This document is confidential and is intended solely for the use and informationof the SNL Financial and the individual, group,or corporation to whom it is addressed.
FTTH and Video CompetitionFTTH Council Europe Conference
Presenter: Julija Jurkevic
Prepared: February 20, 2013
All web-sourced video
All connected devices
PC, tablet, Smart TV, game console, OTT STB
Free broadcast catch-up
Premium rental & purchase
User generated content
Rogue sources
Deployed by pay-TV operators — cable, IPTV, DTH
Authenticated & free to all
Multi-screen: PCTV, game consoles, smart TVs
Diverse content supply: Network supplied VOD, UGC, adjunct, LIVE
Ad-based and rental models. Download to own (DTO) natural extension.
Over-the-top (OTT) Video & TV Everywhere
OTT TV Everywhere
2© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.
Broadband speeds higher than 4Mbps
Strong telecom presence
Open regulatory environment
Diverse international content
Strong local broadcasters
Excess broadband capacity — 20Mbps-100Mbps pipes
Residential purchasing power — device affordability
3
OTT Viability Indicators
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.
4
OTT Viability — MIND THE GAP
0
25
50
75
100
125
Broadband HHs/HHs Multichannel Subs/TVHH Share of Cable Broadband HHs(%)
Near-term OTT opportunities BRIC: Futureopportunities
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 5
Affordability Gap Between Basic Cable, DTH & OTT
48.46 49.57 45.54
22.20
35.57
57.98
36.26
18.06
15.68 13.85 18.54
8.85
8.32
8.00
7.86
7.89
64.14 63.42 64.09
31.05
43.89
65.98
44.11
25.95
0
10
20
30
40
50
60
70
Monthly OTT Subscription Price
Monthly Broadband ARPU
(US$)
Basic cable 1.1% 1.4% 1.5% 0.4% 3.5% 1.1% 0.3% 1.0%DTH 1.3% 2.2% 1.3% 0.6% 5.1% 2.1% 1.4% 2.0%OTT 1.9% 2.6% 2.2% 1.2% 4.6% 2.0% 1.4% 0.8%
Australia(Quickflix)
New Zealand(Quickflix)
Japan(Hulu)
South Korea(SK Broadband)
Brazil(Netflix)
Canada(Netflix)
France(VideoFutur)
U.K.(LoveFilm)OTT system:
Telefónica - Spain
7,734 8,392 8,670 8,898
1,863 1,954 2,083 2,2341656 171 316
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2009 2010 2011 2012
DSL Cable FTTH
(000)
Spain Major Fixed Broadband Platforms Spain Broadband Net Adds by Platform
DSL 80.0% 80.2% 78.7% 77.2%
FTTH 0.2% 0.5% 1.6% 2.7%
568
657
278228
85 91129 151
6 40116 145
0
200
400
600
800
2009 2010 2011 2012
DSL Cable FTTH
(000)
Telefónica’s Home and largest market Incumbent Nationwide Fixed Line Operator Networks: xDSL, FTTH, Wireless 4 Play services – Fixed phone, IPTV, Internet, Mobile voice/data TV Everywhere
BB Mkt. Share 56.7% 54.7% 50.9%
% of Total Subs 0.2% 0.9% 2.9% 4.7%
% of FTTH Mkt. 71.3% 87.8% 95.0% 96.6%
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 7
Telefónica Spain
5,2925,331
5,4245,477
5,5795,620
5,6725,722 5,749
5,6695,607 5,609 5,600 5,613
5,580
4 7 9 11 19 25 3249
6693
126
163
200232
261
0
100
200
300
400
5,000
5,200
5,400
5,600
5,800
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Total BroadbandFTTH
(000)Telefónica Total Broadband and Fibre Subs
2009 2010 2011 2012
Telefónica offers ADSL, VDSL, and FTTH service bundles
Complete HD TV offer available only with FTTH - Linear & On-Demand content
FTTH offers a substantial boost in upload speeds
VDSL upload speeds similar to ADSL
Price/MB is cheaper for FTTH services than xDSLxDSL – at least €1/MB; FTTH - €0.4/MB
FTTH ARPU is 38% higher than xDSL ARPU
FTTH services are priced competitively100Mbps 2 play: €12 cheaper than Cable 100 Mbps 2-play (ONO)
100Mbps 3 play: €6 cheaper than Cable 3-play (ONO)
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 8
Telefónica Spain — FTTH Services
FTTH ARPU - €80.85
xDSL ARPU - €58.43CMT, Q3 2012
€ 0.0
€ 0.5
€ 1.0
€ 1.5
€ 2.0
€ 2.5
ADSL VDSL FTTH
Price/MB of Data
Orange – France
18,586 19,858 20,982 21,916
1,160 1,217 1,415 1,58369
118 198 303
0
5,000
10,000
15,000
20,000
25,000
2009 2010 2011 2012
DSL Cable FTTH
(000)
France - Major Fixed Broadband Platforms
France - Broadband Net Adds by Platform
DSL 93.7% 93.6% 92.8% 92.0%
1,277 1,2721,124
934
153 57198
16821
49 80 1050
200
400
600
800
1,000
1,200
1,400
2009 2010 2011 2012
DSL Cable FTTH
(000)
FT’s Home and largest market Incumbent Nationwide Fixed Line Operator Networks: xDSL, FTTH, Wireless 4 Play services – Fixed phone, IPTV, Internet, Mobile voice/data TV Everywhere
BB Mkt. Share 44.8% 43.0% 42.4%% of Total Subs 0.4% 0.6% 1.0% 1.5%% of FTTH Mkt. 50.7% 45.8% 48.0%
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 10
Orange France
8,5408,639
8,7638,880 8,879 8,925
9,0169,128
9,3089,371
9,4789,598
9,6719,749
9,827
24 29 31 35 37 42 4554
6573
8295
108123
144
0
50
100
150
200
8,000
8,500
9,000
9,500
10,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Total BroadbandFTTH
(000)France Telecom-Orange —Total Broadband and Fibre Subs
2009 2010 2011 2012
Orange offers ADSL and FTTH services
HDTV, 3DTV, multi-screen available to all FTTH subs but limited or unavailable for ADSL subs
ADSL to FTTH upgrade increases speed at least x 5
FTTH bundles are17% more expensive than ADSL bundles, but frequent promotions reduce price difference
FTTH services are priced competitively to cable
200Mbps bundle: €65cheaper than comparable Cable bundle (Numericable)
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 11
Orange France: FTTH Services
12
Orange France Broadband ARPU
© 2013 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.
7.66 7.607.40
7.707.90 7.80
7.50 7.607.30
6.606.90 7.00 7.00
6.70
5.705
6
7
8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(€)
2009 2010 2011 2012
Total 34.80 35.00 35.10 36.20 36.20 36.60 36.10 37.00 35.70 35.50 36.00 36.50 36.10 36.10 36.10
27.14 27.40 27.70
28.50 28.3028.80 28.60
29.40
28.4028.90 29.10
29.5029.10 29.40
30.40
26
27
28
29
30
31
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(€) Access ARPU
Services ARPU (Voice and Video)
2009 2010 2011 2012
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Thank You & Q&A
13
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