IE essay application presentation answer to question H.

1. IE GMBA application
What do you believe are the greatest
challenges facing the sector or industry you
would like to specialize in at IE? What role
do you hope to be able to play in this
sector or industry in the medium term?
by Kamen Georgiev

2. Agenda
• Telecommunication industry
• Mobile sector
• Challenges
• Opportunities
• Internet Service Providers
• Challenges
• Opportunities
• My role

3. Mobile sector challenges - PRICE
One company’s churn is another
company’s growth. But with mobile
penetration nearing saturation and:
• Highly competitive market
• Low ARPU (Average Rate Per User)
• Regulatory pressure that drives the
Revenue/EBITDA down
• Decrease in mobile termination rates
• EU to end mobile roaming in 2017
How will the Mobile sector continue to thrive ?

4. Mobile sector challenges –
Bandwidth/Capacity
•Mobile operators implement new generation networks every 5-6 years – from 2G to 3G in
2005 and from 3G to LTE in 2012
•LTE development is a must in order to meet the constant increase of bandwidth/capacity
demand
•LTE subscribers are expected to outgrow the traditional 2G/3G users by 2020
•Constant CAPEX needs – additional acquisition of frequencies, new network/hardware
deployments

5. • The mobile sector is a
CAPEX intensive business.
Between 15-20% of the
annual Revenue is
reinvested in the network
• The trend is expected to
continue with CAPEX
increase of 4% to $360
billion worldwide in 2015
Mobile sector challenges - CAPEX

6. Mobile sector challenges –
Commoditization of services
Where did the minutes go ?
•Skype/Viber vs Mobile calls
•WhatsApp vs SMS
•Traditional TV vs OTT (over
the top, i.e. NetFlix)
Mobile operators will have to face a
further decrease of Revenue from
traditional services.
How will they justify the constant
need of new investments ?

7. Mobile sector opportunities –
Infrastructure sharing/Consolidation
• After several years of fierce competition, declining revenues,
and increasing broadband demand Mobile operators realized
the benefits of infrastructure sharing
• One time investment – one shared network – multiple
operators -> CAPEX savings
• M&A (Mergers and Acquisitions) is the logical next step in the
process
• America Movil acquired 50,8% of the shares of Telekom Austria in Q3
2014 thus diversifying their business with presence in Europe

8. Mobile sector opportunities –
All IP
• Migrating from switch-based networks (2G/3G) to LTE, from copper wireline
(xDSL) to optical (FTTx) will allow the operators to provide all services over IP
(Internet Protocol).
• Tim Höttges, chief executive of Deutsche Telekom reported that they are migrating 100,000
customers a week to their internet-based platform.
• Mobile operators shift to the converged market by offering bundle services -
mobile, fixed voice, Internet and IPTV. They enhance innovation and provide
customers with new competitive choices thus increasing customer satisfaction
and brand loyalty and boosting their revenues and profitability.
• In Q3 2013 Vodafone bought the biggest cable operator in Germany – Cable Deutschland thus
making its first move into consumer broadband and television.
• In Q2 2015 AT&T acquired DirecTV in the US which enables AT&T to add more bundled
packages to their portfolio making it a fundamentally different company with a diversified set
of capabilities and businesses.
• IP networks provide the base ground for the development of cloud services.

9. Mobile sector opportunities –
New revenue structure
• The penetration of smartphones will completely change the mobile
operators revenue structure
• Value added services (VAS), i.e. Cloud services to become a major revenue
stream

10. Mobile sector opportunities –
Current cloud services
• Application stores
• Vodafone 360 (social computing that combines contact lists with
friends locations ), Orange market, etc.
• Storage
• AT&T Address book (synchronizes contacts), AT&T Mobile Share
(access to photos/videos from any device), Deutsche Telekom (cloud
storage)
• SaaS (Software as a service)
• Telefonica offers Microsoft 365 and McAfee antivirus software in a
bundle with their broadband and hosting solutions
• Online store
• Instant activation of value-added service, i.e. minutes/SMS/Data
packages, data roaming, TV bundles etc.

11. Mobile sector opportunities –
Cloud benefits
• Leverage customer data – Customize and expose applications to the right
customer segment (profiling information)
• Offer end-to-end services – Protect from third party content providers to
capitalize the customer base
• Economy of scale - New products and services can be developed in the
cloud before rolling out to specific markets and adjusted for local needs
• Faster service delivery – IPTV service can be activated over the existing
Internet line instantly rather than waiting several days for a technician to
install a new cable.
• Flexibility - Pay per use model, i.e. OTT platforms, VoD (video on demand)

12. Mobile sector Future opportunities
• Mobile Financial Services
• Mobile wallets - The near-field
communication (NFC) technology
enables mobile phones to transmit
payment information.
• Location Based Service
• Mobile advertising
• Mobile Music
• IoT (Internet of Things)
• Smart home – automation and distance
management
• Telemedicine – Healthcare at a distance
• Smart metering (gas, water, electricity)
• Connected Car - access navigation,
Internet, roadside assistance
• Sensor technology

13. Internet Service Provider sector –
Overview
• The telecommunications industry has never before faced so many challenges and
so many opportunities.
• Likewise the Mobile operators the ISPs face the same problems – high
competition, price erosion, constant increase of capacity demands, CAPEX needs,
commoditization of services
• ISPs have to turn the negative annual revenue growth trend. But how?

14. Internet Service Provider Challenges –
IP Transit Prices
50%-80% price decrease per
Mbps for the last 5 years
The total IP transit market is
forecasted to shrink with 40% to
$3.3 billion in 2020

15. Internet Service Providers Challenges –
Transport Capacity growth
• ISPs face difficulties to handle the bandwidth demands.
• This drives content providers to build their own private networks,
thus cannibalizing the ISP transport capacity business.
• Facebook, Amazon, Google and Microsoft invested in sub-marine cable
systems, inter-city and metro optical networks

16. Internet Service Providers Challenges –
Transport Capacity Price
• The threat from content providers is further increased by the constant
decrease of transport capacity prices.
• The CAGR of a 10Gbps transport capacity is between -15% and -25% for the
last 3 years and will continue at the same rate

17. Internet Service Providers Opportunities -
Colocation
• The constant increase of Internet users, online content and broadband
penetration is driving the colocation demand exponentially.
• The colocation market is forecasted to grow at a compound annual growth
rate of 15% over the period 2014-2020.
• ISPs started to invest in colocation facilities to strengthen their product
portfolio.
• NTT communications bought the biggest German datacenter operator E-Shelter
in 2015
And more importantly
Demand > Supply
drives the prices up

18. Internet Service Providers Opportunities -
from Wholesale to Enterprise
• ISPs operators can benefit from turning their focus on the Enterprise segment
where
• Demand for Managed service is growing
• Companies are optimizing their business by outsourcing IT related activities
• The migration to cloud is tremendous
• IT Security is becoming a key factor
• Margins are high !

19. Internet Service Providers Opportunities -
BIG DATA
Big data promises to promote growth, increase efficiency and profitability by
collecting, managing, and analyzing in real time the vast increase in both
structured and unstructured data
Being able to combine predictive
analytics with real-time data can
• Retain or bring new customers
• Create a holistic customer profile
• Offer relevant customer experience
• Monetize big date know-how by
selling it as a service to other
companies

20. From ISP to Integrated Telco Operator
• ISPs need to diversify their service portfolio by adding new services and
focusing on enterprise market.
• ICT (Information and Communication Technology) as a Service is a
concept that can drive innovation and boost profitability.

21. My role in the Telco sector
• After the “fixed Internet wave” that created over 1 billion users in the 1990s and
the “mobile Internet wave” that connected an additional 2 billion users in the
2000s, the IoT is expected to be the next wave with a potential to connect as
many as 28 billion of “things” by 2020.
• I look forward to being a part of the next revolution in which IoT will inevitably
link together all segments in the Telco industry such that:
• Mobile networks will be the backbone of IoT
• Cloud/BIG date providers will be the brain of IoT
• Colocation/ISP will provide scalability of IoT

22. My role in the Telco sector
• Within the next few years, I hope to develop my potential on two major levels
• General Management - Develop a broader understanding of the business and
acquire skills needed to be a successful cross-functional executive
• Entrepreneurship – Embrace the opportunities to create new products, services and
markets through the IoT applications

23. Used resources
http://www.bmiresearch.com/
www.telegeography.com
www.ft.com
http://www.itbusinessedge.com
http://www.datacenterknowledge.com/
http://www.infinera.com
http://www.microsoft.com