Telecommunications market Briefing notes and sales support for news media sales teams

What’s in this deck? This deck is split into two sections: Section 1 An overview of the Australian telecommunications market (mobile and ISPs) The 2015 Media i Industry Survey asked agencies “what are the most important factors when dealing with media owners”. The most common factor (52% agreed ) was “understanding of your client’s business and category”. Section 1 of this deck won’t make you an instant expert, but it will help get you up to speed on the most important facts about the category. Section 2 Support slides for sales presentations Every great sales presentation is tailored for each client, but there are certain points that are consistently relevant to clients within a category. Section 2 contains research about brands, what consumers consider when selecting a provider, and the contribution news media makes in the decision process.

Section 1 Telecommunications market: an overview

Telecommunications industry: total revenue Telecommunications services (voice + internet): Estimated revenue $42.3 billion in 2015-16 Two key revenue streams: Fixed networks: 25% of revenue Mobile services: 50% of revenue Source: IbisWorld, Telecommunications Services in Australia, May 2016.

The future is mobile In 2015 the number of smart phone owners exceeded the number of fixed line telephone users (those with access to a fixed line telephone connection at home). 31.8 million mobile services (voice + mobile internet)*. * Many users have more than one service Source: Australian Communications and Media Authority | Communications Report 2015.

Mobiles everywhere High penetration 94% of the population owns a mobile phone 72% own a smartphone Mobiles the most-used device for going online Mobiles 79% Laptops 74% Desktops 61% Tablets 58% Sources: emma, 12 months to April 2016; Australian Communications and Media Authority | Communications Report 2015.

Explosion in data downloads Five-fold increase in volume of data downloads since 2011, and increasing due to services such as SVOD (streaming video on demand) 35% of US internet traffic due to Netflix Most data (92%) still downloaded on fixed-line (ADSL or cable). NBN expanding fixed-line telephone and internet infrastructure; scheduled for completion in 2020. Source: Australian Communications and Media Authority | Communications Report 2014-15; “SVOD: Netflix surge threatens free-to-air TV”, Mark Day, The Australian, 13 July 2015; nbn Annual Report 2014-15

Mobile: three key players Telstra dominates, and growing. +664,000 new customers FY15 (total: 16.7m). Investing $5bn in mobile network (2014-17). Optus increasing competitive offering. Expanding mobile network. Mobile network: 98.5% coverage. Added 6th satellite to network Sept-14. Mobile revenue +3% YOY. Vodafone signs of improvement. Customer growth in 2014 (total: 5.3m) after three years of decline. Mobile network: 96% coverage. Not profitable yet (-$286m loss Jan-Dec 2014). Share of mobile services Rank Company 2014 2015 Change (% pts)  1 Telstra 52.8% 53.9% +1.1  2 Optus 30.3% 29.5% -0.8  3 Vodafone 16.8% 16.5% -0.3 Source: Australian Communications and Media Authority | Communications Report 2014-15; Telstra Annual Report 2015, Singtel Annual Report 2015, http://www.vodafone.com.au/doc/Vodafone_HTAL_Annual_Report.pdf, http://www.vodafone.com.au/aboutvodafone/mediacentre/mediareleases/150708-vodafone-reaches-first-milestone-in-network-upgrade.pdf

Internet: four key players 69 ISPs (internet service providers) in June-15. 10 with 100,000+ subscribers, 20 with 10,000+ . Telstra dominant, but competitors closing gap. Optus: growth due to increased localised marketing and broadband bundles. TPG: strong organic growth (subscribers: +9.8%), and purchase of iiNet in 2015 lifted it to #2 position. Total fixed internet subscribers Rank Company 2014 2015 Change (%) 1 Telstra 4,970 5,122 +3.1% 2 TPG* 748 1,810 +6.6%** 3 Optus 1,014 1,049 +3.5% 4 M2 Group*** 482 530 +10.0% * TPG: includes TPG, iiNet and Internode ** Change calculated on TPG & iiNet combined ***M2: includes Dodo and iPrimus Source: Australian Communications and Media Authority | Communications Report 2014-15; Singtel Annual Report 2015

Telco advertisers: under-represented in newspapers Telcos: 4th largest advertising category ($250m) Telstra $71m, Optus $36m, Vodafone $18m Telcos big spenders on TV: Telstra $51.3m (5th), Optus $31.9m (15th) Light spenders in newspapers Only Telstra in the top 50 advertisers: $8.9m (26th). Source: Ebiquity, 2014 Advertisers Report

Section 2 Support slides for sales presentations

About these slides The following slides provide general supporting arguments to assist sales teams when building client-specific presentations. The purpose is to open discussion, to demonstrate a basic understanding of factors that drive sales for mobile and internet services, and to show how news media can help to influence the sales process. These slides are intended to be used in a presentation after recapping the brief, and before presenting analysis and recommendations tailored to the specific client. Needless to say, they can and should be adapted to suit your particular presentation requirements. Recap client/agency brief Telecommunication industry support slides Client specific analysis Recommendations

Mobile phone users: numerous and happy 16.9 million mobile phone owners (incl. smartphones and non-internet capable mobile phones). Most users (69%) are satisfied with their current mobile carrier, but… Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016.

Users need more data than ever Consumers are downloading massive amounts of data. Five times more data than four years ago. Source: Australian Communications and Media Authority | Communications Report 2014-15,.

Three brands dominate the mobile & ISP markets… Telstra, Optus and Vodafone are the three largest mobile providers. Telstra, Optus and TPG (including iiNet) major ISPs. Which brands do switchers consider? Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016. Bases: Any main mobile provider/ any main ISP

It’s still an active market 1.5 million customers plan to change their mobile service provider in the next 12 months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016.

Switchers: large brands have the edge Big brands have higher consideration for mobiles and for ISPs, but Most switchers consider more than one brand. Users choose different brands for different reasons. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016; Base: Any brand considered

Different brands, different appeals Dodo benefits from factors such as “offers competitive pricing” and “good value for money”, Optus is more reliant on “offers a wide range of plans” and “reliable service”. Where do switchers get this information? Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016.

News media excels at reaching telco switchers 1.5 million people intend to change their mobile provider in the next year. 1.4 million of them read news media each month. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016; Nielsen DRM April 2016, People 14+ only.

Digital news media excels People who read news media on digital devices are 12% more likely to switch mobile providers in the next 12 months compared to non-readers. 72% of consumers spend over 2 hours/day on their mobiles. 75% research purchases on mobiles. Sources: emma ™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016; Deloitte Media Consumer Survey 2015 – Australian media and digital preferences – 4th ed.

Technology sections deliver superior efficiency Technology section readers are 34% more likely to switch telcos in the next year than non-readers. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016.

The combined reach of print and digital news media: In print and digital 77% 75% The combined reach of print and digital news media: 93% of telco switchers. Print Digital Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016; Nielsen DRM April 2016, People 14+ only.

Newspapers are a key source of information 1 out of 5 switchers (17%) turn to newspapers when deciding on a telecommunications provider. In contrast only 15% turn to social media, 14% to magazines, 10% to radio, and 7% to out-of-home ads. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending April 2016; Base: any media most useful

Client specific analysis & recommendations This is the point to bridge to a client specific discussion. Each presentation will need to be individually tailored to suit the client and their objectives, but the logical flow from here is to move on to Analyses that address the client’s specific situation, challenges and opportunities. Solutions using your inventory, giving clear reasons why they are appropriate to the client’s specific needs, and suggestions on how they can be used most effectively.