Digital transformation for 2020 and beyond

1 Digital transformation for 2020 and beyond A global telecommunications study A global telecommunications study 1. About this report The 2017 global telecommunications study has been conducted by EY to monitor and evaluate the evolving views of leaders across the global telecommunications industry. This latest survey forms part of EY's ongoing series of global telecommunications studies. Based on in-depth conversations with industry leaders worldwide, the resulting insights help us to assess the current state and future state of this rapidly changing sector. Our 2017 survey drills down into perspectives from the industry's CIO and CTO.

2 Community in order to explore the role of IT and networks and to examine how this is supporting long-term Digital transformation . We conducted 39 in-depth interviews with participants from 36 organizations, supported by insights and analysis from EY's sector professionals and secondary research sources. The 36 organizations taking part this year account for annual revenue of US$421 billion and an aggregate market capitalization of US$603 billion. Figure 1: Participating companies in 2017 annual revenues Number of participating companies Greater than US$25b 4. US$10b US$25b 7. US$5b US$ 3.

3 US$1b US$ 14. Less than US$500m 6. 0 2 4 6 8 10 12 14 16 18. 2 Digital transformation for 2020 and beyond 2017 global telecommunications study: highlights 39 interviews with 36 organizations Participant Participant organizations'. organizations' aggregate market annual revenue: capitalization: US$421 US$603. billion billion Taken together, our 2015 and 2017 surveys have involved a total of 83 interviews with 76 organizations, with the aggregate annual revenues of the participating companies standing at over US$1 trillion. These interviews have covered 44% of the top 50 global carriers by revenue.

4 Figure 2: : Geographic locations of participating companies, 2015 and 2017. Headquarters locations of participating entities in 2015 and 2017. A global telecommunications study 3. Participating industry executives*. Cosmas Adam Jay Ferro Phil Jordan Chief Technology and Information Officer Executive Vice President, Chief Information Chief Information Officer MTN Cyprus Officer, Chief Product Officer Telefonica Group EarthLink Daniel Mizrachi Belisario Panicos Kallenos Chief Technology Officer Vikas Grover Chief Technology and Information Officer Millicom International Cellular Costa Rica Chief Information Officer CYTA.

5 Vodafone India Enrique Blanco Veenod Kurup Chief Technology Officer David Havercroft Group Chief Information Officer Telefonica Group Chief Operating Officer Liberty Global Spark New Zealand Axel Clauberg Francois Mairey Vice President, Aggregation, Transport, IP Kashif Syed Haq Chief Technology and Information Officer (CTO-ATI) Chief Technology Officer Tele2 Group Deutsche Telekom Axiata Digital Amit Marwah Mike Cole Hisham Fathy Hassan Head of Sales, End to End Solutions Chief Information Officer Director, Technology Strategy & Control Nokia Solutions and Networks India Bell Canada Viva Bahrain Gary McLaren Nicolas Costaras Luis Martin Hernandez Chief Technology Officer Chief Information Officer Chief Information Officer HKBN.

6 Wind Hellas America Movil Telcel (Mexico). Shin Murakami Claudio Farina Bouke Hoving Corporate Officer, Executive Head Financial Planning & Analysis Executive Vice President Simplification & Vice President, Chief Mobile Officer Vodafone italia Innovation and CIO Yahoo Japan KPN. 4 Digital transformation for 2020 and beyond Ali Obtel Daniele Schneeberg Chief Technology Officer Head of transformation Viva Kuwait Vodafone italia Tommy Olenius Ken Smithard Chief Technology Officer Vice President, Performance DNA Oyj Organizational Efficiency & IT. Cogeco Connexion Peter Jantosovic Director Technology transformation & Peter Taylor Optimization Vice President, Technology Slovak Telekom Operations and Support Shaw Communications Inc Gunar Post Head of IT Strategy Hugo Van Zyl Deutsche Telekom Chief Technology and Information Officer OpenServe Pty Ltd (Telkom Group).

7 Scott Rice Chief Information Officer Saad Muzaffar Waraich Sprint Corporation Chief Technology and Information Officer PTCL Pakistan John Romano Acting Chief Information Officer Marlon Yu-Shan Telstra Chief Information Officer, Millicom International Cellular Honduras Ruza Sabanovic Chief Technology and Information Officer Telenor Group *Five participants requested to remain anonymous. *Three participants asked to remain anonymous. A global telecommunications study 5. The methodology We met with each of the senior industry executives who participated in the study, asking them 15 questions that focused on the industry as a whole, as well as on specific areas and issues within their organizations.

8 We asked participants to provide their top three answers to provide full insight into the opportunities and challenges confronting them now and in the future. We also captured key comments from the dialogue generated by the interviews, an anonymized selection of which appears in this report. If you would like to the see the complete results of the study, please contact your local EY representative. 6 Digital transformation for 2020 and beyond Sector snapshot: the paradigm shift to Digital is well underway The global telecoms industry landscape is changing faster than While many have embarked on journeys to become Digital ever.

9 Erosion of legacy revenue streams driven by over-the-top service providers, the sector remains vulnerable to quickening (OTT) competitors continues, forcing operators to consider new shifts in terms of technology cycles, competitor actions and ways of remaining relevant to consumer and enterprise customers. customer needs. A decade of disruptive dynamics Telecommunications companies have endured a challenging have further weakened the sector's growth profile. During the decade, with the industry subjected to a number of disruptions in period 2008 to 2016, global fixed and mobile revenues increased recent years.

10 The smartphone revolution has led to an explosion at a compound annual growth rate of in data demand, while the accompanying growth of mobile At the same time, network investments remain burdensome as applications has seen a range of disruptive players monetize new operators upgrade their infrastructure to sustain an exponential customer behaviors. rise in data demand. Large-scale 4G rollout continues, supported While this has resulted in a range of interconnected phenomena, by the acquisition of new spectrum frequencies, while last- from the sharing economy to frictionless marketplaces, operators' mile connections to the home are also the scene of continued revenue streams remain under pressure.