Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

Morgan Stanley -Mobile Data Wave

VIEWS: 38 PAGES: 20

Europe Wakes Up to 4G / LTE: Revisit

More Info
									September 16, 2013


BLUE PAPER - REVISIT


                                                                                                                   MORGAN ST ANLEY RESEARCH
                                                                                                                   Global

                                                                                                                                                1
                                                                                                                   Francois A Meunier
                                                                                                                   Francois.Meunier@morganstanley.com
                                                                                                                   +44 (0)20 7425 6603
                                                                                                                                            1
                                                                                                                   Andrew Humphrey
                                                                                                                   Andrew.Humphrey@morganstanley.com
                                                                                                                   +44 20 7425-2630

                                                                                                                                1
                                                                                                                   Luis Prota
                                                                                                                   Luis.Prota@morganstanley.com
                                                                                                                   +34 9141-81217
                                                                                                                                            1
                                                                                                                   Edward Hill-Wood
                                                                                                                   Edward.Hill-Wood@morganstanley.com
                                                                                                                   +44 20 7425-9224
                                                                                                                                        1
                                                                                                                   Terence Tsui
                                                                                                                   Terence.Tsui@morganstanley.com
                                                                                                                   +44 20 7425-3095
                                                                                                                                    1
                                                                                                                   Cesar Tiron
                                                                                                                   Cesar.Tiron@morganstanley.com
Mobile Data Wave                                                                                                   +44 20 7425-8846


Europe Wakes Up to 4G / LTE: Revisit
We believe VOD’s decision to increase capex is a catalyst for European 4G/LTE                                      Morgan Stanley EEMEA - Telecoms &
upgrade. We have evidence that operators including TEF & Swisscom are on the same                                  Media
path. Ericsson is best exposed among equipment vendors and in EEMEA, Russia and                                    Morgan Stanley Technology
MENA stand out                                                                                                     Morgan Stanley Telecommunicatons

We believe it is not a coincidence that both Vodafone and Telefonica announced a
30% increase in capex and a roll-out of 4G in Spain respectively – with 50%                                        1 Morgan Stanley & Co. International plc +
smartphone penetration in Europe, we believe that data networks are reaching a point
where an upgrade to 4G.LTE is needed to increase the quality of service as detailed in
our June 13, 2012, blue paper: “Mobile Data Wave”.                                                                 Read the original report: Mobile Data
Impact on telecom operators: We think that Swisscom is leading the pack in this regard                             Wave – Who Dares to Invest, Wins,
in Europe with moves from Vodafone, TLSN and Portugal Telecom highlighting the need                                June 13, 2012
to invest to differentiate and gain market share with higher pricing power. In EEMEA
MFON, MTS and Mobily have made an early start.
European Telecom Equipment sector becomes investable again. This is a significant
change for the telecom equipment sector, which had been seen as un-investable by some
investors for many years because of weak European capex. Our top tech picks are
Ericsson and Alcatel – Ericsson has gained market share and should benefit more from
a European recovery than Nokia. Alcatel has leverage on any pick-up in revenues while
the Shift plan is executed.
Could this cyclical recovery in capex become structural? In our view, only
consolidation among telecom operators in Europe could lead to a situation similar to the
US where high capex is part of a virtuous circle.



Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor
in making their investment decision.
For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.
* = This Research Report has been partially prepared by analysts employed by non-U.S. affiliates of the member.
+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE
restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
                                                                     MORGAN        STANLEY        RESEARCH

                                                                     September 13, 2013
                                                                     Mobile Data Wave – Europe Wakes Up to 4G / LTE




Mobile Data Wave Blue Paper Revisit – Europe Wakes Up to 4G/LTE
Key point #1 – European telecom operators are pushing                European operators were initially cautious on increasing
for a 4G/LTE upgrade                                                 capital expenditure budgets to match their US peers’ spend on
Vodafone will increase its capex by 30% compared to our              4G. A lower near-term capacity constraint than in the US and
previous 2015e forecast, and we believe that spending on             superior 3G networks allowed European operators to invest
equipment could increase by >60%. The same week that                 more gradually on 4G technologies.
Vodafone announced its plan to make a big push for 4G/LTE in
Europe including Spain, Telefonica also announced it would           However, in the last 12-18 months we have seen some
make substantial investment in the rollout of LTE infrastructure     progress in this regard with evidence of some acceleration in
in Spain, with a plan to install 8,000 base stations.                the move to deploy 4G networks, stressing some of the above
                                                                     mentioned benefits for the sector. We highlight the following
Key point #2 – EEMEA is moving quicker this time                     operators:
While it took about 3-5 years for EEMEA to follow Western
Europe for 3G, 4G has already been launched in several               o Vodafone: The latest announcement on capex spend
MENA countries and LTE USB modems have been available in               came from Vodafone, which announced earlier this month
Moscow since 2012. Handset prices are for now an issue given           £6bn in new organic investments over the next three years
the predominant no subsidy / prepaid model but operators are           as part of “Project Spring” or £2bn per annum split evenly
accelerating their 4G rollout, especially in Russia. In South          over three years. In FY 12/13, Vodafone’s cash capex was
Africa, 4G spectrum is not yet allocated, but likely to be             £6.2bn. The new capex spend represents a 31% uplift from
assigned late 2014. Turkey, which benefits from a standout 3G          our current FY15 estimate for the next three years. Along
network, does not have 4G plans before 2015.                           the lines of our Blue Paper, Vodafone has stressed the
                                                                       need to exploit the data opportunity with increased volumes
Conclusions for Telecom Operators                                      on 4G, capturing the growth potential in the Enterprise
                                                                       segment and benefit where possible from convergence.
As we stated in our June 2012 Blue Paper, Who Dares to
Invest, Wins, we think that higher investment could drive
                                                                     o Swisscom: investment has been around 3x higher than
longer-term benefits, such as, i) improving pricing power by
                                                                       peers on a Pop basis and over 2x more on a per customer
investing to improve the quality of the user experience, and ii)
                                                                       basis in the last few years (Exhibit 88). However, its capex /
taking market share by actively stimulating data demand,
                                                                       sales is only around 10% higher than peers, pointing
resulting in tighter capacity utilisation and pricing power, as in
                                                                       towards the benefits of high market share and the premium
the US. Strong spectrum position (capacity/quality), extensive
                                                                       that can be charged with best network quality. Swisscom’s
network (coverage) and solid balance sheets (funding) are key
                                                                       strategy to invest more has paid off in terms of increasing
factors, in our view, to successfully exploit the mobile
                                                                       market share, and its ability to offer bundles has helped to
broadband opportunity.
                                                                       sustain market share and drive future FCF generation
                                                                       (Exhibit 99 and Exhibit 1010). Swisscom launched an
We estimate that the cost of a 10-20% increase in capex would
                                                                       innovative tariff scheme in the summer 2012, which for the
initially dilute free cash flow to equity by around 18-36% but
                                                                       first time in the sector, was speed based. Operators can
likely just for 3-4 years before coming back to more normalised
                                                                       distinguish and monetise on speed only if they have superb
levels. Sometimes higher capex in next-generation networks
                                                                       network quality, both in terms of coverage and capacity, the
can be offset by lower capex in legacy networks and increased
                                                                       ability to sustain capex and a strategy that calls for almost full
efficiencies. Despite some short-term pain, we remain
                                                                       coverage of all available network technologies (2G, 3G, 4G)
convinced that the time is right in Europe for scale operators to
                                                                       in order to be able to deliver the required speed everywhere.
move towards a demand fulfilment and network quality
strategy. The risk reward on such a strategy is attractive: we
                                                                     o KPN: According to KPN’s 2Q13 results presentation
estimate a 15-30% uplift to equity value as plausible if the
                                                                       current 4G coverage is 50% of population but the network
sector is able to stabilise or slightly grow revenues on the back
                                                                       roll-out has been accelerated and the company expects
of such a strategy. We estimate that the annual cost needed
                                                                       now to reach 100% 4G coverage by 1Q14. Tele2, as a new
could be below 5% of current equity value and for a temporary
                                                                       entrant in the Netherlands, is expected to launch operations
period (3-4 years) before fully reaping the benefits.
                                                                       as a network player (currently only MVNO) by mid-2014.




                                                                                                                                      2
                                                                 MORGAN                                STANLEY                             RESEARCH

                                                                 September 13, 2013
                                                                 Mobile Data Wave – Europe Wakes Up to 4G / LTE




   According to KPN, data per user is 80% higher when using      o MegaFon: In August 2013, MegaFon announced the
   4G (relative to 3G) while the percentage of Wi-Fi data          acquisition of Yota with a view of translating its previous 3G
   usage is 15% lower on 4G too. Capex target remains              network advantage into 4G. Yota brings 6,000 4G LTE
   unchanged at below €2.3bn for 2013 with below €7bn for          base stations across Russia, 2x30Mhz of spectrum in the
   2013-15 (including Reggefiber consolidation from H2             2.6Ghz band and existing 4G USB modems subscribers.
   2014). KPN says it is aiming to monetise higher bandwidth       According to a recent statement by Russian Minister of
   data propositions, making 4G the choice of reference with       Communications Nikolay Nikiforov, the Big 3 operators
   4G prices similar to 3G in order to boost mobile broadband      have agreed to fully cover with an LTE network all cities
   penetration, while lowering churn rate.                         with at least 10k citizens by 2018YE. Original LTE license
                                                                   requirements were based on cities with a minimum
o TeliaSonera: In March 2013, TeliaSonera announced its            population of 50k. With the new targets, the Big 3 operators
  new wireless pricing plans, which closely resemble               would increase the planned coverage from 79m to 102m
  Verizon's ‘Shared Everything’ plans announced in June            people.
  2012. Telia's ‘subscription for the entire family’ plans are
  structured around shared data and multi-device access          Conclusions for Telecom Equipment – we view the
  with unlimited voice and SMS usage. Customers choose a         push for 4G in Europe as a potential significant shift
  shared data allowance and then pay a monthly fee per           of sentiment towards telecom equipment stocks
  device to access that data. The plans seem to strike a
                                                                 Capex in the region has been trending down for the past six
  balance between stimulating demand and maintaining
                                                                 years and is back to the post TMT-bubble level. Quarterly
  prices, while limiting exposure to pressures in voice and
                                                                 capex is currently trending at $2bn a quarter, 50% below the
  SMS. These additional devices would likely drive
                                                                 $4bn peak. The Vodafone capex announcement alone can
  incremental revenue through access fees and higher data
                                                                 make a substantial difference to this.
  usage over time, to help compensate for customers
  migrating from tablet plans. Overall take-up has been
                                                                 Moreover, operators have benefited from attractive pricing as
  encouraging, and whilst the proposition is initially being
                                                                 Huawei and ZTE were fighting for market share. Operators
  used to defend market share, the company does see
                                                                 have often been vocal that it was a buyers market for them.
  benefits from lower churn in the longer term.
                                                                 With Vodafone pushing for a big capex increase this could be a
                                                                 potential shift in sentiment towards the sector, calling for a
o Portugal Telecom: Above-average investment in the last
                                                                 re-rating.
  few years in Portugal has resulted in one of the best
  networks in the sector, in our view, with 1.6 million homes    Exhibit 11
  covered with FTTH, equivalent to 46%+ of population, a         Telecom capital spending by region
  92% population coverage with 4G and mobile backhauling           5,000

  using fibre, a transmission network that supports 100Gbps
  and a data centre with capacity of up 30 PB to be                4,000

  inaugurated in September. This has allowed postpaid
  market share to grow by 3pp in the last 12 months to 53%,        3,000

  growing the percentage of flat fees in customer revenues
  by 7pp to 38% and cutting SARC by 20% to 22% in 2013
                                                                   2,000




o MTS: After spending ~$2.8bn in Capex in 2012, MTS said it
                                                                   1,000
  could increase its capex spend above its initial guidance of
  20% of revenues for 2013 to allow faster LTE roll-out. In
                                                                     -
  July 2013, MTS signed a partnership with Nokia Siemens,
                                                                           1Q02

                                                                                  3Q02

                                                                                         1Q03

                                                                                                3Q03

                                                                                                       1Q04

                                                                                                              3Q04

                                                                                                                     1Q05

                                                                                                                            3Q05

                                                                                                                                   1Q06

                                                                                                                                           3Q06

                                                                                                                                                  1Q07

                                                                                                                                                         3Q07

                                                                                                                                                                1Q08

                                                                                                                                                                       3Q08

                                                                                                                                                                              1Q09

                                                                                                                                                                                     3Q09

                                                                                                                                                                                            1Q10

                                                                                                                                                                                                   3Q10

                                                                                                                                                                                                          1Q11

                                                                                                                                                                                                                 3Q11

                                                                                                                                                                                                                        1Q12

                                                                                                                                                                                                                               3Q12

                                                                                                                                                                                                                                      1Q13




  which became its sole supplier of FDD LTE radio access, IP                                                                              NA       EMEA         APAC          ROW


  core network equipment and services. In two years, MTS         Source: Dell’Oro, Morgan Stanley Research
  plans to cover 80% of the Moscow territory and over 40
  large cities in the Moscow region with LTE FDD networks.
  The company targets 18-19% capex to sales ratio for
  2013-15.




                                                                                                                                                                                                                                             3
                                                                                                            MORGAN        STANLEY        RESEARCH

                                                                                                            September 13, 2013
                                                                                                            Mobile Data Wave – Europe Wakes Up to 4G / LTE




Exhibit 22                                                                                                  An accelerated move from coverage to capacity as VOD lights
EMEA wireless equipment market share                                                                        up more 3G / 4G line cards is positive for margins, everything
                                      EMEA equipment market share                                           else being equal. Assuming that Ericsson would get 30% of the
                                                                                                            Vodafone windfall capex spend (roughly in-line with its current
                                     10%                                                                    market share) with 50% gross margins, then our 2014 Ericsson
                              6%                                                                            revenue forecasts would increase by 4%, and gross margins
                                                            32%
                                                                                                            would increase by 50bps to 35% from 34.5% in 2014. Our 2014
                                                                                           Ericsson
                                                                                           Huawei
                                                                                                            Ericsson EPS would reach SEK7.6 vs our current SEK6.7 base
                                                                                           NSN
                                                                                           Alcatel-Lucent
                                                                                                            case.
                       23%
                                                                                           Others


                                                                                                            The Ericsson share price has moved up 10% already but we
                                                                                                            believe that many investors are still in doubt, given that it has
                                                   29%
                                                                                                            disappointed on margins in the past.

Source: Dell’Oro (2012 data) Morgan Stanley Research
                                                                                                            In a separate note published today, we are upgrading our PT
ERICSSON (OW) – Ericsson margins have been impacted by                                                      on Ericsson from SEK84 to SEk108. This is driven by an
“network modernisation” projects whereby Ericsson has been                                                  11-12% upgrade to 2014-15e EPS, but also our view that the
swapping out old 2G and 3G base stations for single-RAN.                                                    long-awaited recovery in European capex should drive a
Ericsson has been buying market share at the expense of                                                     re-rating from 1.0x EV/sales and 8x EV/EBIT to 1.2x EV/sales
NSN. Ericsson management has guided that margins would                                                      and 10x EV/EBIT.
recover when “network modernisation” stops and the mix
moves from coverage to capacity, which is exactly what VOD                                                  ALCATEL (OW) – We have a bull case of €5.1 on Alcatel and
has indicated.                                                                                              we are feeling more confident about our 2014/2015 forecasts
                                                                                                            with potential for upside. The contract with Telefonica was
Exhibit 33                                                                                                  unexpected as Alcatel only provides LTE overlay. Not all
EMEA Total Market Share                                                                                     operators have moved to single-RAN and in the race to
EMEA - Market Shares                                                                                        LTE/4G, without single-RAN, a quick fix is to use overlay for an
 40%
                                                                                                            ageing 2G/3G network. We also believe that Alcatel could
                                                                                                            benefit from increased demand for IP Edge Routers and IP
                                                                                                            Transport.

                                                                                                            However, ramping up new contracts has a downside – it could
 20%
                                                                                                            require more working cap and this has been an Achilles’ heel
                                                                                                            for Alcatel in the past 12 years. Therefore, management needs
                                                                                                            to find a balance between ramping up contracts in volume
                                                                                                            without compromising a still fragile balance sheet.
  0%
    2Q10   3Q10   4Q10        1Q11   2Q11   3Q11   4Q11   1Q12    2Q12    3Q12   4Q12   1Q13   2Q13
                                                                                                            REMAIN EW NOKIA – NSN has lost market share in Europe
                       ERIC           NSN           ALU          Huawei          ZTE
                                                                                                            according to Dell’Oro. But we believe that the trend could
Source: Dell’Oro (2012 data) Morgan Stanley Research
                                                                                                            continue as the market recovers. Why? Because Ericsson and
                                                                                                            Huawei are still swapping out equipment from NSN. Also we
                                                                                                            believe that NSN margins were inflated by Japan and South
                                                                                                            Korea, whose spending is rolling over. We prefer to pick
                                                                                                            companies where there is positive earnings / margins
                                                                                                            momentum.




                                                                                                                                                                                4
                                                                  MORGAN        STANLEY        RESEARCH

                                                                  September 13, 2013
                                                                  Mobile Data Wave – Europe Wakes Up to 4G / LTE




Synchronised Capex Push for 4G / LTE in Europe
Vodafone’s Project Spring is the tip of the iceberg                  deeper 3G coverage and capacity in mature markets;
VOD has announced Project Spring. VOD will spend £6bn
                                                                     unified communications: extended fibre roll-out, as well as
over the next three years to improve its network and service
                                                                      widened NGN and VDSL resale reach;
offering. Recent conversations with investors show that the
consensus was not expecting such an increase in capex (if any
                                                                     upgraded distribution presence, both online and retail;
at all). Compared to VOD's £5bn annual capex, this represents
up to a 40% increase (assuming all goes in capex), or a 30%
                                                                     additional 3G voice and data coverage in emerging
increase on our previous estimates for FY15 capex. Assuming
                                                                      markets;
current capex is 30% equipment and Project Spring is 50%
equipment, this could actually represent a 67% increase for
                                                                     enhanced Enterprise service portfolio, including IP-VPN,
equipment. VOD will give more details about the project at the
                                                                      Cloud, Hosting and M2M;
November Q3 results.
                                                                     faster deployment of mobile payment services;
VOD's stated key areas for development are an
acceleration of the 4G network supported by single-RAN
                                                                     development of new and standardised systems to improve
and high capacity backhaul as well as deeper 3G coverage
                                                                      customer experience and simplify Vodafone’s operations.
and capacity in mature markets. We believe this is positive
for Ericsson as it has invested in market share in the past two
                                                                  Vodafone will provide more detail on Project Spring in its
years with its network modernisation project around
                                                                  interim results presentation in November 2013.
single-RAN products for 3G and 4G. Huawei is the other main
supplier of wireless equipment, with NSN behind, in our view.
                                                                  Vittorio Colao, Vodafone Group Chief Executive
                                                                  commented: “As a result of the transactions, we will also
Demand from individuals and businesses for ubiquitous
                                                                  greatly enhance Vodafone’s long-term prospects through
high-speed data is growing rapidly, creating attractive growth
                                                                  Project Spring, our new programme of additional organic
opportunities for Vodafone in mobile and unified
                                                                  investments in 4G, 3G, fibre and broadband, enterprise
communications services. Management believes the transition
                                                                  services and improved customer experience across all of our
to 4G and unified communications makes this the right time in
                                                                  markets. Project Spring will strengthen and accelerate our
the evolution of the sector for Vodafone to pursue further
                                                                  existing Vodafone 2015 strategy, enabling us to take even
development and differentiation. Vodafone is executing its
                                                                  greater advantage of the growing global demand for ubiquitous
Vodafone 2015 strategy to address these opportunities, and
                                                                  high-speed data.”
now plans to make significant additional organic investments to
enhance further its competitive positioning, leading data
                                                                  Alcatel-Lucent will deploy 8,000 4G base stations for
networks and compelling branded customer experience over
                                                                  Telefonica in Spain: this is a landmark deal for Alcatel-Lucent
the next few years.
                                                                  because the 4G network will be deployed over the current
                                                                  2G/3G network of Telefonica (known as ‘overlay’). Most
As a result, Vodafone will implement a programme of additional
                                                                  operators in Europe have chosen to go for single RAN, where
organic investment, named Project Spring, amounting to a total
                                                                  4G is easy to turn-on (just a software upgrade in most cases)
operating free cash flow investment of £6 billion over the next
                                                                  using equipment from Ericsson, Huawei and NSN. Therefore,
three financial years.
                                                                  Alcatel-Lucent has been more or less shut out from the
                                                                  European market for 4G. Some European operators are still
Key areas for investment include:
                                                                  running networks without single RAN; therefore, they will have
                                                                  to either: 1) go for single RAN, which is disruptive for the
   accelerated 4G network build, covering 90% of its five main
                                                                  networks and takes time; or 2) go for 4G overlay, which is less
    European markets by 2017, supported by single RAN and
                                                                  disruptive and faster to deploy.
    high capacity backhaul;




                                                                                                                                    5
                                                                   MORGAN        STANLEY        RESEARCH

                                                                   September 13, 2013
                                                                   Mobile Data Wave – Europe Wakes Up to 4G / LTE




Accelerating 4G network deployment at KPN – a case                 In terms of pricing, the new 4G tariffs are similar to effective
study                                                              prior 3G tariffs, not including any special 4G pricing premium.
According to KPN’s 2Q13 results presentation its current 4G        Customers will now own the handset (handset lease model for
coverage is 50% of population. The network roll-out has been       old 3G) with the new 4G entry price with unlimited voice/SMS
accelerated and the company expects to reach 100% 4G               and 500MB being €45 pm (plus upfront payment for handset).
coverage by the 1Q14. KPN’s 4G roll out is combining               The 2GB option is €47.5 -52.5 for basic/standard handset. A
800MHz, 1800MHz and 2.6GHz frequencies with KPN                    similar old 3G package with unlimited voice/SMS and 2.5GB
mentioning its first-mover advantage in The Netherlands.           was priced at €65 pm but with 50% discount for 3-6-12 months
According to KPN, data per user is 80% higher when using 4G        making average price range over a 24 month period roughly
(relative to 3G), while the percentage of Wi-Fi data usage is      €50-55 pm plus €5pm for handset lease. Therefore the price of
15% lower on 4G too. KPN says its capex target remains             the new 4G All-in-One proposition is not materially different
unchanged at below €2.3bn for 2013 with below €7bn for             from the previous 3G packages.
2013-15 (including Reggefiber consolidation from 2H14).
                                                                   However, higher value for money from 4G propositions is
Monetising higher bandwidth data propositions: making              aiming to increase mobile broadband penetration and lower
4G the choice of reference...                                      churn rate, while lower Wi-Fi usage suggests lower 'Wi-Fi
Since the launch of the new 4G All-in-One tariffs on July 1, the   cannibalisation risk' more typical from low-end 3G packages,
old 3G propositions are not commercially available anymore         with 4G bandwidth actually being more comparable to that from
with 3G propositions only available now for low bundles. From      a DSL/VDSL connection and even potentially becoming an
July 1 the only 3G bundles available will be Basic 100 (100        alternative to lower speed DSL connections in rural areas.
min/100 SMS/100MB) for €29 pm and Basic 200 (200/200/200)
for €35. For higher data bundles from 500MB to 4GB                 Impact on ARPU in a 4G environment
customers will have the 4G All-in-One package with unlimited       As of 2Q13, KPN consumer contract mobile ARPU was €32,
voice/SMS included which, according to KPN, lowers the             down 6% YoY. This average ARPU compares with the above
ARPU profile risk while also reducing churn rate. The aim by       mentioned tariffs for 4G packages and highlights that a
KPN is that 4G becomes the choice of reference for average         differential pricing strategy from any operator may lead to an
data customers.                                                    increase in ARPU as 4G penetration increases within its
                                                                   existing customer base. Out of KPN’s postpaid retail ARPU,
... with 4G prices similar to 3G aiming to increase                72% was the committed ARPU (fixed part of it) up 9pp YoY due
penetration and lower churn                                        to bundles take-up. Market share remains stable around 45%.




                                                                                                                                      6
                                                                                MORGAN        STANLEY        RESEARCH

                                                                                September 13, 2013
                                                                                Mobile Data Wave – Europe Wakes Up to 4G / LTE




Revisiting Who Dares to Invest, Wins (Part 2)
                                                                                we think now is the time to invest, what the implications
Vodafone’s new £6bn capex programme over 3 years is likely to
                                                                                are for the sector’s free cash flow generation and how this
trigger a response from its large-scale competitors. We cannot rule
                                                                                could drive significant upside on equity values. We also
out scale (i.e. incumbent) operators responding to: (1) match Vodafone’s
                                                                                look at the examples of Swisscom and TeliaSonera, as
ambitions; and (2) improve pricing power and take share from subscale
                                                                                operators that have already started the process of network
and typically disruptive competitors.
                                                                                differentiation in Europe.
We estimate that the cost of a 10-20% increase in capex would
initially dilute free cash flow to equity by around 18-36%. The                 Vodafone’s new investment plans: “Project Spring”
transition to a quality investment strategy implies some short-term pain, as
initially free cash flow must fall due to higher capex. Our estimates exclude   Vodafone announced £6bn in new organic investments over
the cost of spectrum, more of which could be required in 2014/15.               the next three years as part of “Project Spring” or £2bn per
                                                                                annum split evenly over three years. In FY 12/13, Vodafone’s
We still think that the time is right in Europe for scale operators to          cash capex was £6.2bn. The new capex spend represents a
move towards a demand fulfilment and network quality strategy. The              31% uplift from our current FY15 estimates and implies a
risk reward on such a strategy is attractive: we estimate a 15-30%+ uplift to   39% reduction in FY15 free cash flow to equity for the next
equity value as plausible if the sector manages to stabilise or slightly grow   three years.
revenues on the back of such a strategy, for an annual cost of below 5% of
current equity value and for a temporary period (3-4 years).
                                                                                The key opportunities that Vodafone is highlighting include:
We look at the examples of Swisscom and TeliaSonera as operators
that have already started to migrate to next gen networks, accelerating            Data opportunity in Europe: Today one in three
network deployment and launching innovative products and services.                  subscribers use their smartphone to watch videos or TV.
                                                                                    Vodafone estimates that this will rise to over two in three
                                                                                    by 2015.

Since we published our Who Dares to Invest, Wins Blue Paper
                                                                                   4G opportunity: Average data usage per smartphone is
in June 2012, European operators were initially cautious on
                                                                                    around 2x on 4G vs 3G.
increasing their capital expenditure budgets to match their US
peers’ spend on 4G. One of the reasons cited was that Europe
                                                                                   Networks: data usage is growing 60% YoY and is now
faced less of a near-term capacity constraint than in the US. In
                                                                                    88% of total traffic in Europe for Vodafone.
particular, it was mentioned that 3G networks in Europe are
superior to those in the US meaning that European operators
                                                                                   Data opportunity in emerging markets: Smartphone
could invest more gradually on 4G technologies.
                                                                                    penetration is only 9% in India vs 37% in Europe.

We think the catalyst for change is Vodafone’s disposal of
                                                                                   Enterprise: Enterprise represents 27% of Vodafone’s
its 45% interest in Verizon Wireless for $130bn in
                                                                                    service revenue and is a growth opportunity.
September 2013 and its resultant new investment
programme (Project Spring), with £6bn of additional
                                                                                   Convergence: Vodafone sees an opportunity to double its
organic investments over the next three years.
                                                                                    addressable market over mobile-only.

Our Blue Paper argued that higher investment could drive
                                                                                Vodafone says that the new investments would be broadly split
longer-term benefits, such as, improving pricing power by
                                                                                into the following categories:
investing to improve the quality of the user experience, and
taking market share by actively stimulating data demand,
                                                                                   Mobile network (45-50%): Vodafone will accelerate 4G
resulting in tighter capacity utilisation and pricing power, as in
                                                                                    deployment, so it covers 90% of the population in
the US.
                                                                                    Vodafone’s five major European markets by 2017.
                                                                                    Vodafone will support this by faster, high-capacity
We believe Vodafone’s actions should be viewed through the
                                                                                    backhaul rollout and single RAN deployment and adding
prism of our Blue Paper themes, and we consider the next
                                                                                    additional capacity and coverage to its 3G voice and data
moves by competitors and potential outcomes. We revisit why
                                                                                    network.



                                                                                                                                                  7
                                                                                              MORGAN            STANLEY            RESEARCH

                                                                                              September 13, 2013
                                                                                              Mobile Data Wave – Europe Wakes Up to 4G / LTE




     Unified communications (20-25%): Vodafone will                                          incumbent operators in Germany, Spain, France and Italy can
      increase its fixed-line access in a number of markets                                   respond to the actions of Vodafone. If the capital intensity at
      through self-build fibre and extending NGN footprints in                                Deutsche Telekom, Telefonica, Orange and Telecom Italia
      certain markets.                                                                        were to increase by 10-20% on our current 2014 base case
                                                                                              estimates this, on average, would result in a 18-36% reduction
     Enterprise (10-15%): Vodafone will mainly expand its                                    in free cash flow to equity.
      hosting platform, IP-VPN businesses and carrier services
      operations.                                                                             We use group numbers including fixed and mobile operations
                                                                                              for these incumbent operators. A 10-20% group capex
     Retail & Customer experience (5-10%): The company                                       increase, which we use for our sensitivity analysis, would imply
      will upgrade stores in all markets and improve the online                               approximately a 20-40% capex increase for mobile with the
      experience. Vodafone will also increase investment in                                   mid-point being similar to the capex uplift above mentioned for
      mobile payments and in M-Pesa.                                                          Vodafone under Project Spring.

     Customer support systems (10-15%): Vodafone will                                        Exhibit 55

      modernise and standardise IT systems for the data era, to                               On average, a 10-20% group capex hike translates
      achieve increased flexibility and reduced cost.                                         into an 18-36% FCFE decline
                                                                                               10
Exhibit 44
Vodafone – how the new investments will be split                                                 0
                                                                                                     0         5         10         15         20         25         30         35
                                                                                               -10
                                                                                                                                                            % increase in capex
              Customer                                                                         -20
               support
                 12%
          Retail                                                                               -30
       experience                       Mobile
           7%                          network                                                 -40
      Enterprise                         47%
         12%
                                                                                               -50
                                                                                                         % decrease in FCFE
                                                                                               -60
                Unified
                                                                                              Note: We take the simple average of Deutsche Telekom, Telefonica, Orange and Telecom
                Comms                                                                         Italia. Source: Company Data, Morgan Stanley Research
                 22%


Note: We take the mid-point of Vodafone’s illustrative split of investment. Source: Company
Data, Morgan Stanley Research                                                                 … But, longer-term, we estimate a 15-30% equity
                                                                                              value uplift from a network quality strategy, allowing
                                                                                              for better pricing and market positioning relative to
Transition to a quality network: FCF must initially                                           laggards
fall from rising capex …
                                                                                              The European telecoms sector is currently trading close to 5.5x
Future networks will have to be based on Long Term Evolution                                  EBITDA 14e. We estimate that this implies just below 5x
(LTE), i.e. the next, faster generation of mobile technology, and                             EBITDA 14e for domestic telco operations, which implies
will need to be more complex, with small cells and better                                     approximately -1% service revenue CAGR growth, -2%
transmission. How quickly we get there will define the capex                                  EBITDA CAGR growth and 15% terminal capex to sales
path, which is highly sensitive to the length of time to upgrade.                             (Exhibit 66).

The transition to a quality investment strategy implies some                                  A modest change in market share and pricing power prospects
short-term pain, as initially free cash flow must fall on higher                              towards US norms could drive a significant uplift in equity value
capex. We cannot rule out scale (i.e., incumbent) operators                                   because of operating leverage (typically Telcos are on 2x net
responding to: (1) match Vodafone’s ambitions; and (2)                                        debt to EBITDA).
improve pricing power and take share from subscale and
typically disruptive competitors. In Exhibit 55, we look at how




                                                                                                                                                                                     8
                                                                                  MORGAN           STANLEY            RESEARCH

                                                                                  September 13, 2013
                                                                                  Mobile Data Wave – Europe Wakes Up to 4G / LTE




For the sake of our sensitivity analysis, we assume in our                        Exhibit 77

theoretical telco model in Exhibit 77 that group capex goes up                    … But, because of operational leverage, a “return to
by 20% for the first three years and by 10% in year four before                   growth” scenario could imply up to 30% equity uplift
                                                                                                                                                           CAGR
coming back to normalised levels by year five.                                                              Year 0     Year 1   Year 2   Year 3   Year 6 Year 0-3
                                                                                  Service revenues             100       101      102      103      103      1%
If we were to assume that such network quality strategy gave                      EBITDA                        35        36       36       37       37      2%
rise to a “return to growth” scenario of +1% service revenue                      EBITDA margin               35%       35%      36%      36%      36%
CAGR growth and +2% EBITDA CAGR growth for the next                               Capex                         14        17       17       17       14      6%
three years (stabilising thereafter when capital intensity levels                 Capex to sales              14%       17%      16%      16%      14%
                                                                                  Tax rate                    35%       35%      35%      35%      35%
come back to normal levels), this could imply a 30% equity
                                                                                  Taxed OpFCF                   14        12       13       13       15       15
value uplift (Exhibit 77) with a 5.6x EBITDA 14e metric implied.
                                                                                  Terminal value                                                    217
                                                                                  Total OpFCF                   14        12       13       13      232
On a less optimistic scenario, if sales and EBITDA were just
kept flat instead of the low single-digit decline discounted in the               WACC                       8.0%
current stock prices, the equity value uplift would still be around               growth                     1.0%
15%, on our estimates (or 5.2x EBITDA 14e implied).
                                                                                  Enterprise value            200
In our note Mobile Data Wave: Who Dares to Invest, Wins:                          EV/EBITDA                   5.6x

Revisit dated Oct 30, 2012, we discuss operators including
                                                                                  Net debt EBITDA               2x
Telstra that are leading the game in network quality strategy.
                                                                                  Net debt                      71
For the sake of comparison and while we acknowledge that                          Equity value                 128
there are many factors behind it, Telstra’s current market                        Change                      32%
metric is above 6.5x EBITDA 14e.                                                  Source: Morgan Stanley Research estimates


Exhibit 66
Telcos currently discount modest EBITDA declines …                                Acceleration of network differentiation stories in
                                                                         CAGR
                          Year 0     Year 1   Year 2   Year 3   Year 6 Year 0-3   Europe
Service revenues             100        99       98       97       97     -1%
                                                                                  1. Swisscom – The best example of a network quality
EBITDA                        35        34       34       33       33     -2%
                                                                                  strategy in Europe and probably worldwide
EBITDA margin               35%       35%      34%      34%      34%
Capex                         14        14       14       14       15      1%
Capex to sales              14%       14%      14%      15%      15%              Swisscom’s investment has been around 3x higher than peers
Tax rate                    35%       35%      35%      35%      35%              on a Pop basis and over 2x more on a per customer basis in the
Taxed FCF                     14        13       13       12       12       12    last few years (Exhibit 88). However, its capex / sales is only
Terminal value                                                    172             around 10% higher than peers, pointing towards the benefits of
Total FCF                     14        13       13       12      184
                                                                                  high market share and the premium that can be charged with
                                                                                  best network quality. Swisscom’s strategy to invest more has
WACC                       8.0%
growth                     1.0%
                                                                                  paid off in terms of increasing market share, and its ability to
                                                                                  offer bundles has helped to sustain market share and drive
Enterprise value            166                                                   future FCF generation (Exhibit 99 and Exhibit 1010), part of
EV/EBITDA                   4.8x                                                  which again can be used to invest and sustain returns.

Net debt EBITDA               2x                                                  Pioneering bundle price structure based on speed
Net debt                      69
                                                                                  differentiation: short-term pain, long-term gain
Equity value                  97
                                                                                  In summer 2012, Swisscom launched an innovative tariff
Source: Morgan Stanley Research estimates
                                                                                  scheme that, for the first time in the sector, was speed based.
                                                                                  This means that customers are able to choose their desired
                                                                                  data speed and pay accordingly for it. With growing
                                                                                  smartphone and tablet penetration, customers will likely value
                                                                                  the speed of connection and predictability of costs more, in our
                                                                                  view.




                                                                                                                                                                    9
                                                                      MORGAN            STANLEY            RESEARCH

                                                                      September 13, 2013
                                                                      Mobile Data Wave – Europe Wakes Up to 4G / LTE




We agree with Swisscom that monetising volumes will become            Exhibit 99

more and more difficult with clients using free IP alternatives for   Correlation between FCF and market share:
both voice and messaging. The only solution to protect                Swisscom in leading position in all segments
revenues is moving to a bundle tariff scheme with data-centric
tariffs where voice and SMS are free services and clients pay
mostly for a quality data service.

Swisscom has gone one step further and, in addition to moving
to data-centric bundles from June 25 2012, these bundles will
be flat-rate with no differentiation made on usage but rather on
speed.

We want to stress that we think this is the right strategy for the
company. In addition, this is the first time we have seen a
speed-based tariff structure in the sector. Operators can
distinguish and monetise on speed only if they have superb
network quality both in terms of coverage and capacity, the           Source: Swisscom 4Q11 results presentation

ability to sustain capex and a strategy that calls for almost full
                                                                      Exhibit 1010
coverage of all available network technologies (2G, 3G, 4G) in
                                                                      Swisscom’s market shares stable at high levels and
order to be able to deliver the required speed everywhere.
                                                                      above peers thanks to network strategy
Swisscom’s strategy should allow it to defend long-term
revenues and potentially grow under a cross-sell and up-sell
strategy once customers see the value in faster connections.
However, initially, new customers and those who can obviously
improve their monthly bills moved to this new pricing scheme
causing some revenue erosion in the first 6-12 months
following introduction.

Once this transition period is over and all clients have migrated
to the new tariffs, we would expect more customers to upgrade
to faster speeds and less price erosion compared to before this
new pricing scheme being in place. Actually, as detailed in
Exhibit 1212, this was already the case for the 2Q13 (ARPU            Source: Swisscom 4Q11 results presentation
impact for the movers within that quarter).
                                                                      Exhibit 1111
Exhibit 88                                                            With new tariffs driving higher market share further
Swisscom’s investment above that of European
peers




                                                                      Source: Swisscom 2Q13 results presentation


Source: Swisscom 4Q11 results presentation




                                                                                                                             10
                                                                MORGAN        STANLEY        RESEARCH

                                                                September 13, 2013
                                                                Mobile Data Wave – Europe Wakes Up to 4G / LTE




Exhibit 1212                                                    including any special 4G pricing premium. Customers will now
Initial ARPU dilution from heavy users trading down             own the handset (handset lease model for old 3G) with the new
has now moved into positive territory                           4G entry price with unlimited voice/SMS and 500MB being €45
                                                                pm (plus upfront payment for handset). The 2GB option is
                                                                €47.5 -52.5 for basic/standard handset. A similar old 3G
                                                                package with unlimited voice/SMS and 2.5GB was priced at
                                                                €65 pm but with 50% discount for 3-6-12 months making
                                                                average price range over a 24 month period being roughly
                                                                €50-55 pm plus €5pm for handset lease. Therefore the price of
                                                                the new 4G All-in-One proposition is not materially different
                                                                from the previous 3G packages.

                                                                However, higher value for money from 4G propositions is
                                                                aiming to increase mobile broadband penetration and
                                                                lower churn rate while lower Wi-Fi usage suggests lower 'Wi-Fi
                                                                cannibalisation risk' more typical from low-end 3G packages,
                                                                with 4G bandwidth actually being more comparable to that from
                                                                a DSL/VDSL connection and even potentially becoming an
Source: Swisscom 2Q13 results presentation                      alternative to lower speed DSL connections in rural areas.

2. KPN - Accelerating 4G network deployment                     3. TeliaSonera – launch of Family Plans

According to KPN’s 2Q13 results presentation its current        New data sharing plans. In March 2013, TeliaSonera
4G coverage is 50% of population. The network roll-out has      announced its new wireless pricing plans, which closely
accelerated and the company expects to reach 100% 4G            resemble Verizon's ‘Shared Everything’ plans announced in
coverage by 1Q14, which would be sooner than any peers in       June 2012. Telia's ‘subscription for the entire family’ plans are
Europe. KPN’s 4G roll out combines 800MHz, 1800MHz and          structured around shared data and multi-device access with
2.6GHz frequencies with KPN mentioning at its 2Q13              unlimited voice and SMS usage. Customers choose a shared
presentation the first-mover advantage in The Netherlands.      data allowance and then pay a monthly fee per device to
According to KPN, data per user is 80% higher when using 4G     access that data. The plans seem to strike a balance between
(relative to 3G), while the percentage of Wi-Fi data usage is   stimulating demand and maintaining prices, while limiting
15% lower on 4G too. Capex target remains unchanged at          exposure to pressures in voice and SMS.
below €2.3bn for 2013 with below €7bn for the period
2013-2015 (including Reggefiber consolidation from H2 2014).    Designed to incentivise tablet activation, in our view:
                                                                Some tablet owners prefer to only use Wi-Fi. The subscription
Monetising higher bandwidth data propositions: making           plan for the family allows tablet owners to connect for a SEK 29
4G the choice of reference ... Since the launch of the new 4G   / €3.5 month access fee. These additional devices would likely
All-in-One tariffs on July 1, the old 3G propositions are not   drive incremental revenue through the access fees and higher
commercially available anymore with 3G propositions only        data usage over time, to help compensate for customers
available now for low bundles. From July 1st the only 3G        migrating from tablet plans.
bundles available will be Basic 100 (100 min/100 SMS/100MB)
for €29 pm and Basic 200 (200/200/200) for €35. For higher      Overall take-up has been encouraging, and whilst the
data bundles from 500MB to 4GB customers will have the 4G       proposition is initially being used to defend market share, the
All-in-One package with unlimited voice/SMS included which,     company does see benefits from lower churn in the
according to KPN, lowers the ARPU profile risk while also       longer-term. About 20-25% of current sales are from new
reducing churn rate. The aim by KPN is that 4G becomes the      customers or people looking to renew their tariffs. TeliaSonera
choice of reference for average data customers.                 is keen to emphasise flexibility: customers can move to a
                                                                higher or lower data package, for instance, if they go on
...with 4G prices similar to 3G aiming to increase              holiday. Children can also join the Family plan during the
penetration and lower churn rate. In terms of pricing, the      contract length.
new 4G tariffs are similar to effective prior 3G tariffs, not




                                                                                                                                    11
                                                             MORGAN        STANLEY        RESEARCH

                                                             September 13, 2013
                                                             Mobile Data Wave – Europe Wakes Up to 4G / LTE




Better late than never: Telia has acknowledged that it has   quickly. In 2012, mobile data volumes grew +79% YoY, but
been slow off the mark with the migration to unlimited       data revenue growth was only +21% YoY.
voice/SMS tariffs, but the transition should now proceed




                                                                                                                        12
                                                                                       MORGAN        STANLEY        RESEARCH

                                                                                       September 13, 2013
                                                                                       Mobile Data Wave – Europe Wakes Up to 4G / LTE




EEMEA Also on Track for 4G/LTE Deployment – Not Much Gap
between Europe and EEMEA for This Upgrade Cycle
While it took about 3-5 years for EEMEA to follow Western                                      6 regions by the end of 2013;
Europe for 3G, 4G has already been launched in several
                                                                                               12 regions by the end of 2014;
MENA countries and LTE USB modems have been
available in Moscow since 2012. South Africa should                                            20 regions by the end of 2015;
follow with licenses attribution in 2014. Turkey lags with
                                                                                               30 regions by the end of 2016;
licenses not attributed before 2015/2016 but stands out in
terms of 3G network quality. Countries that lag further                                        50 regions by the end of 2017;
behind include Algeria, which has just re-started a process to
                                                                                               60 regions by the end of 2018 and
attribute 3G licenses but also the Ukraine, which still does not
have such plans.                                                                               full coverage of the Russian Federation by the end of
                                                                                                2019.
Russia: one of the key standouts in EEMEA for LTE. MTS,
VimpelCom, MegaFon and Rostelecom have each been                                       Recent developments suggest that operators are strongly
awarded spectrum in the 800Mhz and the 2.6Ghz band. The                                focused on 4G roll-out. This is despite the still-high price
former is still currently being used by the military. During the                       (>$300) for LTE handsets and lack of subsidies, which does
clean-up phase, operators have started to roll-out 4G in the                           not suggest a fast customer take-up in the short term. In
2.6Ghz band which is less efficient from a coverage standpoint.                        particular:
Another market participant, Scartel converted previously
owned spectrum in 2.6MHz available for Wi-Max into LTE.                                1) MTS recently signed a partnership with Nokia Siemens and
                                                                                       Ericsson for LTE build-up. According to the NSN press release,
Exhibit 1313                                                                           under the three-year contract, Nokia Siemens Networks will
Russian Telcos: Strong Commitment to Network                                           upgrade the existing Single RAN platform based on its
           100                                                                         high-capacity Flexi Multiradio 10 Base Station. The
           90
                   25% 25%
                                                                                       multi-technology Single RAN solution enables easy upgrading
           80
                             21% 20%                                                   of the existing radio network for a fast LTE rollout. Ericsson
           70
                                                                     24%
                                                                           22%         has been chosen to deploy the LTE network in four regions
                                                                                 20%
                                               20% 19%                                 covering more than half of Russia. Under the three-year
           60                                            17%
                                                                                       agreement and starting in Q2, 2013, Ericsson will roll out LTE
  RUB bn




                                                               18%
           50                           17%
                                                                                       in the Siberian, Ural, Volga, and Southern Federal Districts of
           40
                                                                                       Russia. In two years, MTS plans to cover 80% of the Moscow
           30
                                                                                       territory and over 40 large cities in the Moscow region with LTE
           20                                                                          FDD networks. Its press release mentions “aggressive 4G
           10                                                                          roll-out”.
            0
                        MTS                    MegaFon               VimpelCom
                                                                                       2) Megafon announced the acquisition of Scartel in Aug 2013.
                 2012        2013e     2014e        2015e        22% - Capex/Revenue
                                                                                       Completion would provide MegaFon with 6,000 LTE BTS (a
Source: Company data, Morgan Stanley Research estimates (e)
                                                                                       short-term competitive advantage) and 2x30 MHz incremental
                                                                                       spectrum in the 2.6GHz band. The operator provided LTE
Big 3 operators (MTS, VIP, MFON) offered to increase                                   services in 81 cities across Russia as of the end of 2Q13.
coverage requirements. According to a recent statement by                              MegaFon now offers branded LTE smartphones and tablets, in
Russian Minister of Communications Nikolay Nikiforov, the Big                          the Urals a Megafon 4G Turbo smartphone is on offer for RUB
3 operators have agreed to fully cover with an LTE network all                         9,990, unlimited option. In Siberia, Megafon has launched a
cities with at least 10k citizens by 2018YE. The original LTE                          promotion of its LTE and 3G devices in Siberia. LTE modems
license requirements were based on cities with a minimum                               have been reduced to RUB 1,150, and 3G modems have been
population of 50k. A further condition of the license award is                         cut to RUB 900.
that each winner will invest at least RUR 15bn annually until its
federal LTE network is built. Key coverage requirements are:



                                                                                                                                                          13
                                                              MORGAN        STANLEY        RESEARCH

                                                              September 13, 2013
                                                              Mobile Data Wave – Europe Wakes Up to 4G / LTE




Exhibit 1414                                                  has completed an LTE deal, handing contracts to Nokia
MTS LTE USB modem and Wi-Fi router                            Siemens Networks (NSN) for Altai, Adygeya, Astrakhan and
                                                              Kalmykia.

                                                              4) Rostelecom does not disclose details of its LTE roll-out
                                                              while it is now more focused on 3G roll-out.

                                                              In South Africa 4G spectrum is not yet allocated, but likely
                                                              to be assigned in late 2014. However, Vodacom (market
                                                              leader), MTN (2nd), Telkom mobile (4th) and the second
                                                              biggest fixed-line player, Neotel, have launched limited LTE
                                                              coverage. Key players Vodacom and MTN are using re-farmed
                                                              spectrum around the 1,800 mark and have indicated they will
                                                              only launch nationally after receiving more spectrum. There is
                                                              limited disclosure on LTE at this stage and no operator is
                                                              marketing it aggressively yet – due to spectrum issues etc.

                                                              We also provide a list of countries where the LTE process
Source: Morgan Stanley Research                               is taking longer. This mainly consists of African countries
                                                              such as DRC, Tanzania, Chad and Senegal where no formal
3) VimpelCom launched a commercial LTE service in Moscow      license process has yet been announced. In Ghana, 4G
(fragmented network) in June 2013 and plans to increase the   licences have been awarded, but none of the MNOs have been
number of LTE stations in Moscow by 15x by 2013YE to cover    granted a licence. In Rwanda 4G has been awarded to Korea
the whole city. VimpelCom also plans to launch its LTE        Telecom on a wholesale model. Recent LTE trials and limited
services in four regions in Southern Russia and Northern      launches have taken place in: Nigeria, Angola, Namibia,
Caucasus this year. According to telecompaper, Vimpelcom      Mauritius, Tanzania, Uganda and Zimbabwe.




                                                                                                                               14
                                                                                    MORGAN        STANLEY        RESEARCH

                                                                                    September 13, 2013
                                                                                    Mobile Data Wave – Europe Wakes Up to 4G / LTE




Exhibit 1515
4G in MENA: Key Facts
UAE                 Current Deployment     % Population Coverage            Bands   BTS Speed Peak speed        Target Population coverage        Launch Date
Etisalat                            Yes                       80        1800/2600 1000     150        300                  100% by 2015              2011/12
Du                                  Yes                       50             1800          100        150                                           July 2012

Saudi Arabia
Mobily                              Yes                       80    1800/2400/2600 4500    100                                                        Sep-11
STC                                 Yes                       65         1800/2300 7000    100                              95% by 2014
Zain KSA                            Yes                                       1800         100

Oman
Omantel                             Yes                      95              1800   400    100                       Major cities in 1Q13              Jul-12
Nawras                              Yes                  ~40-50                                                                                       Feb-13

Qatar
Qtel                                Yes                  ~50-60         1800/2600   200                                    100% by 2014               Apr-13
Vodafone Qatar                       No                                                                                                             End 2013

Kuwait
Zain                                Yes                  ~40-50                                                                                        Nov-12
Wataniya                             No             Pilot testing                                                                            Not Yet launched
Viva                                Yes                      100                                                                                       Dec-11

Egypt
Vodafone                             No
Mobinil                              No
Etisalat                             No

Algeria
OTH                                  No
Wataniya                             No
AT                                   No

Iraq
Asiacell                             No
Zain                                 No
Korek                                No
Source: Company Data, Morgan Stanley Research




                                                                                                                                                                15
                                                                       MORGAN        STANLEY        RESEARCH

                                                                       September 13, 2013
                                                                       Mobile Data Wave – Europe Wakes Up to 4G / LTE




Morgan Stanley & Co. International plc ("Morgan Stanley") is           Morgan Stanley & Co. International plc and OOO
acting as financial advisor to Kabel Deutschland Holding AG            Morgan Stanley Bank (together "Morgan Stanley") are
("Kabel Deutschland") in relation to the preliminary approach          acting as financial advisors to OJSC MegaFon
by Vodafone Group Plc as announced on 12 June 2013. Kabel              ("MegaFon") in relation to a potential transaction with
Deutschland has agreed to pay fees to Morgan Stanley for its           Scartel LLC and Yota LLC, as announced on 25 July
financial services. Please refer to the notes at the end of the        2013. Morgan Stanley may be paid fees by MegaFon for
report.                                                                its financial services. Please refer to the notes at the end
                                                                       of the report.
Morgan Stanley is acting as financial advisor and providing
financing services to Verizon Communications Inc. ("Verizon")
in relation to their definitive agreement with Vodafone Group
Plc. ("Vodafone") to acquire Vodafone's U.S. group with the
principal asset of 45 percent of Verizon Wireless, as
announced on September 2, 2013.

The proposed transaction is subject to the consent of Verizon
and Vodafone shareholders, required federal regulatory
approvals and other customary closing conditions. This report
and the information provided herein is not intended to (i)
provide voting advice, (ii) serve as an endorsement of the
proposed transaction, or (iii) result in the procurement,
withholding or revocation of a proxy or any other action by a
security holder.

Verizon has agreed to pay fees to Morgan Stanley for its
services, including transaction fees and financing fees that are
subject to the consummation of the proposed transaction.
Please refer to the notes at the end of the report.

Morgan Stanley & Co. International Plc is acting as financial
advisor to Telefonica SA ("Telefonica") in relation to Telefonica
Deutschland Holding AG's proposed acquisition of E-Plus
Holding GmbH & Co. KG from Koninklijke KPN N.V as
announced on 22 July 2013. Telefonica has agreed to pay fees
to Morgan Stanley for its financial services. Please refer to the
notes at the end of the report.

Morgan Stanley Bank International Limited, Milan Branch is
acting as M&A adviser to Telecom Italia S.p.A. on potential
strategic alternatives for its fixed network assets including a
potential sale of a minority stake to a third party. Please refer to
the notes at the end of the report.




                                                                                                                                      16
                                                                                MORGAN         STANLEY         RESEARCH

                                                                                September 13, 2013
                                                                                Mobile Data Wave – Europe Wakes Up to 4G / LTE




                                                       Disclosure Section
Morgan Stanley & Co. International plc, authorized by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the
Prudential Regulatory Authority, disseminates in the UK research that it has prepared, and approves solely for the purposes of section 21 of the
Financial Services and Markets Act 2000, research which has been prepared by any of its affiliates. As used in this disclosure section, Morgan Stanley
includes RMB Morgan Stanley (Proprietary) Limited, Morgan Stanley & Co International plc and its affiliates.
For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan
Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley
Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA.
For valuation methodology and risks associated with any price targets referenced in this research report, please email
morganstanley.research@morganstanley.com with a request for valuation methodology and risks on a particular stock or contact your investment
representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA.
Analyst Certification
The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and
that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this
report: Edward Hill-Wood, Andrew Humphrey, Francois Meunier, Luis Prota, Cesar Tiron, Terence Tsui.
Unless otherwise stated, the individuals listed on the cover page of this report are research analysts.
Global Research Conflict Management Policy
Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at
www.morganstanley.com/institutional/research/conflictpolicies.
Important US Regulatory Disclosures on Subject Companies
As of August 30, 2013, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in
Morgan Stanley Research: Alcatel-Lucent, Etihad Etisalat, Nokia, Portugal Telecom, Vodafone Group.
Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Alcatel-Lucent, MegaFon,
Telefonica, Vodafone Group.
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Alcatel-Lucent, Ericsson, MegaFon,
Telefonica, Vodafone Group.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Alcatel-Lucent,
Ericsson, Etihad Etisalat, KPN, MegaFon, Mobile TeleSystems, Nokia, Portugal Telecom, Swisscom, Telefonica, TeliaSonera, Vodafone Group.
Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from
Alcatel-Lucent, Ericsson, Mobile TeleSystems, Nokia, Telefonica, TeliaSonera, Vodafone Group.
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client
relationship with, the following company: Alcatel-Lucent, Ericsson, Etihad Etisalat, KPN, MegaFon, Mobile TeleSystems, Nokia, Portugal Telecom,
Swisscom, Telefonica, TeliaSonera, Vodafone Group.
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past
has entered into an agreement to provide services or has a client relationship with the following company: Alcatel-Lucent, Ericsson, MegaFon, Mobile
TeleSystems, Nokia, Portugal Telecom, Telefonica, TeliaSonera, Vodafone Group.
Morgan Stanley & Co. LLC makes a market in the securities of Ericsson, Mobile TeleSystems, Nokia, Portugal Telecom, Telefonica, Vodafone Group.
Morgan Stanley & Co. International plc is a corporate broker to MegaFon.
The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment
banking revenues.
Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making,
providing liquidity and specialized trading, risk arbitrage and other proprietary trading, fund management, commercial banking, extension of credit,
investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in
Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report.
Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions.
STOCK RATINGS
Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below).
Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the
equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since
Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley
Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as
investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings)
and other considerations.
Global Stock Ratings Distribution
(as of August 31, 2013)
For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside
our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we
cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative
weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy
recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

                          Coverage Universe    Investment Banking Clients (IBC)
                                         % of                   % of % of Rating
Stock Rating Category        Count       Total     Count Total IBC Category
Overweight/Buy                978        34%         400        38%         41%
Equal-weight/Hold            1280        44%         491        46%         38%
Not-Rated/Hold                114         4%          28         3%         25%
Underweight/Sell              510        18%         137        13%         27%
Total                       2,882                   1056




                                                                                                                                                           17
                                                                                              MORGAN            STANLEY           RESEARCH

                                                                                              September 13, 2013
                                                                                              Mobile Data Wave – Europe Wakes Up to 4G / LTE




Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual
circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan
Stanley received investment banking compensation in the last 12 months.
Analyst Stock Ratings
Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe,
on a risk-adjusted basis, over the next 12-18 months.
Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage
universe, on a risk-adjusted basis, over the next 12-18 months.
Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the
analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage
universe, on a risk-adjusted basis, over the next 12-18 months.
Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.
Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the
relevant broad market benchmark, as indicated below.
In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant
broad market benchmark, as indicated below.
Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant
broad market benchmark, as indicated below.
Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index;
Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index.
.
Important Disclosures for Morgan Stanley Smith Barney LLC Customers
Citi Research publications may be available about the companies or topics that are the subject of Morgan Stanley Research. Ask your Financial Advisor or use Research
Center to view any available Citi Research publications in addition to Morgan Stanley research reports.
Important disclosures regarding the relationship between the companies that are the subject of Morgan Stanley Research and Morgan Stanley Smith Barney LLC or
Morgan Stanley or any of their affiliates, are available on the Morgan Stanley Wealth Management disclosure website at
www.morganstanley.com/online/researchdisclosures.
For Morgan Stanley specific disclosures, you may refer to www.morganstanley.com/researchdisclosures.
Each Morgan Stanley Equity Research report is reviewed and approved on behalf of Morgan Stanley Smith Barney LLC. This review and approval is conducted by the
same person who reviews the Equity Research report on behalf of Morgan Stanley. This could create a conflict of interest.
Other Important Disclosures
Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of Alcatel-Lucent, Ericsson, KPN, Mobile TeleSystems,
Nokia, Portugal Telecom, Swisscom, Telefonica, TeliaSonera, Vodafone Group.
Morgan Stanley is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of
Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Morgan Stanley produces an equity research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to the
recommendations or views expressed in research on the same stock. This may be the result of differing time horizons, methodologies, market events, or other factors. For
all research available on a particular stock, please contact your sales representative or go to Matrix at http://www.morganstanley.com/matrix.
Morgan Stanley will make certain research products and announcements available only on the Matrix platform. For access to Matrix, please contact your sales
representative or go to Matrix at http://www.morganstanley.com/matrix.
Any access and/or use of Morgan Stanley Research are subject to Morgan Stanley's Terms of Use (http://www.morganstanley.com/terms.html). By accessing and/or using
Morgan Stanley Research, you are indicating that you have read and agree to be bound by our Terms of Use (http://www.morganstanley.com/terms.html). In addition you
consent to Morgan Stanley processing your personal data and using cookies in accordance with our Privacy Policy and our Global Cookies Policy
(http://www.morganstanley.com/privacy_pledge.html), including for the purposes of setting your preferences and to collect readership data so that we can deliver better and
more personalised service and products to you. To find out more information about how Morgan Stanley processes personal data, how we use cookies and how to reject
cookies see our Privacy Policy and our Global Cookies Policy (http://www.morganstanley.com/privacy_pledge.html).
If you do not agree to our Terms of Use and/or if you do not wish to provide your consent to Morgan Stanley processing of your personal data or using cookies please do not
access our research.
Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the circumstances and
objectives of those who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to
seek the advice of a financial adviser. The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. The securities,
instruments, or strategies discussed in Morgan Stanley Research may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in
some or all of them. Morgan Stanley Research is not an offer to buy or sell any security/instrument or to participate in any trading strategy. The value of and income from
your investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes,
operational or financial conditions of companies or other factors. There may be time limitations on the exercise of options or other rights in securities/instruments
transactions. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. If
provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject company's securities/instruments.
The fixed income research analysts, strategists or economists principally responsible for the preparation of Morgan Stanley Research have received compensation based
upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or
revenues), client feedback and competitive factors. Fixed Income Research analysts', strategists' or economists' compensation is not linked to investment banking or capital
markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks.
Morgan Stanley Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy.
The "Important US Regulatory Disclosures on Subject Companies" section in Morgan Stanley Research lists all companies mentioned where Morgan Stanley owns 1% or
more of a class of common equity securities of the companies. For all other companies mentioned in Morgan Stanley Research, Morgan Stanley may have an investment
of less than 1% in securities/instruments or derivatives of securities/instruments of companies and may trade them in ways different from those discussed in Morgan Stanley
Research. Employees of Morgan Stanley not involved in the preparation of Morgan Stanley Research may have investments in securities/instruments or derivatives of
securities/instruments of companies mentioned and may trade them in ways different from those discussed in Morgan Stanley Research. Derivatives may be issued by
Morgan Stanley or associated persons.
With the exception of information regarding Morgan Stanley, Morgan Stanley Research is based on public information. Morgan Stanley makes every effort to use reliable,
comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley
Research change apart from when we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley Research have
not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking personnel.
Morgan Stanley Research personnel may participate in company events such as site visits and are generally prohibited from accepting payment by the company of
associated expenses unless pre-approved by authorized members of Research management.
Morgan Stanley may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.
To our readers in Taiwan: Information on securities/instruments that trade in Taiwan is distributed by Morgan Stanley Taiwan Limited ("MSTL"). Such information is for your
reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decisions. Morgan Stanley Research may not




                                                                                                                                                                                      18
                                                                                             MORGAN           STANLEY            RESEARCH

                                                                                             September 13, 2013
                                                                                             Mobile Data Wave – Europe Wakes Up to 4G / LTE




be distributed to the public media or quoted or used by the public media without the express written consent of Morgan Stanley. Information on securities/instruments that do
not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities/instruments. MSTL may not
execute transactions for clients in these securities/instruments. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable
to, Morgan Stanley Asia Limited as part of its regulated activities in Hong Kong. If you have any queries concerning Morgan Stanley Research, please contact our Hong
Kong sales representatives.
Morgan Stanley is not incorporated under PRC law and the research in relation to this report is conducted outside the PRC. Morgan Stanley Research does not constitute
an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors shall have the relevant qualifications to invest in such securities and shall be
responsible for obtaining all relevant approvals, licenses, verifications and/or registrations from the relevant governmental authorities themselves.
Morgan Stanley Research is disseminated in Brazil by Morgan Stanley C.T.V.M. S.A.; in Japan by Morgan Stanley MUFG Securities Co., Ltd. and, for Commodities related
research reports only, Morgan Stanley Capital Group Japan Co., Ltd; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents); in
Singapore by Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number
200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters
arising from, or in connection with, Morgan Stanley Research); in Australia to "wholesale clients" within the meaning of the Australian Corporations Act by Morgan Stanley
Australia Limited A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents; in Australia to "wholesale
clients" and "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder
of Australian financial services license No. 240813, which accepts responsibility for its contents; in Korea by Morgan Stanley & Co International plc, Seoul Branch; in India
by Morgan Stanley India Company Private Limited; in Indonesia by PT Morgan Stanley Asia Indonesia; in Canada by Morgan Stanley Canada Limited, which has approved
of and takes responsibility for its contents in Canada; in Germany by Morgan Stanley Bank AG, Frankfurt am Main and Morgan Stanley Private Wealth Management
Limited, Niederlassung Deutschland, regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin); in Spain by Morgan Stanley, S.V., S.A., a Morgan Stanley
group company, which is supervised by the Spanish Securities Markets Commission (CNMV) and states that Morgan Stanley Research has been written and distributed in
accordance with the rules of conduct applicable to financial research as established under Spanish regulations; in the US by Morgan Stanley & Co. LLC, which accepts
responsibility for its contents. Morgan Stanley & Co. International plc, authorized by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority
and the Prudential Regulatory Authority, disseminates in the UK research that it has prepared, and approves solely for the purposes of section 21 of the Financial Services
and Markets Act 2000, research which has been prepared by any of its affiliates. Morgan Stanley Private Wealth Management Limited, authorized and regulated by the
Financial Conduct Authority, also disseminates Morgan Stanley Research in the UK. Private UK investors should obtain the advice of their Morgan Stanley & Co.
International plc or Morgan Stanley Private Wealth Management representative about the investments concerned. RMB Morgan Stanley (Proprietary) Limited is a member
of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by Morgan
Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services
Authority (the DFSA), and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will only
be made available to a customer who we are satisfied meets the regulatory criteria to be a Professional Client.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre
Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the
QFCRA.
As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory
activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio
management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these
comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying
solely to this information stated here may not bring about outcomes that fit your expectations.
The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or
representations relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages relating to such data. The Global
Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley bases projections, opinions, forecasts and
trading strategies regarding the MSCI Country Index Series solely on public information. MSCI has not reviewed, approved or endorsed these projections, opinions,
forecasts and trading strategies. Morgan Stanley has no influence on or control over MSCI's index compilation decisions. Morgan Stanley Research or portions of it may not
be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley research is disseminated and available primarily electronically, and, in
some cases, in printed form. Additional information on recommended securities/instruments is available on request.
Morgan Stanley Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley.
Morgan Stanley Research is disseminated and available primarily electronically, and, in some cases, in printed form.
Additional information on recommended securities/instruments is available on request.




                                                                                                                                                                                    19
                                                          MORGAN    STANLEY            RESEARCH




The Americas               Europe                           Japan                           Asia/Pacific
1585 Broadway              20 Bank Street, Canary Wharf     4-20-3 Ebisu, Shibuya-ku        1 Austin Road West
New York, NY 10036-8293    London E14 4AD                   Tokyo 150-6008                  Kowloon
United States              United Kingdom                   Japan                           Hong Kong
Tel: +1 (1) 212 761 4000   Tel: +44 (0) 20 7 425 8000       Tel: +81 (0) 3 5424 5000        Tel: +852 2848 5200




© 2013 Morgan Stanley

								
To top