Marketing Fibre to the Global Consumer · Case Study 1: Telefónica Case Study 2: France Telecom -...
Transcript of Marketing Fibre to the Global Consumer · Case Study 1: Telefónica Case Study 2: France Telecom -...
Julija Jurkevic
Analyst
Marketing Fibre to the Global
Consumer
November 20, 2012
SNL Kagan & FTTH Council Europe Webinar
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 2
Presentation Outline
Case Study 1: Telefónica
Case Study 2: France Telecom - Orange
Case Study 3: TeliaSonera
Comparison with United States
Strategy Comparisons
Factors Determining FTTH Deployments
1
2
3
4
5
6
Data Sources: SNL Kagan estimates, Operators, FTTH Council Europe
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 3
Telefónica
Present in 25 countries; Over 313.8 million customers at September 2012.
Fixed Broadband Services – Spain, UK, Germany, Ireland, Czech Rep., Brazil,
Argentina, Chile, Peru, Colombia
Commercial FTTH Services (residential) – Spain, Brazil, Chile
Global Brands:
Global Presence:
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 4
Telefónica - Spain
7,166 7,734 8,392 8,670
1,778 1,863
1,954 2,083 10 16
56 171
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011
DSL Cable FTTH
(000)
Spain Major Fixed Broadband Platforms Spain Broadband Net Adds by Platform
DSL 79.6% 80.0% 80.2% 78.7%
FTTH 0.1% 0.2% 0.5% 1.6%
887
568
657
278
145 85 91
129
9 6 40
116
0
200
400
600
800
1,000
2008 2009 2010 2011
DSL Cable FTTH
(000)
Telefónica’s Home and largest market
Incumbent Nationwide Fixed Line Operator
Networks: xDSL, FTTH, Wireless
4 Play services – Fixed phone, IPTV, Internet, Mobile voice/data
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 5
Telefónica - Spain
58.3 56.7 54.7 50.9
14.2 14.3 13.8
13.7
12.9 11.2
10.7 11.5
5.2 5.1 8.1
10.1
0
20
40
60
80
100
2008 2009 2010 2011
Telefónica ONO Orange (FT) Jazztel(%)
Spain - Major ISPs by Market Share
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 6
BB Mkt. Share 56.7% 54.7% 50.9%
% of Total Subs 0.2% 0.9% 2.9% 4.1%
% of FTTH Mkt. 71.3% 87.8% 95.0%
Telefónica - Spain
5,292 5,331
5,424
5,477
5,579 5,620
5,672
5,722 5,749
5,669
5,607 5,609 5,600 5,613
4 7 9 11 19 25 32 49
66
93
126
163
200
232
0
100
200
300
400
5,000
5,200
5,400
5,600
5,800
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total Broadband
FTTH
(000)
Telefónica Total Broadband and Fibre Subs
2009 2010 2011 2012
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 7
Telefónica – Spain: FTTH Services
FTTH services launched 2008 in 12 cities, speeds up to 30 Mbps
Deployments alongside VDSL
Response to cable threat
2011 - FTTH speeds increased to 100 Mbps
Regulation requires Telefónica to unbundle all connections under 30
Mbps
FTTH Network Coverage – about 12% of HHs in mid-2012
Target – 50% of premises by 2015
Main cities nationwide
FTTH Take up rate – over 11%
-> 4% of total broadband subs
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 8
Telefónica – Spain: FTTH Marketing & Pricing
Both xDSL and FTTH require a phone line
FTTH is marketed as a premium service :
FTTH only available at 100 Mbps -> the most expensive service
at €40/mo
HD IPTV is only available with FTTH
Upgrading from ADSL to VDSL costs 20% more; upgrading
from VDSL to FTTH – 30% more (speed x3 with every upgrade)
Price/MB of data is cheaper with FTTH
However, bundles present good savings:
100 Mbps 4 play is only 12% more expensive than 10 Mbps
ADSL 4 play
FTTH bundles are only a little cheaper than comparable HFC
services
Movistar Fibre 4 Play is 10% cheaper than Ono cable 3
play with 100 Mbps + comparable mobile plan
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 9
Telefónica –Europe: Other Markets
UK
Alternative operator
Only 3% market share
Decreasing subscriber base
Small FTTH market
Germany
Alternative operator
10% market share
Decreasing subscriber base
Telefónica aims to sell 20% stake
Czech Republic
Dominant Incumbent operator
VDSL deployments offering up to 40 Mbps speeds
Sole IPTV provider
Fragmented telco competition
Sole 4-play provider; largest fixed and mobile network
Historically small FTTH market
However: strong cable growth and local fibre network roll-outs putting pressure
on the Incumbent
xDSL Services
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 10
Telefónica - Brazil
7,028 7,678 8,975 10,398
2,454 3,130
3,824
5,011
8 32
78
160
332 403
627
829
0
5,000
10,000
15,000
20,000
2008 2009 2010 2011
DSL Cable FTTH Fixed Wrls.
(000)
Brazil - Major Fixed Broadband Platforms Brazil - Broadband Net Adds by
Platform
DSL 70.6% 67.4% 65.0% 61.9%
FTTH 0.1% 0.3% 0.6% 0.9%
543 650
1,297 1,423
764 676
694
1,187
8 24 46 81 48 71
224 202
0
400
800
1,200
1,600
2008 2009 2010 2011
DSL Cable FTTH Fixed Wrls.
(000)
Telefónica’s Second-largest market, largest Latin American Market
One of 2 Incumbents
Networks: xDSL, FTTH, Wireless
4 Play services – Fixed phone, Internet, Mobile voice/data, CATV, DTH, IPTV in
Sao Paulo
Long-term regulatory ban on telco IPTV services (lifted 2011)
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 11
BB Mkt. Share 23.2% 25.7% 21.7%
Telefónica - Brazil
2,659 2,729 2,580 2,638
2,801 2,974
3,139 3,319 3,394
3,487 3,568
3,648 3,700 3,732
2,000
2,500
3,000
3,500
4,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)
Telefónica Broadband Subs
2009 2010 2011 2012
20.3 37.0 31.6 29.3
22.3
25.3 23.7 25.4
25.7
23.2 25.7 21.7
0
20
40
60
80
100
2008 2009 2010 2011
Oi Net Servicos Telefónica
(%)
Brazil - Major ISPs by Market Share
100,000 FTTH subs 500,000 Homes Passed Q3 2012
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 12
Telefónica – Brazil: FTTH Services
FTTH services available to 500,000 homes in Sao Paulo region,
speeds 15-100 Mbps
Response to cable threat, competitive FTTH deployments
Infrastructure upgrade for IPTV
FTTH Network Coverage – about 500,000 HHs in Q3 2012
Target – 1 million subs by 2015
About 100,000 FTTH subscribers at Q3 2012
Cherry-picked deployment to densely populated upscale residences
FTTH Take up rate – 20%
-> less than 3% of total broadband subs
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 13
Telefónica – Brazil: FTTH Marketing & Pricing
xDSL and FTTH available in bundles or naked
FTTH is marketed as a premium service :
Marketed to upscale households
FTTH only available at top speeds 15 -100 Mbps
-> the most expensive service starting at $R90/mo
in a combo pack
IPTV is only available with FTTH
Only Fibre IPTV offers advanced services: Interactive
services, Multiroom , Pic in Pic
Price/MB of data is cheaper with 10Mbps DSL
than with 15Mbps FTTH service (but lower at higher speeds).
One of the cheapest 100 Mbps offer on the market
30% cheaper than 100 Mbps on HFC from NET
Other speed tiers – comparable
FTTH Services have higher ARPUs
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 14
Telefónica - Chile
Incumbent and largest operator
Networks: xDSL, FTTH, Wireless
4 Play services – Fixed phone, Internet, Mobile voice/data,
IPTV, DTH
Chile Fixed Broadband Market (2011)
DSL – 50% market share; Cable – 48% share
Cable: faster growth than DSL, gaining market
share
Nascent Fibre market
Telefónica dominates with a 42.5% market share
Main competitor: MSO VTR: 37% market share
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 15
Telefónica – Chile: FTTH Services
FTTH services available in Biobio Region , containing the
capital Conception; Speeds 4- 80 Mbps
Launched in Q2 2011
Response to cable threat , competitive Fibre deployments
Network upgrade for IPTV
FTTH Network Coverage – about 50,000 HHs
Target – 700,000 (80% of HHs) by end-2014
Deployment in selected areas around capital, but target –
urban areas nationwide
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 16
Telefónica – Chile: FTTH Marketing & Pricing
xDSL and FTTH available in bundles or naked
FTTH is marketed to a wide audience
Fibre services are available at all speed levels
ADSL and Fibre at 4Mbps and 15 Mbps speeds cost same;
Higher speeds – only with FTTH
IPTV is only available with FTTH
Basic IPTV subs access more channels, incl HD, than DTH
subs
Matching and undercutting VTR cable prices
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 17
Telefónica – Latin America: Other Markets
Argentina
DSL dominates w. 67% share
Until 2010, cable market grew slower than DSL
Almost no competitive Fibre deployments
3 strong operators (Telefónica, Telecom, Cablevision)
BUT: telco competition and DOCSIS 3.0 driving Fibre trials and
greenfield deployments
Colombia
Telefónica has regional monopoly
Fragmented DSL and Cable markets
Almost no competitive Fibre deployments
Low broadband penetration
Peru
Telefónica dominates the broadband market w. >90% share
Very low broadband penetration
Little or No FTTH, but deployments starting
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 18
France Telecom - Orange
Present in 33 countries; Over 227 million customers incl 15 million broadband at
September 2012.
Fixed Broadband Services – France, Spain, Belgium, Poland, Slovakia, Moldavia,
Romania, Jordan, Egypt, Ivory Coast, Kenya, Mauritius, Cameroon, Tunisia
Commercial FTTH Services (residential) – France, Slovakia, (planned in
Spain)
One Global Brand:
Global Presence:
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 19
France Telecom – France
17,309 18,586 19,858 20,982
1,007 1,160
1,217 1,415
48 69
118 198
0
5,000
10,000
15,000
20,000
25,000
2008 2009 2010 2011
DSL Cable FTTH
(000)
France - Major Fixed Broadband
Platforms
France - Broadband Net Adds by
Platform
DSL 94.2% 93.7% 93.6% 92.8%
2,504
1,277 1,272 1,124
295 153 57 198
20 21
49 80 0
500
1,000
1,500
2,000
2,500
3,000
2008 2009 2010 2011
DSL Cable FTTH
(000)
FT’s Home and largest market
Incumbent Nationwide Fixed Line Operator
Networks: xDSL, FTTH, Wireless
4 Play services – Fixed phone, IPTV, Internet, Mobile
voice/data
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 20
France Telecom – France
45.3 44.8 43.0 42.4
21.2 22.4 23.0 22.2
22.9 22.5 21.4 21.4
0
20
40
60
80
100
2008 2009 2010 2011
Orange (FT) SFR Iliad(%)
France - Major ISPs by Market
Share
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 21
BB Mkt. Share 44.8% 43.0% 42.4%
% of Total Subs 0.4% 0.6% 1.0% 1.3%
% of FTTH Mkt. 50.7% 45.8% 48.0%
France Telecom – France
8,540 8,639
8,763
8,880 8,879 8,925
9,016
9,128
9,308 9,371
9,478
9,598 9,671
9,749
24 29 31 35 37
42 45 54
65 73
82
95
108
123
0
50
100
150
200
8,000
8,500
9,000
9,500
10,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total Broadband
FTTH
(000)
France Telecom -Total Broadband and Fibre Subs
2009 2010 2011 2012
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 22
France Telecom - France: FTTH Services
FTTH rollout started in 2007 in 6 major cities, speeds up to 30 Mbps
Primarily, response to competitive Fibre deployments
Slow speed of rollout due to lack of clear FTTH regulation
FTTH Network Coverage – over 900,000 homes in 20 cities at end-2011
Target – 2 million homes by 2015, 15 million (60% of HHs) by 2020
across 3,6000 districts 50% of premises by 2015
Infrastructure sharing agreements with competing telcos (SFR,
Iliad-Free, Bouygues)
FTTH Take up rate –11%
-> 1.3% of total broadband subs
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 23
France Telecom - France : FTTH Marketing & Pricing
FTTH are marketed as a 3 or 4 play bundle only
ADSL is available as solo at lowest speed (8Mbps)
Strategy – to sell an STB providing access to 3 basic
play and encourage upgrades
FTTH 3 play is €5 more expensive than ADSL 3 play but
frequent timed promotions often make it cheaper
ADSL to FTTH upgrade increases speed x 5
HD and 3D IPTV channels only available with FTTH
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 24
France Telecom – Slovakia
Slovakia - Major Fixed Broadband
Platforms Slovakia - Broadband Net Adds
by Platform
DSL 56.0% 45.8% 41.7% 38.8%
330 368 398 405
62 80 94 119
66
178 200
238
82
147
236 262
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011
DSL Cable FTTH Fixed Wrls.
(000)
52
38 30
7 11 18
14
24 18
111
22
38
8
65
89
27
0
20
40
60
80
100
120
2008 2009 2010 2011
DSL Cable FTTH Fixed Wrls.
(000)
Alternative operator
5% broadband market share at end-2011
Networks: FTTH, Wireless
4 Play services – Fixed phone, IPTV, Internet, Mobile
voice/data
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 25
France Telecom – Slovakia
Orange Slovakia FTTH Subs
BB Mkt. Share 4.6% 4.9% 4.9%
25 29
32 37
41 43 45 47 49 49 50 51
55
62
10
20
30
40
50
60
70
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)
2009 2010 2011 2012
57.5 48.7 44.5 44.4
9.0
7.8 4.2 9.1
3.4
4.6 4.9
4.9
0
20
40
60
80
2008 2009 2010 2011
Slovak Telekom UPC Orange
(%)
Slovakia - Major ISPs by Market Share
21.4% FTTH market
share at end-2011
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 26
France Telecom - Slovakia: FTTH Services
FTTH 3 play launched in 2007, up to 100 mbps
FTTH deployed to supplement wireless network, enable 4 play to
compete with Incumbent‘s DSL and UPC‘s cable services
Access to Incumbent’s network is very expensive
FTTH Network Coverage – 20% (<400,000) of HHs as of Sept. 2012
Launched DSL services in late 2011 over Incumbent’s network (access
to over 80% of HHs)
FTTH Take up rate – over 12%
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 27
France Telecom - Slovakia : FTTH Marketing & Pricing
FTTH is available as solo or 3 play package
ADSL is available as solo or bundled with home phone
FTTH is prices nearly as low as ADSL (€15 vs.
€12, respectively)
Fibre 3 Play costs only 30% more than solo Fibre
broadband
IPTV is available only over FTTH
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 28
France Telecom – Other Markets
Spain
FT provides DSL services over Incumbent’s local loop
Cheaper alternative to Incumbent’s services
FTTH and cable competition heating up
June 2012: €300 mln investment in FTTH over 4 years to cover 1.5 mln premises
Poland
FT operates nationwide DSL network, focus on VDSL
Historically: fragmented cable and LAN market, little DSL competition
Small FTTH market
Cable, telco consolidation, nascent Fibre FT losing subs to competition
UK, Belgium, Egypt, Tunisia
FT provides DSL services over Incumbent’s local loop
Cheaper alternative to Incumbents’ services
Little or no FTTH
Egypt, Tunisia – no cable broadband
xDSL services
BUT: FTTH is gradually being rolled out in hypercompetitive markets
Other AMEA countries (Jordan,
Kenya, etc)
FT operates its own DSL network
Little competition
Little or no FTTH
Virtually no cable broadband
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 29
TeliaSonera
Present in 17 countries; Over 180 million customers at September 2012.
Fixed Broadband Services – Sweden, Finland, Norway, Denmark, Lithuania, Latvia,
Estonia.
Incumbent operator – Sweden, Finland, Lithuania, Estonia, (Latvia – 49%)
Alternative operator - Norway, Denmark
Commercial FTTH Services (residential) – all markets where fixed broadband is offered,
exc. Denmark (HFC)
Uses strong local brands:
Global Presence:
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 30
TeliaSonera – Sweden, Finland
1,737 1,666 1,591 1,515
563 579 596 612
590 687 794 906
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2009 2010 2011
DSL Cable FTTH
(000)
Sweden - Major Fixed Broadband
Platforms
Sweden - Broadband Net Adds by
Platform
DSL 59.8% 56.6% 53.1% 49.7%
FTTH 20.3% 23.3% 26.5% 29.7%
21
-71 -75 -76
27 16 17 16
81 97
107 112
-100
-50
0
50
100
150
2008 2009 2010 2011
DSL Cable FTTH
(000)
Largest Markets
Incumbent Nationwide Fixed Line Operator
Networks: xDSL, FTTH, Wireless
4 Play services – Fixed phone, IPTV, Internet, Mobile
voice/data
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 31
BB Mkt. Share 38.2% 38.3% 37.7%
TeliaSonera - Sweden
1,132 1,132 1,132 1,125
1,130 1,131 1,124
1,129 1,135 1,134
1,138
1,149 1,156 1,159
1,100
1,120
1,140
1,160
1,180
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)
Telia Sweden - Total Broadband Subs
2009 2010 2011 2012
38.6 38.7 38.9 39.5
17.4 18.0 18.5 19.0
21.4 19.9 18.5 18.4
0
15
30
45
60
75
90
2008 2009 2010 2011
TeliaSonera ComHem Telenor
(%)
Sweden - Major ISPs by Market Share
420,000 FTTH Homes Passed Q2 2012
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 32
TeliaSonera - Finland
1,277 1,205 1,132 1,144
215 223
241 264
98 100 159
180
0
300
600
900
1,200
1,500
1,800
2008 2009 2010 2011
DSL Cable FTTH(000)
Major Fixed Broadband Platforms Broadband Net Adds by Platform
DSL 60.9% 77.0% 72.6% 71.2%
-38
-72 -73
13
5
8 18 23 21
2
59
21
-100
-80
-60
-40
-20
0
20
40
60
80
2008 2009 2010 2011
DSL Cable FTTH(000)
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 33
TeliaSonera - Finland
TeliaSonera Finland Total Broadband Subs
BB Mkt. Share 21.8% 22.7% 23.4%
472
465 460 458 458 459 458
476
470 470
484
491 494 493
450
460
470
480
490
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)
640,000 FTTH Homes Passed Q2 2012
2009 2010 2011 2012
22.8 21.8 22.7 23.4
9.1 8.6 13.9
23.7
23.9 22.3 22.3
18.6
0
20
40
60
80
2008 2009 2010 2011
TeliaSonera DNA Elisa
(%)
Finland - Major ISPs – Market Share
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 34
TeliaSonera – Sweden, Finland: FTTH Services
Mixed technology NGN strategy:
FTTH, VDSL, ADSL
Partnerships with muni/utility & property owners
Residents pay for Fibre installation or self-install
Response to cable threat, competitive Fibre deployments
Sweden Finland
•Telia leader in broadband
• But: accounts for <25% of Fibre
HP in Sweden (Q2 2012)
• Unbundling obligations
•Target - 1 mln HHs by 2014
• Gov. target: 100Mbps speeds for
90% of HHs by 2020
• Sonera #2 in broadband
• Early Fibre investment
• >550,000 HH covered in main cities in 2011
(30% of HHs)
• Sonera accounts for 95% of Fibre HP in
Finland (Q2 2012)
• Gov. target: 100 Mbps to everyone by end-
2015
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 35
TeliaSonera-Sweden and Finland: FTTH Marketing & Pricing
FTTH services are marketed as solo or bundled services
Service offers vary depending on type of subscriber: direct or housing assoc.
Limited Video options on xDSL
Sweden: HD available only to HH close to exchange
Finland: IPTV is not offered on ADSL below 24Mbps
FTTH is cheaper than or same price as comparable DSL services
Low-speed FTTH services priced cheaper than comparable cable services
Sweden Finland
• FTTH: 10Mbps – 1000 Mbps
• xDSL: 2-60Mbps
• 30 Mbps DSL is 14% more expensive than
100/10 Mbps FTTH service
• Fibre-based 3 play is at least 2% cheaper
(start at SEK 428) than DSL-based (start at
SEK 439)
• Telia’s 100Mbps FTTH pack priced similar
to ConHem HFC 100 Mbps pack
• FTTH – up to 100 Mbps
• ADSL – up to 24 Mbps
• FTTB + LAN (EuroDocsis 3.0) – up to 100
Mbps
• Price is same for all high speed (over 10
Mbps) broadband services
• FTTH is x2 cheaper at 10Mbps than DSL
• Sonera 10Mbps FTTH priced similar to
DNA cable 10Mbps service
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 36
TeliaSonera - Lithuania
222 202 187 173
64 52 48 45
155 244 296 343
0
100
200
300
400
500
600
2008 2009 2010 2011
DSL Cable FTTH
(000)
Lithuania - Major Fixed Broadband
Platforms
Lithuania - Broadband Net Adds
by Platform
DSL 41.1% 34.6% 29.9% 26.2%
19
-20 -15 -14
1 -12 -4 -3
65
89
52 47
-40
-20
0
20
40
60
80
100
2008 2009 2010 2011
DSL Cable FTTP
(000)
Incumbent Nationwide Fixed Line Operator
Networks: xDSL, FTTH
3 Play services – Fixed phone, IPTV, Internet
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 37
TeliaSonera Lithuania
TEO Total Broadband and Fibre Subs
BB Mkt. Share 53.7% 55.3% 56.3%
% of Total Subs 20.0% 30.0% 37.7% 40.0%
% of FTTH Mkt. 25.7% 35.1% 40.9%
305 304 308 313 319 327
335 346 353
358 367 372 374 377
32 42
51 63
74 85
93 104
113 119 131
140 147 151
0
50
100
150
200
200
250
300
350
400
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total Broadband
FTTH
(000)
2009 2010 2011 2012
TEO - Dominant broadband provider –
56% market share in 2011
Fragmented competition:
LRTC (FWA) – 8.7% share
Cgates (FTTH) – 5.3% share
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 38
TEO LT: FTTH Services
FTTH rollout started in 2007
TEO historically controlled close to 99% of all DSL connections
Telecom monopoly expired in 2003
Fibre deployed as response to cable threat and competitive
Fibre deployments (by telcos and MSOs)
Now available in 100 cities nationwide, speeds up to 300
Mbps
TEO FTTH Network Coverage – about 62% of HHs in Q3 2012
Rapid deployment due to predominance of MDUs and small
country size
FTTH Take up rate – close to 21%
-> 40% of total broadband subs
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 39
TEO LT: FTTH Marketing & Pricing
Both xDSL and FTTH available as solo or in 2-3 play
bundles
TEO provides some of the cheapest FTTH services and
bundles in Lithuania
Comparable FTTH services from MSOs are up to 20%
more expensive
Pay-TV programming inferior to MSOs
FTTH is cheaper than DSL services
FTTH and DSL bundles are similarly priced
1 Mbps DSL pack costs as much as 10 Mbps Fibre pack
50Mbps Fibre pack costs as much as 4Mbps DSL pack
10 Mbps Fibre pack is up to 400% cheaper than 8 Mbps
DSL pack or 10 Mbps cable pack
Comparable top-tier DSL and FTTH 3-play services cost
same (but fibre offers x25 faster bb)
Subscribers are encouraged to switch to FTTH
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 40
TeliaSonera – Other Markets
Norway
NextGenTel - alternative operator
Small market share
Fibre available in some areas, deployed in partnership with utilities
Utilities lead in Fibre deployments
Estonia
Elion – fixed line incumbent
Leader in FTTH deployments
ADSL – only up to 5 Mbps, FTTH – up to 100 Mbps
5 Mbps ADSL and FTTH priced the same; 12 Mbps DSL priced same as 50
Mbps FTTH
Government investment: Nationwide 100 Mbps FTTH network rollout for 90% of
the population by 2012 and 100% by 2015, developed by an independent entity
comprised of all major telcos
Mix of NGN technologies
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 41
Comparison with United States
2011 Market Data:
Broadband Penetration: 68.5%
Cable share: 56.8% - stagnating (56.4% in 2008)
Cable broadband net adds peaked in 2011
Telco Broadband (xDSL+FTTH) share: 39.3% - decreasing (41.5% in 2008)
Telco broadband net adds falling
Wireless broadband – strong gains
Main telcos (4 play):
Main competitors – Cable MSOs (3play)
Cable and Telco 3 play service offers are similar
Wireline: FTTH, ADSL
FTTH – Greenfield + ADSL upgrade in
main cities
FTTH expansion is effectively over exc.
previous contractual obligations
77% of telco FTTH deployments (2011)
But: FiOS accounts for <6% of US
broadband subs (2011)
Wireline: FTTH, FTTN,
ADSL
FTTH – Greenfield only
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 42
Verizon FTTH Services
FTTH up to 300 Mbps
FiOS achieved 37% service take-up rate in Q3 2012
60% of Wireline Broadband subs are on FTTH
87% of FTTH broadband subs take IPTV
Consumer ARPU: upwards of US$100 in 2012
Little or no telco (xDSL or Fibre) competition
Targeted deployments, DSL shut off in fibre footprint
Leverage wireless network to offer value-added/TV
Everywhere services
Higher speeds than cable
Able to offer IPTV on Fibre to compete with MSOs
Able to match or undercut cable prices in some areas
Heavy marketing campaigns criticizing cable
Fibre is ‘cool’, ‘modern’, ‘the future’ (and nobody
else has it!)
Consumer dissatisfaction with cable
WHY AND HOW?
FiOS bb solo is 130% more
expensive than DSL
FiOS 2-play 43% more expensive
than DSL
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 43
Strategy Comparisons
Telefónica FT-Orange TeliaSonera Verizon
Geographic
Reach Spain: Nationwide
Lat. Am.: Cherry-picked
Nationwide Nationwide
Main cities, quite selective
Brands Several established Global brand Local brands Distinct brand for Fibre
Bundling • 1-4 play
• Large savings w. bundles
• ES: HDTV only on fibre
•Lat.Am: IPTV only on fibre
•FR: 3-4 play
•SK: 1-4 play
• FR: HD, 3DTV only
on Fibre
•SK: IPTV only on fibre
•1- 4 play
• Limited Video
options on xDSL
•1-4 play
•Large savings w. bundles
•IPTV only on fibre
Pricing •Fibre usually available at highest
speeds only
•More expensive than DSL (20-
30%)
• Cheaper (up to 30%) or
comparable to than HFC
• Premium service
• Fibre available only
at highest speed
• Priced similar or
cheaper than DSL
• Priced similar to HFC
• Fibre available at all
speed levels
• Priced similar or
cheaper than DSL
• Low-speed fibre
cheaper than cable
• Fibre available at all speed
levels
• More expensive than DSL
(130% more on solo, 43%
on 2 play)
• Premium service
Marketing • Better alternative to cable
• Price competition w. high-end
cable
• Price competition • Price competition •Better alternative to cable
• Price competition w. high-
end cable
Target
Consumer • HHs who need speed
• Wealthy HHs (esp. Lat.Am)
Everyone Everyone • HHs who need speed
• HHs unhappy w. cable
DSL -> FTTH
migration Spain: DSL decreasing
Lat.Am: DSL – primary business
DSL still growing
DSL subs decreasing DSL subs decreasing
No single global strategy
Telia comes close with Fibre deployments in most markets
Global Telcos leverage their wireless networks
Integration of Video strategy with Fibre
Fibre priced to make bundles more attractive
© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 44
Factors Determining FTTH Deployments
Factors: Regulation Economy Market Size Competition Role of Public
Bodies
Promote
Fibre • DSL LLU ->
incumbent
deployments
• No functioning
LLU -> altnet
deployments
• High
purchasing
power, GDP
• Dense
population
• Smaller size
• Strong
cable market
• Competitive
Fibre
deployments
• National BB
Strategies
• Public-Private
Partnerships
• Regional dev.
Funds
Inhibit
Fibre • Fibre LLU
• Telco TV ban
• Uncertain reg.
• Large
Income
disparity
• Small
middle class
• Low
urbanization
• Predominance
of single homes
• No/little
cable, fibre
• No public
incentives
Fibre service take-up increases with time
Cherry-picked, targeted deployments usually have higher take-up rates
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