Page 2 © Copyright 2012
Agenda
Big Themes
General Framework
Trends in Fixed Voice
Trends in Mobile Voice
Conclusions
Page 3 © Copyright 2012
New Mobile
Economy
Desktop Internet 1 Billion+ Units/Devices
PC 100 Million+ Units
Mobile Internet projected to exceed 10 billion units/devices by 2016
Opportunity Yankee Group predicts that the
total mobile service market (line subscriptions) will exceed $1 trillion by 2014
Yankee Group forecasts that the mobile connected devices market (phones, tablets and e-readers) will exceed $435 billion by 2014
Yankee Group predicts that revenues from mobile apps, cloud and advertizing will grow to $340 billion by 2014
Yankee Group forecasts the
growth in the value of mobile transactions worldwide will increase to $984 billion by 2014
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Text to Speech to Video
Increasing Bandwidth
Communication modes do not disappear but costs are transformed by technology and prices fall towards costs
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One-to-One To Many-to-Many Shared Personal Experiences
Source: Yankee Group U.S. Consumer Survey, 2011, 2012 Hispanic Respondents Only
As many Hispanic Smartphone Users Connect to Social Networks EVERY DAY as Make Voice Calls (58%)
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Defined Place to Any Place
Source: Yankee Group U.S. Consumer Survey, 2011 Hispanic Smartphone Respondents Only
2%
2%
3%
5%
13%
13%
16%
18%
27%
45%
90%
0% 20% 40% 60% 80% 100%
Public transportation
Other
Airports
Hotels
Internet Café
Public buildings
Private transportation
Out and about
School
Work
Home
Where Did You Use The Internet In The Last Month
(Ranked 1, 2,3)
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Smartphone Growth Driven by The Interaction of These Two Forces
1-to-1 to Shared Personal Experiences
Def
ined
Pla
ce t
o A
ny
Pla
ce
For many Latin Americans, a smartphone is their first personal internet device
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General Framework
0,0
20.000,0
40.000,0
60.000,0
80.000,0
100.000,0
120.000,0
2003 2004 2005 2006 2007 2008 2009 2010 2011
United States
Consumer Telephony Access Revenue Consumer Mobile Service Revenue
Source: Yankee Group ConnectedView Mar 2012
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General Framework
-20,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
2003 2004 2005 2006 2007 2008 2009 2010
United States Year over Year Growth in Minutes
Interstate Switched Access Minutes of Use Carrier Minutes of Use
Source: FCC, Yankee Group ConnectedView, Yankee Group Mobile Carrier Monitor Mar 2012
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General Framework – Minutes Are Harder To See The Crossing Point – May Not Have Come
France Fixed and Mobile Minutes
Source: ARCEP Annual Report for Year 2010
Page 12 © Copyright 2012
General Framework – Minutes Are Harder To See Crossing Point – Inconsistent Data
0
20000000
40000000
60000000
80000000
100000000
120000000
1400000001
98
0
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
Cellular mobile calls
National calls (local + long distance)
VoIP calls
France Fixed, Mobile and VOIP Minutes per EUROSTAT
Source: DataMarket.com June 2012
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General Framework – Why Do The Curves Cross?
Mobile Lines Are Personal – Fixed Lines Are Shared
“I want to call YOU, not your house/family/office”
Prepaid Mobile Opens New Socio-Economic Sectors
Calling-Party-Pays PLUS Prepaid Opens The Market Even Further
Mobile ARPUs Tend To Decline As Penetration Increases Whereas Fixed Voice ARPU Nearly Flat Delays Revenue Crossing Point
Mobile Voice Minutes More Expensive Than Fixed Voice Delays Minutes Crossing Point
Page 14 © Copyright 2012
Global Trends in Fixed Voice – Some Growth, Especially in Emerging Markets But …
866917 937 952 960 970 965 953 961 971 981 991 1.000 1.010
0
200
400
600
800
1.000
1.200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Consumer Fixed Telephony Lines (M)
Consumer Traditional Voice Consumer Non-Traditional Voice Consumer Voice Fixed Lines
Consumer Traditional (i.e. Telco) Lines Decreasing, Replaced by VOIP over
Broadband
Source: Yankee Group ConnectedView Mar 2012
Page 15 © Copyright 2012
Global Trends in Fixed Voice
271,0 277,9
262,7 250,3 251,6 256,4
243,0 234,7 231,0 227,3 222,9 218,7 215,3 212,3
-
50,0
100,0
150,0
200,0
250,0
300,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Global Consumer Fixed Voice Revenue (USD M)
With Broadband Voice Given Away (Bundled) or Priced Low and VOIP Rates << Traditional, Voice
Revenues Fall Despite Growth in Lines
Source: Yankee Group ConnectedView Mar 2012
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Cord Cutting – US Attitude Survey
0%
10%
20%
30%
40%
50%
60%
70%
80%
18-19 20-24 25-34 35-44 45-54 55-64 65+
Pe
rce
nt
of
Re
spo
nd
en
ts
Age Group
US Cord Cutting Attitudes 1Q12
My Primary Phone Is Mobile
My Primary Phone Will Never Be Mobile
Source: Yankee Group US Consumer Survey Mar 2012
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Cord Cutting – US Attitude Survey
43%
2%
3%
3%
4%
39%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
It is a mobile phone
It will be replaced with a mobile phone within the next three months
It will be replaced with a mobile phone within the next year
It will be replaced with a mobile phone the next time I
move
It will be replaced with a mobile phone when I get a new bundle that does not include home phone service
It will never be replaced by a mobile phone
When Will You Replace Your Primary Fixed Phone With A Mobile Phone?
5%+ intention to "Cut the Cord" w/in 1 year is consistent with 5.8% decline we see/forecast
Source: Yankee Group US Consumer Survey Mar 2012
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Cord Cutting – As Reported by FCC – A More Restricted Definition
10%
12%13%
15%
16%
18%
21%
1,8% 1,7% 1,6% 1,9% 2,1% 1,7% 1,5%
0%
5%
10%
15%
20%
25%
Jan - Jun 2006 Jul-Dec 2006 Jan - Jun 2007 Jul-Dec 2007 Jan-Jun 2008 Jul-Dec 2008 Jan-Jun 2009
Fixed Mobile Substitution
Adults with Wireless Service Only
Adults with No Telephone Service
Source: Wireless Substitution: Early Release of Estimates From The Data from the National Health Interview Survey, January – June 2009). As Reported in FCC 15th Annual Report on Mobile Wireless Competition (2011)
Page 19 © Copyright 2012
Global Trends in Mobile Voice
1.206 1.509
1.889
2.341
2.884
3.456
3.962
4.574
5.102
5.422 5.659
5.837 5.976 6.038
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Global Consumer Mobile Voice Lines (M)
Reaching saturation for Voice Lines. Further Mobile Growth will come from M2M and Mobile
Broadband
Source: Yankee Group ConnectedView Mar 2012
Page 20 © Copyright 2012
Global Trends in Mobile Voice
282,4
339,9
370,1
405,6
458,9
491,5
458,5 452,7 469,3 461,3
444,8 428,3
414,5 401,2
-
100,0
200,0
300,0
400,0
500,0
600,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Consumer Mobile Voice Revenue (USD B)
Voice ARPUs continue to fall due to Regulatory and Competitive Action so Voice Revenues continue to
fall as well
Source: Yankee Group ConnectedView Mar 2012
Page 21 © Copyright 2012
Voice ARPUs Fall “Sin Piso” (Except ZERO)
-
0,20
0,40
0,60
0,80
1,00
1,20
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Real Voice ARPU (Seasonal Smooth) Indexed to 4Q07
Movistar COL (Telefonica)
Entel CHI
Movistar CHI (Telefonica)
Personal ARG
Movistar ARG (Telefonica)
Oi BRA
TIM BRA
Vivo BRA (Telefonica)
Movistar MEX (Telefonica)
Movistar PER (Telefonica)
Movistar VEN (Telefonica)
Movistar ECU (Telefonica)
Telcel MEX (America Movil)
Source: Yankee Group Mobile Carrier Monitor Mar 2012
Page 22 © Copyright 2012
Voice ARPUs Are Not Falling Because of Decreased Usage
-
50,00
100,00
150,00
200,00
250,00
MOU = Average Voice Minutes of Use Per Month
Comcel COL (AMX)
Movistar COL (Telefonica)
Entel CHI
Claro CHI (AMX)
Movistar CHI (Telefonica)
Personal ARG
Movistar ARG (Telefonica)
Claro ARG (AMX)
TIM BRA
Vivo BRA (Telefonica)
Claro BRA (AMX)
Telcel MEX (AMX)
Movistar MEX (Telefonica)
Claro PER (AMX)
Movistar PER (Telefonica)
Movistar VEN (Telefonica)
Claro ECU (AMX)
Movistar ECU (Telefonica)
The issue is ARPM (Average Revenue Per
Minute) not OTT competition or
Penetration Growth leading to Marginal
Users or Growth in 2nd Lines
Source: Yankee Group Mobile Carrier Monitor Mar 2012
Page 23 © Copyright 2012
Conclusions
Societal trends favor personal devices i.e. Mobile
Mobile is accessible to a broader base of society
2-5% of existing Fixed line customers “cut the cord” every year
Only bundling of Fixed Voice with Fixed Broadband prevents this from happening faster
Fixed Voice Revenues will continue to fall because of VOIP and migration to Mobile
Mobile Voice Revenues will continue to fall because of Regulatory and Competitive Action
Page 24 © Copyright 2012
¡Gracias!
¿Preguntas? W. Swain
Managing Partner, C3 Comunicaciones SAS SVP Emerging Markets, Yankee Group [email protected] [email protected] www.MacondoTelecom.net @WSYGLA