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MVNOs in M2M and Enterprise space

Presentation

Kuala Lumpur, 17th October 2012

Contents

About Value Partners

MVNOs in M2M and enterprise space Q&A

Value Partners: a global management consultiancy...

An international player Headquartered in Milan, with offices in 7 countries, including double-digit growth rate markets A strong team of professionals 25 partners, 275 professionals, 23 nationalities An excellent track record Constant growth over the last 18 years A large and loyal customer base Over 350 client served in the past three years, 60% of which have been with us for over 8 years The first to successfully integrate business and IT expertise

with a global reach - 10 offices with engagements in over 40 countries

Value Partners engagements Value Partners offices

London Milan Rome Istanbul Beijing Shanghai Hong Kong

Singapore

So Paulo Buenos Aires

Our TMT practice has advised the leading TMT organizations regulators and investors around the world
Telecoms clients
Media clients Investment clients in TMT

SouthernCapital

with a extensive footprint in the Asia Pacific region

Selected Asia Pacific clients

ELLIOTT ADVISORS

ELLIOTT ADVISORS

Japan China Nepal Pakistan Bangladesh India Macau Hong Kong Vietnam Philippines Sri Lanka Malaysia Singapore

Taiwan

Thailand

Indonesia

Australia

New Zealand

A selection of our MVNO, Enterprise and M2M experience from around the world
Europe: SME and large enterprise MVNO strategy for British Telco in Italian market Premium MVNO offering business users and HNWI in UK MVNO opportunity assessment for leading Greek bank Development and launch of a second brand focused on youths Developed enterprise strategy for incumbent in Turkish market Middle East: MVNO strategy for Zajoul - Saudi retailer and distributor of mobile products

Asia:
2G/3G MVNO strategy for Malaysian Pay TV operator Regional market study to identify potential network partners throughout Asia MVNE strategy for fixed Malaysian operator Wholesale strategy for Malaysian mobile operator MVNE strategy in SE Asia for leading technology solutions provider Enterprise strategy for leading operator in the Philippines SME strategy and implementation for leading operator in Indonesia

M2M and UC strategy for Malaysian operator

Contents

About Value Partners MVNOs in M2M and enterprise space Q&A

In many developed markets, enterprise and M2M MVNOs are still the minority
Breakdown of MVNO by type in selected markets
Enterprise Local telco (fixed and mobile services) - 6 Cheaper rates and international calls - 2 SME ICT and UC provider 2 Small business soln provider - 1 Cheaper rates and international calls - 1 M2M Full service network operator 4 Connectivity provider - 1 Enterprise ICT and UC provider 6 Cooperative 1 Local telco 1 TLC and utilities retailer - 2 SME ICT and UC provider 8
Consumer segment Enterprise segment SME segment M2M

M2M
Network and solutions provider 2 GPS solution provider 1 Smart metering, energy mgmt - 1

Enterprise ICT and UC provider 4 Mobile services provider 5 Local telco 1

SME Google Cloud Computing Provider 1 FMC products retailer, e.g, pico cells 1

M2M VAS provider for Smart Homes, Smart Buildings and Smart Grids -1

48

31

18 8 4 10 8 4 10 2 1

USA

UK

Netherlands

Source: MVNOdirectory.com, Value Partners analysis

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M2M connections within Asia Pacific is expected to grow nearly twice as fast as globally
Projected M2M Connections in APAC
Millions
CAGR

Projected M2M Connections in selected Asian mkts

Millions

117 Others India 85 Indonesia Malaysia 61 Australia South Korea Japan

+50%
2.3

+40%
2.4

+48%
2.7

+41%

42 29 21

0.5

0.5

0.5

China

2011 2010 2011 2012 2013 2014 2015

2015

2011

2015

2011

2015

Driven by Telematics,
m-Payments, Tracking and mHealth
Source: Frost and Sullivan, Value Partners analysis

Driven by
Telematics, mPayments and mHealth

Driven by Telematics,
Remote Monitoring, M-Payments, and mHealth

6 consumer MVNOs
and 1 M2M MVNO

No MVNOs

1 consumer MVNO
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M2M players along different parts of the value chain already have MVNO activities
M2M value chain
Module / Modem Suppliers Smart object suppliers Network operators Service enabler (Platform) System Integrator (Interface) Service Provider (Seller)
Areas with existing MVNOs

Resellers

Vertical Industries / Customers

MVNO MVNO MVNO MVNO MVNO MVNO MVNO MVNO

% of value

5 10%

15 20%

30 40%

15 20%

10 20%

Providing connectivity contributes ~3% of mobile operator revenues while providing the platform, interface and being a seller could generate another 10-12% in revenues
Source: Nokia Siemens Networks, Frost & Sullivan, Informa, Value Partners analysis
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Optimized network service provider typically work with multiple MNOs and offers services for more robust network performance
Examples of optimized M2M network operator Positioned as a premier data MVNO Multiple Virtual Network Operator that provides optimized wireless network for enterprises MNOs are AT&T and Vodafone (for GSM) and Sprint (for CDMA) as well as partnering Iridium for satellite connectivity Operates own NOC and offers system integration services North Americas largest wireless network developed specifically for M2M communications only network optimized for automation and performance MNO is T-Mobile for both GSM and CDMA Offers provisioning and device management platform Positioned as most comprehensive M2M service provider in Europe GSM, SMS, GPRS and 3G MNOs include all mobile operators in the UK and international providers Three, everything everywhere, Vodafone, O2-Telefonica, JT Global and Vodafone Global Has own off-mast network infrastructure higher end-to-end resilience, security and manageability

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The range of services in the unified communications space wide and still evolving
Range of Unified Communication services

Virtualisation Real-time session management

Speech Voice access to services

Mobility Wired and wireless

Presence Intelligence in the network

Video Rich media collaboration

Policy Identity and preference

IP networks
Source: Cisco, Value Partners analysis

Leased lines/ Wireless leased lines

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Cbeyond is an example of a successful enterprise MVNO that is expanding its focus beyond providing connectivity
Case study of successful enterprise MVNO - CBeyond Worlds first 100% VoIP local phone network - provides mobile services through MVNO partnership Specifically targeted at SMEs

Offers core communications

Local and long distance phone services Mobile services Broadband internet access Messaging and collaboration Cloud services cloud servers, cloud PBX Data backup and security Marketing services web hosting, web design, domain services Installation and support services

and IT and UC services

Offers three packages from basic services to enterprise-class and industry solutions for Lawyers and Healthcare professionals Since 2011, has expanded focus from communications-centric (Cbeyond 1.0) to tech-dependent (Cbeyond 2.0)

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M2M and Unified Communications require different competences and commercial approach from connectivity services
Commercial approach across products/services and customer segments Customer segments
SMEs Corporates/ Large enterprises M2M customers

Connectivity

Products/Services

Telco approach sufficient - Relatively simple selling process

Connectivity resold as part of M2M propositions

Telephony and UC solutions (e.g., PABX, etc) System integration and/or managed services required - Relatively more complex selling process

Vertical-specific applications /solutions

Source: Value Partners analysis

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Therefore, the key takeaways are

In the M2M and enterprise space, mobile/connectivity is either an enabler or part of a larger portfolio of services... and providers require specialist domain knowledge and expertise to deliver Commercially, the market will need to be approached differently from the traditional market

Mobile operators may not be fully equipped to play in this space and will need to collaborate with third-parties

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Possible business models Some ideas and examples

Sell as utility - plain vanilla cheap lines

1. 1

Adopt discount strategy and compete on rates no specialist capabilities required

Sell optimized network

1.
2

Construct optimized data network possibly leveraging multiple networks and technologies requires specialist network capabilities

Sell solutions and managed services

1.
3

Provide end-to-end solutions (M2M and/or UC) where mobile connectivity is one of many services requires specific capabilities

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Contents

About Value Partners MVNOs in M2M and enterprise space Q&A

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Contact Information
www.valuepartners.com cheryl.lim@valuepartners.com

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