bmiresearch.com 2

Agenda

What is the IoT? Telecoms: M2M Must Become IoT Telecoms: Partnerships Key To Success Cars: From Connected To Autonomous

IoT And Industry: Disruptive Technology To The Fore Energy And Utilities: In Need Of A New Model Infrastructure: IoT To Revolutionise Construction And Operation Mining: Cutting Costs And Boosting Efficiency

bmiresearch.com 3

Services vs Connectivity – Networks enable the IoT, but the focus for end-users is on services

Enterprise the first adopter – Corporates quickest to implement cost-saving measures, smart cities to emerge first in city-states like Singapore and Dubai

Partnerships/cooperation are essential – No player can be all things to all people, collaboration across the value chain can allow players to monetise their core competencies

The IoT is global – Standing in contrast to telecoms markets which remain national in terms of regulation and services

Fragmentation – Nascent market means lack of standardisation and interoperability, which could deter some companies from early adoption

What Is The IoT?The ‘Internet of Everything’

A generic label for the trend of connecting 'things' - usually electronic devices - that can passively or actively monitor, collect and exchange data over a wired or wireless communications network. Two-way connectivity means that these 'things' can interact or intervene with their environments either directly or remotely. Timely interventions, diminished need for manpower and greater accuracy means that the cost benefits will appeal to almost every business and social sector.

Connected Devices Forecast, mn. f = BMI forecast. Source: BMI

The IoT Will Shape The Next 30 YearsBMI Core Views

bmiresearch.com 4

Y-o-Y Revenue Growth (%). Source: BMI, Bloomberg

Connectivity Is A Low Value Product – France M2M

Source: ARCEP

Online Players Outperform Telcos

Telecoms: M2M Must Become IoTServices The Key To Monetisation

bmiresearch.com 5

Privacy / Security – ‘privacy by default’ & ‘security by design’ puts the onus on manufacturers and service providers

Privacy – Consumers need transparency over data usage and the choice to opt out

Security –Early investment into security will avoid risk of tighter regulation

Fragmentation – This will be resolved when a dominant player’s technology wins, and through consolidation

Key Risks

Operator LPWA Memberships, May 2016. *Not deploying full networks

Telecoms: Partnerships Key To Success Partnerships At Network Level…LoRa Sigfox NB-IoTKPN Altice VodafoneProximus Telefonica KT SK Telekom Omantel EtisalatOrange T-Mobile CRBouygues POST LuxembourgTata India NTT DoCoMo*du UAE SK Telecom*Tele2

IoT Network Software Platform Security

Connected Home Connected Car

Enterprise

Consumer

+

+

…But Even More Important At Service Level

bmiresearch.com 6

Supporting infrastructure – particularly in terms of full geographical coverage with high speed mobile telecoms networks

Regulation – How should autonomous cars act in a scenario where it must choose between harming two people?

Security – Minimising the risk of cyber attacks on autonomous and driverless cars

Big Obstacles To Driverless Car Reality

Connected Devices, mn. Source: AT&T

Connected Cars: The Leading Consumer IoT Application

Cars: From Connected To DriverlessPartnerships Driving Development

While fully autonomous vehicles remain a long way off owing to big regulatory and security obstacles, connected cars offer a rich opportunity for premiumisation for carmakers, telecoms operators, and the content and service providers in between.

+

+

Technology and content already exists

Entertainment a better strategy than diagnostics

Dependent on rolling out reliable LTE networks – US/Developed Asia/GCC outperform Europe

But diagnostics an important service element for self-driving cars

AT&T: Connected Cars Drive M2M GrowthWill Tech Companies Or Carmakers Dominate?

bmiresearch.com 7

IoT And IndustryDisruptive Technology To The Fore

Major upside and downside risks to our forecasts for energy consumption, infrastructure investment & commodities prices

Traditional business models will have to adapt to technological changes or they risk becoming obsolete

Regulators are still playing ‘catch-up’ in key sectors and will play an important role in the widespread adoption of IoT

IoT Upside IoT Downside

Growing penetration of 'smart tech' drives higher electricity

consumptionGranular household management

of energy curbs consumption

IoT demand-management tools are used to support greater grid-based renewable integration –

supporting efforts to boost household electrification

IoT in combination with solar and battery tech leads to a collapse in centralised, grid-based generation

and consumption

Rapid growth in electric vehicles could drive demand for electricity

Widespread deployment of automated demand-response and

virtual power plants

Risks To Our Forecasts – An Energy Example

A Radically Different Competitive Landscape

Opportunities for non-traditional players to enter new sectors – in competition or in partnership.

IoT companies must put forward a clear commercial proposition if industry uptake is to accelerate

As IoT penetration across industry becomes commonplace, the need for cyber security will grow exponentially

10-Year Forecast – Global Electricity Consumption (TWh). Source: BMI

bmiresearch.com 8

Energy & UtilitiesRadically Altering The Utility Model Power markets are undergoing radical structural change -

driven by changes to generation, consumption and the advent of energy storage

The major reason for the changes in power markets are intermittent supply from renewables and distributed energy solutions – predominantly rooftop solar and battery storage paired with smart tech

Utilities have been slow to respond but are increasingly reorienting their business models to focus on renewables, regulated grid assets and energy services as traditional assets become stranded (e.g. German utility E.ON)

Decentralised generation will create growing demand for ‘smart’ products that support energy services

Non-traditional players with ‘behind-the-meter’ access are primed to capitalise

Digitalisation of the grid will empower consumers who also produce power – known as ‘prosumers’

Source: E.ON Company Reports

bmiresearch.com 9

InfrastructureA Generational Shift In Infra Provision

Evolution of infra: over the last decade, PE and institutional investors have changed the sector; the next big shift will be driven by tech companies

Construction: Building methods are set to evolve Robotics (e.g. bricklayers) Connectivity Of Machinery

Operation: part of an integrated approach to tackling population growth, urbanisation and pollution underpinned by smart cities and intelligent transit

Developed markets will focus on technological overlay – a risk to our forecasts for investment in traditional infrastructure

Developing markets will focus on building out new infra that incorporates smart tech, creating opportunities to leapfrog developed counterparts

A Chance To Leapfrog Developed Markets

BMI Global Urbanisation Forecasts. f = BMI forecast. Source: BMI

bmiresearch.com 10

MiningReducing Costs And Increasing Operational Efficiency

Innovation via automation to reduce production costs and increase operational efficiency. This is crucial amid a lost decade for commodities prices

This strategy is in contrast to the volume-orientated strategy of 2000-2012, which was driven by high minerals prices due to growth in Chinese demand

Only the mining majors are currently making use of IoT but we expect greater uptake as costs fall

Miners are using IoT to make efficiency gains in four main areas: IoT Platforms & Processors: data analytics and

processing The Human & External Interface: ops, safety and green

governance Communicators And Controllers: process control and

safety The Apparatus: autonomous fleet utilisation

BMI Iron Ore And Copper Price forecasts. f=forecast. Source: BMI

bmiresearch.com 11

Q&A