An Acknowledged Industry Innovator - MIT IDEebusiness.mit.edu/sponsors/common/2002-AnnualConf... · An Acknowledged Industry Innovator 1998 the first telecom operator in Europe to

02/06/02Sonera Venture Partners LPSonera Venture Partners LP Confidential

An Acknowledged Industry Innovator

1989 DataNet, the first European LAN interconnection service

1990 The first European concept for Packet Switched Private Network

1991 DataNet, The first European Frame Relay service

1993 The world's first pilot ATM service

1994 Hot Product of the Year award by Data Communications International magazine for DataNet ATM, Europe's first commercial ATM service

1995 Nation-wide commercial ATM network Medianet, Europe's first multimedia service pilot

1996 Hot Product of the Year award by Data Communications International magazine for Medianet multimedia service pilot

1997 Neophone, the first service for IP voice over corporate data networks including a gateway to the PSTN. User's choice award by Data Communications International magazine for Sonera's Frame Relay service

First in the world to apply mobile cash in consumer applications

First in the world to develop wireless data backup service for smart phones

Source: http://www.sonera.fi/english/rd/milesto.html

http://www.live.soneragroup.com/


An Acknowledged Industry Innovator

1998 the first telecom operator in Europe to introduce a new IPcommunications network incorporating the functionality of both the Internet and the traditional telephony network.

1999 Hot Product of the Year award by Data Communications magazine for Sonera's IP Communications Network

The World Billing Award for outstanding customer service and customer management in mobile telephone service billing by Institute for International Research (IIR)

The International Ovations Award for outstanding innovation and vision in mobile network design, engineering and services by tele-com magazine and the ComNet2000 conference.

2000Sonera was awarded as the best mobile operator in World Communication Awards 2000 in Cannes

Source: http://www.sonera.fi/english/rd/milesto.html

http://www.sonera.fi/english/rd/ip/

http://www.sonera.fi/english/rd/ip/

http://www.sonera.fi/english/press/salin.html






http://www.sonera.fi/english/pressinfo/releases/EngSonera1999/1999/128.html







Sonera/Sonera/SnVPSnVP Fund Structures & AgreementsFund Structures & Agreements

Sonera CorporationSonera Corporation

Sonera PortfolioSonera Portfolio

€120M€120M€150M€150M

20%20%

Sonera Venture Sonera Venture Partners Partners

SnV PartnersSnV Partners

1 2 4

3

3. Sonera investment into SVP Fund4. Advisory Agreement of SVP Fund

1. Advisory Agreement for Sonera Fund 2. Strategic Co-operation Agreement


• We expect the moderate growth to continue• Low valuations create good time to enter

Hype

Disillusion

RealismGrowthPe

rcei

ved

Valu

e

TimeNow Investments during 5 years

Cycles of the Industry


Mobile market potentialMobile vs. television and PC penetration

0

200

400

600

800

1,000

1,200

1,400

1997

1999

2001

2003

2005

mill

ion

Mobile Handsets:• Will become the dominant

communications device• Will supersede fixed-line telephones• Are personal communications

devices, offering customized services

• Will be used for a variety of communications and commerce applications

• Will utilize many networks, including 2G, 3G and Bluetooth

Households with TV

Mobile phone subscribers

PC

Source: Dataquest, EMC


SnV Partners’ Value Creation

StrategyStrategy&&

KnowledgeKnowledge

Expe

rienc

eEx

perie

nce

Skill

sSk

ills

Net

wor

kN

etw

ork

SnVPSnVP International Partner NetworkInternational Partner NetworkSonera’s Sonera’s Extensive Mobile & Telecom ExpertiseExtensive Mobile & Telecom Expertise

Sonera’s Sonera’s World Class Test LaboratoriesWorld Class Test Laboratories

Leading Mobile Market in FinlandLeading Mobile Market in FinlandSnVP SnVP presence in selected critical VC Hot Spotspresence in selected critical VC Hot Spots

ICT Industry Growth & TrendsICT Industry Growth & Trends

Sonera Partnership NetworkSonera Partnership NetworkInsight from the Mobile Industry standardization bodiesInsight from the Mobile Industry standardization bodies

Technology DD ProcessTechnology DD Process

Practical knowledge on SW andPractical knowledge on SW andMobile Services developmentMobile Services development

30+ years of experience in International SW30+ years of experience in International SWDevelopment, Mobile Applications and Services Development, Mobile Applications and Services Development, Product ManagementDevelopment, Product Management

Experience in Intellectual Asset ManagementExperience in Intellectual Asset Management 20+ years of experience in 20+ years of experience in crosscross--border Mergers and border Mergers and AcquisitionsAcquisitions

Business Development Experience combinedBusiness Development Experience combinedfrom many different segments and markets from many different segments and markets

Wide experience in Business Development Wide experience in Business Development

Technology Intelligence Technology Intelligence skillsskills

Backgrounds in strategy development ofBackgrounds in strategy development ofCorporations and smaller CompaniesCorporations and smaller Companies

General Business Management General Business Management SkillsSkills

Corporate Venture Capital Corporate Venture Capital BackgroundBackground

Accounting and Business Control Accounting and Business Control ExperienceExperience

Industry ExpertiseIndustry Expertise

Several Several implemented implemented successfull Dealssuccessfull Deals

Joint Joint Venture Venture ManagementManagement

Technical Sales Technical Sales Support, IT Support, IT ManagementManagement

Research in Medical Technology Research in Medical Technology

Personal Personal EntrepeneurshipEntrepeneurship

Deal FlowDeal Flow&&

OpportunitiesOpportunities

AnalysisAnalysis& Due& Due

DiligenceDiligence

NegotiationNegotiation&&

Deal MakingDeal Making

PortfolioPortfolioCompanyCompany

ManagementManagement

Exits, Exits, Mergers,Mergers,

Trade SalesTrade Sales


14 Direct Investments, €63M

Wireless streaming media infrastructure developer

(MPEG4)

raised EUR 150+M

Natural user interaction platform for wireless and

other applications

raised EUR 30M

Leading online payment service

raised EUR 250M

Consumer credit card and banking company with advanced wireless &

Internet features

raised EUR 290M

Online sales & marketing solutions for telecom service distribution

channels

raised EUR 56M

European online music promotion and research

provider

raised EUR 20+ M

Wireless 2.5/3G data QoSmanagement and

capacity optimization platform

raised EUR 5M

Software platform for tailored and personalized

search and navigation

raised EUR 18M

Software and platform developer for handhelds(Symbian competence

center)

raised EUR 37M

Wireless gaming and entertainment software

developer

raised EUR 12 M

Provider of software, services, and technology

for handheld terminals

raised EUR 4M

3D animation developer for interactive TV and

wireless

raised EUR 3M

Rich-media publishing platform service provider

for businesses

raised EUR 16M

Wireless data optimization and service

creation platform

raised EUR 16M


SVP Preferred Investment Range

SVP Investment Range

Other(non-tech)

Inve

stm

ent

Foc

us

Wireless

Data & Telecom

Biotech & Health

Software& IT

“A”- R&D & First

Revenue

“C” –Market Share

“B” -Revenue Growth

Seed –Concept

R&D

“Mezzanine” – Pre IPO

Investment Stage


Investment ThemesPlatforms, Applications and Services in ICT convergence

Ubiquitous Rich-Media

Mobile Data / Internet

Infrastructure

Alternative Mobile / Wireless

Technologies

BetterUsability

Home & Family Enterprise solutions

Mobile

Internet PC / IT


SnVP & Sonera co-operation

•• CoCo--operation agreement provides access to:operation agreement provides access to:– Sonera’s in-depth industry knowledge (e.g. standardization

committees)– Technology due diligence process– Carrier-grade test-laboratory facilities

•• Portfolio value building:Portfolio value building:– Strategy and technology consulting by experts – Pilot deployments– Potential distribution and sales channel development– Leverage Sonera’s network of affiliated carriers,

infrastructure vendors, terminal vendors and partners


A shift that already took place ?

• Dell’Oro Group– Wireless equipment revenue estimates for 2001

NICs

$1,000M

$2,000M

$4,000M

$8,000M

$16,000M$32,000M

Cellularinfrastructure

2000 2001

35,857 34,812

-- 3%3%

APs / bridges + 5 %Broadband GWs + 191 %

+ 16 %

Wireless LAN

2000 2001

564

1,156

313

1999

+ 105%+ 105%

Fixed wireless

2000 2001

655727

+ 11%+ 11%


Definitions

• 2G Second generation digital wireless technologies.In Europe GSM; in North America CDMA, TDMAand GSM

• 2,5GPacket switched data to circuit switched 2Gnetworks. GPRS

• 3G Third generation digital wireless technologyreferring primarily to UMTS (W-CDMA)

• 4G Short range wireless technologies (802.11a/b,HiperLAN2, Bluetooth) and alternative metro andwide area wireless technologies


The challenge behind 11.5G

Simultaneous discontinuities create a challenge, as operators must at the same time:• manage technology evolution and investment cycles• transition to a new industry structure• migrate into new business models

AS THEY RETAIN THEIR CUSTOMERS AND PROFITABILITY

Simultaneous discontinuities create a challenge, as Simultaneous discontinuities create a challenge, as operators must at the same time:operators must at the same time:•• manage technology evolution and investment cyclesmanage technology evolution and investment cycles•• transition to a new industry structuretransition to a new industry structure•• migrate into new business modelsmigrate into new business models

AS THEY RETAIN THEIR CUSTOMERS AS THEY RETAIN THEIR CUSTOMERS AND PROFITABILITYAND PROFITABILITY

It is not 2G to 3G, but 11.5G!It is not 2G to 3G, but 11.5G!


The demand for integration !

Markets will be flooded with parallel roll-outs of competing and complementing technologies

Markets will be flooded with parallel roll-outs of competing and complementing technologies

Others (4G) : WLAN, Bluetooth …

3rd Generation digital (3G)/ packet switched (UMTS)

2nd Generation (2G)/digital (GSM)

1st Generation/analog

2.5 Generation digital (2,5G)/ packet switched (GPRS)

6G6G 8G8G 6.5G6.5G

8.5G8.5G

9.5G9.5G 7G7G

4.5G4.5G

2000 2001 2002 2003 2004


11.5G hamburger

Content and services

Terminal

00 22 2.52.5 33 44 = 11.5G

Service management

Back-end


Sonera in the global hamburger ?

Service management

Content and services

Back-end

Terminal

00 22 2.52.5 33 44

Controlled by playersthat can’t be controlled

by Sonera

A world of Yahoo!’sand mega media

moguls

Technology play drivenby technology vendors

Makes sense, butwhere’s the billiondollar business ?

Driving the network integration

Strengthens leadingedge position but

difficult to extract value

Requires customerownership, VNO

model questionable

End

user

11.

5G

Clearly valuableposition but more

technology than service

Requires networkownership, only 4G

within Sonera’s reach


Operator’s Technology FocusCommunications Operator (3/4G)

1985 1995 2000Time

Telecom Operatoras a monopoly

NetworkProduct platforms

Billing

Mediation and Service Provisioning

Customer RelationshipManagement

Network

Telco operatorin competitive environment



Network

Mediation and Service Provisioning

BillingMediation and

Service Provisioning

Customer RelationshipManagement

Billing and customer care

Customer

Customer Relationship management +Service management +Network/terminal independent

?Integration of digital services


The New Opportunity is Enormous

• Only infrastructure companies make currently money with internet in addition to some IPO’s

• Internet has had a 10x effect on business and society

• Information Society will have 100x impact

• Network based business needs completely new infrastructure

• Real-time location based life&community management infra

Bus

ines

s &

Soc

ial I

mpa

ct

Computer & Communications

Revolution

InternetRevolution

WirelessInternet

Revolution

We Are Here

CISCONokia

makes moneyGlobal roaming

Seamless access selection

Real-time service management

IP routing

Herenew players

who understand new infra willmake money

Documents

An Acknowledged Industry Innovator - MIT IDEebusiness.mit.edu/sponsors/common/2002-AnnualConf... · An Acknowledged Industry Innovator 1998 the first telecom operator in Europe to