103.05 103.05

Industry lines are blurring between players in the market...

They seek diversification in new industry verticals

In these new industries, Telcos should play new roles

Telcos will leverage their proprietary data to differentiate

Telcos will likely encounter new types of cybersecurity risks

...leading Telcos to adapt their business model in response to competition from OTT players

11-33 36

67

63

18

eHealth

eHealthTackle market concerns in well-being wearable market

Connected CarsRelevant in entertainment and connectivity

Mobile Financial ServicesDefine a new way of banking

Utilities Industry 4.0 TransportationSmart Cities

Sources: IDC, Ovum, Technavio, MarketsAndMarkets, GSMA, Grand View Research, Navigant Research, Mind Commerce, Strategy& analysis

Sources: Global State of Information Security Survey 2016, Strategy& analysis

Estimated global addressable market for Telcos, Bn USD-2020

10

Connected Car

Mobile banking

Unbanked populationEmergent countries

Banked populationDeveloped countries Disease Management

Remote patient monitoring

Well-being wearables

Tele-diagnostic

Telcos' legitimacy to play a significative role

NFC based payments

Mobile commerce

Money transfers in developing countries

Telco Key Differentiators in Mobile Banking

Well-being wearables market state

Customer knowledge

Best-In-Class Customer Journey

Lower fees and product bundling

Consumers have not embraced health wearable technology in large numbers, but they are interested• 10% own a wearable and wear it everyday

Most consumers do not want to pay much for their wearable devices• 38% would pay $100 for a fitness band• 68% would wear employer-provided wearables

Consumers remain concerned about privacy• 23% of consumers want to share their health

information• 82% only felt concerned that wearables would

invade their privacy

Sources: PwC’s 18th annual Global CEO Survey 2015, Strategy& Analysis

Mobility Management

Vehicle Management

Well-being

Safety

Autonomous Driving

• Keep a dominant position in the connectivity space• Play a central role in the distribution of new

service offerings• Leverage brand trust to reinforce data protection

Major M&A Deals from 2011 – 2015, In €bn

• Weve delivered couponing campaigns for Tesco and drove 40k customers to retail stores

• Orange’s Flux vision analyze visits & mobility behaviors for Bouches-du-Rhône Tourisme

• Vodafone Analytics improve and balance the flow of traffic in London by analyzing movement on the different types of transport

• Life cycle-based behavior churn and profit forecast modelling decreased attrition by 50-60%

• Network optimization based on data consumption analysis and customer geo-localization — network quality improvement

• Network operations enhancement through identifying potential BTS failure due to defective batteries caused by temperature decrease

FMC convergence observed in all markets

A second trend is local mobile convergence

Further international expansion possible

On average, number of players per market expected to be reduced to three

FormerEmployees

Current Employees Hackers Competitors

38%33%

30%25%

Increasing cybersecurity threats

Strategic initiatives adopted by Telcos

Cybersecurity – an opportunity

45%Increase in detected security incidents in Telcos between 2014 and 2015

62%Have an overall security strategy

58%Have a CISO in charge of security

57%Have security standards for 3rd parties

58%Employee security training

54%Conduct threat assessments

54%Monitor actively security intelligence

Most-cited sources of incidents

• Cybersecurity can create competitive advantages by boosting customer trust in brand and reputation, giving the company a leg up in entering new industries

• Some Telcos like Singtel have already entered the cybersecurity business

1 Passenger vehicles only excluding light commercial vehiclesSources: Strategy& analysis

Sources: Web search, Strategy& analysis

Consolidation is another way for telcos to adapt their business model

International expansion

Local mobile consolidation

FMC

2.6

2.3

Current trends

7

Smart Home

Tele- consultation

Externally

Internally

7

7.78.6

America Movil / KPN

3 Ireland - O2

Telefonica Deutschland / Eplus

Free / Orange

VimpelCom / Wind

Vodafone / Kabel Deutschland

1.3

3 / Orange

Mobile Financial Services

Opportunities for telcos

SafetyAutonomous drivingVehicle managementMobility management

• Requires auto knowledge – OEM specific

• Relevance in connectivity only

• Telcos are already providing entertainment solutions

• Requires specific technology

• Low relevance but might communicate with eHealth and Smart Home offerings

• Relevance in connectivity

Entertainment

Well-beingHome integration

BT / EE

Vodafone / Cable Wireless Worldwide

Altice - SFR

Orange - Jazztel

Altice / Portugal Télécoms

Vodafone - ono

7.47.2

3.4

17.0

16.50.9

1.3

Internally

ExternallyKey challenges• Improve data quality

across all IT systems• Develop enhanced Data

Analytics capabilities• Manage confidentiality

issues• Detect and mitigate

Cyber security threats

Find new areas of growth outside of core business1

56% of CEOs saying competition will come from another industry16% of CEOs expect competition to come from Telcos

• Voice and Messaging (WhatsApp, Skype…)

• Infrastructure (Google Loon, Fiber, Microsoft WiFi…)

• Pay TV• Gaming and Video• Mobile Money

• Apple TV, Apple Pay, Maps• Samsung Tizen

• Google Nest, Google Car• Amazon Firephone

• Russia (MTS, Megafon)

• Orange (PIXI, KLIF)• Apple SIM

Differentiate by leveraging customer data both internally and externally2

65% of Telco CEOs consider Data Mining & Analysis capabilities as strategically important for their organization

• Credit scoring based on big data

• Geolocalized discounts

• Look and Feel• Leverage mobile to

eliminate pain points

• Bundle with Telco services• Lower cost due to lower

structural cost & revenue synergies

Evolution of Mobile Financial Services Most promising eHealth markets for Telcos

Estimated Market potential for Connected Car technologies (€bn)1

Entertainment

Embrace OTT growth to drive data consumption through content offering3

71% of Telco CEOs are extremely concerned or somewhat concerned by the threat of new entrants in their industry

Consolidation426% of Telco CEOs plan to initiate a domestic M&A in 201624% plan to initiate a cross-border M&A in 2016

AppleHuaweiSamsung

GoogleFacebookMicrosoftSkypeNetflix

SpotifyWhatsAppSkyGoDeezer

Device manufacturer OTT / Digital players

TelefonicaAT&TT-MobileVodafoneOrange

New PlayerSigfox

Telcos

5

7

713

36

47

2020∑115

4

426

10

16

2016∑40

© 2016 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

Disclaimer: This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Outcomes of the Mobile World Congress Press Conference 2016