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Digital Europe: How?
February 2014
Michael Tsamaz
OTE Group Chairman and
CEO
Alarming trends for the continent's digital econo
Declining in whole ICT
sector
Competitiveness
Industry value
Eroding market capitalization vs.
North America
Market structure Fragmentation and lack of scale
Revenues
Declining vs. growing data traffic
Investments
270 bln needed for high-speed
NGNs
OTT players
Additional pressure
Regulation
Harsh
framework
Declining revenues
IP traffic
Western
Europe
Telecoms revenues
-10%
+836%
2016e
2008
North
America
+35%
+966%
2008
2016e
2008
2008
Source: European Commission (Sept.2013)
2016e
+40%
+1006%
AsiaPacific
2016e
2008
2016e
2008
2016e
Behind in investments
Telecommunications investment in EUR per capita
EUR
210
US
180
190
170
170
Asia Pacific
150
130
EU
130
110
90
USA
EU-15
Asia Pacific
70
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e2013e
Source:Asia
OECD
Communications
Asia: Japan,
South Korea, Australia, New Zealand.
Data
Pacific:
Japan, SouthOutlook
Korea, 2013.
New Zealand,
Australia.
Source:
OECD.
estimated for 2012 and 2013.
OTTs versus Telcos: No level playing field
European
employees
European
investments
11,000
22,000
1.2bn
Very low


Income taxes
in Europe
Little or none
Source: OTT data for largest EU countries (DE, FR, UK), plus EU HQs (Amazon
Luxembourg, Google Ireland)
In the next 4
years
Only in Greece
1bn (2012)
 For taxes & other
social
contributions
 Only in Greece
Regulation stifles growth
Return on Capital: Incumbents vs.
Unbundlers
Favouring
noninvesting
unbundlers
Source: Bernstein Research, BCG. 1 BT, DT, Orange, TEF. 2 BSkyB, Iliad, Jazztel, TalkTalk, United
Internet
EU
regulation
complex &
intrusive vs.
US & AP
Source: OECD, McKinsey
The myths
of
• Ladder of investment
• Essential facility
• Spectrum auction
The Greek challenges
Challenging macros
Challenging telco market
Market consolidation/partnering
Enhanced FMC offerings
Aggressive pricing
Incumbent main investor
Regulation
2008-2013
•
•
Private consumption: -30%
GDP: -25%
The Greek challenges
Regulation
• Pricing
• IP transformation / VoiP
• Vectoring
• Universal service
ICT can lead Europe back to the top
ICT = Growth and employment
Vision for EU’s ICT
•
21% of GDP growth
Regain leading position within next 10 years
•
10pp up in broadband penetration =
0.9-1.5 pp up in annual pc growth
•
Telecom network infrastructure (fiber,
LTE, Intelligent networks)
•
Productivity growth:

31% Europe

59% USA
•
Software and hardware
•
Internet Services
•
2.6 new jobs for every one lost
Source: McKinsey, ifo, European
Commission.
Key priority
•
EU policies alignment for consistency
and credibility of decision-making
ICT can lead Europe back to the top
Key measures to restore EU
competitiveness, investment & growth
Digital
development
Digitalinfrastructure
infrastructure
development
BOOST
Digital infrastructure
development
Regulated
telecoms markets
DEREGULATE
Market
and cooperation
Digitalconsolidation
infrastructure
development
EASE
Spectrum
policy
Digital infrastructure
development
HARMONIZE