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Enabling Growth through Mobility Services

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Presentation on theme: "Enabling Growth through Mobility Services"— Presentation transcript:

1 Enabling Growth through Mobility Services
Dr Walid Moneimne Senior Vice President Nokia Networks Europe, Middle East and Africa

2 Mobile market development in Middle East
2003 2007 Middle East & Turkey 58M Middle East & Turkey 125M 1.38 Bn 2.15 Bn Source: EMC Mobile Subscribers Forecast December 2003

3 Diverse markets in Middle East and Turkey
Prepaid share of markets: UAE: 83.9% Kuwait: 79.8% Bahrain: 60.1% Qatar: 40.6% Turkey: 33.2% Jordan: 24.3% Saudi Arabia: 23.1% Oman: 17.4% Lebanon: 14.5% Palestine: 11.1% Egypt: 8.0% Yemen:3.9% Pakistan 2.3% Syria:1.5% Afghanistan: 0.5% Iran: 0% UAE, Kuwait, Bahrain, Qatar, Turkey, Saudi Arabia and Oman penetration over 50% by 2007 Other countries steadily reaching 20-30% penetration level by 2007 Strong correlation between prepaid market share and mobile penetration level Source: EMC Mobile Subscribers Forecast December 2003

4 Comparison of Monthly ARPU by Region
US$ Source: EMC December 2003

5 Success in Middle East requires a two-fold strategy
Focus on mobile voice Targeting new mobile users Driving fixed to mobile substitution Targeting new mobile users Driving fixed to mobile substitution Drive mobile multimedia Enrich service offering to current subscribers Openness for market growth and long-term success A mobile operator, particularly in the growth markets with low penetration, can implement a dual service and network strategy: focused approach to capture a broad base of new price sensitive users within and outside of current mobile service area. This builds on mobile voice/SMS service. . 2) enhancing the service offering to current subscribers in higher ARPU segments in order to increase revenue Next, we will take a closer look at reaching the lower ARPU customers profitable with a voice based service.

6 Growth shifts to lower income segments
Example income distribution Subscriber growth in Middle East coming from markets with low mobile penetration Revenue potential from high volume of low ARPU increments Share of population High Upper mid Mid Low Very low Income classes Expected penetration in 2008 Penetration now Population

7 Profitability in entry segments based on lowered costs
Key driver for growth: Affordability Operator competitiveness through cost-effectiveness 16$ 8$ Subscriber acquisition HANDSET 6$ Service OPEX 8$ 4$ Network OPEX Depreciation 4$ 2$ SERVICE Profit TODAY 2010 2015 Example ARPU levels $/month Subscriber acquisition costs Services costs Network costs Handset subsidies Distribution Promotion Customer care Prepaid refill Service offering Content and interconnection Coverage rollout Capacity upgrades Network operations

8 New distribution solutions for growth and lower subscriber aquisition costs
Cost per USD 5 refill Electronic prepaid refill: Reduced costs and dealer commissions Small (0.5 USD) prepaid denominations possible Affordability increases usage SMART Philippines: SMART launched e-refill “Load” 2Q 2003 Dealer numbers increase to > by 1Q 2004 Variety of new distribution channels Results: 1Q m transactions/day 86% of prepaid subscribers use “Load” Capture ~70% of new subscribers in 2003 (three-player market) Subscriber growth is acceleratng Scratch card E-refill Voucher system management Voucher printing & logistics Transaction cost

9 Full mobility saves enterprise costs while boosting mobile operator revenue
Total voice communication costs (Jan. – June) Fixed and mobile infrastructure Total: $ Mobile voice services (with fixed lines for fax and modem) Total: $ 20 15 10 5 K$ 2002 2003 21 % cost savings with one voice infrastructure for the customer and…. 66 % revenue increase for the operator 220 € per employee per year for this enterprise! Case Motoman Robotics Finland Fixed Telephony Costs Mobile Telephony Costs

10 Success in Middle East requires a two-fold strategy
Focus on mobile voice Targeting new mobile users Driving fixed to mobile substitution Drive mobile multimedia Enrich service offering to current subscribers Openness for market growth and long-term success A mobile operator, particularly in the growth markets with low penetration, can implement a dual service and network strategy: focused approach to capture a broad base of new price sensitive users within and outside of current mobile service area. This builds on mobile voice/SMS service. . 2) enhancing the service offering to current subscribers in higher ARPU segments in order to increase revenue Next, we will take a closer look at reaching the lower ARPU customers profitable with a voice based service.

11 Healthy Growth continues in Mobile Services Market
2003 2008 Data services CAGR 30% ( ) Data and messaging Person-to-person messaging Content and business services 13% 87% 11% 18% 71% Voice and other calls KEY MESSAGE: Healthy growth ahead in Mobile services market. Voice dominates revenues still, non-voice has the fastest growth. Additionally: Growth in Mobile Services Market between 2002 and 2007: CAGR 10% of which: Voice and other calls CAGR 5% and Data services CAGR 35% Entertainment & Media: 3.5% of 400 BEUR = 14BEUR in > 11% of 635 BEUR = 70 BEUR in 2008 Total 400 BEUR Voice and rich call services CAGR 5% ( ) Total 635 BEUR Source: Nokia March 2004

12 SMS was just the beginning Standardized enablers will increase revenue from non-voice services
Person-to-person services Real time video sharing Content-to-person services Push-to-talk Video messaging Photo and audio messaging Business services Full Internet browsing experience, high-value videos Enhanced browsing, versatile applications these new enablers are building on the existing well-received services SMS -> MMS with photos, audio and eventually video messages downloading of riging tones and icons -> application and video content B&W wap browsing -> color and access to web content basic voice telephony -> richer variety of telephony services but all new evolution steps are seamlessly interoperable with existing mobile services Short videos Improved performance and usability Basic applications Basic browsing, rich terminal personalization Messaging and mobile Secure corporate connectivity

13 Services adoption will be very personal
% 100 Voice Number of different services will explode Text messages 90 Ringtones 80 Entertainment & media 70 Icons/Wallpaper Individuals will adopt selected services initially 60 Multimedia messages Browsing & service discovery 50 Few services exceed 20% subscriber penetration A huge number of services will be bubbling under 40 Adult entertainment Online gaming 30 Instant messaging & chat 20 KEY MESSAGE: No one global killer application for all but rather a large variety of different services Constant innovation and market testing of new ideas. This sets a challenge to operator / service provider to manage the whole process. Downloadable games 10 Video call Streaming music 2001 2002 2003 2004 2005 2006 2007 Source: Nokia Service Forecast Dec 2003

14 Network evolution for richer service experience at reduced cost
EDGE: Seamless coverage and capacity extension for 3G services 200 400 600 800 GPRS EDGE WCDMA HSDPA Practical bit rate [kbps] WCDMA: Highest bandwidth and mass-market capacity WCDMA kbps EDGE kbps Cost of delivery example (CAPEX) 50 100 150 Mbyte/sub/month Relative cost GPRS EDGE WCDMA Cost of data capacity per MB GPRS EGPRS WCDMA HSDPA

15 US SMS interconnection agreements No SMS interconnections
Learning from SMS success: Open technology Interconnections, Roaming and IOP are key for mass market growth of mobile services SMS penetration in USA 35% US SMS interconnection agreements SMS market in USA grew % when interconnections were in place 30% 25% 20% % using SMS 15% No SMS interconnections Optus: 100 % increase in MMS traffic when interconnections were in place 10% Another set of key enablers for volume markets include interoperability, interconnections and roaming. Openness and standardization are the best ways to achieve these benefits. When interconnections have been introduced between operators, the SMS usage has soared (e.g. UK 5-fold growth, in the US very similar effect). On MMS side the very same type of growth is taking place, with Optus in Australia the MMS traffic increased 100% after interconnections were put in place. The growth is not a surprise, when considering the user need: communicate with other users regardless of their serving network. 5% 0% Dec.99 Jun.00 Dec.00 Jun.01 Dec.01 Jun.02 Dec.02 Jun.03 Date Source: Nokia

16 Nokia market update GSM: Nokia supplies GSM systems to over 120 operators in over 50 countries GPRS: Nokia has close to 80 operators use Nokia GPRS solutions MMS: Nokia has delivered 60 MMS solutions EDGE: 16 commercial networks launched as of April 2004 – Nokia supplying to 12 of them 77 customers rolling-out Nokia GSM/EDGE hardware in 38 countries Nokia has 25 public EDGE references Over 75% of Nokia GSM hardware deliveries EDGE 3G WCDMA: 26 commercially launched networks – Nokia is a supplier for 12 of them Nokia has 43 public WCDMA 3G references Source: Nokia April 2004

17 Conclusions Success in rapidly growing markets requires a dual focus: Mobile voice and multimedia Full benefits of mobile voice opportunity are achieved with strict cost controls and innovative business models Mobile multimedia services based on openness help to boost ARPU and customer loyalty with high spending users Dual market strategy results in growth and improved profitability

18 Thank you!

19

20 Backup material

21 16 Public EDGE launches Nokia delivering EDGE network solution for 12 of the operators
Finnet TeliaSonera Rogers Bite GSM Pannon Cingular Wireless Bermuda Telecom Westel AT&T Wireless AT&T Wireless, BE CSL AT&T Wireless, PR AT&T Wireless, BA Dialog GSM AIS Telefonica Movil Sources: Nokia and GSM mobile Suppliers Association Nokia as a supplier

22 26 Commercial WCDMA networks today 12 supplied by Nokia
Based on public sources 26 Commercial WCDMA networks today 12 supplied by Nokia **Shared network, no own license/ subscribers 3GIS SE** VF DE 3 UK 3 DK VF UK 3 SE VF SE VF NL VF PR TeliaSonera SE VF SP Mobitel SL SFR FR NTT Docomo JP VF Omnitel IT VF KK JP MTC-VF Bahrain 3 IT 3 AT 3 HK TMN PR Connect AT STET Hellas GR T-Mobile DE tele.ring AT Launched commercial 3 AU Mobilkom AT Supplied by Nokia

23 EDGE is in commercial use!
77 customers rolling-out Nokia GSM/EDGE hardware in 38 countries Nokia has 25 public EDGE references Over 75% of Nokia GSM hardware deliveries EDGE Global operator commitment to EDGE from e.g.: North-America: AWS, Cingular, T-Mobile USA… Latin-America: Comcel, Conecel, TIM Brazil… Europe: TIM, TeliaSonera, Bouyges… Asia-Pacific: CSL, Smart, AIS, DTAC… Sixteen commercial networks launched as of April 2004 Nokia delivered 12 of the 16 operators, e.g. AWS, CSL Hong Kong, Telefonica Movil Chile and TeliaSonera Finland Virtually all new Nokia GPRS and WCDMA terminals will be EDGE capable Twelve models already launched by Nokia Nokia alone expected to ship close to 100M EDGE phones by 2005 Other commercial launches are Cingular & AIS Pannon has soft launched

24 WCDMA subscribers increasing rapidly
26 commercially launched WCDMA networks in addition to world’s first shared network launch. Nokia is a supplier for 12 of them. 4.9 million subscribers in WCDMA networks Nokia is a leader in WCDMA deployment 30, 000 base stations delivered 43 public references 27 roll-outs in 15 countries First Commercial 3GPP compliant Network launched with J-Phone in Dec 2002 World’s first WCDMA/GSM terminal Nokia 6650 and Nokia 7600 WCDMA/GSM terminal WCDMA/GSM subscribers early days WCDMA GSM 4.9 M WCDMA subscribers end of March 2004 subscribers 1Q 2Q 3Q 4Q 5Q 6Q 7Q 8Q 9Q 10Q 11Q Quarters since first launch Source: EMC database


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