Group Technology & Information Investor Update Karel Pienaar Group CTIO
Group Technology &Information Investor Update
Karel PienaarGroup CTIO
2
Agenda
• Best mobile operator• Current network infrastructure
• Current network performance
• Network drivers – coverage, quality, efficiency
• Key network initiatives
• Key IS initiatives
• Future growth and innovation
• Preparing for Future Telco• New Telco Eco system
• Current MTN activities
• Demonstration• Technology demonstration
3
Agenda
• Best mobile operator• Current network infrastructure
• Current network performance
• Network drivers – coverage, quality, efficiency
• Key network initiatives
• Key IS initiatives
• Future growth and innovation
• Preparing for Future Telco• New Telco Eco system
• Current MTN activities
• Demonstration• Technology demonstration
4
The Challenge is to be a World Class Operator in our 21 operations
Before After
Switching Centre - Uganda
Building the Call Centre – Tehran“From a humble beginning”
5
Current performance benchmarkedNetwork infrastructure
1563751025,1141143,0111,42354981400295Sites
0001,1680000000Node B
000130000000Radio network controller
2002109101220Media gateway
1588001508,5782102,8012,8462,14396581333Base transceiver station
9714,82397742,6691,70042,73520,8065,0359364,0392,545Transceiver unit
392673575015276Base station controller
121141731121Home location register
1523824955164Mobile switching centre
ZambiaUgandaSwazilandSouth AfricaRwandaNigeriaIranCote
d’IvoireCongoBCameroonBotswanaAugust
6412,035840901152785335578420Sites
03058000010000Node B
0210000100Radio network controller
0200003000Media gateway
6652,7631,053128212391,365355125450Base transceiver station
4,54515,4738,1301,2401,64033819,2051,7261,1242,461Transceiver unit
24323823115723Base station controller
3431112111Home location register
414422112123Mobile switching centre
YemenSyriaSudanLiberiaGuineaConakry
GuineaBissauGhanaCyprusBeninAfghanistanAugust
6
Best mobile operatorCommitment to QUALITY
• Network Quality Key Performance Indicators:• BH Congestion• Call Setup Success rate• TRX Availability• Average Half rate Utilisation
7
Current network performancePeak BH Erlang
Peak Busy Hour Erlang (August 2007)
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000G
uine
a Bi
ssau
Zam
bia
Bots
wan
a
Cyp
rus
Con
goB
Swaz
iland
Rw
anda
Libe
ria
Beni
n
Afgh
anis
tan
Gui
nea
Con
akry
Cam
eroo
n
Yem
en
Cot
e d'
Ivoi
re
Uga
nda
Suda
n
Iran
Syria
Gha
na
Sout
h Af
rica
Nig
eria
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Best mobile operatorCommitment to EFFICIENCY
• CAPEX Targets:• Cumulative Capex/BH Erlang (<1 million subs): $10,000-$15,000
(>1 million subs): $15,000-$20,000
• Cumulative Capex/Sub $100-$200
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Current network performanceTechnology CAPEX
Capex per subscriber (2007)
0
100
200
300
400
500
600
Beni
n
Gui
nea
Con
akry
Yem
en
Sout
h Af
rica
Iran
Gha
na
Libe
ria
Rw
anda
Gui
nea
Biss
au
Swaz
iland
Afgh
anis
tan
Suda
n
Uga
nda
Cam
eroo
n
Syria
Cot
e d'
Ivoi
re
Nig
eria
Con
goB
Zam
bia
Cyp
rus
Mar
gina
l Cap
ex/s
ub [U
SD]
Cumulative Capex/subscriber Marginal Capex/subscriber
10
Best mobile operatorCommitment to coverage
Coverage (July 2007)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Iran
Sud
an
Afg
hani
stan
Cot
e d'
Ivoi
re
Ben
in
Gui
nea
Con
akry
Gui
nea
Bis
sau
Zam
bia
Gha
na
Nig
eria
Libe
ria
Uga
nda
Bot
swan
a
Cam
eroo
n
Con
goB
Rw
anda
Yem
en
Sw
azila
nd
Cyp
rus
Sou
th A
frica
Syr
ia
Geographic coverage Population coverage
Broad coverage ensures MTN reaches maximum potential customers…
coverage is absolutely critical
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Best mobile operatorChallenges
• The Mobile Operator is also a Utility Provider• Initial infrastructure must be built• Transmission (Fixed Network), Power, Security, Transport
(4 million litres of diesel per month in Nigeria - 3% of OPEX)• All 10 switches and 70% of sites run off NEPA, but typically only 30%
availability • Focus on Affordability Issues
• How to profit from marginal ARPUs < $1 ?• Compete with basic spend items• Subscriber TCO (device, tariff, denominations)• Public access phones (>30% of traffic)
• Build a Trusted Brand• A powerful brand positions the mobile operator to launch new services
• Integrate with the Community• SMME/local development• Social responsibility
• Demand Often Exceeds Supply• Overcome problems of quality & capacity
• Become the Lowest Cost Operator• ASR’s below 30% are inefficient• Distribution e.g. virtual top-up
Doing business in developing markets is tough but the rewards are high and opportunities are huge
Existing Deployment of Vendors in 2007
2007 South Africa Swaziland Nigeria Zambia Uganda Rwanda Cameroon IranCongo-
Brazzaville Ivory CoastEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Siemens
Huawei Huawei Huawei Huawei HuaweiNokia
Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Nokia Huawei
Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Huawei Huawei Huawei
Siemens Harris/Stratex Harris/Stratex Harris/Stratex Nokia Siemens Harris/StratexCisco Cisco Marconi Cisco Cisco
Ericsson Ericsson Ericsson Ericsson Ericsson EricssonHuawei Nokia
Comverse Alcatel
Sudan Syria Liberia Ghana Guinea BissauGuinea
Conakry Afghanistan Benin Cyprus YemenEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson
SiemensAlcatel Alcatel Alcatel
Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson EricssonSiemens
Alcatel Alcatel AlcatelEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson
Alcatel Harris/Stratex Alcatel AlcatelSiemens Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson
Alcatel Alcatel Alcatel
Transmission
Pre-paid Platform
BSS/RAN
Transmission/Packet Switches
Pre-paid Platform
BSS/RAN
Core
Core
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Best mobile operatorKey network initiatives overview
Least Cost operatorNetwork quality, efficiency drive
Leverage synergies across the Group
Fully integrate operations into Group standards and practice
VAS platforms, systems and interfaces standardisation
Connectivity project
FACTS rollout (transparent network quality metrics reporting system)
Evolving to next generation Network architecture and
services“New Telco”
(Convergence)
Capital projects management process standardisation
Network and IT Operation & Maintenance standards and procedures
CM support technologies standardisation
BTS sitebuild criteria and implementation
Centralize procurement of infrastructure
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Key network initiativesWest terrestrial connectivity
Project to investigate the viability of terrestrial connectivity via microwave radio and fibre between all West Region OPCOs.
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Key network initiativesConnectivity between all OPCOs
August 17 - 2007 December 31 - 2008MTNInvestcom
Phase 1: Establishment of basic OpCoconnectivity
Phase 2: Improving and extending OpCoconnectivity in regions
• Establishment of regional connectivity hub structure
• Inter-regional traffic concen-trated on regional hubs
• MedNetforms most important connectivity
Phase 1: Establishment of basic OpCoconnectivityPhase 1: Establishment of basic OpCoconnectivity
Phase 2: Improving and extending OpCoconnectivity in regionsPhase 2: Improving and extending OpCoconnectivity in regions
• Establishment of regional connectivity hub structure
• Inter-regional traffic concen-trated on regional hubs
• Focus on upgrading existing links
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Key network initiatives BTS site build process and implementation
• Network rollout standardisation• Site design• Vendors
• BTS Mechanical & Electrical design optimisation
• Generator Standards• Building Management System• Outdoor Units
• Development of standardises contractual approach for OPCO’s
• Pre-approved sitebuild vendors across the Group for tenders (8-12)
• Setting up adjustment factors for each country
Site build process focused on:• Improve cost efficiency• Improve rollout performance• Streamline approval process• Improve standardisation of site types
CAPEXManagement Fee $13,500
Antenna System $14,000
Tower Structure Cost $17,500
Transmission EQ Cost $15,000
Electrical Cost (ACs, DBs , trays etc.) $6,000
RBS Cost (Average single BTS) $20,000
Internal Power Systems $8,000
Shelter $5,000
Tower Civils and Installation Cost $17,500
Electrical Installation & Connection $6,000
Generator and Fuel System $16,000 or$32,000
Fencing $5,000
General installation Civil works $14,000
Total (Single Generator + 1 BTS) $157,500
BTS CAPEX breakdown
BTS OPEX breakdown
OPEX
Land Lease PA $4,800
Transmission lease cost (SA) $3,000
Electrical consumption cost PA $1,200
Tower Maintenance PA $700
General Civil Maintenance PA $700
BTS Maintenance PA $250
Fuel with no AC connection PA $15,000
Total $ 25,600
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Key network initiatives Eco friendly BTS sites
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Network initiatives Key evolution areas of the network
• GPRS -> EDGE• Driven by algorithm change for improved security• BSS modernisation (2202 -> 2206)• Compelling data offering
• GPRS roaming• 3G• HSxPA – LTE• WiMax• NGN• IP/MPLS area (IMS)• Fibre rollout• DVB-H
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Current status of MTN OpCos
Strategic focus and investment around data and mobile media is directly related to the revenues generated by the different OpCo’s
Developed Markets Industry Norm Emerging Markets
Data % contribution to total revenue
Content % contribution to total data revenue4%25%
20% 5%
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Key network initiatives3G
• Combined 2G+3G CAPEX can be below the originally planned GSM investment• Options for cheap capacity (efficiency) or additional capacity (new spectrum)• Transmission infrastructure efficiency must keep up with increased capacity
Increased 3G efficiency provides opportunity to deliver cheaper voice in emerging markets
2000Source: CSFB Estimates
Cost per Erlang Equivalent of Capacity
$ ’0
00
‘02 ‘06E ‘07E‘01 ‘03 ‘04E ‘05E
GSMCDMAWCDMA
More Efficient
2005Source: MTN South Africa
Planned 2+3G CAPEX vs Original 2G Only Plan
Plan
ned
CA
PEX
20072006 2008 2009 2010
2G Only2G+3G
Initial Coverage
3G Efficiency Reduces CAPEX
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Key network initiatives3G
3G efficiency only applies once handset prices allow mass adoption in emerging markets
2001Source: MTN South Africa
3G H
ype
‘03 2008‘02 ‘04 ‘05
3G Launch
182+ operators live - 2007
Inflated hype and licence payments!
• MTN benefits from lessons learned & technological innovation since 3G pioneers• Fewer handset components lower manufacturing costs and drive economies of scale
Com
pone
nt C
ount
1060
Sources: CSFB
200
400
600
800
1000
Han
dset
Cos
t (U
S$)
50
100
150
200
250
UMTS2003
UMTS2004
UMTS2007
GSM2007
234
765170
400
100200
25
Handset CostComponent Count
Trend of Decreasing Costs for 3G Handsets3G Maturity + = 3G Opportunity
in Africa
‘06 ‘07
24
Peak Radio Throughput/UserAverage User Perceived Throughput
1800
3600
7200
HSDPA1 800 kbps 3 600 kbps
14000
7 200 kbps
0.8-1.2 Mbps
800
1200
1500
2200
3000
1000
1500
2000
1.0-1.5 Mbps 1.5- 2.2 Mbps 2 - 3 Mbps
14 400 kbps
Average Download time of 10 MBytes ~80 sec ~64 sec ~43 sec ~32 sec
2 000
300
200
R992 000 kbps
0.2-0.3 Mbps
~320 sec
473
EDGE
~571 sec
171
GPRS
~2133 sec
135-145 kbps35-40 kbps
473 kbps171 kbps
Source: Ericsson, Qualcomm
Latency
Source: RY Savy Research
Network Initiatives HSxPA – LTE Evolution
25
Where is WiMAX going?
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Key Activities
Overview of key IS initiatives
Customer Care and Billing
Strengthen IS Infrastructure
Customer Facing
IS Initiatives
Employee Facing
IS InitiativesOpCo Connectivity
Informating the Organisation
Group Content Portal
Email, Conferencing (video, audio, web), IM, Intranet & Hyperion
Shared IS Services
HRIS
Common Billing processes and technical environment
IT standards & Asset management
Regional Shared DR
CRM & Billing Change Control
The right information at the right time to make appropriate decisions
Common DDWH environment for accurate information
HRIS Implementation & Rollout
Short Term Medium Term
Focus on creating an Agile base on which to build Efficient Proactive systems to benefit of MTN Group
World Class Data Centre
27
Future Growth and InnovationContinued Innovation is Key to Competitiveness
• Strong record of developing innovative products and tools that are ahead of market trends
• Internal focus:• Maximise performance• Manage quality• Reduce costs• Support new products
• External focus:• New revenues
• TNMS (network management system) • USSD/SMS-C• IBS (Intelligent broker system, open source)• Voucher distribution system• Pre-paid • VTU (Virtual Top Up)• 3G/GPRS realtime charging• Balance enquiry and recharge• Call Back• PPMED (Prepaid mediation)• FACTS / dashboards (web-fronted statistical views)• Optima (statistical, long term analysis)• REMEDY (Trouble ticket scheduling and tracking)• RAPTOR (call testing for revenue assurance and
quality)• Asset (Radio Network planning tool)• Datasafe (network data configuration)• FOTON (automatic frequency planning)• EDIP (Early Delivery Intelligent Platform, MIP, EDP,
SMSC)• USA (Universal Service Architecture)
28
Future growth and innovationDrivers of MTN’s future technology
• Regulatory• Mobile number portability, legal intercept, interconnect rates• Self-provisioning by VANs/ISPs• International Voice for MCOs
• Increased Competition• Drives network requirements for differentiation in terms of coverage, quality
and products at lower cost than competitors• Strong competition with established fixed line telco in SME and corporate
market• Product/Service flexibility
• Least Cost Operator• Target Bottom-of-Pyramid• New Telco
• Fixed/mobile and fixed/wireless• Pre and postpaid• Media and entertainment• The internet
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Agenda
• Best mobile operator• Current network infrastructure
• Current network performance
• Network drivers – coverage, quality, efficiency
• Key network initiatives
• Key IS initiatives
• Future growth and innovation
• Preparing for Future Telco• New Telco Eco system
• Current MTN activities
• Demonstration• Technology demonstration
Mobile Operators
2BN+Users
New Telco contextA broad view of the MTN New Telco landscape
Source: MTN Group Technology, 2006
Fixed Operators
WiMAX
WiMAX3G
GSMWiFi
UMA
ISPs
HSPA WiMAX
VoIP
Infrastructure
NGNTx
IMSOSS
BilllingSDP
Media &Content
DVB-HMBMS
3GHSPAMp3
MPEG4P2P
Retail & Services
VoIP
SoftwareSymbianWindows
Opensource
Devices
iPodPhenomenon
SIM
Internet
VoIP
XMLHTML
TCP/IP
P2P
IMSSDP
31
MTN Actions
New Telco contextGartner technology cycle
32
Time to maturity1 year 2 years 3 years 5 years
Low
Hig
h
Execute now!! Finalise plans Formalise strategy and experiment
Partner and execute Watch closely
Mature developments Trials and early developments Analysis underway
Low costvoice
InstantMessaging
Low cost Handsets
Mobile money
AttackFixed Voice
OutsourceMobileinternet
Corporatesolutions
VOIP
User generatedcontent
Contentportals
Mobile TV
Mobilesearch
AccessTechnologies
Triple/quadplay
Mobileadvertising
Managedservices
Softwareas service
Online communities
MVNOMobile
ApplicationsMobilemusic
M-commerce
Unlicencedmobile access
LocationServices
Peer2peer
IdentifyServices
Actively Tracking
New Telco contextTracking global trends
33
Media
Infrastructure
Internet
Devices
Fixed Operators
Retail & Services
ISPsSoftware
Expand down the Value Chain- Resell core infrastructure
VANS- Internet/ISP services
Attack adjacent industries(e.g. mobile financial services)
Mobile entertainment
Mobile music
Quad/ Play
Device Strategy
Attack fixed operators:- Fixed mobile substitution- Fixed mobile convergence
Mobile TV
Mobile Operators
Best mobile operator(specialise)
VoIP
1
2
3
4
5
6
8
91011
12
Software- Applications Service Provider- Manage access to the device
7
Mature Deployments
Analysis Underway
Trials and Early Deployments
Source: MTN Group Technology, 2006
New Telco contextCurrent MTN activities
34
Strategic initiatives The Internet goes mobile
• Situation • Connectivity moving from a want to need • User-generated content allow people to
participate in services in real time, spontaneously
• Handset Evolution enables a richer user Experience
• Mobile becoming the primary access method to Internet
• Overview of Activity• Use existing infrastructure to provide Internet
Access • Mobile Media and Content Services -
MTNLoaded• Provide internet related services – Instant
Messaging • Providing Consumer & Corporate ISP Services• OPCO’s engaged VANS model to date:• Nigeria, South Africa, Cameroon, Uganda,
Rwanda
Media &Content
Infrastructure
InternetDevices
Fixed Operators
Retail & Services
ISPsSoftwareMobile
Operators
OpportunityProvide services that combine user-generated and 3rd party content into a single user experience Drive uptake of content downloads, and advertisingPartner with global players to offer services
Source: MTN Group Technology, 2007
35
Strategic initiatives Infrastructure
• Situation• Alternative Access technologies have
matured in both Technology & Deployment• Technologies such as WiMAX provides
more cost effective Access Network• Evolution of Handsets allowed for access to
multiple networks from single devices
• Overview of Activity• Implementation of Fiber Transmission
Backbone (Nigeria, South Africa, Ghana, Uganda, Ivory Coast, Rwanda)
• Corporate High Road Strategy – South Africa• Providing Fixed Wireless Solutions as part of
Corporate solutions• Develop capability to resell transmission in
OPCO’s where we self provide, avoid empowering competition
Media &Content
Infrastructure
InternetDevices
Fixed Operators
Retail & Services
ISPsSoftwareMobile
Operators
OpportunityResell transmission backbone, facilities and switching capability Adopt a user transparent multi access network
Source: MTN Group Technology, 2006
36
Strategic initiatives Media & content – It is all about the user experience
• Situation • Evolution has lead to a Multi-sensory
Experience • Access to Media Content at appropriate
location• Advertisers and media companies see
mobile as a huge opportunity • By 2012, 100m media devices will ship with
Broadband connections - ABI Research• Overview of Activity
• Extended MTNLoaded to cater for:• Photo/video sharing• User-generated media• Competitions and contests • Mobile and web blogs• Social networking• Community chat / Forum
• Launched Mobile TV Initiative
Media &Content
Infrastructure
InternetDevices
Fixed Operators
Retail & Services
ISPsSoftwareMobile
Operators
OpportunityPartner with Media Companies to gain access to ContentCreate new revenue streams by providing users with access to appropriate content. Expanding of Brand beyond Mobile Telephony
Source: MTN Group Technology, 2006
37
Strategic initiativesDevice strategy
• Overview of Activity1. GSM Association & other operator alliances formation2. Ultra Low Cost Handset initiative 3. MTN Group SIM standardisation project:
• Application eco-system (Java) creation• Group-wide application deployment efficiency
4. Service Discovery Enhancement: MTN Idle Screen5. Over The Air configuration (OTA):
• SIM/USIM: subscriber self service• Handset: Intelligent Mobile Device Management
6. DVB-H Mobile TV:• DVBH/3G handset for Africa
• Nokia handset support: OMA BCAST SCP standard migration• SIM based ESG (TV Service Guide) rendering
7. Branded device (external and internal):• 3G/HSDPA PC/USB card in SA• 3G/laptop bundling in SA• 3G/wifi hub bundling in SA
Media &Content
Infrastructure
InternetDevices
Fixed Operators
Retail & Services
ISPsSoftwareMobile
Operators
Opportunity• GSMA, BMCo & strong MNO Alliances
help MNO’s gain greater control of handset design & clients [& other end user devices], to enhance services, customer experience, reduce cost, & ensure “lock in”
• Device control supports application eco-system for variety, innovation & new revenue streams creation
38
Agenda
• Best mobile operator• Current network infrastructure
• Current network performance
• Network drivers – coverage, quality, efficiency
• Key network initiatives
• Key IS initiatives
• Future growth and innovation
• Preparing for Future Telco• New Telco Eco system
• Current MTN activities
• Demonstration• Technology demonstration
39
Convergence - a connected life
High Speed Mobile Access
Live Video Streaming via HSPA
Skype Video Call over HSPA
IMS IP Centrex
IMS PTT / WeShare
IMS Mobile Blogging
Google Earth / LBS overlay
On Device Portal
MTN Banking
Value Wallet
Mobile Payment Acquiring
Mobile Gaming
NFC Credit Cards
NFC Content purchases
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Notice
The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinions and forward looking statements expressed represent those of the Company at the time. Undue reliance should not be placed on such statements and opinions because by nature, they are subjective to known and unknown risk and uncertainties and can be affected by other factors that could cause actual results and Company plans and objectives to differ materially from those expressed or implied in the forward looking statements.
Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and do not undertake to publicly update or revise any of its opinions or forward looking statements whether to reflect new information or future events or circumstances otherwise.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.