Carriers & OTTs

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  • 1. Carriers & OTTs Emilio SepulvedaMegève, bics Carrier EventFebruary 2012
  • 2. 2009-2012 Where was the most value created?Market value creation by sector 1/1/09à1/1/12(1) Other Internet (10 companies: +$112Bn) eCommerce (11 companies: +$125Bn) (+319Bn) Semiconductors (56 companies: +$164Bn) (+$70Bn) Other Mobile Social/Local (Intel, Qualcom, ARM: +$95Bn)(Facebook, Baidu, Groupon, LinkedIn, Mail.ru, Pandora, Tencent: +$164Bn) Tech Bellwethers (Google, IBM, Microsoft, Oracle, HP, Cisco: +$284Bn) Software Mobile (77 companies: +$184Bn) Total value creation $1,517 Bn Source: Capital IQ, Morgan Stanley Notes: (1) Comm Equipment and device manufacturers (Nokia, RIM, Alcatel-Lucent, HTC, Juniper, ZTE) are not included in the chart as these sectors had a negative value creation of ($43Bn), wihich corresponds to a (2,9%) of total value creation 2
  • 3. What does the ecosystem look like? Apps/OTTs Telcos Handsets Global, no ties to Local silos, tied to Global, no ties to Infrastructure or OS Infrastructure infrastructure 3
  • 4. But  communications  is  the  operators’   core  business  …  much trouble? Are OTT causing Which option best reflects your opinion on the impact of smartphone Global mobile revenues, voice vs. data, 2009-2016 adoption on usage of operator voice & messaging services? Users are heavily substituting Users are voice & moderately messaging substituting services, 13% voice & messaging No material services, 41% impact, 6% No material impact today,•  Revenue erosion comes from local market but we expect users to substitute in competition, not OTTs, and regulators the future,•  OTTs only accelerate changes and leverage 40% arbitrage opportunities Source: Informa Telecoms & Media Source: Informa Telecoms & Media www.informatandm.com ©Confidential 4
  • 5. Is‘MadeShare from 5% Five Years Agoat all? it about voice Systems = 64% in USA’ Smartphone Operating Smartphone Operating System Market Share, 2005 vs. 2011E 100% Market Share of Smartphone OS 80% Other OS 60% iOS Android Windows Mobile 40% BlackBerry OS Linux Nokia Symbian 20% 0% 2005 2011ESource: Morgan Stanley Research, Gartner.Copyright 2011. All rights reserved. Source: Mary Meeker 45 5
  • 6. Should we invest in RCS/IMS… platforms? Where is the business rational? Better partner with OTTs selectively•  Zero billion incremental revenue opportunity•  Harvesting is OK, but why invest?•  Only winners are vendors 6
  • 7. So what are the opportunities for us, telcos? Whatkind of platform/OTT are we? Source: Mary Meeker •  Experience as a Service/Experience delivery network •  We are an infrastructure platform •  No one can get closer to the end user 7
  • 8. Are we properly organized to overcome? Chairman & CEO César Alierta COO Julio Linares Telefonica Digital Latam Europe Global Resources Mathew Key Santiago Fernández Valbuena José M. Álvarez-Pallete Guillermo Ansaldo•  Centralize decisions on services, technology, VC•  Deploy centralized platforms and maximize synergies•  Let local units take care of market approach and local positioning 8
  • 9. What about us, wholesalers? Any opportunity? E2E QoS Behave as Higher wholesale availability customer and security Control and New Visibility Services New OTT model Business enables Models direct access Evolve from to end middlemen customers to enabler 9
  • 10. …and allows us to get rid of middlemen and enforce Cascade payment modelsMoney and Traffic flow Marketing Content Ingestion Delivery Advertisers Enablers Agencies Providers Carriers Carriers Broadband Users Example: Content ecosystem Source: Chetan Sharma Telefonica International Wholesale Services
  • 11. What is the value we add? Closer to the Customer EfficientNetwork aware & Content aware QoS SecurityNo IncrementalCost for a Better ValueE2E Responsibility 11
  • 12. Summary•  OTTs is accelarating changes in users behaviour•  This change in behaviour means a shift from voice revenues to data revenues•  Real threat to core revenues come from local competition in broadband services, fixed an mobile (and regulator activities…)•  OTT in voice and messaging is a zero billion opportunity, but the OTT model itself offers lots of opportunities, even for wholesalers•  We must rethink what are our actual core assets, how we leverage them and what value can be added as a wholesaler 12
  • 13. Thank You !More questions?emilio.sepulveda@telefonica.com 13