Outcomes of the mobile world congress press conference 2016

This presentation deals with the mega trends underlying the Telco and High Tech field: the evolution of the industry is blurring the limits between players in the market leading telcos to adapt their business model and find growth engines in new industry verticals. To win on this market, Telcos need to leverage their assets such as their proprietary data and brand trust while being challenged by new hurdles such as cybersecurity.

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Outcomes of the Mobile World Congress Press Conference 2016
Industry lines are blurring between players in the market...
Telefonica AT&T 103.05 T-Mobile Vodafone Orange

New Player Sigfox

• Apple SIM

• Russia (MTS, Megafon) • Orange (PIXI, KLIF)

• Pay TV • Gaming and Video • Mobile Money

• Voice and Messaging (WhatsApp, Skype…) • Infrastructure (Google Loon, Fiber, Microsoft WiFi…)

Device manufacturer
Apple Huawei Samsung

• Apple TV, Apple Pay, Maps • Samsung Tizen

OTT / Digital players
Google Facebook Microsoft Skype Netflix Spotify WhatsApp SkyGo Deezer

• Google Nest, Google Car • Amazon Firephone

Sources: PwC’s 18th annual Global CEO Survey 2015, Strategy& Analysis

...leading Telcos to adapt their business model in response to competition from OTT players 1
Find new areas of growth outside of core business


Differentiate by leveraging customer data both internally and externally


Embrace OTT growth to drive data consumption through content offering



56% of CEOs saying competition will come from another industry 16% of CEOs expect competition to come from Telcos

65% of Telco CEOs consider Data Mining & Analysis capabilities as strategically important for their organization

71% of Telco CEOs are extremely concerned or somewhat concerned by the threat of new entrants in their industry

26% of Telco CEOs plan to initiate a domestic M&A in 2016 24% plan to initiate a cross-border M&A in 2016

They seek diversification in new industry verticals
Estimated global addressable market for Telcos, Bn USD-2020
67 11-33 36

18 10 7 Smart Home Smart Cities 6 Utilities

3 Industry 4.0 Transportation

Mobile Financial Services


Connected Car

Telcos' legitimacy to play a significative role

Sources: IDC, Ovum, Technavio, MarketsAndMarkets, GSMA, Grand View Research, Navigant Research, Mind Commerce, Strategy& analysis

Mobile Financial Services Define a new way of banking

eHealth Tackle market concerns in well-being wearable market

Connected Cars Relevant in entertainment and connectivity

Evolution of Mobile Financial Services
Banked population Developed countries Mobile banking NFC based payments

Most promising eHealth markets for Telcos
Tele-diagnostic Disease Management

Estimated Market potential for Connected Car technologies (€bn)1 2020
∑115 Safety 47


Remote patient monitoring Autonomous 36 Driving 10


∑40 6 2

4 4 5 Mobility Management

Mobile commerce

Money transfers in developing countries

Well-being wearables

13 Entertainment

7 Vehicle 7 Management Well-being

Unbanked population Emergent countries

Telco Key Differentiators in Mobile Banking
Customer knowledge Best-In-Class Customer Journey Lower fees and product bundling • Credit scoring based on big data • Geolocalized discounts • Look and Feel • Leverage mobile to eliminate pain points • Bundle with Telco services • Lower cost due to lower structural cost & revenue synergies

Well-being wearables market state
Consumers have not embraced health wearable technology in large numbers, but they are interested • 10% own a wearable and wear it everyday Most consumers do not want to pay much for their wearable devices • 38% would pay $100 for a fitness band • 68% would wear employer-provided wearables Consumers remain concerned about privacy • 23% of consumers want to share their health information • 82% only felt concerned that wearables would invade their privacy

Opportunities for telcos
Entertainment • Telcos are already providing entertainment solutions • Requires auto knowledge – OEM specific • Relevance in connectivity only • Requires specific technology • Low relevance but might communicate with eHealth and Smart Home offerings • Relevance in connectivity

Safety Autonomous driving Vehicle management Mobility management Well-being Home integration


Passenger vehicles only excluding light commercial vehicles Sources: Strategy& analysis

In these new industries, Telcos should play new roles

• Keep a dominant position in the connectivity space • Play a central role in the distribution of new service offerings • Leverage brand trust to reinforce data protection

Telcos will leverage their proprietary data to differentiate
er nally Ext
• Weve delivered couponing campaigns for Tesco and drove 40k customers to retail stores • Orange’s Flux vision analyze visits & mobility behaviors for Bouches-du-Rhône Tourisme • Vodafone Analytics improve and balance the flow of traffic in London by analyzing movement on the different types of transport

Key challenges
• Improve data quality across all IT systems • Develop enhanced Data Analytics capabilities • Manage confidentiality issues • Detect and mitigate Cyber security threats

• Life cycle-based behavior churn and profit forecast modelling decreased attrition by 50-60% • Network optimization based on data consumption analysis and customer geo-localization — network quality improvement • Network operations enhancement through identifying potential BTS failure due to defective batteries caused by temperature decrease


e r n a ll y

Telcos will likely encounter new types of cybersecurity risks
Increasing cybersecurity threats
45% Increase in detected security incidents in Telcos between 2014 and 2015
Most-cited sources of incidents
38% 33% 30% 25%

Strategic initiatives adopted by Telcos
62% Have an overall security strategy 58% Employee security training 54% Conduct threat assessments 58% Have a CISO in charge of security 57% Have security standards for 3rd parties 54% Monitor actively security intelligence

Cybersecurity – an opportunity

• Cybersecurity can create competitive advantages by boosting customer trust in brand and reputation, giving the company a leg up in entering new industries • Some Telcos like Singtel have already entered the cybersecurity business

Former Current Employees Employees Hackers


Sources: Global State of Information Security Survey 2016, Strategy& analysis

Consolidation is another way for telcos to adapt their business model
Major M&A Deals from 2011 – 2015, In €bn
Vodafone / Cable Wireless Worldwide BT / EE 3 Ireland - O2 America Movil / KPN Telefonica Deutschland / Eplus Vodafone / Kabel Deutschland

1.3 16.5 2.6

Current trends
FMC convergence observed in all markets A second trend is local mobile convergence


7.7 8.6

Altice - SFR

Orange - Jazztel



Free / Orange 3 / Orange

Further international expansion possible On average, number of players per market expected to be reduced to three

3.4 7.4 7.2
Vodafone - ono Altice / Portugal Télécoms


VimpelCom / Wind


Local mobile consolidation

International expansion

Sources: Web search, Strategy& analysis

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