NEW MODELS OF INVESTMENT AND PUR PUR e e Meca Mecani nismo de o de COMPETITION IN THE ACCESS sust su stentab abilid ilidad ade FRAMEWORK Reg Regra ras s defini efinidas p s pela ela Co Comi missã ssão Euro Europei eia BERE REC, , Octob tober 2017 Dezembro de 2016 DJR
The Po The Port rtuguese Ma Mark rket et in in nu numbers rs % popula latio ion able le t to choos ose n NGN o N operators rs 2Q 2Q2017 2017 2020 2020 2016 2016 2016 2016 1 81% 81% Coverage >30 Nr operators HSPA 81% 2 57% 57% Mbps for all 100% 98,8% 98,0% 3 43% 43% Take up of >100 LTE Mbps service 42% 98,8% 96,0% 50% Source: ANACOM Source: ANACOM Unit: population 2H2017 2H 2017 2H2014 2H 2014 (% xP (% xP) (% xP (% xP) 14.3 18.3 35.5 44.4 41.3 46.2 Source (Portugal): ANACOM 2P 3P 4/5P 2P 3P 4/5P Penetration: Special Eurobarometer 438 (Most recente information) 2
Pressur ssure o e on revenu nues h es has n not d diminished N minished NOS c commit mitment ment w with h inve investment a as s a gro rowt wth lever lever Reven enues es (M€) Ca Capex ex (M€) -8% -23% +21% -7% 1,261 6,276 5,915 1,159 1,128 1,118 5,520 1,102 5,206 1,043 5,035 4,822 4,852 958 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Source: NOS Annual accounts Ca Capex ex to to sales ( (%) EBIT ITDA DA ( (M€) 26% 26% 23% 23% -19% 21% 21% 20% 20% -3% 19% 19% 18% 18% 17% 17% 18% 18% 17% 17% 16% 16% 15% 15% 15% 15% 2,457 2,395 2,211 2,039 1,983 1,826 1,853 2014 2014 2015 2015 2016 2016 2017e 2017e European Incumbents European challengers NOS 2010 2011 2012 2013 2014 2015 2016 Source: NOS Annual accounts Source: Barclays Global Telecom
Ho How w do we we lo look at inve investment ZON and Optimus merge NOS launches converged NOS launches Optimus supports offers UMA 1st PT 4k the deployment of channel and new a single nationwide NOS launches TV cloud set top box with Fisrt multiscreen NGNetwork. PT recording personal profiles Gov and NRA do offer in Portugal launched by Zon not support and NOS launches TV efforts fail (now NOS) on Hololens Negotiations for the sharing of World launch by Zon Optimus is 1st civil infrastructure for mobile of 7 day automatic operator in OPT agrees with network fail NOS and VDF recording NOS launches Portugal deploying VDF on FTTH sign sharing Commercial launch OTT player FTTH network Sharing agreement agreement 2,6 of rural NGN of 400k hh kk HH networks Optimus launch 2017 1998 2001 … 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Ho How w do we we lo look at inve investment ~6,38 ~6, 38 millio lion ho hous useho holds ds Less More ore de dense de dense 295k H 295k HH Own dep Ow eploym yment NGA GA (F (FTTH/H /HFC) 1,3M H 1, 3M HH - Co i inves estmen ent ~2 M HH - MEO M ~2 M H Monop opol oly? Wholes esale 2,85M 2, 85M H HH (YE E 2018 2018 4, 4,4M 4M) acces access Compe mpeti tition tion in n 31% H 31% HH 14% H 14% HH 49% 49% H HH 6% 6% fixe xed lin line PAY Y 1 1 PAY TV TV o oper erat ator 4 PAY TV 4 TV opera rators rs 3 3 PAY TV TV opera rators rs 2 PTV 2 P TV TV YE 2018 TV E 2018 Maintains duct and poles access (SMP) and symmetrical obligations for vertical network but Maintains duct and poles access Reg Regulat atory/le legal l adds (SMP) and symmetrical • Duct and pole access (SMP approach) approa pproach obligations for vertical network Co sharing agreements? • Symmetrical obligations for vertical network (third party infrastructure not • but adds State aid? operator’s) • Co sharing agreements • State aid for white NGA areas •
Ho How w ca can reg n regula ulatio ion help help? Acces cess Re Regu gulati tion Co inves estm tmen ent Access to essential facilities (ducts and Co investment requires incentives • • poles) is essential and should not be alignment between envolves parties questioned NOS is skeptic of co investment that thus • Deregulation per se is not na investment not result from comercial initiative of the • lever. Only if all operators are in equal parties involved footing However, when such co investment occurs, • The existing SMP toolkit seems adequate to and has practical effect in the end user by • address the bottlenecks that exist increased retail competition, it should be recognized by the NRA in its SMP analysis REGULATION CAN HELP BY CONSIDERING REAL CO-INVESTMENT AGREEMENTS ON THEIR SMP ANALYSIS. BUT SHOULD NEVER TAKE AUTOMATIC AND BROAD REGULATORY CONSEQUENCES OF THE MERE EXISTENCE OF AN AGREEMENT OR AN WHOLESALE OFFER THAT IS YET TO TRANSLATE IN ADDITIONAL COMPETITIVE BENEFITS FOR THE END USER.
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