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Global role of mobile
companies in the world
Infobalt 2002
Darius Masionis,
Chief Executive Officer
UAB Bite GSM
0
Outline

About Bitė GSM

Slowdown on the global market

European telecommunication sector
development

What can we expect in the future of telecoms?

Conclusions
1
Bitė GSM in brief
• Bite GSM was established in 1995
• Full scale provider of mobile and internet services
• GSM 900 and 1800 mobile network
• Data and Internet license
• Roaming with 155 operators in 74 countries
• 427 employees
• TDC is 100% shareholder
2
Bite is 100% owned by
TDC Mobile International, the member
of TDC group
100%
100%
78.7%
TDC Tele
Danmark
TDC Mobile
TDC
Switzerland
International
100%
TDC
Internet
100%
TDC
Directories
100%
TDC
Cable TV
100%
TDC
Services
TDC group consists of 20 companies, operating in 12 Europe countries
In first half of 2001 Bitė GSM has been listed by independent international
experts as one of the most effectively operating companies in TDC group
3
TDC Mobile International
TDC Mobil (100%)
Talkline
(100%)
Bité
(100%)
Polkomtel
(19.6%)
UMC
(16.3%)
Connect Austria
(15.0%)
4
A capital markets’ perspective on
the recent evolution
Early 2000
Early 2002
Number of customers
Increase ARPU, reduce customer
acquisition costs
Increased penetration
Penetration peak
Third generation, m.data
Mobile data disappointment
Optimistic growth prognosis
Heavy debts, growth slowdown
Long term growth, UMTS
Cash, short term return
Hype over new economy
Back to balance sheet approach
Consolidation
Consolidation
5
Data as the ARPU driver
Estimations seen in 2000 and 2002
90
80
70
60
50
40
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Nokia
Credit Suisse
2002 perspective
6
Slowdown ahead in the absence of
a new killer application
60%
Annual revenue and GDP growth for telecoms operating in EU15
50%
Mobile
40%
30%
20%
Data
Telecom
Revenues
GDP
10%
0%
Fixed
-10%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source: WEFA-WMM; Dataquest; ITU
7
In wireless:
concentration around six large groups
European market share (subscribers), percent 1997-2000
30%
Aggregate share of six
largest operators is over
70% of European Market
Vodafone
25%
Telecom Italia
20%
15%
British Telecom
10%
France Telecom/ Orange
Deutsche Telecom
5%
Telefonica, Spain
0%
1997
1998
1999
2000
Source EMC Database; Company websites; Eurotel Analysis
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In wireline:
incumbents will face challenges along three horizons
Horizon 3
+
Horizon 2
Magnitude
of opportunities
Horizon 1
• Broadband content/
• Broadband
services
access
• Technology
innovation
+ Level of
-
•
•
•
•
•
Infrastructure competition
SME battle
Price decline
Wireless substitution
Attacker consolidation
uncertainty
• New attackers (new
business models)
• Technology
substitution
Magnitude
of threats
+
• Regulatory issues
(e.g., rebalancing, separation of network)
Potential real threat
Characteristics
• Challenges clearly identified • Challenges identified, but
still unclear dimensions
• Incumbents have a chance
to achieve positive outcome • Incumbents have to set-up
through excellent execution
• Challenges/opportunities
unclear
enhanced capabilities to
face challenges
9
Search of growth opportunities
Development
within current
businesses
Expansion within
the value chain
Deployment of
intangibles into
other industries
• Continues to be
top priority
– Current markets
– New markets
+
+
+
+
• Option to explore
– Content provider
– Content owner/
developer
– Device design, offering
and installation
– Service outsourcing for
clients
– Redeploying intangibles
into adjacent industries
10
The landscape of the European Telecom Industry
will evolve towards larger and more focused
players via restructuring at BU level rather than at
group level
European landscape today
Future European landscape
Small
Integrated Large Integrated Focused
Small
Integrated Large Integrated
Focused
• Incumbents maintain
Wireline
local positions
• Possibly some
turnaround plays
Wireline
• Some small players
will shred data assets
Data
• Some large players
will grow
internationally
• Increased focus
Data
• Some small players
Wireless
will shred wireless
assets
• Possible moves to
complete/develop panEuropean coverage
and regional plays
• Increased focus
Wireless
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Integrated players should opt to become
multifocused operators with a value-added
corporate role
Operational
Role of corporate center
Operationally
integrated
company
Strategic
• Group
configuration
• Development of
synergies and
shared skills
• Management of
critical
resources
For telecom players
that will remain
integrated, this is
the configuration to
adopt
Integrated multifocused player
with value adding
corporate
center
Financial
holding
Not suited for value
adding, integrated
model
Financial
Unrelated,
autonomous
businesses
Current situation for
many Telco's, leading
to significant discounts
in many cases
Same business
systems and
dynamics
Degree of Business Unit Integration
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Consequences and implications
• Balance sheet restructuring is a first priority for players with high
Balance sheet
restructuring and
focus on earnings
debt levels
• Performance improvement needed to address the turnaround play
• Responding to changed priorities from the capital markets
perspective: from growth to ROI, EBITDA. Cash is king: efforts to
reduce Capex and Opex
• Corporate strategy: decide on core areas to strengthen, businesses on
Focus or multi-focus
strategy in the
context of sector
restructuring
which control will be maintained, revise value of options developed
• Have an M&A roadmap in place to strengthen core-areas and,
potentially, to divest non-core areas
• Organizational model for the corporation and role of the corporate center
• Cope with the growth challenge; organic, inorganic, business
Search of growth
opportunities
building
• Explore activities to grow new business and leverage skills and
intangibles
• Develop and cultivate networks of partners. Critical for new
businesses
13
Bitė – communication for everyone
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