Mobile and Convergence the future of communication is here?

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Christian de Faria

MTN Group Chief Commercial Officer

Mobile and Convergence

– the future of communication is here?

Highway Africa Conference

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2

Africa calling

- the early beginnings of mobile telephony

o Less than 1% of the continent’s

population was connected by landlines run by inefficient state-owned

monopolies

o Tele-density (Tel lines/100 people) was 1.4, compared to Asia’s 6.3 and the world’s 10.3

o Average waiting period for a line installation was 5 years

o Making call a phone call was almost a privilege

Africa before the 1990s Recent Africa

o The first calls were being made on SA’s network just as South Africans were voting in the first democratic elections

o Through sheer ingenuity, African

entrepreneurs( like Mo Ibrahim and Strive Masiyiwa) realized that erecting BTS was considerably cheaper than running cables

o Soon the novelty of mobile telephony caught on very rapidly in other African countries

o Now Africa’s mobile penetration is about 50%

o And 1 out 5 Africans has an MTN SIM card Africa’s mobile revolution took off in earnest in

SA 17 yrs ago, with two licences issued Conditions in the 90s were perfect for the

emergence of mobile telephony in Africa

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A connected world

 Close to 5 billion mobile subscribers by end of 2010 worldwide

 Mobile cellular networks cover almost 90% of the world population – expected to reach 100% by 2015

 Biggest ICT success story has been the spread of mobile networks into rural areas driven by:

o Liberalization of the telecoms sector worldwide

o Competition in the cellular market. All but 17 African countries* now have three or more mobile operators

 Almost 2 billion people worldwide have access to the Internet

 But the ‘broadband divide’ remains * Lesotho, Swaziland, Mozambique, Namibia, Angola, Malawi, Rwanda, Cameroon, Chad, Libya, Tunisia, Mali, Senegal, Western Sahara, Eritrea, Ethiopia and Equatorial Guinea

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Battle for the pocket

Camcorder Digital Camera

Wrist

watch Compass GPS

Terminal Ultranotebook PC

PDA

Pocket Calculator

Dictation Machine

Portable Radio

Walkman MP3

Player i-Pod

Minidisk Player DVD

Player Pocket TV

Gameboy

Communicators Camera

phones

Gaming

phones Music

phones Smartphones

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2^nd battle for convergence

Watch

Internet Computers

Banking

Gaming

Music

Broadcast Print

Credit

Mobile

Mapping

Telecoms

Advertising Camera

The aggregate value of all these industries in 2009:

5 Trillion dollars

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Segmented approach

Voice Data Devices Charging

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MTN key priorities

 Voice revenues declining world-wide, and are being substituted by data revenues

 Over time revenue growth will slow down, but voice remains key MTN focus

 Smartphone distribution challenges and poor banking infrastructure present opportunities

 Partnerships with distribution companies and manufacturers remain a priority, and proving successful

 MTN Mobile Money platform facilitates financial transactions through this novel payment gateway

 Couple device with leading technologies to improve customer’s Internet experience, yet controlling their spend in emerging economies

 Segmented value propositions and niche services are key, as consumer’s needs go beyond voice

 MTN positioning itself as a dominant ICT player across our footprint and beyond

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• Pipe model

• No ICT focus Mainly Connectivity

• Limited ICT offering (focus on Managed Network services and basic Data centre Services)

Managed Networks + DC+

Convergent

• Connectivity,

Managed Networks + DC + Convergent

• LAN Management

• System Integration if major player

Full ICT - Local

• Global ICT managed solutions

• Target Global MNC and top tier of local Corporate/Governme nt

Full ICT - Global

• Convergent services

• Lever local landline players or build their own fixed networks to deliver ICT services to SMB

Mobile Driven ICT

ICT PositioningExamples Why ICT?

• No ICT focus • Defend connectivity

revenues & margin leveraging own networks – focus on medium size business and above

• Grow top line and maximize market share in a strong local Corporate/

government market

• Niche global MNC business

• Defend own market fixed business (T- Systems) by following the key clients wherever they go!

• Drive mobile data / convergent services

• Lever ULL to address SMB (low margin)

• Lever DC/Fiber backbones in countries with poor fixed networks (high margin)

FIXED > 70% FIXED > 80% MOBILE > 50%

Key telecom service in target clients

> 35-45% 10% - 25% (ICT Unit, low if IT intensive)

+ 30-40% (Fixed Unit in home country) > 40% (Mobile) EBITDA Margin

Classic ICT

Source: Delta Partners

Why ICT?

MTN moving towards ICT to develop mobile data, deploy convergent services and leverage own fixed infrastructure

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Where do we want to be?

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To do nothing is not an option

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Radical consumer empowerment

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The rise of Google & Facebook

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We need disruptive innovation models

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The Google factor

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Developers APIs

+ Channels + User Profile + CRM data + Presence + Charging

+ Hosting Environment + Location & movement Mobile Marketplace

Service Providers Enterprise

Developers Content Providers

= Bit Pipe

= Smart Pipe

End User

End User Network

Network Developers

APIs

Developers APIs

Bit pipe vs. Smart pipe

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Digital Age of real time