GREEN GROWTH AND NETWORK QUALITY IN A HIGH-GROWTH MARKET

Martin bäckström, Vice president Technology, Ericsson APAC Innovation§

© Ericsson AB 2010 2010-02-162

Mobile Voice User10 kbps

10-50 MB/month

Smartphone User100-1,000 kbps

100-500 MB/month

Mobile Broadband User>1 Mbps

1-5 GB/month

1

10

100

Customer demands are changing

© Ericsson AB 2010 2010-02-163

Network modernization drivers

› Energy efficiency

› Consumer demand boosting mobile data traffic

› Cost efficiency

› Increased quality demand

© Ericsson AB 2010 2010-02-164

Modernization meets demand

Many operators’ equipment older than 2004:

› Not possible to upgrade to EDGE, HSPA or LTE

› Poor energy efficiency

› Higher costs for operation and maintenance €

€€ €

€

€€

€

€

© Ericsson AB 2010 2010-02-165

5 million base stations installed

0

1 000

2 000

3 000

4 000

5 000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

3G RBS

2G RBS

Radio Base Stations (3GPP)(thousands)

1.5 million would benefit from being

modernized

2010All vendorsSource: Ericsson

Ericsson RBS represent only 25% of installed base in need of modernization

© Ericsson AB 2010 2010-02-166

70

100

Legacy cost

9

Site rental

8

Power

10

Operation & Maintenance

2

Investment (HW + roll-out)

New cost level

~30%

9

Fewer units & less spares

RBS 6000 reduction in cabinets (3 to 1)

More efficient HW Less staff,

site visits andO&M

Fewer units to support

1

23

4Investment

(HW/SW + roll-out depreciated 8 years)

72

Total Investment

65

Modernization cost savings

© Ericsson AB 2010 2010-02-167

Speech Quality Index

80 – 100 %60 – 80 %0 – 60 %

Good

Improved quality drives top-line

Traf

fic

Speech Quality

Bad Poor Good

After ModernizationBefore Modernization

Speech Quality

Poor

Bad>20% longer average calls

in this example

e1

Slide 7

e1 Remove % signs. ekariha; 2010-05-07

© Ericsson AB 2010 2010-02-168

Complete modernization approach

Project Management

Planning & Design Build Integration Optimization Operations

& SupportConsulting

Turnkey Network Rollout

© Ericsson AB 2010 2010-02-169

Vodafone essar, india

Customer Benefits› Improved network performance› Near zero interruption in network services› Improved cost efficiency and sustainability

Ericsson Solution› Replacement of 10,500 GSM sites at

peak-rate of 1 site per minute!› Delivery of 16,000 RBS and 250 BSCs› 13 months (2 months ahead of schedule)

Customer Challenges› Unequalled growth of new subscribers› Technological limitations of installed base › Deteriorating performance of old network

The worlds largest replacement of a live network – performed at record pace!

"Swapping a commercially live network with near zero service deterioration is a very demanding task. I am pleased that Ericsson managed to undertake and complete such a challenging project in record time."

Naresh Gupta,Technical Director at Vodafone Essar

TCO2 Approach to Energy efficiency

© Ericsson AB 2010 2010-02-1611

Challenge: Realize Telecom CO2Potential and Manage Energy cost

Source: ABI Research, Ericsson

ICT Industry footprint, 2%

Global CO2Emissions

1800 1850 1900 1950 2000 2050

80% by 2018

50% by 20201

15% by 2020

20% by 2020

Note 1. excluding Turkey and India

GLOBAL CO2 CHALLENGE COMMITTED CO2 REDUCTION

BT

Vodafone

Orange

Telefonica

› ICT have limited CO2 footprint itself but is a critical enabler to others› Reaching CO2 targets may demand use of expensive green energy

and taxations have potentially very high cost impact

What we haveobserved inthe market

© Ericsson AB 2010 2010-02-1612

CARBON INTENSITY

Revenue

Traffic

Subscribers

Tonnes CO2e

$M Revenue

Tonnes CO2e

MB

Kg CO2e

Subscriber

CARBONINTENSITY

A MEASURE OF CO2E

EMISSIONS RELATIVE TO

BUSINESSOUTPUTS

© Ericsson AB 2010 2010-02-1613

Drivers for telecom SECTOR

Energy Cost Brand image

Power disturbancesOff-grid sites

Government Directives

© Ericsson AB 2010 2010-02-1614

TCO2

TCOCO2TCO CO2

© Ericsson AB 2010 2010-02-1615

TCO and CO2

› TCO2 is an approach to optimize CO2 and cost at the same time using TCO techniques

CO2 module

TCO model

NW design alt 1 NW design alt 2

TCO

CO2

TCO

CO2

© Ericsson AB 2010 2010-02-1616

Power in – traffic out

less energy, more traffic optimize kWh/sub

© Ericsson AB 2010 2010-02-1617

Energy efficient business solution: The Complete picture

Energy efficient Network Design(coverage & Capacity)

Alternative Energy Sources

Energy Efficient Site Design

Energy Control

Optimized Power Supply

identify and re-deployredundant equipment

Network energy consumption

Radio Modernisation

Cooling concepts

energy Saving Features

© Ericsson AB 2010 2010-02-1618

TELSTRA IS CHALLENGED TO REDUCE ITS CARBON INTENSITY IN A LARGE, RAPIDLY EXPANDING NETWORK.

› >100% mobile penetration› Single national network:

> 2.1 million km2 > 99% population

6th largest land mass9th lowest population density1

3G Data Driving Traffic GrowthAustralia

06/07 07/08 08/09 09/10 10/11 11/12FINANCIAL YEAR

Ann

ual M

B

› Driven by broadband-enabled PCs and content

› Data traffic doubling every 8 month

“Telstra is committed to assisting Australia in reducing its carbon emissions by aspiring to reducing its own carbon intensity by at least 10% and up to 15% by 2015”

TELSTRA’S CARBON CHALLENGE

Source: Telstra

© Ericsson AB 2010 2010-02-1619

-30%

Telstra Potential REDUCTION IN CARBON EMISSIONS BY 2014

Radio Access Network

Core Network

-22%

-11%

-56%

-31%

© Ericsson AB 2010 2010-02-1620

Conclusion

› Consumer demand forces operators to continuously evolve their networks

› Network modernization enables better quality, increased revenues and reduced cost

› Combine TCO and CO2

› Ericsson offering: Efficient Energy Business Solution

› Ericsson in a prime position to address the market

© Ericsson AB 2010 2010-02-1621

© Ericsson AB 2010 2010-02-1623

References

› China Unicom 3G Roll-Out 2009– World’s largest green-field network deployment

› AT&T Broadband Access 2009– Full systems solution for fixed broadband access

› Telstra 3GSM National Network 2007– Largest geographic WCDMA network deployment

› Metro PCS / USA 2009– Mobile Broadband (LTE) deployment

› Eco-smart for TIM in Italy 2009– Solar-powered sites – up to 100% of energy needs

© Ericsson AB 2010 2010-02-1624

Customer Benefits› Commercial launch on time Oct.1› Enabling 3G high-speed communications› Nationwide commercial launch of 3G

Ericsson Solution› High speed 3G coverage to tens of

millions of subscribers› 31,000 RBS’s in 7 months› 200 RNC’s in 3 months

Customer Challenges› Tight deadline for fast time-to-market › Fierce competition› Large geographical area (15 provinces)

Massive turnkey network rollout at record pace

3G NETWORK UpgradeChina Unicom, china

© Ericsson AB 2010 2010-02-1625

Continent-wide HSPA UpgradeTelstra, Australia

Customer Benefits› Providing wireless broadband to areas

where it previously was impossible› Fast time to market› Cost efficient solution enabling a rural

subscriber offering equivalent to the city

Ericsson Solution› Countrywide HSPA network deployment› Ericsson’s Mobile Broadband Router as

alternative to traditional copper lines› Coverage for 99% of population

Customer Challenges› Broadband connectivity in rural areas› Vast geography of Australia› Low subscriber density in those areas

Groundbreaking 3G rollout across the whole continent of Australia

”This project allows us to take our services a step further and provide a comparable level of service to all of our customers.”

Mike WrightExecutive Director, Telstra

© Ericsson AB 2010 2010-02-1626

Customer Benefits› Improved network quality› IP migrated future-proof network› Improved competitive position

Ericsson Solution› Full Service Broadband solution (2G & 3G)› Swap of 2,500 radio base stations› Accelerated 3G network deployment

Customer Challenges› Strong customer demand for broadband› Interoperability quality issues› Gaining overall leadership in the market

Live network swap replacing two existing vendors with Ericsson network

”A dedicated team, fully committed to the project and led by a team of specialists meant that services were maintained throughout.”

Karim Benabdallah, Advisor to CTO and CEO office, O2 Ireland

Network ModernizationO2, Ireland