Telecom Italia presented its strategic vision for addressing future business drivers and IT implications. Massive growth in connected devices, data, traffic and usage will lead to a 1.1 trillion dollar increase in the mobile ecosystem by 2020, but operators' share will significantly decrease due to high competition and the dominance of internet companies. Telcos face challenges to reduce costs through lean operations and capture new digital opportunities. Telecom Italia's strategy is to transform networks and IT, leverage big data and cloud computing, and partner with internet companies to transition to a digital telco model.

1. TELECOM ITALIA GROUP
Telecom Italia’s Strategic Vision
on Future Business Drivers and IT implications
ETIS Community Gathering
Riga, October 2013
Oscar Cicchetti
Director, Strategy – Telecom Italia Group

2. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
2
Telecom Italia’s Strategic Vision
on Future Business Drivers and IT implications

3. Massive Growth: connected objects, data, traffic, usage…
3
Source: Intel Co.
Global Network Connections from
objects will exceed 17B in 2017
Source: Cisco, Visual Networking Index, May 2013.
Global IP Annual Traffic will
reach 1,4 zettabyte in 2017
Digital Society and Competition between Ecosystems

4. Mobile connected devices become key in consumers’ life…
Smart cities improve quality of life:
• IoT and sensors enable dynamic services
to reduce traffic, crime and improves
efficiency
Connected homes:
• IoT and sensors improves
overall convenience, save time
and significantly reduce utility
bills
E-Health improves care quality:
• IoT and connected sensors
permit remote monitoring and
combat chronic disease, assisting
the elderly and improves access
Digital Identity improves access
to government services:
• enhances speed and ease of
authentication
Mobile wallet:
• enables customised
offers and seamless
payment
c
Connected
devices
Smartphones
Wearables
Tablets
Home
Health
Connected cars become the
next mobile platform:
• consumers receive seamless
access to adaptive services
• autonomous driving improves
safety
E-Education enables learning
anytime, anywhere:
• classroom linked with the
online world
• dynamic learning provides
immediate feedback
4
Source: Draft of “GSMA ExCom: Vision 2020”
Digital Society and Competition between Ecosystems

5. As a consequence, Mobile Ecosystem will grow by 1,1 tn$......
5
1,8 tn $
2,9 tn $
62% 50%
+1,1 tn $
2012 2020
MNO share of the
value chain
Mobile Ecosystem
Revenues
Digital Society and Competition between Ecosystems
… but Operator’s share will significantly decrease

6. 6
… because competition between Operators is very high, mainly
in Europe …
Sources: GSMA Infocenter, Analysys Mason
EU 27 (509M inh; 204M hh) USA (320M inh.; 115M hh)
107 Mobile Network Operators
~160 Fixed BB Operators*
4 Mobile Network Operators
16 Fixed BB Operators*
(*) Cable Operators are included
Digital Society and Competition between Ecosystems

7. ...because Internet Ecosystem seems to have a darwinian superiority
compared to the Telcos Ecosystem…
7
CAPEX (€bn) CAPEX (€bn)
OpFCF**(€bn) OpFCF**(€bn)
EMPLOYEES (000) EMPLOYEES (000)
MARKET CAP (€bn) MARKET CAP (€bn)
vs
vs
vs
vs
vs
4 67
14 84
70 1.217
270 521
Pure OTT TELCO
REVENUES (€bn) REVENUES (€bn)
47 460
Pure OTT revenues are
quite lower than TELCO...
…they invest relatively
less than TELCOs…
…but produce a
significant cash flow...
…employing a limited
amount of people.
and are more
«appealing» than TELCO
10%
6%
17%
6%
52%
Pure OTT/ TELCO
Google, Facebook, Yahoo
TI, TEF, FT, BT, DT,
Vodafone, Verizon, AT&TData from FY 2012
Source: Telecom Italia study «Benchmarking OTT»
Digital Society and Competition between Ecosystems

8. …and because Internet Companies fight to lock the
customer into a silos...
8
Digital Society and Competition between Ecosystems

9. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
9
Telecom Italia’s Strategic Vision
on Future Business Drivers and IT implications

10. In a global competition size matters: the US case
10
Source: WSJ, Aug 27th, 2013
Traditional Levers
such as:
Interoperability
Consortia
Alliances
Can fill the gap?
Narrow path towards Digital Telco

11. Telco Challenges
11
€
t
Revenues
TCO
as it would be
TCO
as it MUST be
Lean challenge
€
t
Connectivity
Digital Services
as it would be
Digital Services
as it SHOULD be
Digital challenge
A deep transformation is
needed to reduce unitary
cash costs
A deep transformation is
needed to capture digital
opportunities
Narrow path towards Digital Telco

12. 12
Lean Challenge: Total Cost Reduction
 Streamlined commercial machine
• On Line CRM
• Simplified Offering Portfolio
 Zero Opex NetworkS
• Flat IP architecture
• SDN oriented
 Simplified and Flexible IT
• Cloud based
• SOA and Agile
Narrow path towards Digital Telco

13. Digital Challenge: Service Evolution
13
Big Data and Personal Data
Digital Identity
M2M and Internet of Things
Security Services
Smart Environments
Digital Media
Cloud
1. Bet on distinctive assets
• Local Presence
• SIM and AAA
• Billing and CRM
• QoS, QoE Features
Narrow path towards Digital Telco
2. Adopt Internet Service
Paradigm
•Flexible Partnerships
•Net and Cloud API
•Embedded Connectivity
•Use of customer and
network data

14. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
14
Telecom Italia’s Strategic Vision
on Future Business Drivers and IT implications

15. OSS/BSS Transformation
 Away from a Spaghetti Architecture
 Leverage on SOA and Cloud
 Adopt Agile Methodologies
 Real Time Processes
15
Telco and IT Industries go hand in hand

16. Big Data to transform operations and services
 Data Gathering
 Data Processing
 Next Generation “Data Based” Services
 Data Brokering
Telco and IT Industries go hand in hand

17. The multi-facet role of the cloud
17
Cloud
Service
offering
Integration
of old IT
architectures
SDN
support
Network
Control Centre
Telco and IT Industries go hand in hand

18. 18
Telecom Italia’s Strategic Vision
on Future Business Drivers and IT implications
What Telcos should look like in the changing world

19. Telco Challenges
€
Revenues
TCO
as it would be
TCO
as it MUST be
Lean challenge
€
Connectivity
Digital Services
as it would be
Digital Services
as it SHOULD be
Digital challenge
Narrow path towards Digital Telco

20. Should we pretend to be a Tiger?
Should we ibridate ?
The only way is to nurture a
tiger while continuing to be
an elephant
Telco Transformation