Welcome to Today’s IDC Web Conference

EMEA Telecoms — Update on the Market for

Telecom Services Across Developed and Emerging
EMEA
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© IDC Dec-10 1
EMEA Telecoms — Update on the Market
for Telecom Services Across Developed
and Emerging EMEA

Eric Owen, GVP, EMEA Telecommunications

Kresimir Alic, Research Manager, CEMA Telecommunications

Copyright IDC. Reproduction is forbidden unless authorized. All rights reserved.

EMEA Telecommunications Trends

Agenda
 Introduction to EMEA Telecom Database

 EMEA Telecom Trends

 Western Europe Telecom Highlights

 Central and Eastern Europe Telecom Highlights

 Middle East Telecom Highlights

 Africa Telecom Highlights

 Summary

© IDC Dec-10 3
 4
Dec-10
This provides a complete in-depth view of the telecom network services market in
55 countries for 2009, and forecast to 2014, which is updated every quarter
Penetration

Perpopulation
Per population
Perhousehold
Per household
Per small,
Per small, medium
medium and
and large
large business
business
Type
Type of
of Access
Access(dial,
(dial,DSL,
DSL, Cable,
Cable,etc.)
etc.)
EMEA Telecom Services Database

Access and

Type
Typeof ofnetwork
network(GSM,
(GSM, 3G)
3G)
technology

Technology
Technology(X.25,
(X.25, frame
frame relay,
relay, etc.)
etc.)
Type
Typeofof VPN
VPN (CPE, network- based)
(CPE,network-based)
Etc.
Etc.
Large Business
Large Business
MediumBusiness
Medium Business
Users

Small Business
Small Business
Product Segment Coverage

Consumers
Consumers
Traffic
Traffic
Metrics

Connections
Connections
User spending
User spending

Other Fixed Data

voice
line voice
Network Service

Voice
Mobile Voice
Mobile Data
Broadband

IP Access
Fixed line

Ethernet
IP VPN

Mobile
VoIP
VoIP

-
Coverage 1650European
CountriesCountries
in EMEA

Services
Telecom
Telecom
Services

© IDC
EMEA Telecom Services Database
Geographic Coverage

EMEA Telecom Services Database, 3Q10

Produced by IDC European Telecommunications Research

Select a country or select service definitions

Country Analysis Pivot Tool CEE Country Analysis MEA Country Analysis

Austria Italy General Pivot Albania FYR Macedonia Algeria Morocco

Belgium Netherland Company Size

Bosnia & Montenegro Bahrain Nigeria

Norway Main Contact

Denmark for Inquiries Bulgaria Poland Egypt Oman

Finland Portugal Service Croatia Romania Israel Qatar

Definitions
France Spain Czech Russia Jordan South Africa

Main
Germany Sweden Estonia Serbia Kenya Tunisia
Changes
Greece Switzerland Hungary Slovakia KSA Turkey

Ireland UK Latvia Slovenia Kuwait UAE

Western Europe Lithuania Lebanon

Central & Eastern Europe Middle East & Africa

© IDC Dec-10 5
EMEA Telecom Market
Spending on Telecom Services by Users Across EMEA Overall
CAGR
09–14
1%
5%

1%
$B

2%
4%
16%
-8%

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 6

EMEA Trends – by sub-region

Spending on Telecom Services Spending on Telecom Services

in WE ($B) in CEMA ($B)
4%
-2%

WE CAGR CEMA CAGR

Fixed connections -3% Fixed connections 3%
Mobile connections 1% Mobile connections 8%
Fixed ARPC 0% Fixed ARPC -2%
Mobile ARPC -3% Mobile ARPC -4%
© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 7
EMEA Telecom Penetration by Country
Germany Russia
Mobile connections
Per Population
Consumer
Broadband connections
Per Household
Consumer
PSTN/ISDN connections
Norway UAE
Per Household

Portugal Nigeria

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 8

WE Top Level Trends

Key updates in Q2 and

Q3:
• TDM Voice declining a
little quicker

• Consumer IP Voice
spending reduced a little

• Mobile Voice and Data

updated

• Broadband access
definition change

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 9

WE Trends: Fixed vs Mobile
Broadband — End 2009

WE average = 28%

WE average = 6%

Penetration is expressed in connections as % of population

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 10

WE Trends: Fixed vs Mobile
Broadband — End 2014

WE average = 32%

WE average = 10%
Penetration is expressed in connections as % of population

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 11

WE Trends by Type of User

Consumer Business
 NG broadband services will remain  Emergence of cloud
competitive — mobile substitution
not a major issue  DIY solutions still widespread

 Increased bundling of voice,  Rapid growth in Ethernet adoption

broadband and entertainment
 Convergence of voice and data
services
continuing
 Concern about impact of OTT
 Voice not so much of a cash cow
players
any more
 Mobile broadband contracts
attractive to some but not all!  Mobile working is growing

 Evolving mobile operator /device  CIO’s still concerned about large

vendor /Internet portal relationship scale mobile transformation

 Smartphones usage growing

© IDC Dec-10 12
CEE Trends (TSDB Countries Only)
 Total CEE telecoms service spending $M
will continue to grow during each of
the next five years, despite high
mobile penetration and weak
economic performance in 09–10.
 Mobile spending remains the
dominant part of total spending.
Mobile data spending will grow
considerably, but slow growth of the
mobile voice spending will result in
tiny overall growth rates.
 Fixed-voice segment will steadily
decline, as users continue to migrate
to mobile and to IP networks.
 Fixed data spending is growing,
driven by the growth of broadband,
IP-VPN and Ethernet spending.

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 13

CEE Trends
1) Traditional fixed telephony operators will use various types of service bundles to keep their
lines in service — all they can do is narrow the losses.
2) The major part of CEE mobile markets is saturated — there are just a few areas where
faster growth can still be expected, such as the Balkans (Bosnia, Kosovo, Albania) and
Central Asia (Tajikistan, Turkmenistan, Kyrgyzstan, etc.).
3) In most of the CEE countries, mobile subscriptions penetration is higher than in WE and is
still growing – multiple SIM ownership is very popular.
4) Mobile data service usage will rise in CEE as smart phone penetration and data
applications adoption rise.
5) Mobile broadband connections will grow but remain relatively modest. Fixed broadband will
continue to grow as well.
6) The usage of small-screen MBB will rise faster than the large-screen MBB – however, a
different trend might be seen in regions with under-developed fixed infrastructure.
7) No major fixed-to-mobile broadband substitution in the next few years. Mobile broadband
will complement fixed services.
8) Legacy corporate data services (digital leased lines, ATM/frame relay) are fading out in
favor of MPLS IP-VPN and Ethernet.

© IDC Dec-10 14
ME Trends (TSDB Countries Only)
 Despite the recent economic/financial
$M
shocks, the ME market remains stable
and growing strongly, though slightly
slower than before the crisis.
 Fixed telephony is the only declining
segment, suffering from fixed-to-
mobile substitution and users’
migration to IP.
 Mobile ARPUs will keep on eroding as
the sector is stepping away from the
prevalent monopolistic conditions, but
total spending will continue to grow.
 Spending on fixed broadband will
grow as MEA markets develop in
terms of stronger infrastructure,
competition, pricing, higher bandwidth
availability, newer technologies and
internet users’ maturity.
© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 15
ME Trends
1) Wider fiber-optic access deployments across the region, primarily in the GCC,
leads to operators pushing new high-bandwidth content and services to the
market such as IPTV and high-end video conferencing.
2) Rising uptake of IP-VPN due to better awareness of convergent networks among
company stakeholders.
3) High growth in mobile broadband, posing as a complementary access to fixed-
broadband services, and sometimes an alternative.
4) As an answer to the sharp growth of mobile data usage, all leading MEA mobile
operators (including Etisalat, STC, Zain, and Q-tel) have announced plans to
deploy LTE over 2011 and 2012. Some of them are already in the trial phase.
5) Blackberry services suspended in UAE and KSA as a potential threat to national
security - users started to shift towards alternative options (iPhone, Android).
6) New submarine cable landings in the region, such as the IMEWE, TGN, EIG
systems, expected this year will provide better diversity, drive down tariffs and
support better services delivery.

© IDC Dec-10 16
Africa Trends (TSDB Countries Only)
 Total telecom services spending will $M
be growing during next five years -
the Africa’s market is unsaturated
and its future is bright.
 There is a combination of a growing
number of customers and declining
average spending — new customers
are small spenders.
 Mobile dominates. If all African
countries were included, the share of
mobile revenues in the total would
have been even greater. Mobile is
often the sole network terminal.
 Fixed data spending will grow quite
slow because the poor fixed telecom
infrastructure inhibit the wide
adoption of fixed broadband services.

© IDC Source:/Notes: IDC EMEA Telecom Services Database 3Q10 Dec-10 17

Africa Trends
1) Submarine and terrestrial fibre projects
 Three along the west coast and one along the east coast.
 How to get the capacity inland and across the last mile? There are various
planned and ongoing partnerships between governments, operators and
NEPs to build terrestrial infrastructure.
2) Consolidation among operators
 ME investors (Zain, Orascom) likely moving away from Africa.
 Those left behind are mainly African (MTN, Vodacom, etc) and new Indian
entries (Bharti, Essar).
3) Mobile broadband developments
 Many operators are upgrading to 3G, though some regulatory issues
(license fees) still prevail in some areas.
 Development of local content will be key in driving data growth. However,
access to affordable mobile devices that offer data capability remains a
constraint to data usage.

© IDC Dec-10 18
Africa Trends
4) Regulatory reform proceeds

 Most independent regulators are evolving laws to take into account the
changing market conditions, technology and the effects of competition.

 Unified licenses have been issued in many states.

 Regulations requiring registration of subscribers by operators have caused

reductions in subscriber numbers.
5) Poor infrastructure as the major inhibitor

 Availability of power and reliability of electricity grids will continue to dog

efforts to take capacity to unserved areas.

 fixed line penetration is generally low, hampering adoption of ASDL for

broadband

 In some countries, the regulatory bodies encourage operators to share their

infrastructures to reduce costs of ownership.

© IDC Dec-10 19
Summary

 EMEA is a collective of many countries — individual markets will have

their own characteristics

 The ecosystem of the telecoms market is changing and service

providers need to decide where they want to play

© IDC Dec-10 20
 Questions?
Please visit http://idc-telco-db.com/ to
view an online demo of the IDC
Telecoms Services Database

Kresimir Alic

CEMA Telecoms Research Manager

Zagreb, Croatia

Phone: +385 1 30 40 052

Email: kalic@idc.com

Eric Owen

GVP, EMEA Telecommunications & Networking

London, UK

Phone: +44 2089877124

Email: eowen@idc.com

© IDC Dec-10 21