Beirut, April 16, 2009
This presentation is the property of its rightful owner.
Sponsored Links
1 / 18

Booz & Company PowerPoint PPT Presentation


  • 111 Views
  • Uploaded on
  • Presentation posted in: General

Beirut, April 16, 2009. Conference Presentation. Booz & Company. Growth in the Recession Challenges and Opportunities for the Telecom Sector. This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Download Presentation

Booz & Company

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Booz company

Beirut, April 16, 2009

Conference Presentation

Booz & Company

Growth in the Recession

Challenges and Opportunities for the Telecom Sector

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.


The world is experiencing a far reaching recession

.

The world is experiencing a far-reaching recession

Comparative Growth Rates

Real GDP Change p.a. (%)

%

North Africa

Asia & Australasia

Gulf

Eastern Europe

Latin America

G10

EU15

Note: Gulf includes GCC countries and Yemen


However emerging markets including the middle east continue to promise sustained economic growth

However, emerging markets, including the Middle East, continue to promise sustained economic growth

GDP Growth Projections, 2009-2010

%

Note:“Advanced Economies” includes US, Euro Area, Japan, UK, Canada and Other Advanced Economies

“Developing Asia” includes China, India and the five ASEAN countries

“Western Hemisphere” includes Brazil and Mexico

Source:World Economic Outlook Update, January 2009


Booz company

3

Developed

Markets

  • Essential service for users

  • Relatively small percentage of disposable income

Emerging

Markets

  • Nascent market stage with continued exponential growth momentum

  • Coverage expansion in under- penetrated regions

Telecom services growth has proven resilient in economic downturns, especially in growing emerging markets…

Global Telecom Service Revenues

(1997 - 2003) (USD Billion)

Telecom Resilience Drivers

2001 downturn

1997

1998

1999

2000

2001

2002

2003

Source: ITU


As telecom services are becoming essential for consumers

… as telecom services are becoming essential for consumers

Expected Cut in Consumer Spending during an Economic Downturn

(2008) (%)

Rationale and Evidence

  • Voice remains an essential service

  • Broadband access is increasingly becoming important for consumers

    • E.g. European Commission is considering a universal service obligation (USO) on broadband access

  • Telecommunications services become more critical during a recessions; e.g.:

    • Less travel and face-to-face meetings

    • Less social activities leading to more calls and home entertainment (IPTV, internet browsing, etc.)

Luxury goods

Travel

Entertainment

Electronics

Household goods

Clothing

Essential Basics

Source:Business Week, Booz & Company Survey 2008, Booz & Company analysis


Booz company

S

Telecom plays a key role in enabling other sectors and is thus important for driving overall GDP growth during this recession

Telecom Industry Enabling Role

Contributions to GDP Growth

Average Annual Growth in %, 1985-2006

Sector

Applications - Examples

Labor Input

%

ICT Capital

Healthcare

  • Telemedicine

  • Health services research

  • Online monitoring

3,5

Non-ICT Capital

Multi-Factor Productivity

3,0

Government

  • e-Public services

  • National backbone ICT infrastructure

2,5

2,0

Aviation

  • Ticketing systems

  • Routing systems

  • Aerospace research

1,5

1,0

Logistics

  • RFID and NFC apps

  • Broadcasting

  • Logistics IT applications

0,5

0,0

Education

  • e-Learning

  • Virtual university

  • Content management

-0,5

Germany

Australia

Canada

Japan

UK

US

Defense

  • Simulation systems

  • Remote intel gathering

  • GPS

  • ICT accounts for majority of capital's contribution to GDP growth

Note:ICT related capital includes hardware, communication and software

Source:OECD Factbook 2008, Booz & Company analysis


Booz company

Governments see the national broadband infrastructure and a key driver for growth out of the recession

National Broadband Networks - Government Investments

“[We] need action – and action now. That is why I have asked my economic team to develop an economic recovery plan… that will help save or create at least two and a half million jobs, while rebuilding our infrastructure… As we renew our schools and highways, we’ll also renew our information superhighway… because that’s how we’ll strengthen America’s competitiveness in the world.”

Rationale

  • Policymakers in the US, UK, Korea, Germany, Spain, and Portugal are looking at channeling investments in Next Generation Broadband Networks to

    • create new jobs

    • support new businesses

    • stimulate investment

Barack Obama, Radio Address on the Economy1)

“When we talk about the roads and the bridges and the railways that were built in previous times - and those were anti-recession measures taken to help people through difficult times - you could [by comparison] talk about the digital infrastructure and that form of communications revolution at a period when we want to stimulate the economy. It's a very important thing”

Gordon Brown, The Observer Interview2)

1) http://change.gov/newsroom/entry/the_key_parts_of_the_jobs_plan/

2) http://www.guardian.co.uk/politics/2009/jan/04/gordon-brown-employment-new-deal


However government ownership in national incumbents may create inefficiencies in operations

However, Government ownership in national incumbents may create inefficiencies in operations

Government Ownership - Impact

Impact of Ownership on Efficiency (2006)

Regional Incumbents (2008)

Other Drivers

  • As the telecom sector develops, there is a lower need for the government to remain directly involved

  • Changing demographic structure drive governments to free up funds to invest in social welfare projects

  • Reducing ownership increases private investment attractiveness

  • Reducing ownership eases pressure international trade commitments

* Jordan Telecom excluded due to its recent rapid privatization and accompanying restrictions on labor cut-backs

Source: ITU 2005. Epsicom, Operator Annual Reports


Booz company

MENA telecom liberalization has led to a rapid increase in the number of operators, particularly in the mobile sector …

Number of Mobile Operators in the MENA Region

(2000 - 2008)

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Global Insight, Booz & Company analysis


Resulting in strong market growth

%

… resulting in strong market growth

MENA Telecom Market Overview

MENA Telecom Subscribers

(Million) (2004 - 2008)

MENA Telecom Revenues

(USD Billion) (2004 - 2008)

227.0

+16%

217.2

Broadband

+27%

21%

Fixed

24%

168.5

28%

128.7

35%

87.4

79%

Mobile

76%

43%

71%

64%

57%

2004

2005

2006

2007

2008

2004

2005

2006

2007

2008

Note: Telecom revenues are estimates

Source: Informa, Global Insight, Booz & Company analysis


Booz company

10

The MENA region can be divided into three sub-regional clusters, each with its unique characteristics

Overview of Sub-Regional Clusters in the MENA Region

North Africa

Levant and Egypt

Gulf

28.496

8.755

4.644

GDP/Capita (USD)

Population (Million)

Mobile Penetration

ARPU (USD/Month)

Number of Mobile Players

Note: All numbers are 2008

Source: Informa, EIU, CIA World Fact book, Booz & Company analysis


Market level competition is intensifying in most markets but lags in others

s

Market level competition is intensifying in most markets, but lags in others…

Competitive Activity of Sub-Regional Clusters in the MENA Region

(2008)

Legend:

< 3 Mobile Players

3 Mobile Players

> 3 Mobile Players

Source: Informa, Booz & Company analysis


While cross border competition is becoming increasingly dominant

l

… while cross border competition is becoming increasingly dominant

International Footprints and Revenues of Selected Regional Players

(2008)

Zain International Footprint

Qtel International Footprint

Etisalat International Footprint

81% of revenues from international Operations

12% of revenues from international Operations

73% of revenues from international Operations

Orascom International Footprint

STC International Footprint

Batelco International Footprint

22% of revenues from international Operations

30% of revenues from international Operations

83% of revenues from international Operations


This is leading to the emergence of true global players in the mena region

This is leading to the emergence of true global players in the MENA region

Number of MENA Telecom Service Providers by Class

8

7

7

Local

Incumbents

MVNO

Emerging

Global

Operators

4

3

Expatriate

Operators

2

Niche

Operators

Regional

Operators

Description

  • Operators that don’t own physical network

  • Emerging global telecoms with assets spanning multiple clusters

  • Mainly state-owned operators that have not expanded their footprint

  • Operators with several assets within the MENA region

  • Operators with one telecom asset

  • Typically part of large Western European group

Source: Global Insight, Booz & Company analysis


Booz company

%

Lessons from advanced markets indicate that local incumbents tend to disappear in time and global/regional players dominate

MENA and Europe Subscriber Market Share by Class

MENA Market Share By Service Provider Class

(%) (2009)

Europe Market Share by Service Provider Class

(%) (2009)

MVNO

MVNO

Niche

Niche

2%

Local Incumbent

2%

0%

Regional

17%

7%

Regional

71%

77%

Global

Global

Source: Global Insight, Merrill Lynch Matrix, Booz & Company analysis


Booz company

Capacity Building and Know-how Transfer

Roaming Management

Synergy Sources

Corporate Strategy Unification

Procurement Consolidation

Shared Services Consolidation

Being part of a global or regional network helps operators success against competition and serve their customers appropriately

Non-Exhaustive

Potential Sources of Synergies

  • Leverage best practices and knowledge sharing across the organization

  • Leverage intensity of traffic across the footprint

  • Align corporate strategy across operations and unify corporate brand image

  • Consolidate and streamline purchasing activities across operations

  • Consolidate other shared services with the organization and streamline processes across operations


Booz company

As a result, the CEO agenda in the MENA region today is beginning to resemble that of emerging markets three years ago

CEO Agenda - Advanced Markets (2005)

CEO Agenda - Middle East (Today)

International Expansion

"This purchase (Vodafone Sweden) will improve our economic scale in the Nordic region,“

EVP, Telenor, 2005

“This transaction… will help us achieve our ambition to become the undisputed leader in the region."

Chairman, STC, 2008

1

Service Sophistication

“Continued portfolio extension through tariff and product innovation”

CEO, Telefonica, 2005

“Each package has its own unique advantage in terms of pricing and services"

CEO, Omantel, 2008

2

Roaming Agreements

“The partnership with Vodafone will enable du to join the world’s largest international mobile network

CEO, du, 2009

“Our strategic partnership with America Movil significantly increases our roaming footprint

CEO, Vodafone, 2005

3

Infrastructure Investment

“We intend toseed 3G among the masses…look forward to more content and services.”

CEO, SingTel, 2005

“The launch of 3.5G rounds off the year in spectacular fashion”

CEO, Batelco, 2008

4

Horizontal Integration

“The partnership between Microsoft and FT promises customers a New Experience in Telecommunications”

CEO, France Telecom, 2005

Establishing a company for content reflects STC’s quest to launch value-added services

CEO, STC, 2008

5


In summary

In summary…

  • The telecom sector is less vulnerable to the global recession than other sectors

  • The sector is seen as a driver of the economy and therefore policy makers are driving investments and reform more than ever before

    • Support broadband infrastructure deployment

    • Encourage investments

    • Reduce Government ownership while increasing government support

  • The region continues to experience growth as liberalization advances, however lags behind in some countries where liberalization is necessary

  • We will see single market operators being subject to failure as globalization pcks up pace

    • Being part of a global or regional group is a must for long term success

  • The gap between the Middle East region and Europe is narrowing, however some countries need to play significant catch up in order to reach this level


  • Login