2012 European Market Challenger: Asia-Pacific Telecoms Service Provider of the Year

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1 European Market Challenger: Asia-Pacific Telecoms Service Provider of the Year 2012 Frost & Sullivan 1 50 Years of Growth, Innovation and Leadership

2 2012 European Market Challenger Asia-Pacific Telecoms Service Provider of the Year Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360 Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2012 European Market Challenger Asia-Pacific Telecoms Service Provider of the Year Award to China Telecom (Europe) Limited. Significance of the European Market Challenger Award Overview on Asia-Pacific Telecoms Service Providers Activities in Europe Globalization has driven many European companies to expand into Asia Pacific (APAC), either to access new markets or use more advanced and cost-effective production facilities. This expansion process requires reliable and robust telecommunications services and supporting infrastructure. In recent years, we have also observed a contrary phenomenon. APAC-based large enterprises are taking their operations global, and the European market is a key location for market expansion. Additionally, many companies mainly small- and medium-sized enterprises are broadening the scope of their operations within Europe. These companies need ICT support to support their expansion plans and enable connection with their headquarters. In all these processes of globalization, APAC-based telecoms service providers are gaining momentum, offering innovative telecommunications services to companies that wish to have reliable connection and services between APAC and Europe and, indeed, within these regions. Today, Asia Pacific-based telecoms services have developed a strong presence in Europe, competing with their European and North American counterparts. In this scenario, the next challenge is to diversify the offer, tapping uncovered market areas with innovative technologies, but also business and marketing acumen. Key Benchmarking Criteria for European Market Challenger Asia- Pacific Telecoms Service Provider of the Year For the European Market Challenger Asia-Pacific Telecoms Service Provider of the Year, the following criteria were used to benchmark China Telecom Europe s performance against key competitors: Company performance, in terms of revenue and employment growth Geographic presence in Europe Technology and product footprint 2012 Frost & Sullivan 2 50 Years of Growth, Innovation and Leadership

3 Award Selection Methodology To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Matrix. The DSM is an analytical tool that compares companies performance relative to each other with an integration of quantitative and qualitative metrics. In addition to the DSM, each nomination is supported by a case study based on the Frost & Sullivan s analyst research. The combination of the DSM and the nominations is the material that an external panel of judges will use to identify the nominees. The panelists are professionals that are involved in different type of information and communications technologies companies. The DSM and the nominations allow the external panel of judges to objectively analyze each company's performance on each criterion relative to its top competitors and assign performance ratings on that basis. The DSM follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines shown in this Chart. Performance-Based Ratings for Decision Support Matrix This exercise encompasses all criteria, leading to a weighted average ranking of each company. Panelists can then easily identify the company with the highest ranking Frost & Sullivan 3 50 Years of Growth, Innovation and Leadership

4 Best Practice Award Analysis for China Telecom Europe The Decision Support Matrix, shown in the Chart below, illustrates the relative importance of each criterion for the European Market Challenger Asia-Pacific Telecoms Service Provider of the Year and the ratings for the leading companies under evaluation. It should be noted that a total of 9 companies formed scope of Frost & Sullivan s initial evaluation only the highest 3 performing companies are included in this report. The judging panel believed that the Technology and Product Portfolio criterion was more important than the others therefore its relative weight is higher than the others. To remain unbiased while also protecting the interests of the other organizations reviewed, we have chosen to refer to the other key players as Competitor 1 and Competitor 2. Decision Support Matrix for New Product Innovation Award Measurement of 1 10 (1 = lowest; 10 = highest) Company Growth Performance Geographic Presence in Europe Technology and Product Portfolio Weighted Rating Relative Weight (%) 30% 30% 40% 100% China Telecom Europe Competitor Competitor Criterion 1: Company Growth Performance In comparison to other APAC-based telecoms service providers, China Telecom Europe can be considered a newcomer in the European market. However, China Telecom Europe has experienced tremendous growth since its establishment in 2006 the judging panel were particularly impressed with the huge strides that the operators has made over recent years. The company s revenues grew at a remarkable compound annual growth rate (CAGR) of per cent from 2008 to 2011, while staffing levels increased by per cent over the same period. This growth has come handin-hand with a growing customer portfolio. Currently, CTE s customers are mainly large enterprises, but there is an increasing demand from medium-sized companies for its services. Moreover, CTE has introduced a broad range of network solutions and innovative business models to its portfolio. This has helped to reshape traffic patterns as well as empowering its carrier customers to expand their business development activities across the Euro-Asia telecommunication market. Criterion 2: Geographic Presence in Europe The company was incorporated in London, and the UK capital host China Telecom Europe s headquarters. Nevertheless, driven by its regional business development strategy, the company has rapidly expanded into other 2012 Frost & Sullivan 4 50 Years of Growth, Innovation and Leadership

5 key European markets. China Telecom Europe has subsidiaries in Frankfurt (covering Central Europe), Moscow (for the Russian market), and Johannesburg (for Africa). The company has also expanded in the Middle East with an office in Dubai. This expansion has been supported by the establishment of a pan-emea network of PoPs (Point of Presence). Currently, China Telecom Europe has two PoPs in London, Frankfurt and Stockholm, and one each in Helsinki, Moscow, Paris, Dubai and Johannesburg. In addition, China Telecom Europe has established a strong partnership strategy with European telecoms providers in order to extend its PoP network. Currently, China Telecom Europe can integrate another 50 PoPs to its proprietary network. The company is working to further expand its presence in the EMEA region in terms of offices and PoPs. New PoPs will be launched in Istanbul, Madrid, and Nairobi, and a new regional office will be opened in Paris. Criterion 3: Technology and Product Portfolio China Telecom Europe was established with the ambitious vision to create the Information Silk Road, a Euro- Asia communications network that enables exchange between two cultures and two economies as the original Silk Road transformed trade between Asia and Europe. This vision drove China Telecom Europe to develop terrestrial telecommunications links between Europe and Asia, creating the Euro-Asia Network Solution (ENS) and bring the network capacity from 2G in 2006 to its current 100G within Europe and 75G over the Europe-Asia route. China Telecom Europe s ENS can currently offer: The shortest and fastest communications route: the current Round-Trip Delay by one of the ENS terrestrial links between Beijing and London is 180ms, compared with 240ms on a submarine cable A more reliable connection: an industry best standard of 100% availability for nine consecutive months, (CTE internal networking monitoring statistics) The first to offer a wholesale service with a flexible IEPL Bandwidth on Request solution over 1G, enabling highly scalable and cost-effective operations An extensive network of Internet Data Centres (IDCs) throughout EMEA and APAC, and another 260 world-class IDCs in China. Global links and extended resources are also achieved via sister companies and strategic partners. While China Telecom Europe s attention to the enterprise market is consolidating, the Chinese company has also decided to enter the consumer market in Europe. During the first part of 2012, China Telecom Europe launched MVNO mobile services in the UK. As the first Chinese telecoms operator to launch overseas MVNO services, its entry into the UK mobile market is a strong strategic move for China Telecom Europe. The UK presents a highly mature MVNO market with fierce competition; however, there is a gap in the UK market for the provision of tailored and high-quality mobile services aimed at the growing Chinese population in the country. With a targeted market strategy leveraging on China Telecom s strength in the telecommunications industry, the company aims at delivering high-quality Chineselanguage communication services to strengthen its product differentiation and competitive advantage. China Telecom Europe is also setting up a comprehensive customer service system aimed at continuously improving 2012 Frost & Sullivan 5 50 Years of Growth, Innovation and Leadership

6 customer satisfaction. The UK is the starting point for the company s mobile branch, which will gradually reach out to other key countries across Europe. By entering the consumer market, China Telecom s overseas product portfolio and its service capabilities in Europe are further enhanced. Conclusion Since its establishment in 2006, China Telecom Europe has positioned itself as a key provider of Euro-Asia telecommunications infrastructures and services. Today, the company offers high speed and reliable intercontinental links that bring Europe and Asia closer together. In addition, the company has rapidly expanded its geographic presence in Europe with offices in the most important business hubs. This geographic footprint is empowered by a dense network of Point of Presences and data centres all over Europe and further in Africa and Middle East. Much of China Telecom Europe s remarkable achievement is attributable to its Managing Director, Mr Yan Ou. Mr Ou is directly responsible for driving the company s success over recent years his leadership and vision of building the Information Silk Road for the company impressed the judging panel. All this, combined with the unique presence of data centres and network infrastructures in China, makes China Telecom Europe a provider of preference for European and Asian companies that want to expand their geographic presence. In addition, the customer portfolio has grown dramatically in recent years. Today, more than 120 multinational companies and telecoms service providers use China Telecom Europe s telecommunications infrastructures and services. In parallel to the growth in the enterprise and wholesale segments, at the beginning of 2012, China Telecom Europe ambitiously entered the consumer market in the UK, offering mobile services as an MVNO to the Chinese community in the country. This is an unprecedented move for an APAC-based telecoms service provider that brings China Telecom Europe into the European consumer segment. In fact, the company is planning to expand its consumer-based activities in other European countries. For all these reasons the judging panel has conferred the European Market Challenger: Asia-Pacific Telecoms Service Provider of the Year Award on China Telecom Europe. The CEO 360 Degree Perspective TM - Visionary Platform for Growth Strategies The CEO 360 Degree Perspective model provides a clear illustration of the complex business universe in which CEOs and their management teams live today. It represents the foundation of Frost & Sullivan's global research organization and provides the basis on which companies can gain a visionary and strategic understanding of the market. The CEO 360 Degree Perspective is also a must-have requirement for the identification and analysis of best-practice performance by industry leaders. The CEO 360 Degree Perspective model enables our clients to gain a comprehensive, action-oriented understanding of market evolution and its implications for their companies growth strategies. As illustrated in the Chart below, the following six-step process outlines how our researchers and consultants embed the CEO 360 Degree Perspective into their analyses and recommendations Frost & Sullivan 6 50 Years of Growth, Innovation and Leadership

7 How the CEO's 360 Degree Perspective Model Directs Our Research 2012 Frost & Sullivan 7 50 Years of Growth, Innovation and Leadership

8 Critical Importance of TEAM Research Frost & Sullivan s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360 degree view of industry challenges, trends, and issues by integrating all seven of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients. Benchmarking Performance with TEAM Research About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-inclass positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents Frost & Sullivan 8 50 Years of Growth, Innovation and Leadership