Technology Overview Martin Lamprecht Special Projects Agenda - PowerPoint PPT Presentation

Technology Overview Martin Lamprecht Special Projects

Agenda • Group technology vision and strategic objectives • Equipment price trends, rationalisation of vendors • Voice and data technology needs • Shared services and outsourcing • Global carrier services • Evolution of technologies to accommodate ICT 2

Group technology vision To pro-actively support MTN to become a leading convergence player in emerging markets by becoming an agile and service centric organisation that utilises relevant technologies to create business value while improving cost efficiency . Opco support Operational efficiencies • Strategic technology and guidance on • Standardisation for ease of product launch products and services and additional services • Transformational change and ad-hoc • Strategic partnerships with vendors and problem solving key suppliers • Knowledge and expertise transfer • Facilitation of infrastructure and maintenance sharing • Identification and implementation strategies for capex and opex efficiencies 3

Group network snapshot Key countries South Africa Nigeria Ghana Iran Syria 2G sites 6 514 6 745 2 118 7 300 2 732 3G sites 2 873 1 808 779 - 515 2G coverage 98% 85% 78% 78% 99% (population) 3G coverage 55% 24% 29% - 10% (population) Wimax No Yes No Yes No BH Erlang 244k 492k 184k 396k 71k Gateway Licensed Licensed Licensed Restricted Restricted Fibre (km) 2 500 8 500 2 220 - - Cable landing WACS, EASSy, WACS WACS - - stations Main1 4

Key vendors Multi vendor approach in the IT and networks area’s ensuring pricing and technologies are suitable for emerging markets 2011 Vendor Landscape South Africa Nigeria Uganda Cameroon Ghana Ericsson Ericsson Ericsson Ericsson Ericsson BSS/RAN Huawei Huawei Huawei Huawei Huawei Core Ericsson Ericsson Ericsson Ericsson Ericsson Cambridge Ericsson Ericsson Ericsson Ericsson Transmission/Packet Aviat Aviat Huawei Aviat Switches NEC NEC Nera IN/ Billing Platform Ericsson Ericsson Ericsson Ericsson Ericsson 5

Price erosion and aggressive negotiation CAPEX Spend- RAN Example OPEX Spend- SLA Example USD M USD M -50% p.a. SW 94 2G -12% p.a. 73 HW 222 123 39 42 39 41 41 40 39 -27% p.a. 38 37 3G SW 37 37 29 36 HW 24 39 31 16 35 2008 2009 2010 2009 2010 Implementation of additional saving levers is underway and will bring additional benefit in the next year: • Optimise pricing model and business model in place Quick wins • Allow transfer of assets across OpCos to optimise utilisation • Optimise forecasting and planning tools Long term achievements • Increase supplier cost transparency during negotiation Capex spend reduced by 30-50% and opex spend by 10-15% in 3 years 6

Voice evolution Voice traffic trends • Voice revenue still approx 90% of total revenue (including interconnect) • Main driver for subscriber growth • Enhanced offerings • Downward pressure on price per minute • Increased MOU (elasticity) • Declining ARPU’s (as penetration increases) Evolving the network for voice • Employing coding schemes – AMR half rate • Capture a larger volume of voice on 3G; 30-40% less spectrum needed than on 2G • Proprietary solutions • Introduction of HSPA allowing for more efficient voice calls on circuit switch mode and VOIP • Actively pursuing international VOIP peering opportunities • LTE trials • Interfacing traditional voice call infrastructure to becoming seamless and infinitely adaptable

Data trends • 3G network launched in 9 ops Data revenue (R’000) / % rev • Driven by smartphones / tablet devices 7 4000 3558 6.3 6 3500 • Data revenues and traffic decoupled 3000 5 • Sufficient spectrum is a stumbling block for 2500 2037 4 2000 3.6 expansion 3 1500 753 2 • Data pricing is key 1000 435 161 1.3 1 117 500 55 • Apps shift power balance from carrier to 0.8 0.2 0.3 0 0.1 0 apps developer South Nigeria Iran Ghana Syria Other Group Africa • Difficult to match fixed line operators Revenues & Traffic Traffic decoupled Voice dominant Revenues Data dominant 8

Data technology evolution • Invest in flexible, scalable and profitable flat architecture b c a HSPA+ 3G/HSPA LTE 21/42/84 • 3GPP specification to ensure max traction GSM • Wimax only employed where no 3G licence d EDGE e Still be be standardised • Radio spectrum optimisation Wimax Technology migration will • Evolve and modernise SDR platforms be driven by economic considerations through ABC simulation of TCO • LTE trial in SA 450 Relative costs (Dimensionless) 400 • New generation fibre transport networks 350 300 250 200 150 100 50 0 0.1 1 10 100 1000 Traffic in Mbps/km 2 EDGE HSPA 7.2 900 HSPA 7.2 2100 HSPA 42.2 DC 2100 LTE 10+10 1800 FTTH 9

Service delivery platform 10

Convergence evolution Postpaid rating / Prepaid Rating/ Credit Billing & Balance control management Invoicing ERP CRM Prepaid customers CRM Prepaid Voice/ Postpaid rating 1 Legacy Rating/Billing System Data Prepaid Voice / Data rating Postpaid customers CRM Prepaid voice/data, Postpaid Data Converged customer view Legacy Rating/Billing System Existing prepaid Services 2 • Postpaid fixed line CRM Support for hybrid models Any new service rated in real-time Voice / Data Converged Charging Converged Invoicing All services rated & charged in  Allcustomers Billing and invoicing for all • real-time; services; 3 Real-time credit control available  Converged invoice – multiple CRM • to all; service lines Avoidance of bill shock;  11

Convergence evolution • Two years ago: -Silo based charging & rating, customer management and Invoicing and billing time discounts for postpaid customers; • Transition step:- • moving new services and postpaid data services to real-time charging. Provide customers with ability to control their spending e.g. monitor their data usage in real-time • Unified customer management – prepaid and postpaid customers managed in a single platform • Converged/ centralised charging for all services: - • All services charged in real-time • Product portfolio extension to all – prepaid/postpaid/ fixed/ WiMax • Customer choice in a payment method – elimination of billing shock 12

IT shared service Benefits of implementation The implementation of the new pilot IT Shared Services Organisation in SEA is deriving the following levers, which will result in the benefits listed below: • Leveraging economies of scale (Same product at a lower price) Consolidation & • Efficiency – specialisation Diversification • Economies of skill – Type of competencies required • Unified governance structure • Improving services levels, quality and performance L • Increase productivity Standardisation • Consistency of operational processes E • Reducing operational complexity and resources V • Efficient operating model E • One global organisational structure One Way of R • Optimises the governance of the structure Working • Streamlining of operations S • Facilitate information, knowledge and experience sharing Create a new IT • Foster collaboration Shared Services • Implement best practices Culture • Avoid reuse of assets and duplication of efforts 13

IT shared services evolution With the implementation of the new IT Shared services organisation, there will be major changes in the way of working at the OPCO level. Theses changes have been summarised below: “AS=IS” “TO=BE” Only application support Services within IT Varied IT Services services provided at an Business provided at an OPCO level OPCO level Each OPCO was a stand IT Shared Services Or. is Reporting Lines within alone organisation and centralised and OPCO IS the IT Department operated autonomously report into the HUB Governance structure Used to have their own Global IT Shared Services within IT Department governance structure Governance structure Relationships & Relationship was Standardised/global interactions with established at an OPCO approach for the IT Vendors Level Shared Services org. 14

Submarine cables investment Strategic intent • Address the internal growing demand and supply gap in international broadband capacity via self- provision over shared infrastructure • Long-term value enhancement to shareholders and customers Cable consortia participation • EASSy (East African Submarine Cable System) • Europe-India Gateway (EIG) • West Africa Cable System (WACS) • The East African Marine System (TEAMS) • Long-term leases on other cables, incl. SAT-3 (Back to back) MTN capacity ownership • Current - STM1 Units: > 1,300 (200Gb) • Design - STM1 Units: > 15,000 (2.3Tb over next 15yrs) MTN operations benefiting • All Opcos to access capacity (excl. where regulatory restrictions exist) • Abundant capacity over resilient links around Africa and Middle East, to global peering points • Limited reliance on third parties • Cost significantly lower than market prices 15