ByNoor Said

Telecommunications Industry:

An Industry of the future, always looking to the future

Industry Perspective

Industry Profile

Two Market Segments Fixed line

communications Wireless

communications

Geographic Market Segments Americas Europe Asia-Pacific Middle East/Africa

Market ShareFixed versus Wireless

Wireless Services in 2007

Asia-Pacific, 33

Americas, 31.6

Europe, 35.4

Fixed Line in 2007

Americas, 33.1

Asia-Pacific, 33.2

Europe, 33.7

Keeping in Mind About the Telecommunications Industry… All seasoned telecom companies have both fixed line and wireless segments. Africa and the Middle East are considered fairly new “break through” markets, and

are not reflected in global market shares. Both Fixed Line and Wireless Services require infrastructure building.

Datamonitor© (Comp.). (2008, August). Fixed Line Telecoms and Wireless Telecoms – Industry Analysis. Retrieved February 26, 2009, from Business Source Complete Database Web site: http://web.ebscohost.com

Executive Summary Industry Comparison -

Fixed Line versus Wireless(in 2007)Fixed

Market grew by 0.2% and reached a value of $490.1 billion.

By 2012 – Forecasted to grow to a value of $522.3 billion: 6.6% increase.

Volume grew to 1040.6 million fixed line phones: 1.2% increase.

By 2012 – Forecasted to grow to a volume of 1115.7 million fixed phones: 7.2% increase.

Wireless Market grew by 8.9% and

reached a value of $557.3 billion.

By 2012 – Forecasted to grow to a value of $733.1 billion: 31.5% increase.

Volume grew to 2 billion subscribers: 10.9% increase.

By 2012 – Forecasted to grow to a volume of 3.1 billion subscribers: 53% increase.

Industry Leaders

Fixed Line Global Leaders

9.8%

7.0%

6.7%

4.3%

72.2%

NTT Corp

AT&T

Verizon/Vodafone

FranceTelecom

Other

Fixed Line European Leaders

12.7%

12.2%

9.1%

8.8%

57.2%

FranceTelecom

DeutschTelekom

British Telecom

Telecom Italia

Other

Datamonitor© (Comp.). (2008, August). Fixed Line Telecoms and Wireless Telecoms – Industry Analysis. Retrieved February 26, 2009, from Business Source Complete Database Web site: http://web.ebscohost.com

Wireless Superstars#1 – China Mobile Limited

As of April 2008 – about 399.5 million subscribers In 2007 – $46,862.2 million in revenue, 24.4% profit margin. GSM roaming services cover 231 countries, GPRS roaming covers 161

countries.#2 – China Unicom

In 2007 – around 146.9 million wireless subscribers 260 operators in 170 countries and regions. Also is a fixed line competitor. In 2007 - $13,067.7 million revenue, liabilities are very low, profit

margin of 9.3%#3 – Vodafone Group PLC

In 2007 – about 206 million consumers Owns 45% of Verizon Wireless (Verizon Communications owns 55%) Also is a fixed line competitor. In 2007 - $62,224.2 million revenue, negative 17% profit margin.

Where does France Telecom fit into the industry?

Company Comparisons:Vodafone, France Telecom, Deutsche

Telekom, Royal KPN21

9,29

1.00 13

8,45

1.30

165,

156.

90

33,9

30.4

0

ASSETS inmillions

Vodafone

France Telecom

Deutsche Telekom

Royal KPN

62,2

24.2

0

72,4

65.2

0

85,5

20.4

0

17,0

50.7

0

REVENUEin millions

Vodafone

France Telecom

Deutsche Telekom

Royal KPN

-10,

596.

80

9,33

0.60

821.

00

3,62

8.80

NET INCOMEin millions

Vodafone

France Telecom

Deutsche Telekom

Royal KPN

84,6

70.0

0

91,4

83.5

0

103,

308.

60

27,7

86.6

0

LIABILITIESin millions

Vodafone

France Telecom

Deutsche Telekom

Royal KPN

FINDINGS2003 to 2007

Out of All Global & European leader telecoms, France Telecom was the only company able to reduce its employees and liabilities, simultaneously, for five

years consecutively. Over five years they:

Reduced liabilities by approximately 24% Reduced employees/labor by approximately 16% Increased revenue by approximately 13% Approximate average annual profit margin was

9.82%

ECONOMIC FINDINGSContinued

France Telecomasset examination

◦ Strong Cash Flows◦ Uses cash to build more

infrastructure◦ Infrastructure is assets

Royal KPN’s acquisitions: effects on Global 500

ranking

◦ Purchased Telfort in 2005 & ranking was 418.

◦ Years without acquisitions, rankings were low.

◦ Recently acquired Dutch MVNO company, interesting to see what their ranking will be for this next year.

THE NEXT STEP FOR TELECOMS

Move into unsaturated Markets in developed nations, North America and Europe are saturated

Focusing on untapped markets◦ Poor, rural areas, and areas of aging populations,

e.g. France Telecom E-healthcare, Indian farmers Cell phones linked to increasing economic

status, focus in improving social status in developing nations

Infrastructure being invested in developing nations as “point of entry” in difficult markets.

France Telecom’s“ORANGE” Brand

Number 50

A Very Clever Plan

1. Partnerships in Competitive Markets2. Unsaturated/Low Penetration3. Underdeveloped4. Rural5. Poor6. Globally Viewed as “Politically Unstable”7. Acquisitions8. Investment in Infrastructure

saturated

saturated

unsaturated

saturated

unsaturated

unsaturated

saturated

unsaturated

Local Market Environment Sample KENYA

Penetrating Kenya Market Telkom Kenya was entirely public, owned by

government, then negotiated shares with FT for partial privatization.

In 2007, FT acquired bid securing 51% of Telkom Kenya's shares from the government of Kenya.

In 2010, FT would have to bring about 11% of shares back out onto the market as part of the deal.

Thank You