UBS SA Telecommunications Infrastructure Day 8 th October Kanagaratnam Lambotharan CTO MTN South Africa

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1 UBS SA Telecommunications Infrastructure Day 8 th October 2012 Kanagaratnam Lambotharan CTO MTN South Africa

2 End to End User Experience MTN is adapting to meet fast changing customer needs Consumer Segment Devices Content Applications Accessibility Digital Services Business Segment Digital Communication Converged Services - Integrated Price Plans - Customised Solutions Cloud Services Data Centres Wholesale Segment Passive Infrastructure Fibre Infrastructure - Undersea cables - National long distance - Landing stations - Metro fibre Multinational Services Transforming Industry Verticals Education Health Finance Automation Enriching the Traditional Services Layer Voice Messaging Data VAS Carrier to Carrier and Wholesale ISP Services Expanding the Network & Infrastructure Layer Passive Infrastructure Core Network Radio Network Backbone Connectivity 2

3 New EBU Structure Context To provide E2E Converged Communications Services Market Dynamics Expansion into the ICT sector Enhanced competitiveness A developing sophistication within our markets Deeper realisation of the synergies and economies of scale offered by our network of OPCOs Need to focus our energies on the convergence of ICT Deliver more efficiently converged, broaderspectrum solutions to enterprise customers Strengthen our positioning as a major ICT player Bring a consolidation and leveraging of our energies in serving our enterprise customers Converged, integrated Mobile & ISP Go to market strategy Efficiency & Effectiveness Ensure that the design effects an optimised Go-to-Market process Doing things faster and with greater accuracy Positively influence customer experience management 3

4 Cloud Content Manage ment BYOD Enterprise Mobility Social Networks Key ICT Trends ICT Trends Impacting Business: A new set of factors has been emerging in tandem with entrenchment of ICT within the enterprise, including factors previously not considered to be significant. More and more companies use these for marketing and other operational purposes. Social media + social software + social networks = new set of tools to for re-engineering business. Adoption of mobile apps to cater to a mobile workforce away but part of the office. Calls for development of mobility strategy and planning around enterprise enablement through mobility. Part of a larger set of policies that address mobile device management, mobile apps management and enterprise apps store becomes more profuse as the mobile office moves onto the smart device. There is growing need for distinguishing between useful and useless content, as well as sources of content. This is also driven by an evolution of need to know to need to share with the outside environment as it happens Public vs. private cloud, and hybrid cloud considerations within corporates and multinationals Other flavours include community cloud - Public Sector Source: Deloitte & Africa Analysis,

5 Capex Investment in 2012 >R5 billion Network Capex Split 5

6 Expanding the Network Better Coverage and more Capacity 2011 Rollout - saw 314 new 2G sites and 598 new 3G sites rolled out, at a cost of ~R2bn 2012 Rollout to date 200+ new 2G sites and 730+ new 3G sites have been rolled out, at a cost of ~R2bn Project 2011 (H1+H2) 2012 (To Date) Cumulative (To date) 2G 314 >200 >6800 3G U >200 >320 3G U >500 >3500 BTS Modernisation (HSPA & LTE capable) >1000 >1300 >2800 BTS connected to Fibre 517 >600 >1100 6

7 2G network coverage - Updated - 2G network coverage extended to service 98.6% of population Land coverage km (79.2%) National road coverage (98.7%) Sea coverage sq km Population covered 48.6m (98.6%) Towns 98% covered Cities 100% covered GPRS 100% covered 7 7

8 3G/EDGE network coverage Updated 3G network coverage extended from 44% (to close to 65%) EDGE coverage extended from 78% to 92% 8 8

9 COVERAGE STATS: JUNE 2012: 3G-HS Network Stats June 2012: 3G- HS (HSPA & HSPA+) 3G-HS: Land Coverage sq km

10 UMTS900 Traffic Growth 6,000,000 UMTS900 Data Traffic Growth (Weekly-MBytes) 5,000,000 4,000,000 3,000, times Traffic Increase over 6 Months 2,000,000 1,000,

11 Current and Planned LTE coverage Description Approximate population covered within the area People 353,338 BLUE: Planned by year end ( sites across 3 cities) GREEN: Current coverage (250 sites) 11

12 World Class Transmission Network E2E Network Management POC3 Site POC2 Site POC1 Site BSC RNC Core Sites BSC RNC MSC MGW HLR IN SGSN GGSN Access 10Meg - 1Gig Aggregation 10Gig Core 10Gig 100Gig 2G/3G E1 CTN BSC WiMax/LTE FE/GE IP RNC Optical + MPLS Business PON FE/GE CTN SGSN Residential IP/ MPLS over Fibre & Microwave BRAS IP/MPLS over WDM/OTN Future Proof, Unified Transport Network 12

13 Core Fiber NLD Project NLD1-4 (2481km) NLD 5-6 (1936km) NLD 7-8 (1108km) ASON (National) GE-DB ETC Q NL-BL ETC Q BL-CT ETC Q km (74%) Trenched Providing connectivity to EASSy & WACS Part of Co-Build agreement Connects all coastal Metro s between CT- DB Completes National ring ETC 2014 High level planning completed Route originates Ladysmith, running north to Ermelo, Nelspruit, Polokwane back to Pretoria. ETC 2015 Progressive move to meshed networks Increase network resilience Improved restoration time Increase SLA for future wholesale customers / clients 13

14 Core Fiber - Undersea Cable Connectivity EASSy (Eastern Africa Submarine Cable System) Operational since Aug Tbit/s capacity MTN has approx. 16% ownership Integrated to MTNSA WACS (Western African Cable System 5.12 Tbit/s capacity MTN has approx. 12% ownership Terrestrial fibre (DFA) completed Yzerfontein site in progress Expected Q

15 ICT Investment Switching and Data Centers Pholokwane Johannesburg (5) Pretoria Port Elizabeth Durban (2) Cape Town (2) Bloemfontein George Klerksdorp Nelspruit Ladysmith Rustenburg Ermelo Centurion East London Umtata Queenstown Worcester Port Shepstone Empangeni Kimberley 15

16 Looking Forward Investment Programme G 500 >5000 >2300 3G FTTS >1000 >1000 >5500 >4500 CTN uwave >2000 >2500 >3900 Modernisation >1000 National >2500km Backbone Complete Phases

17 Planned Capex investment in 2013 Network Capex spend 17

18 Challenges to Network Infrastructure Rollout Spectrum Limited spectrum - sharing models, unlock value through investment, spectrum is the lifeblood of telecoms operators and must be used High cost of microwave spectrum Government Authority approval Fibre & Site implementation is held back by a strict and time consuming approval process Public Private Partnerships to create value for government and big business Time to market National Fibre projects are usually long term investments Increase in number of towers and additional loading capacity on the existing towers Investment Escalating civil works costs Duplication of investment in infrastructure scale should be leveraged for efficiency and effectiveness Infrastructure sharing is key both at active and passive level 18

19 Opex Savings Due To Self Provisioning ~100% opex increment from 2010 to 2015 without SP Opex increment from 2010 to 2015 with SP Opportunity Cost not captured as well 19

20 Capacity as % of Leased Leased vs Self Provided Capacity 2000% 1800% 1600% 1400% 1200% 1000% 800% 600% 400% 200% 0% Year Leased Self Provisioning (as % of Leased) 20

21 Self Provided Rollout Technology Pre (Planned) 2013 (Planned) 2014 Planned) Microwave (hops) FTTS (Sites) Metro Backbone (km) >380 >600 Long Haul Backbone (km) ~350 >1700 >

22 Quality of Service challenges/solutions Transmission/Backhaul capacity Build high capacity/scalable/converged transport networks part of MTN s investment strategy Supporting Infrastructure Poor grid power availability and deployment into rural areas generators, alternative energy Network availability Third party provider service availability Theft of infrastructure Content location Key content sites far from South Africa Network Coverage Challenges acquiring sites in certain suburbs, EMF concerns lobbying, education, following international/global guidelines 22

23 Evolution of User Experience The Smartphone Challenge Smartphone Capability bringing with it enriched Subscriber Experience but at a Network impact 1. Additional Network Capacity HSPA+ Evolution Upgrades Transmission Upgrades New sites and expansions Additional Spectrum 2. Additional Network Coverage- Provisioning for an Always ON experience requires an increase level of Coverage This requires an evolution in Customer/ Device Specific Experience Monitoring 23

24 Evolution of user experience Customer/Device Centric Monitoring Approach Traditional Monitoring. Customer/Device Centric Approach Customer Network Service Cell Level Monitoring, Server, Platform Infrastructure Monitoring of Subscriber Experiences per Location Individual or Group New Capabilities allow MTN to deviate from 1. Traditional: Monitor and hence Optimise for the General Masses 2. New: Customer centic approach to optimise per Individual Subscriber or Group of Subscribers: 1. Trending 2. Geographically (for Transmission this is Key) 24

25 Evolution of user experience Customer/Device Centric Monitoring Approach 1. Measure 2. Collate, Prioritise 1. Measure Coverage Experience Quality Differential Subscriber Density Quality Experience Where is Bad coverage QoE? Handset Capability Locations Where are our Hotpots? Where are Subs Dropping? 3. Rollout where it will give the best Subscriber Experience 3. Optimisation of existing sites to improve that experience 4. Improved Customer Quality of Experience 25

26 Thank you 26