue growth by region USD billion,

20122018

6.4%

5.9%

4.6%

3.4%

1.5%

0.4%

0.1%

0.6%

1.7%

SS

A

EM

AP

ME

NA

LA

TA

M

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AP

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0

20

40

60

80

100

120

140

160

180

EM

AP

LA

TA

M

ME

NA

SS

A

DV

AP

NA

CE

E

WE

Glo

bal





Key implications



Five key challenges for network operators and the telecoms industry in 2013 and beyond

10

Driving subscriber and revenue growth

Protecting core service

revenue

Understanding and improving the

customer experience

Maximising financial performance

Innovation strategies: positioning for the

digital economy



Active SIMs in personal devices will outstrip the worlds population by 2016, and 20% of SIMs will be 4G by 2018

11

Global mobile connections by technology generation, and 3G and 4G share of total SIMs (excluding M2M)

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

1

2

3

4

5

6

7

8

2009

2010

2011

2012

2013

20

14

2015

2016

2017

2018

Share

of

tota

l S

IMs

Connections (

bill

ion)

2G 3G 4G 3G share of total SIMs 4G share of total SIMs



Monetising growing demand for fixed broadband usage is a key opportunity for service providers

12

Usage to grow by at least 35% CAGR.

Drivers: OTT video on primary sets; tablets replacing secondary TVs.

2018: tablets approaching 50% of all fixed broadband traffic in richest economies.

Lower-income HHs consume more.

Average Internet usage on fixed broadband

0

50

100

150

200

250

300

Middle Eastand North

Africa

WesternEurope

NorthAmerica

Usage

(G

B p

er

mo

nth

pe

r co

nn

ectio

n)

2012

2018

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=hZW0a0--Kn1VPM&tbnid=i-HIY47cbkCiHM:&ved=0CAUQjRw&url=http://www.digitalspy.co.uk/tech/news/a465636/youview-looks-to-future-after-rocky-past-feature.html&ei=pLJOUoqtN4mg7AbLmIDIBw&bvm=bv.53537100,d.ZG4&psig=AFQjCNF8Zaa6wDJHCQ9EorLGvrlYJMqM-w&ust=1380975640908615http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=tI--PMQsjCxDsM&tbnid=-J8Fp3QmlzwfIM:&ved=0CAUQjRw&url=http://www.techtricksworld.com/2013/04/tablet-market-hold-for-google.html&ei=fbNOUr-uNIrPhAeV6oGICA&psig=AFQjCNHTOJ4Az8biwI1Rb0LEJMKi7TQVWw&ust=1380975858984238



Five key challenges for the telecoms industry: protecting core service revenue

13



revenue


customer experience



digital economy



OTT adoption is becoming significant and impacting core revenue particularly in certain markets/age groups

14

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Egypt SaudiArabia

UAE Kenya Nigeria SouthAfrica

Perc

enta

ge o

f re

spondents

% respodents with smartphone % respondents with featurephone

OTT services have become more popular as

their reach extends to the most basic phones

80% of respondents

aged 1834 used OTT

communications services

Penetration of OTT services on mobile, by type of mobile phone and country

% respondents with smartphone % respondents with feature phone



Five key challenges for the telecoms industry: understanding and improving the customer experience

15



revenue


customer experience



digital economy



Customers and suppliers perceptions of customer experience may not align

Customers form perceptions when

interacting with employees, IT

systems and services at different

lifecycle phases.

The complexity of the ecosystem

makes it difficult to assess how the

customer experience is really playing

out.

Customer experience measurement

tools can be:

Outside-in: to measure and report

perception of products and

services.

Inside-out: internal performance

metrics and subscriber data.

16

The complexity of the customer experience

ecosystem

Over-the-

top (OTT)

providers

Retail

distributors

and

partners

Communications

service providers

(CSPs)

Mobile device

manufacturers



Five key challenges for the telecoms industry: maximising financial performance

17



revenue


customer experience



digital economy



Operators face increasing pressure on financial performance; bringing down opex is critical

Operators must focus on

improving their operating

margins

Operating costs have increased

more rapidly than revenue.

which in some cases may be

helped by increased capex.

Disciplined approach to capex over

the past 5 years may be holding

back operational changes.

Focus on incremental changes has

delayed transformations (e.g.,

network and systems consolidation

initiatives) that could reverse

margin erosion.

18

Telecoms market financials, worldwide, 20082012

0%

10%

20%

30%

40%

50%

60%

70%

0.0

0.5

1.0

1.5

2.0

2.5

2008 2009 2010 2011 2012

Pe

rcen

tage

of

reve

nu

e

US

D t

rillio

n

Revenue

Opex

EBITDA

Capex

Opex margin

EBITDA margin

Capex margin



Capex decisions are becoming more rational: LTE deployments arent characterised by deployment fever

Measuring capex efficiency through RoI is

a key metric for the industry.

LTE deployments are generally being

driven by clear market and business

considerations - unlike the move to 3G, no

deployment fever in most countries.

Most CSPs want to maximise use of 3G

infrastructure, putting in LTE only where

required.

LTE has some immediate RoI potential:

supports multiple technologies and

diverse spectrum holdings

helps position for technology leadership

useful for high-value segments and

possible fixedmobile substitution.

But longer-term monetisation depends on

driving demand more broadly.

19

0

5

10

15

20

25

30

35

40

45

Ce

ntr

al a

nd

Ea

ste

rnE

uro

pe

De

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lope

d A

sia

P

acific

Em

erg

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Asia

P

acific

Latin

Am

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Mid

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Operational

Planned

Operational and planned LTE networks, by region,

July, 2013



Five key challenges for the telecoms industry: innovation strategies positioning for the digital economy

20



revenue


customer experience



digital economy



How large are these opportunities? Telefnica Digital forecasts robust growth from the digital economy

21

Telefnica Digitals revenue targets for 2015 [Source: Telefnica]

1.2 1.5

1.11.3

0.8

1.10.5

0.8

0.5

0.7

0.3

0.6

0

1

2

3

4

5

6

Minimum Maximum

Revenue (

EU

R b

illion)

E-health

Security and cloud

M2M

Financial services andadvertising

Subsidiaries

Content distribution



Third-party players are spreading throughout the telecoms value chain and threaten operator plays

Google, Apple, Amazon, Facebook

and a host of other players continue

to stretch across the telecoms value

chain.

Their advantage:

nimble, open to experimentation,

no or limited underlying network

costs, ecosystem, cash.

22

Googles activities across the mobile value chain

Apps &

services

Third-party

content

Android-

powered

devices

Devices with

other operating

systems

Google apps and

services

Third-party apps

and services

Google advertising Advertising

Content

Apps and

services

Operating

systems

Devices

Google Play

content and

YouTube



Third-party players are spreading throughout the telecoms value chain and threaten operator plays

Google, Apple, Amazon, Facebook,

Yahoo! and a host of other players

continue to stretch across the

telecoms value chain.

Their advantage:

nimble, open to experimentation,

no or limited underlying network

costs, ecosystem, cash.

The telco advantage:

the network, billing relationships,

untapped customer data, location

information.

23

Googles activities across the mobile value chain

Apps &

services

Third-party

content

Android-

powered

devices

Devices with

other operating

systems

Google apps and

services

Third-party apps

and services

Google advertising Advertising

Content

Apps and

services

Operating

systems

Devices

Google Play

content and

YouTube

Network





Key implications



Key implications: to drive profitability in the MENA region, operators must be efficiently bold

Drive innovation

digital economy services, new core

service pricing structures, new

channels, new partnerships and

business models.

Plan and execute on

efficient investment

in growth areas, in network

deployment, in key enabling

systems and software.

Enable future differentiation:

understand and address speed and

impact of changes in:

customer behaviour and experience.

technology and device evolution.

25

Driving subscriber and revenue

growth


revenue

Understanding and improving

customer experience

Maximising financial

performance

Innovation strategies for the digital economy

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