MOBILE COMMUNICATIONS AND MOBILE BROADBAND AS DRIVERS OF ECONOMIC AND SOCIAL DEVELOPMENT OCTOBER 2017

CONTENTS UNIT 1 THE INDUSTRY OF MOBILE COMMUNICATIONS INTERNATIONALLY THE INDUSTRY OF MOBILE COMMUNICATIONS IN GREECE UNIT 3 DIGITAL AGENDA FOR EUROPE: GREECE COMPARED TO THE ΕU UNIT 4 THE ROLE OF MOBILE COMMUNICATIONS IN THE GROWTH OF THE GREEK ECONOMY UNIT 5 GROWTH SCENARIOS – CONCLUSIONS

2 bn 2.5 bn 1.5 bn people 1.3 bn people 13.5 Mbps 16.6 Mbps MOBILE COMMUNICATIONS WORLDWIDE Better networks: 4G networks cover half of the earth’s population (4 bn people). $ 900 bn investments. Number of social network users 2 bn 2.5 bn 2015 2016 29% Increase 1.5 bn people have carried out purchases via mobile phone 1.3 bn people have used governmental services via mobile phone Average mobile broadband speed 13.5 Mbps 16.6 Mbps Greater connectivity: 4,8 bn people own a mobile telephone. $1 trillion of annual contribution to global GDP (4.2%), 36 million jobs, $500 bn of public revenues. Richer services: Internet (3.5 bn users – 1 million new users each day), social networks, e-gov, health services, etc. Source: 2017 Mobile Industry Impact Report, GSMA

84% €143 bn €100 bn MOBILE COMMUNICATIONS IN EUROPE 2,6 million jobs Important contribution to employment 124% Penetration (457 million subscribers with 752 million connections) 84% of the population owns a mobile telephone (CAGR 0.4%) Mobile data CAGR 42% 143 bn euros turnover Important contribution to GDP (3.4% in 2016 ➤ 3.9% in 2020) Important contribution to public revenues Source: The Mobile Economy: Europe 2017, GSMA

MOBILE COMMUNICATIONS IN EUROPE Growing contribution to european economy 3,4% 3,5% 3,6% 3,8% 3,9%

UNOBSTRUCTED CONNECTIVITY THROUGH 5G THE FUTURE: UNOBSTRUCTED CONNECTIVITY THROUGH 5G Today, we are in the 4th generation era (4G) Each ΕU member state must offer commercially available 5G services in at least one large city by 2020 (EC Action Plan) All european cities must offer unobstructed 5G connection by 2025 (EC Action Plan)

5G IN EUROPE: PROJECTIONS 3,4% 3,6% 3,8% 73% 31% 30% 60% 40% 70% 50% 20% 10% no. of connections (in millions) rate %

TOWARDS A FASCINATING NEW WORLD 5G can support totally new telecommunication services, thus realizing the vision of a completely digital era These services are expected to create new markets of goods and services, with a total value exceeding 12 trillion dollars by 2035. For Greece, Ε.U. envisages a GDP increase by 2.18 bn euros and more than 100,000 new jobs by 2025.

Basic 5G services: NEW TELECOMMUNICATION SERVICES Ultra-fast mobile broadband (eMBB): high definition video (TV/gaming), immersive communications (AR/VR). Device communication services (D2D): Internet of Things, telemetering services, smart cities, connected vehicles.

applications blockchain REVOLUTION IN SERVICES SHORT TERM LONG TERM Mobile payments / commerce Blockchain applications Internet of Things Virtual / augmented reality applications Smart cities / homes Machine learning, AI Telemedicine, health service providers’ connectivity, management of medical infrastructures Robotics Unmanned aerial machines (drones) Wearable computing Cloud computing mobile payments cloud computing wearable computing machine learning robotics applications blockchain drones τηλεϊατρική VR / AR Internet of Things smart cities/homes

INDUSTRY’S FINANCIAL DATA Mobile telephony operators’ revenues constantly keep diminishing (a 43% drop between 2010 – 2016, the largest in Europe), however…

INDUSTRY’S FINANCIAL DATA Revenues from services amounted to 1.83 bn, reduced by 1.3% in 2016, indicating stabilization or even recovery trends for 2017. Cumulative loss of revenues from services since the start of the economic crisis (2008) amounts to 57%. …for 2017, international analysts* foresee an increase of revenues from services for Greece by 1.4%, with a further improvement at 1.9% for 2018 *Merrill Lynch

VOLUME AND REVENUES PER SERVICE In 2016, data increased spectacularly (58.3%), while messages (SMS & MMS) were reduced by 30.8%, since subscribers tend to use IP applications to communicate. Talk time (minutes), after three years of increase, were reduced by 5.5%, returning to the usage level of 2012.

DATA USAGE Despite a high increase in usage for 2016, compared to other OECD countries, data usage is very low in Greece (0.4 Gb per capita per month compared to 2.88 Gb in OECD and 3.1 Gb in european countries). It is worth mentioning the very high data usage in scandinavian and baltic countries, since a growing number of european providers are adopting the unlimited data usage model, which was initially implemented in Finland.

INDUSTRY’S FINANCIAL DATA Cutting down on operating costs Providers have limited their operating costs by 54% from 2009 to 2016. Cutting down on borrowing costs The industry has minimized its borrowing costs from the banking system. Source: Providers’ data processed Providers have adapted to the conditions of greek economy’s recession and financial system’s lack of liquidity, limiting both their expenses and borrowing

INVESTMENTS The industry’s total investments exceeded 351 million euros in 2016, since 4G networks geographic and population extension is ongoing. Despite the difficulties faced by the industry, its annual investments over the last three years have increased by approximately 100 million euros. investments Source: Providers’ data processed Since the onset of the economic crisis (2008), the industry has invested 3.17 bn euros

€2.5bn 2020 2017 FUTURE INVESTMENTS Roll out of new generation networks is expected to create the necessary broadband dynamics that shall support new 5G services The results of investments in new generation networks will be the following: Ultra-fast mobile internet speeds Possibility of supporting innovative video streaming services Extension of geographic coverage 2020 €2.5bn Telecommunications companies have announced 2.5 bn € investments in fixed and mobile networks for the 2017-2020 period, so that Greece may achieve the goals set by the EU regarding broadband. 2017

Greece is far behind the european average (holding the 26th place) GREECE COMPARED TO THE ΕU Greece is far behind the european average (holding the 26th place)

GREECE COMPARED TO THE ΕU The country fails to converge with the european average, lagging steadily behind them with a 4-5 year gap as far as digital modernization is concerned

The industry is burdened with additional charges ~225 million euros PUBLIC REVENUES The special mobile telephony fee places a burden of 12%-20% on all bills, which, along with VAT, increases indirect taxation to 39%-49%. Public State revenues from this special fee amounted in 187.7 million euros for 2016. In 2016, the industry contributed 37.7 million euros to HTPC, which exceed by far the HTPC’s operating costs (10.5 million euros), thus further contributing to public revenues. The HTPC has paid 582 million euros* to the greek public State in the 2000-2016 period, without including revenues from spectrum frequencies’ auctions. * “Kathimerini“ newspaper, 26/9/2017 issue, p.21 The industry is burdened with additional charges ~225 million euros

GROWTH SCENARIOS – CONCLUSIONS Mobile data Baseline scenario: data penetration increases by 42% annually, reaching 2.3 GB per inhabitant in 2021, without converging with european average Convergence scenario: Greece converges with the average of Italy, Spain and Portugal in 2021 (at 6.8 GB per inhabitant per month) Mobile broadband Baseline scenario: penetration reaches 84% in 2021, which is the current european average Convergence scenario: penetration reaches 100% Financial Solution This is example for a subtitle Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit.

GROWTH SCENARIOS – CONCLUSIONS If the required reforms are implemented, so that Greece may digitally converge with the rest of Europe (Convergence scenario), the mobile industry’s additional contribution to GDP may reach 2.05% or 3.06 bn euros, while its additional contribution to public revenues shall amount to 1.62 bn euros. Financial Solution This is example for a subtitle Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit.

GROWTH SCENARIOS – CONCLUSIONS A prerequisite for the country’s successful convergence and utilization of benefits in the economy is that the State undertake immediate initiatives, to upgrade Greece’s position on the european digital map. Financial Solution This is example for a subtitle To this end, the following are required: Simplification and implementation of the regulatory framework in order to speed up the licensing process of existing and new base stations. The aim is to solve pending issues in view of network upgrades, so that planned investments may be faster implemented 01 Lorem ipsum dolor sit amet, consectetur adipiscing elit. Lorem ipsum dolor sit amet, consectetur adipiscing elit. 02 Allocation of spectrum areas, ready for use. The aim is to make use of EU best practices, to review frequency fees and the licensing cost of base stations, so as to safeguard and facilitate the providers’ long-term investment plan. Lorem ipsum dolor sit amet, consectetur adipiscing elit. 03 Removal of the special fee distortion. In Greece, consumers bear the cost of up to 48.8% of their final bill when the maximum charge in the EU is 25% Lorem ipsum dolor sit amet, consectetur adipiscing elit. A campaign to inform competent authorities and citizens about the importance of infrastructure, services and digital technology in the development of the economy and society, in the context of the implementation of the national digital strategy 04 05 Strengthening demand by introducing incentives for the adoption of innovative mobile services by businesses, citizens, local authorities and public administration