Transcript Deutsche-Telekom-Istvan

The voice services market:
how to master the challenges?
International Carrier Sales & Solutions DTAG
Istvan Révész/Judit Gerloczy Albers, Istanbul 19.04.2012
1
The Voice Services Market.
Deutsche Telekom Group profile and figures.
We aim to become a global leader in
“Connected Life and Work”.
René Obermann
Company
Global Group
Deutsche Telekom is one of the
world’s leading service
companies in the
telecommunications industry
Facts and Figures
Products
Our strengths

Products and services for the
fixed network, mobile
communications, the Internet
and IPTV for consumers, and
ICT solutions for business
customers and corporate
customers.
By the numbers

In 2010, Deutsche Telekom
reported revenue of EUR 62.4
billion (more than half was
generated outside of Germany).
Adjusted EBITDA totaled
EUR 19.5 bio, free cash
flow 6.5 bio
Employees
Major factor in success:
At June 30, 2011, the total
headcount stood at about
241,000.
2
The Voice Services Market.
Market sizing.
Total Voice Market (in bn. €) per Region
Asia & Pacific
Eastern Europe
Description
Middle East
Latin America
Africa
Western Europe
USA & Canada
 Although traffic is still growing in total, price regulation effects
-3%
5,9
5,4
5,3
5,2
5,2
5,1
1,1
1,1
1,1
1,1
1,2
+0,3%
0,7
0,7
0,7
0,7
0,7
- 6,6%
1,2
1,0
0,1
0,7
0,7
0,1
0,7
0,7
0,1
0,7
0,6
0,1
0,7
-14 %
0,1
0,6
0,8
0,1
0,7
1,4
1,4
1,4
1,4
1,4
1,5
+1,3%
0,4
0,4
0,4
0,4
0,4
0,4
+1,0%
2010
2011
2012
2013
2014
2015
1,1
1,0
-1,8%
+2,1%
(mainly Europe) and the shift to pure VoIP connection leads to a
decrease of the total market volume of – 3% CAGR.
 US/Canada still falling prices lead to a decrease of market volume,
but market is relatively small anyway.
 CEE still suffering from economic crisis and regulatory
interventions lead to a sharp decrease in voice market (CAGR -6,6
%)
 Western Europe: harsh decline of CAGR -14% in the voice market
mainly based on regulatory impacts in the mobile markets.
 Middle East with stable growth rates for Voice (both for prices and
minutes). Asia with stable growth rate of 1,3%. Latin America still
profiting from growing minutes and stable price development.
Africa is growing although growth is smaller than expected (+1,0%
CAGR)
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The Voice Services Market.
Market segment pricing.
Development (2003 – 2010)
Forecast (2011 – 2015)
Conclusions
Global Wholesale Price per Minute (TeleG.)
Global Wholesale Price per Minute (TeleGeography)
US dollars per minute
US dollars per minute
Average Wholesale Rates by Country (TeleGeography)
Total Wholesale Voice Traffic (TeleGeography)
US cents per minute
Billion voice minutes
370
2006
2010
+9%
-29%
11.4
6.6
3.3
Africa
Asia
276
342
295
-22%
-50%
12.4
317
2.8 2.0
Europe
-55%
8.9 6.9
Latin
America
1.1
Wholesale players face
continuing price declines due to
competitive pressure, particularly
from VoIP carriers.
 In 2009, wholesale prices
experienced more severe declines
(-8.5 %) than world average retail
prices (-3.7 %).
 Combined with slowing traffic
growth, these price declines
served to force wholesale market
revenues downward.
 Wholesale prices often vary
tremendously from carrier to
carrier and from day to day.
 IP players will face to find a
balance between high volume
growth and lower costs to
support margins and ensure
profitability.

0.5
North
America
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The Voice Services Market.
Market Overview and Strategic Imperative.
Absolute Margin Decrease.
Market Rates
New Invest Mandatory.
Revenue in bn US$
PSTN
-3%
5.9
5.1
Voice Traffic
Asia
South Am
North Am
CEE
MEA
WE
Voice Carriers
MUST EITHER
become bigger and
more efficient
OR
leave the market
Manual Workflow
Next Generation Network
Automation
Source: TeleGeography 2010, ICSS calculation
Strong Regulatory Intervention.
Fierce Competition.
Market Consolidation
+
+
+
+
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The Voice Services Market.
How to tackle the challenges? The answer is: DTAG ICSS
DT your reliable partner – together keeping ahead of the game!
Voice
Outsource
Ease of Doing
Business:
Automate
Ovum
“ICSS has a growing portfolio of international voice
outsourcing customers that are increasing its economies of
scale and proving its ability to execute in this area.
Customers looking for wholesale/network outsourcing
should consider Deutsche Telekom ICSS.”
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The Voice Services Market.
Voice
Outsource
Voice Outsource – DT the Ideal Partner.
Deutsche Telekom ICSS - Voice Trading & Factory
Dedicated Team of Synergy Experts
 Financial stability and reliability
 Consultative Approach
 Commitment to voice business; continuous investment in
 Excellent team, diverse skill set
networks, systems, tools
 Local market access: 22 offices worldwide
 Long term voice outsourcing experience
 Excellence
in synergy analysis and implementation
 Scale: >27bn minutes (Under Top 5 Voice Carriers)
 Quality focus: mobile orig. traffic from own operations
Consolidation Reference Cases
Customer Feedback
“After 111 days I can say, perfect implementation,
great service management work, active and
good commercial cooperation as well”
“Voice partnership is working very well, and targets
are again overachieved”
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The Voice Services Market.
New Approach to old problems - GBET is the answer
Automation

Carrier-to-carrier information bottlenecks and data exchange inefficiencies currently cost the
industry over $6 billion every year, so it is time to streamline and automate the Business-to-Business
aspects of the industry

GBET was launched at ITW June 2011 by major players in the industry: Deutsche Telekom-ICSS,
Telia Sonera, PCCW, iBasis, Telarix, Verizon and currently has over 50 members
GBET is a voluntary association of carriers cooperatively working to establish solution-based best
practices and processes for electronic exchange of commercials, operational and financial
information


Best practices and processes allow each carrier’s back-office to cost effectively interface with one
another in order to reduce cost, maximize revenue and better manage present and future challenges
and opportunities.

Membership is free of charge and comes without any commercial obligations, register at
www.gbetcommunity.com
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8
The Voice Services Market.
Automation
GBET Solutions

Pricelist: reduce quantity of offers, varied format and increased accuracy of data by simplifying and
automating the buy and sell processes.

Billing, Settlements & Disputes: establish processes to protect revenue and profit margin through
accurate rating, invoice validating and bill verification,reduce settlement time and establish end-toend audit and dispute management standards

Trouble Tickets: focus on the synchronization of trouble ticket format within the industry

eTRA: approved contracts, standards and templates for all service providers and vendors

eMarketPlace: a single source, multi vendor platform allowing automated pricing and quotations,
streamline process from quote to provisioning, customise products and rates based on business rules,
expand market reach to markplace providers.
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9
Thank you for your attention!
Questions?
[email protected]
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10
The Voice Services Market. Transparency
Voice
Outsource
Efficiency Improvement Case.
Efficiency Levers (Generic)
 Revenue (+ 3 %)
- Reciprocal business
- Revenue assurance
 Direct Cost (- 3 %)
- Economies of scale
- Bargaining power
 Indirect Cost (- 80 %)
- Network and Operations
- IT systems
- Billing, Contract process
- General, Admin., HC
 Capex (-100 %)
Transparency
Efficiency
Project

Synergy Assessment
High Level Feasibility
Assessment
Business & Network
Review






Business Case Preparation
Customer Base
Revenue Mix (Product/Region)
Termination Cost (Product/Region)
Indirect Cost
Network / IT Architecture
Asset Base
Financial Plan
Feasibility



Road blockers
Tax, Legal, Regulatory, Labour
Migration & Integration Plan
1
2
3
4
5
6
7
8
9
Synergy Case (Generic)
Baseline – Financial Plan
Efficiency – Financial Plan
Eircom
Generic Baseline
Int`l Wholesale Voice
in k €
Source: DT Assumption
Year 2
Revenue affected by
Efficiency*
40.000
36.000
Total Cost
37.900
Termination Cost**
35.000
Network Cost
thereof Cabling
thereof Switches
thereof IT
Year 3
Total impact related to
EBITDA
Int`l Wholesale Voice
in k €
Source: DT Assumption
Year 1
Eircom
Delta Impact
Year 2
Year 3
Int`l Wholesale Voice
in k €
Source: DT Calculation
Year 1
Year 2
1.200
1.080
Year 3
32.400
Revenue affected by
Efficiency*
41.200
37.080
33.372
Delta Revenue*
34.252
30.970
Total Cost
34.950
30.585
26.933
Delta Total Cost
-
2.950
-
3.667
-
4.038
31.500
28.350
Termination Cost**
33.250
29.925
26.933
Delta Termination Cost** -
1.750
-
1.575
-
1.418
2.100
1.200
800
100
1.980
1.080
800
100
1.872
972
800
100
1.400
800
533
67
660
360
267
33
-
Delta Network Cost
thereof Cabling
thereof Switches
thereof IT
700
400
267
-
1.320
720
533
-
1.872
972
800
800
400
400
772
412
360
748
424
324
-
772
412
360
-
748
424
324
2.100
1.748
1.430
Restructuring Cost
HR & Bad Debt
thereof HR
thereof Bad Debt
Delta Impact
Eircom
Efficiency Baseline
Plan
Year 1
Note:
500
*excl. Outbound from Eircom 10.000
Retail unit &1.000
Eircom Mobile
Capex
**excl. Termination at Eircom own network
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Network Cost
thereof Cabling
thereof Switches
thereof IT
Restructuring Cost
100
-
-
Delta Restructuring Cost
HR & Bad Debt
thereof HR
thereof Bad Debt
200
200
-
-
-
Delta HR & Bad Debt
thereof HR
thereof Bad Debt
6.495
6.440
Total impact related to
EBITDA
Capex
6.250
0
0
0
Delta impact related to
EBITDA
Delta impact related to
EBITDA incl. Risk buffer
70%
Capex
-
100
-
600
200
400
972
-
4.150
4.747
2.905
3.323
-
5.010
3.507
11.500