Mobile and Convergence the future of communication is here?

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1 Mobile and Convergence the future of communication is here? Christian de Faria MTN Group Chief Commercial Officer Highway Africa Conference 17 September 2011, CTICC, Cape Town

2 Africa calling - the early beginnings of mobile telephony Africa before the 1990s Recent Africa Conditions in the 90s were perfect for the emergence of mobile telephony in Africa Africa s mobile revolution took off in earnest in SA 17 yrs ago, with two licences issued o Less than 1% of the continent s population was connected by landlines run by inefficient state-owned monopolies o Tele-density (Tel lines/100 people) was 1.4, compared to Asia s 6.3 and the world s 10.3 o Average waiting period for a line installation was 5 years o Making call a phone call was almost a privilege o The first calls were being made on SA s network just as South Africans were voting in the first democratic elections o Through sheer ingenuity, African entrepreneurs( like Mo Ibrahim and Strive Masiyiwa) realized that erecting BTS was considerably cheaper than running cables o Soon the novelty of mobile telephony caught on very rapidly in other African countries o Now Africa s mobile penetration is about 50% o And 1 out 5 Africans has an MTN SIM card

3 A connected world Close to 5 billion mobile subscribers by end of 2010 worldwide Mobile cellular networks cover almost 90% of the world population expected to reach 100% by 2015 Biggest ICT success story has been the spread of mobile networks into rural areas driven by: o Liberalization of the telecoms sector worldwide o Competition in the cellular market. All but 17 African countries* now have three or more mobile operators Almost 2 billion people worldwide have access to the Internet But the broadband divide remains * Lesotho, Swaziland, Mozambique, Namibia, Angola, Malawi, Rwanda, Cameroon, Chad, Libya, Tunisia, Mali, Senegal, Western Sahara, Eritrea, Ethiopia and Equatorial Guinea

4 Battle for the pocket Camcorder Pocket TV DVD Player Gameboy Digital Camera Minidisk Player Wrist watch Camera phones Gaming phones i-pod Compass GPS Terminal Ultranotebook PC PDA Smartphones MP3 Player Communicators Music phones Portable Radio Walkman Pocket Calculator Dictation Machine

5 2 nd battle for convergence Credit Computers Internet Banking Telecoms Watch Mobile Advertising Camera Music Mapping Gaming Print Broadcast The aggregate value of all these industries in 2009: 5 Trillion dollars

6 Segmented approach Voice Data Devices Charging

7 MTN key priorities Voice revenues declining world-wide, and are being substituted by data revenues Over time revenue growth will slow down, but voice remains key MTN focus Smartphone distribution challenges and poor banking infrastructure present opportunities Partnerships with distribution companies and manufacturers remain a priority, and proving successful MTN Mobile Money platform facilitates financial transactions through this novel payment gateway Couple device with leading technologies to improve customer s Internet experience, yet controlling their spend in emerging economies Segmented value propositions and niche services are key, as consumer s needs go beyond voice MTN positioning itself as a dominant ICT player across our footprint and beyond

8 Why ICT? ICT Positioning MTN moving towards ICT to develop mobile data, deploy convergent services and leverage own fixed infrastructure Mainly Connectivity Pipe model No ICT focus Managed Networks + DC+ Convergent Limited ICT offering (focus on Managed Network services and basic Data centre Services) Full ICT - Local Connectivity, Managed Networks + DC + Convergent LAN Management System Integration if major player Full ICT - Global Global ICT managed solutions Target Global MNC and top tier of local Corporate/Governme nt Classic ICT Mobile Driven ICT Convergent services Lever local landline players or build their own fixed networks to deliver ICT services to SMB Examples Why ICT? No ICT focus Key telecom service in target clients EBITDA Margin Source: Delta Partners Defend connectivity Grow top line and maximize market Niche global MNC business Drive mobile data / convergent services revenues & margin share in a strong Defend own Lever ULL to address leveraging own local Corporate/ market fixed SMB (low margin) networks focus government business (T- Lever DC/Fiber on medium size market Systems) by backbones in business and following the key countries with poor above clients wherever fixed networks (high FIXED > 70% they go! FIXED > 80% margin) MOBILE > 50% > 35-45% 10% - 25% (ICT Unit, low if IT intensive) % (Fixed Unit in home country) > 40% (Mobile) 8

9 Where do we want to be?

10 To do nothing is not an option

11 Radical consumer empowerment

12 The rise of Google & Facebook

13 We need disruptive innovation models

14 The Google factor

15 Bit pipe vs. Smart pipe End User = Bit Pipe Network Enterprise Content Providers Service Providers Mobile Marketplace + Channels + User Profile + CRM data + Presence + Charging + Hosting Environment + Location & movement Network End User = Smart Pipe

16 Digital Age of real time