Maximising Margin From Mobile - September 29th 2011Presented by Nimans Network Services & O2

Presenters:

Jamie Hullah – Nimans Network Services Sales Manager

Hannah Rees – Nimans Network Services Business Development Manager

Feriel Clarke – O2 Channel Business Manager

Agenda

• Why O2? The network story & the UK market

• JUC partner, what does this mean?

• The Proposition • Commission

• Marketing support

• Handsets

Telefónica Europe

• O2 plc was acquired for £17.7 billion (26 billion Euros) by Telefónica S.A. in January 2006

• Combining the two created one of the world’s largest integrated telecoms operators

• The acquisition gave Telefónica entry to the two largest and most competitive mobile markets in Europe – the UK and Germany

• Telefónica is the fourth largest telecommunications company in the world – the biggest outside China

• Activities – mainly fixed, mobile, broadband as well as new digital services

• Telefónica Europe comprises businesses in the UK, Germany, Ireland, Czech Republic, Slovakia and Spain

Telefónica’s History

• Set up in 1924, as the Spanish subsidiary of an American

corporation (ITT)

• Listed in the Stock Exchanges since 1925

• Multi-domestic since 1989

Telefónica’s Transformation from 1984 to 2011

Central AmericaMexico, Guatemala, Panama,

El Salvador, Nicaragua

South AmericaArgentina, Brazil, Colombia,

Chile, Ecuador, Peru, Uruguay, Venezuela

EuropeUK, Ireland, Germany

Czech Republic, Slovakia, Spain

North AfricaMorocco

China

Portugal

USA

Italy

Where Telefónica has presence

Where Telefónica operates

Telefónica Presence Across the Globe

Telefónica is a leader in the Latin America Telco Market

Wireline market rank Mobile market rank

Total Accesses (as of Jun11)190.4 Mill.

Argentina: 22.6 million

Brazil: 79.8 million

Central America: 7.3 million

Colombia: 12.3 million

Chile: 12.4 million

Ecuador: 4.5 million

Mexico: 21.2 million

Peru: 17.5 million

Uruguay: 1.8 million

Venezuela: 10.4 million

Argentina: 22.6 million

Brazil: 79.8 million

Central America: 7.3 million

Colombia: 12.3 million

Chile: 12.4 million

Ecuador: 4.5 million

Mexico: 21.2 million

Peru: 17.5 million

Uruguay: 1.8 million

Venezuela: 10.4 million

21

12

22

11

2

2

11

2

2

3

Data as of June 2011

Notes: - Central America includes Guatemala, Panama, El Salvador, Nicaragua and Costa Rica- Total accesses figure includes Narrowband Internet accesses of Terra Brazil and Terra Colombia, and Broadband Internet accesses of Terra Brazil, Telefónica de Argentina, Terra Guatemala and Terra Mexico

… and enjoys a significant footprint in Europe

Data as of June 2011 Wireline market rank Mobile market rank

Spain: 47.4 million

UK: 22.9 million

Germany: 24.0 million

Ireland: 1.7 million

Czech Republic: 7.7

million

Slovakia: 1.0 million

2

21

11

4

2

4

3

Total Accesses (as of Jun11)104.7 Mill.

About Telefónica Europe

We provide integrated mobile, fixed and broadband services as well as new digital services and OTT routes to market.

Our operating businesses are in:

Spain United Kingdom Ireland Germany Czech Republic Slovakia

Together, we’re Telefónica Europe, but customers know us as Movistar in

Spain and O2 in our other operating businesses

Telefónica Europe owns:

50% of the Tesco Mobile in UK and Ireland Tchibo Mobilfunk, Fonic and HanseNet in Germany Jajah based in Silicon Valley, California and Israel

Telefónica O2 UK

• O2 is the leading mobile operator in the UK with over 22 million mobile customers and 130,000 fixed broadband customers

• 125 million calls and 150 million text messages each day!

• O2 was formed in 2001 when BT demerged its mobile business, BTCellnet

• O2 UK is the 3rd largest operating unit within Telefónica contributing 13% of Telefónica Group Revenue

• O2 UK owns 50 percent of the Tesco Mobile

O2 SME Market Share

• O2 is clear market leader• O2 has 37% of SME customer accounts• O2 has 34% of SME customer connections• O2 wins and retains SME business through:

1. Premium business proposition

2. Helping customers join up their communications

3. Becoming the customers trusted advisor

O2 – 2010/2011 Highlights & Awards

• Won the Best Network 2011 for the 4th consecutive year at the Mobile News Awards

• We were awarded the '2010 Best Network Award' by the readers of both Mobile Choice and What Mobile magazines. It's the third year running we've won the Mobile Choice Award. And we’ve also been awarded Know your Mobile’s Network of the Year for 2010.

• Which? magazine score O2 Mobile Broadband highest in its customer ratings and JD Power rates O2 in first place for O2 Mobile Broadband customer satisfaction

• O2voted 'Best Technology Service Provider' in Which? awards.

• In 2010, O2 UK was rated the 16th Best Big Company to work for in a study published by the Sunday Times

• The O2 - In partnership with AEG, ‘The O2’ is most popular music venue on the planet!

• O2 are the first mobile company to be awarded the Carbon Trust Standard Award

• Telefónica is the No 1 in ‘Fortunes Worlds Most Admired Companies 2011’

O2’s network – a proven track record

We’re proud of our network and care about how it’s working for you.

Leading the market

More businesses are with O2 than any other

mobile operator

Best mobile Network 2011 (3rd Year

Running)

Best Broadband Network 2011

(3nd year running)

Number 1 for brand consideration

O2 (UK) The Network Story

Network Evolution - 2011

Building on our innovative deployment of 6 sector cell sites, creating capacity wherever its needed.

Sustained investment in our core network, leveraging our joint venture with Vodafone: Cornerstone

U900:Introducing super-fast 3G by pioneering the rollout of 900MHz in the UK.

Wi-Fi:Thinking ahead of the market to bring a richer, seamless, experience to life.

Cornerstone

Network Evolution – U900

Increased 3G Data Coverage

Increases Availability and Capacity of 3G High Speed Data

Better In-Building Coverage

Network Evolution – WiFi

• An investment of £10 million

• 14,000 hotspots by the end of 2013

• A free-to-all, seamless, quality experience.

Network Revolution LTE – Under Starters Orders

• Spectrum auctions scheduled for spring 2012.

• O2(UK) Trials have been a great success

• Trial network carried more data than the whole of our 3G network in its busy hour.

• Data speeds in excess of 150Mbps experienced.

• O2(UK) are ready to go.

Networks: Building for now. Planning for the future

Cornerstone

6 Sector Cells

U900

Femto Cells

4G

Wi-Fi

2011 2012 2013

In Summary

• Smart Phones continue to drive network growth.

• 3G at 900MHz (U900) is on its way, changing the way our customers experience high speed data.

• Wi-Fi – We’re innovating to build a multilayer network strategy that gives a great seamless experience over many technologies.

• LTE/4G is a step change – Telefonica-O2 UK is prepared to lead the way.

• The customer experience remains at the heart of what we do.

One philosophy for our NetworkWe remain the number one network of choiceWe never mislead our customers on coverage or speedWe listen to and act on what our customers tell us they wantWe lead the industry in rolling out the most sophisticated technology

Network in Manchester – O2’s investment

80 O2 Think Big projects in the North West

£32.9 network investment in Manchester in 2010

£500m UK investment planned for 2011

21 O2 stores in Greater Manchester

1322 O2 employees in Greater Manchester

... Data usage in Manchester has

more than doubled over the last 12 months

O2 already has the fastest webpage download speed in 12 out of 13 key cities measured in the UK

O2 offers a webpage download speed of 1.4 seconds in Manchester making O2 the fastest operator in the city

Ofcom report puts us at number one for Mobile Broadband performance

Fast 3G 900 live in

Manchester

Investment is already providing a better experience for customers today

Nimans is an O2 JUC Partner

What does this mean?

• Nimans is able to offer a ‘true wholesale’ model

• Resellers retain customer ownership

• Even as a bureau reseller – true wholesale

• As an existing Communications Partner – fixed, mobile, broadband etc

• BE Wholesale – coming soon!

• Access to business tariffs, special offers & Marketing support

• Access to all major handset brands inc iPhone & BlackBerry

The Proposition - DISE

DISE:

• End user retail rate

• Partner discount applied (% off retail)

• Single & Share tariffs

• Minute, text and data bolt-ons (inc BlackBerry BIS/BES & BES Express)

• Mobile broadband

• Daily CDRs

Voice TariffInclusive minutes Monthly charge Inclusive texts

No of users (Adding extra minutes increases the number of additional users you can connect

on shared tariffs)

Business Single 300 300 £25 100 1

Business Single 600 600 £30

Unlimited

1

Business Single 1200 1200 £40 1

Business Single Max Unlimited £55 1

         

Business Share 500 500 £25 500 2-3

Business Share 1300 1300 £45 1300 2-6

Business Share 2000 2000 £80 2000 2-10

Business Share 5000 5000 £200 5000 2-25

Additional users can be added to Share tariffs Shared £15 Shared N/A

DISE – bundled tariffs

ABS – Best For Business

Best For Business – Zero line rental:

• Resellers billed at wholesale rates

• £20 upfront commission on every voice connection

• £80 commission on every Blackberry connection

• £20 anniversary award at month 13 (this is on a matrix and can be between £10 and £35

but this is the average)

• 20% discount off all UK calls

• 25% revenue share on UK calls* (This gives a total discount of 40% on UK rates)

• ITS offers a 5% discount

• Roamed calls offers a 5% discount

* 01/02 numbers and cross network mobile calls only

Commission - DISE

• Connection bonus

• Connection bonus dependent on % discount

• BlackBerry connection commission

• Porting commission

• All of the above are bespoke to the deal and reseller requirements I.e. some resellers have forgone all/some of their connection bonus to bring down the costs of handsets

• Commercials differ for Bureau resellers

• Contact us now for more details on commission.

Marketing Support

Access to O2’s sales website:

• On line Marketing toolkit

• Access to accredited logos

• Brand guidelines

• Link to order merchandise and order stands

• On line learning – BlackBerry, networks

• Network story

• Sign off required!!

• Bespoke Marketing support from Network Services

Handsets

Access to handsets:

• All major handsets

• iPhone 4 and BlackBerry

• Nokia, Sony Ericsson, Motorola, Samsung, LG & HTC

• Leasing options

Handset leasing

Leasing examples:

10 x iPhone 4 - 24 month = £220.89/month plus VAT

10 x BlackBerry Bold 9900 = £207.51/month plus VAT

Coming soon…

New BlackBerry handsets

BlackBerry® Torch 9810 BlackBerry® Torch 9860 BlackBerry® Curve 9360 BlackBerry® Entry-Level Touch

Contact Network Services for:

• Engagement process – Contract to become a mobile partner

• More information on our mobile proposition

• Collateral and supporting documentation

• Commercials & price books

• Marketing support

• Meetings

Tel: 0844 8480965

Email: networksales@nimans.net

And finally…

Look out for our BE Wholesale launch webinar on 11th October at 10.30,

Invite going out tomorrow (30/09), contact us for further details

Introducing BE Wholesale

Q & A