1. NBED Title in sentence case © Analysys Mason Limited 2015 UBS TMT Conference September 2015 analysysmason.com The global M2M and IoT market: forecasts and key trends Michele Mackenzie

2. NBED Title in sentence case © Analysys Mason Limited 2015 2 Consulting from Analysys Mason For 30 years, our consultants have been bringing the benefits of applied intelligence to enable clients around the world to make the most of their opportunities. To find out more, please visit www.analysysmason.com/consulting 2 Consulting portfolio Strategy and planning Transaction support EXPERTISE Commercial due diligence Regulatory due diligence Technical due diligence Regulation EXPERTISE Policy development and response Margin squeeze tests Analysing regulatory accounts Expert legal support Media regulation Postal sector costing, pricing and regulation Regulatory economic costing Net cost of universal service Performance improvement EXPERTISE Market research Market analysis Business strategy and planning Market sizing and forecasting Benchmarking and best practice National and regional broadband strategy and implementation EXPERTISE Performance analysis Technology optimisation Commercial excellence Transformation services EXPERTISE Radio spectrum auction support Radio spectrum management Spectrum policy and auction support

3. NBED Title in sentence case © Analysys Mason Limited 2015 3 Research from Analysys Mason We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a range of research programmes that focus on different services and regions of the world. To find out more, please visit www.analysysmason.com/research 3 PROGRAMMES Service Assurance Customer Experience Management Customer Care Revenue Management Analytics Network Orchestration Software-Controlled Networking Service Delivery Platforms Service Fulfilment Telecoms Software Market Shares Telecoms Software Forecasts PROGRAMMES Digital Economy Strategies Digital Economy Platforms Future Comms and Media IoT and M2M Solutions PROGRAMMES Mobile Services Mobile Devices Fixed Broadband and Multi-Play SME Strategies PROGRAMMES Fixed Networks Wireless Networks Spectrum Consumer and SME services Digital economy Regional markets Telecoms software Network technologies PROGRAMMES Global Telecoms Forecasts Asia–Pacific The Middle East and Africa European Country Reports European Core Forecasts European Telecoms Market Matrix Research portfolio

4. NBED Title in sentence case © Analysys Mason Limited 2015 IoT and M2M Solutions Programme: In 2014, our IoT and M2M research was largely vertically focused Examples of vertical focused research reports Connected CarSecurityFleet ManagementIndustrial Internet Digital SignageSmart Cities Smart Metering 4

5. NBED Title in sentence case © Analysys Mason Limited 2015 IoT and M2M Solutions programme: In 2015, our IoT and M2M research focuses on examining horizontal issues, while further developing our vertical insights Examples of planned horizontally focused research reports, 2015 Opportunities in APAC Application Enablement Platforms Enterprise wearables Emerging Wireless Access Technologies HealthcareUsage Based Insurance Building Energy Management Examples of vertically focused research reports 5

6. NBED Title in sentence case © Analysys Mason Limited 2015 CONTENTS INTRODUCTION TO ANALYSYS MASON DEMAND AND SUPPLY SIDE DRIVERS OUTLOOK FOR M2M/IoT KEY TRENDS ABOUT THE AUTHOR 6

7. NBED Title in sentence case © Analysys Mason Limited 2015 7 Definition: M2M versus IoT M2M and IoT continue to be used interchangeably on both the demand and supply side of the industry. M2M typically refers to the connectivity that enables two or more machines or things to communicate with each other. The IoT industry is nascent and its boundaries and structures are still evolving – and, as a result, so is its definition. IoT is often closely associated with the consumer market and consumer devices, and IoT certainly takes into account the human interaction with the data generated by devices in a connected environment. However, IoT is just as relevant, if not more so, in the enterprise domain as it is in the consumer environment.

8. NBED Title in sentence case © Analysys Mason Limited 2015 Barriers: Fragmentation of standards, and fears over privacy and security will make some firms reluctant to invest 8 Key inhibitors for growth in internet of things New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Privacy New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Fragmentation of standards New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Security Internet of things Billions of new devices will be connected Internet of things Billions of new devices will be connected New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Vertical-specific barriers New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Funding

9. NBED Title in sentence case © Analysys Mason Limited 2015 Drivers: Developments in devices and networks as well as new business models are enabling new internet of things services 9 Key reasons for enterprise adoption of internet of things Internet of things Billions of new devices will be connected Internet of things Billions of new devices will be connected New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Opportunities to grow revenues New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Opportunities to reduce costs New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Regulation on connected cars & smart meters New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups New low cost devices, networks & solutions $ $ New providers The lowering cost of service provision has led to hundreds of new start ups New providers The lowering cost of service provision has led to hundreds of new start ups Stimulus plans and government funding

10. NBED Title in sentence case © Analysys Mason Limited 2015 And forecasts from industry stakeholders for ‘connected things’ have been bullish…. 10

11. NBED Title in sentence case © Analysys Mason Limited 2015 11 …although some forecasts have since been slashed Ericsson’s forecast for connected devices 26 BILLION CONNECTED DEVICES

12. NBED Title in sentence case © Analysys Mason Limited 2015 Headlines like these indicate increased media focus on the broader IoT sector and it’s not always positive… 12 6 reasons why we’re under-hyping the Internet of Things The Internet of Things businesses taking the sector by storm

13. NBED Title in sentence case © Analysys Mason Limited 2015 But the macro-economic situation is driving enterprises to try to achieve operational excellence and the IoT presents an opportunity… Figure: Growth in world output, developed and emerging economies, 2011-2014 [Source: World Economic Outlook Update, IMF, July, 2013] Operational efficiency Risk management Modernisation 13

14. NBED Title in sentence case © Analysys Mason Limited 2015 14 The evolution of equipment with respect to time and intelligence And smart connected devices will redefine many industry sectors and transform companies and user experiences ‘Dumb’ physical equipment Smart equipment with embedded system Smart connected equipment with networking capabilities Past, present & future Present & future Recent past, present & future Product Intelligence Time 14

15. NBED Title in sentence case © Analysys Mason Limited 2015 CONTENTS INTRODUCTION TO ANALYSYS MASON DEMAND AND SUPPLY SIDE DRIVERS OUTLOOK FOR M2M/IoT KEY TRENDS ABOUT THE AUTHOR 15

16. NBED Title in sentence case © Analysys Mason Limited 2015 M2M device connections by sector, worldwide, 2013–2024 16 Supply side and demand side factors feed into our projection that M2M connections will grow to 3.4 billion by 2024 16

17. NBED Title in sentence case © Analysys Mason Limited 2015 Three sectors will account for more than 90% of connections from 2014 onwards 17 M2M device connections by key sectors, worldwide, 2013–2024 Automotive & Transport vertical Securityvertical Utilities vertical 17

18. NBED Title in sentence case © Analysys Mason Limited 2015 18 M2M device connections by sector, Western Europe, 2013–2024 M2M device connections by sector, North America, 2013–2024 North America and Western Europe have pioneered developments in M2M and IoT CAGR 16% CAGR 15% 7 million connections EUR 35bn revenue

19. NBED Title in sentence case © Analysys Mason Limited 2015 Emerging Asia Pacific (China!) is now leading in terms of overall volumes of connections and Developed Asia Pacific focuses on different segments M2M device connections by sector, EMAP, 2013–2024 M2M device connections by sector, DVAP, 2013–2024 19 CAGR 22% 300m + smart meters CAGR 22% 3000 digital signage units

20. NBED Title in sentence case © Analysys Mason Limited 2015 M2M device connections by sector, Middle East & Africa, 2013–2024 20 Middle East and Africa is growing fast from a small base CAGR 22% “ROI depends on the major fleet issues in each market. It could be oil theft, driver behaviour, route optimisation, vehicle recovery and cold storage monitoring. However, on average, an ROI in the 15–20% range can be expected.” Head of M2M, Middle East telco R66,000 fuel savings month

21. NBED Title in sentence case © Analysys Mason Limited 2015 21 Passenger cars in use with embedded or tethered connectivity Core segments: Several factors are now aligning to make in-car connectivity a reality 1 Technological advancement 5 New data and connectivity opportunities for VMs Consumer demand seamless services 4 Vehicle manufacturers extend their appeal 32 Regulation drives adoption

22. NBED Title in sentence case © Analysys Mason Limited 2015 Fleet management M2M device connections by vehicle type, worldwide, 2013–2024 [Source: Analysys Mason, 2014] 22 Core segments: fleet management is a more mature M2M segment but still has room for growth  The penetration rate for fleet management solutions stood at 15% of total fleet vehicles in 2013, when there were 34 million fleet management connections worldwide.  In developing markets, reducing vehicle and fuel theft and misuse of the vehicle are stimulating demand for solutions  But hardware and installation costs can be prohibitive

23. NBED Title in sentence case © Analysys Mason Limited 2015 M2M device connections in the security sector by application, worldwide, 2013–2024 [Source: Analysys Mason, 2014] 23 Core segments: alarms constitute the largest application for connectivity in the security sector The migration from ‘dumb’ security systems to smart connected systems that enable users to access and monitor alarms and CCTV remotely is revitalising the security sector and providing new opportunities for connectivity. The number of connected security devices worldwide will grow from 83 million in 2013 to 307 million in 2024, at a CAGR of 13%.

24. NBED Title in sentence case © Analysys Mason Limited 2015 CONTENTS INTRODUCTION TO ANALYSYS MASON DEMAND AND SUPPLY SIDE DRIVERS OUTLOOK FOR M2M/IoT KEY TRENDS ABOUT THE AUTHOR 24

25. NBED Title in sentence case © Analysys Mason Limited 2015 25 Key trends in the M2M/IoT market LPWA: optimised networks will drive future growth M2M and IoT merger and acquisition activity continues to shape the industry Players are positioning to take advantage of the M2M/IoT market

26. NBED Title in sentence case © Analysys Mason Limited 2015 LPWA network standards are emerging and are opening new market opportunities Total addressable market and forecast of LPWA opportunity and connections Low Cost Less than USD5 per module Long, independent power source Up to and exceeding 10 years Strong propagation The ability to penetrate walls and obstacles Proposed characteristics of LPWA 26

27. NBED Title in sentence case © Analysys Mason Limited 2015 LPWA networks launches are mainly concentrated in Europe for now: A number of operators are deploying LoRa LPWAN KPN Netherlands Proximus Belgium Bouygues France Swisscom Switzerland USA South Africa Cisco USA Fastnet South Africa LoRa network launched LoRa network planned 27

28. NBED Title in sentence case © Analysys Mason Limited 2015 Vibrant M&A activity has shaped the composition of the M2M value chain in 2013 and 2014, and will continue to do so through 2015 Established M2M players aim to expand their position in the M2M value chain Established M2M players strengthen their position in the M2M value chain Players entering the M2M space to complement their core line of business and capitalise on the M2M opportunity Financial investments to capitalise on the M2M opportunity $ $7.7 B Total disclosed transaction value (Nov. 2014) Source: Hampleton Partners 28

29. NBED Title in sentence case © Analysys Mason Limited 2015 Financial investors Technology companies M&A activity in M2M is driven by diverse players and diverse motivations ▪ Source: Analysys Mason, Public sources 29 In market consolidation Telecoms operatorsNon-TMT strategic 1 1 3 2 2 3 3 1 3 3 3 2 4 4 4 4 5 8 8 5 7 8 8 5 8 8 9 9 9 9 9 9 8 8 8 6 7 6 9

30. NBED Title in sentence case © Analysys Mason Limited 2015 30 Key takeaways 1 Demand and supply side drivers are aligning to drive growth in the M2M/IoT market But the market is immature and dynamic and forecasts have already been adjusted The IoT is however expected to deliver a new wave of economic growth 2 Regional and vertical variations will persist  Developing markets are beginning to deploy M2M/IoT more rapidly  Fleet management, connected car, security and utilities have grown quickly but other verticals are attracting interest. 3 IoT optimised networks are emerging and M&A activity is increasing  LPWA affords a significant opportunity to connect new application groups  M&A activity is significant as players position to capture the value of the IoT