IDATE DigiWorld Summit 2006
Futur Trends For Mobile
November 2006
Frank Esser - Chairman and CEO - Member of Vivendi’s Management Board
IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION.
1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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What are the market trends? Telecom market evolution 2005 - 2010
Market estimates by segment:
Source : Idate
2005
Internet and data
2010
Mobile
15% 51%
Internet and data
Mobile
20% 57%
34%
Fixed
23%
Fixed
Market: €34.9 bn
Market est.: €39.5 bn
+ 4.6 billion of euros
+ 4.7 billion of euros for mobile operations
+ 2.4 billion of euros for internet operations
Mobility and internet are the two growth drivers for internet / Telecom sector
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What are the market trends?
81% of mobile penetration as of today 100% in the short term 12 million potential customers
Mobile penetration in main European countries at the end of June 2006:
Source: Arcep
130% 121% 112% 111% 101% 90%
Average: 100 %
81%
Italy Italie
Royaume Uni United Kingdom
Espagne Spain
Suède Sweden
Allemagne Germany
Belgique Belgium
France
French mobile market has still strong growth potential
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What are the market trends? Mobile voice usage: a double digit growth …
Number of minutes from a mobile phone in France: In million of minutes
100000
>+10% +10%
80000 60000 40000 20000 0 2004 2005 2006 (est.)
Source = Arcep, SFR estimates
SFR customers: 12month rolling AUPU grew by +14.7% to 319 min/month (end of June 2006)
… still far away from the most advanced countries (USA: ~1,000min / month)
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What are the market trends?
Average time spent / day on media
TV Radio(1) Reading(2) Music (non-radio) Cinema Video Games
~2h50
~1h50
~56 min.
~30 min.
~15 min.
~15 min.
Average time spent / day on telecom
Internet(3) Fixed phone Mobile phone
Of which <1min spent on mobile digital content ~20 min. ~15 min. ~10 min.
Strong potential of growth for mobile content usage Mobile captures small share of consumers’ time
(1) Including when listening as background activity (2) Including newspapers, books, magazines (3) For personal use Source: panel data, INSEE, IFOP, Datamonitor, Estimates
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What are the market trends?
SFR revenues Data and services revenues Mobile data content revenues
Voice
Interpersonal messaging (SMS, MMS, Mail, Visio) WAP Internet Localization Chat / IM Enterprise / Web
Data and services
Mobile content services
CAGR +10% by 2010
CAGR +25% by 2010
Strong growth of mobile content services driven by internet, localization, chat/IM and enterprise
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What are the market trends? 44% of French households have broadband internet access as of today
expected to be 70% in 2010 potential of more than 8 million households
Penetration rate in French households estimates:
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source : Idate
Internet internet Broadband Haut Débit
Potential of 8 M households
ADSL is the second driver for internet / telecom sector
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What are the market trends? Internet is naturally extended into mobile
Increasingly proven business models Search & eCommerce Broadband Access Experimental / new business models Share & Create Shared Communication / Content Payment Broadband Access
Communication
Access
FIXED
Continuity of usage Personalization Localisation (GPS)
MOBILE
SMS / MMS
Operator WAP portal
3G / HSDPA
Untapped revenue potential around audience for French mobile market
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1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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What are customers demands?
Mobile phone is the preferred handset (continuity of usage)
94% of SFR customers take their mobile phone everywhere 81% of SFR customers consider their mobile phone as their main handset More than 1/3rd of SFR customers use their mobile phone outside France, at least once a year. Mobile phone is easy to use (simplicity)
77 % of mobile users think that mobile phone is simple to use
Mobile phone is more and more used at home (personalization)
56% of communications made by SFR customers from their home is from their mobile phone 59% of SFR customers record their contacts in their mobile phone directory.
Mobile operators are winning the battle for the preferred communicating device Usage is key, mobile customers are technology agnostic
Sources: Louis Harris study - May 2006 / TNS Sofrès / AFOM – October 2006
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1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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SFR ”mobile centric” strategy SFR vision
Mobile customers are technology agnostic …
technology should be transparent technology need to ease user experience, Mobility « by SFR » :
… usage is key:
a communicating handset: the mobile phone mobile usage is growing strongly… … and is naturally transitioning to the internet.
Continuity of usage
Personalization
Take advantage of the growth of mobile phone usage Mobility ≠ Technology
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SFR “mobile centric” strategy
SFR Core Offerings
SFR existing mobile offer Happy Zone GSM / 3G – 3G+
Option
Internet access
2G / 3G-3G+ / WiFi / WiMAX Voice Internet
ADSL
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1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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Illustration of SFR’s strategy SFR: first operator to launch 3G+ (HSDPA) in France End of December 2006:
3G+ will be deployed on all of the SFR’s 3G network, i.e. 65% of the French population
One of the largest EU HSDPA network to date An evolving debit rate of 1.8 Mbit/s at launch and test at 3.6 Mbit/s in 2007
Quantum leap in user experience
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Illustration of SFR’s strategy Launch of “Happy Zone”
Offerings with discounted tariffs for calls made from home Customers keep their favorite handset Coverage zone larger than the house Large success in other European countries
Continuity of mobile usage at home and around (fixed – mobile substitution)
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Illustration of SFR’s strategy SFR will launch ADSL offerings in April 2007: an option on top of mobile offerings continuity of mobile services on the internet Strong fixed assets Télé2 France acquisition:
acceleration of SFR’s ADSL strategy
immediate credible player in ADSL
SFR and neuf cegetel, a long term partnership:
SFR and Télé2 are “Fixed VNOs” on the neuf cegetel ADSL network
Continuity of mobile services on the internet = value creation for mobile operators
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Illustration of SFR’s strategy SFR on the internet: “audience” model Music on mobile and PC:
SFR Music: 1.5 M tracks downloaded in H1- 2006 Top 3 of legal downloading platforms in France
Success of “SFR Jeunes Talents”
SFR strategy for community websites and web created content
Continuity of SFR services on the web
Mobile environment accessible on the internet: Synchronization of the directory Self-care / shop on-line
…
Success of first SFR’s “audience” model
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1 What are the market trends?
2 What are customers demands? 3 SFR « mobile centric » strategy 4 Illustration of SFR’s strategy 5 Conclusion
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Conclusion Two different visions Technical convergence
“mobile centric”
Entry point: the home
vs
Entry point: the person
The “box” is the core of service offering
vs
Mobility is the core of SFR’s service offering
Technical convergence through a fixed point
vs
Continuity of usage through a personal and free service
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Conclusion
1. Mobile and internet usage is growing 2. Mobile handset is the preferred communicating device 3. Internet will go mobile
4. Emergency of new business models from the internet transitioning in mobile
5. Focus on user experience and not on technology
Mobile operators are well positioned for the years to come
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