new route - «baltic highway»

«Lattelecom» (Latvia)«Deutsche Telekom» (Germany) «MegaFon» (Russia)

«Baltic Highway»

Opening Event, Riga

September 26, 2012


New route - «Baltic Highway»

Juris GULBIS


Benefits of the Project for Latvia and Baltics

Juris GULBIS


«Baltic Highway» benefits for Latvia

Juris GULBIS

Source: Akamai,1Q,2012

Broadband Internet market

Residential Business

Lattelecom

share44%

Latvia 64%

Lattelecom

share63%

Latvia 85%

Broadband Internet speed

• Increased access speed to International web-based content.

• Infrastructure to develop Internet based e-services in East and West directions.

Source: Lattelecom


«Baltic Highway» benefits for Baltics

• To facilitate more than half of growing Lattelecom Internet traffic

• Enables to participate in Internet transit service connecting Russia, Asia, and Europe

Lattelecom International Internet traffic by routes (forecast)

Traffic via MegaFon 28%

Traffic via Deutsche Telekom 36%

Lattelecom International Internet traffic (GBps)

2007 2008 2009 2010 2011 2012

5 1226

46

96

129

Juris GULBIS

Traffic via other routes 36%

Sou

rce:

Lattelecom

Sou

rce:

Lattelecom


Role and Benefits of the Project for Western Europe and USA

«Lattelecom» (Latvia)«Deutsche Telekom» (Germany) «MegaFon» (Russia)Holger MAGNUSSEN


Deutsche Telekom – profile.

Holger MAGNUSSEN

Customers & markets

Customers 130 m mobile

customers 33 m fixed-line

customers/17 m broadband customers

4.6 m (IP) TV customers

About 2 m workstation systems marketed

Markets Presence in 50 countries Germany,

Europe, USA: with own infrastructure

T-Systems: global presence & alliances via partners

Facts & figures

Telekom in figures 2011 Revenue EUR 58.7 bn Adjusted Ebitda

EUR 18.7 bn Free cash flow

EUR 6.4 bn Among the top 100

companies worldwide (#75 in 2011 Fortune 500 list)

Employees & responsibility Employees worldwide:

233,000 9,000 trainees and

cooperative degree students in Germany

Pioneer of social issues (promotion of women, data privacy, climate protection, etc.)


Products & services.

Holger MAGNUSSEN

Partner services & platforms

Partner for infrastructure access and network services

Platforms & co-operation projects for innovative services

Business customers

Information & communications technology solutions (ICT)

Outsourcing & cloud services Intelligent networks for

Health, Automotive and Energy

Consumers

Modern mobile &broadband experience

Television Online services Cloud solutions


Trends & technologies.

Holger MAGNUSSEN

Roll-out of networks worldwide

Network security becoming more relevant

Source: Symantec Report 2011

Investments worldwide (per Year)

USD 175 bnInvestments in Europe(per year)

USD 65 bn

Direct damage caused by cyber crime 2011 (worldwide)

EUR 85.2 bnTotal volume cyber crime incl. countermeasures

2011 (global)

EUR 290 bn

Source: OECD 2011

Mobile internet booming

Growth with global trend Cloud

2010 2015

950 m

1.890 millionUsers worldwide

currently

1.8 Zettabytesof data volume worldwide

+33%(per year)

Source: MorganStanley/Nielsen

Source: IDC, DTAG

2016

Turnover Worldwide EUR 114 bn


Deutsche Telekom – transformation.

Holger MAGNUSSEN

Transformation

Mobile internet & highspeed networks Exponential data traffic growth Network and IT-security Gigabit society

Trends & technologies

Defend/improve market position in core markets

Increase efficiency Develop innovative services & new

business models Expand customer service

Challenges Deutsche Telekom

Traditional telecommunication markets decline

Extreme competition & declining prices Strong influence of regulation &

political broadband targets High investments in modern networks

Industry & markets

From a state-owned telecommunications

company to a service provider:

My First Choice for Connected Life and

Workfor customers

Transformation

«Lattelecom» (Latvia)«Deutsche Telekom» (Germany) «MegaFon» (Russia)Holger MAGNUSSEN

Deutsche TelekomInternational Carrier Sales & Solutions (ICSS).


Bridge for Western Europeto Baltic states, Russia and Asia.

Holger MAGNUSSEN

• Baltic Highway provides a robust, high-capacity and low latency bridge to Baltic states, Russia and Asia supported by reliable partners.

• These factors are critical for financial institutions, wholesale carriers or large corporate customers from WE and US for their transactional environments and disaster recovery solutions.

Source: TeleGeography

20092010

20112012

20132014

20152016

20172018

0

5,000

10,000

15,000

20,000

25,000 Capacity Europe-Asia

Total Used Capacity …for Internet …for switched voice …for private networks

Gbps


Extended Accessto Baltic & Russian markets.

Deutsche Telekom & Affiliates• Deutsche Telekom ICSS offers

services to the carrier and corporate segments in Baltic countries and Russia.

• New DWDM infrastructure and established partnerships will enable Deutsche Telekom ICSS to offer additional flexibility and new services in the markets covered by Baltic Highway.

Holger MAGNUSSEN


Baltic Highway - New opportunities for Russian and Asian markets

Svetlana SMIRNOVA

«Lattelecom» (Latvia)«Deutsche Telekom» (Germany) «MegaFon» (Russia)Svetlana SMIRNOVA

83

The highest net income among Russian mobile Big-3 The highest revenue from mobile data transmission in Russia The highest investing rating in Russian Telco market (Baa3, Moody`s)

Full coverage of All Russian regions

63,99 Million subscribers

75%of Russian population live on the territory, covered by Megafon’s 3G network

13% Revenue growth in 2011

About MegaFon in brief

5,85 6,06 7,18 8,09

Revenue, $ bln

5,85

2008

6,06

2009

+ 11%

7,18

2010

8,09

2011


MegaFon`s business markets in Russia

Residential clients

Wholesale business

Governmental agencies

Enterprise business

• #2 in mobile overall• #1 in mobile data• 28% total mobile revenue market share

• #3 in mobile• 9% overall revenue market share

• #2 operator overall• 8% overall revenue market share

• #3 in IP connectivity• #3 in Data transmission services• 17% overall revenue market share

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MegaFon in Baltic Highway Project

Possibility to connect telco services in Russia and CIS based on MegaFon`s and it`s partners` networks

Direct routes to Moscow and St. Petersburg with minimum latency

“Ring” back up for each route

Riga

Saint Petersburg

Moscow

Smolensk

Pskov


2011 2012

+ 40%

2013 2014

IP traffic growth rate in Russia

2011 2012

+ 5%

2013 2014

Multinational companies market growth rate in Russia

«Baltic Highway». Benefits for Russia

New level of internet access quality (less signal response time) based on the shortest route

More possibilities for latency critical corporate services for international companies with offices in Russia and Europe


«Baltic Highway» responds to Europe – Asian Market demand

2011

2016

2012

+ 25%

2013

Europe – Asia traffic volume growth rate Europe – Asia Traffic traffic distribution

2014 2015

Europe-Asia leased bandwidth will triple by the end of 2016 up to 1,5 Tbps

The terrestrial route through Russia are getting more demanded. By 2016 its share in Euro-Asian traffic will double


«Baltic Highway» in DREAM project

High quality alternative to existing terrestrial routes

Significant decrease of latency in the European part of Eurasian transit

Completed Nx10G capacity for fast growing traffic volume between Europe and Asia

Moscow

Riga

DREAM North Route

DREAM South RouteFrankfurt

”Baltic Highway” – potential additional route to Frankfurt in DREAM”

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Thank You!

new route - «baltic highway»

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