Growth codes presentation

Growth codesExtended Strategies Edition

Growth Codes 2.0 | Commercial in confidence | © Ericsson AB 2014 | 2015-04-27 | Page 2

More subscriptions, more trafficMore Services

Mobile subscriptions

LTE

HSPA

10

9

8

7

6

5

2

4

3

1

0

+ 2.4 billion

Monthly traffic (per application type)

0

15 000

5 000

20 000

10 000

25 000

30 000

Glo

bal m

obile

tra

ffic

(Peta

byte

s/m

onth

)

2014 2020

Video (55%)

Social networking (15%)

Web browsing (5%)

8X Audio (2%)

Source: Ericsson Mobility Report 2014


But who ismaking moneyON IT?


An Extended group of frontrunners keeps growing

› 20 Frontrunners

show revenue growth

of 9.6% CAGR*

› Revenues of peers

grows with 2.7% CAGR

› The rest at -1.4%

CAGR*) Yearly Revenue Growth Indexed, 2010 = 100

Reference Year 2010Index 2010 = 100


The Study

270operators

Financial

Analysis

20Front

Runners

Strategic

Analysis

30operators

Growth

Codes

Operator

Strategies


Leading

Revenue Growth

Frontrunners identified

Evaluated and identified based on 3 key parameters

~5% or higher

Full Year Growth

>25% non-voice revenues in last quarterPositive EBITDA

Profitable Data centric


Different strategies in different markets

Source: Ericsson

EMEAAMERICAS APAC

Quality led Market led Offering led


Different strategies in different markets

Source: Ericsson

Quality led Market led Offering led

EMEAAMERICAS APAC


Interviews Information

20%

10%

40%

30%

C-Suite Function

CFO

COO

CSO

CTO

30%

50%

20%

Geographical Split

North America

Asia-Pacific

Europe


What have they done to be that successful?


Innovating

new revenues

Connectivity and

Services as

differentiators

Connectivity and

Services as

commodities

Market &

Tech Synergies

Market &

Tech Silos

Maximizing

old revenues

Problem Focused Opportunity Focused

Frontrunners think differently

Shift of

mindset


The Growth Codes


6 Growth CODES

Create ways of showing superior

performance in contexts that people

can relate to, and show that the

difference is worth paying for.

Build direct feedback loops between

user experience & network

optimization. Move KPI’s closer to

user experience to focus attention

where it matters the most.

Invest proactively to create demand,

rather than reactively to meet the

existing demand. Stay ahead of price

wars by being hard to copy.

Tear apart and re-figure to create

cleverly segmented service offerings

to increase loyalty and revenue.

Build flexibility into systems and

processes.

Bundle offers with third-party brands

to deliver synergistic experiences.

Be an open platform for value

creation, based on the customer

relation asset.

Form long-term collaborations,

empowered by shared incentives,

insights and roadmaps. Create

“we’re in this together” mentality and

minimize restarts.

“Ecosystematic” “Unboxing”“Co-Partnering”

“Streetwise Metrics” “Showcasing”“Gap Minding”

Market your Performance Leadership

Create Innovative OfferingsEmbrace Innovation

Measure and Manage User ExperienceCreate Performance Gap to competitors

Create Strategic Partnerships for Growth


The Value chain for investment


Is there a common strategy behind their success?


Frontrunners apply a dual approach to growth

Strategies for current growth

Existing Markets & Existing Capabilities New Markets and/or New Capabilities

Strategies for future growth

› IoT & Vertical solutions

› Cloud & ICT services

› Expand operations and footprint

(e.g. through M&A, geographical

expansion or alliance)

› Explore new business models ,

partnerships and services

› Traditional telecom products &

services

› Present markets & segments


Differentiation

Market scope

Customer scope

Product scope

Technology & Operations

How do frontrunners think differently?

Offering-led transformation

Quality-led progression

Market-led adaptation


three Strategies to profitable growth

› End-to-end customer

experience focus

› Selective distribution & campaigns

› Segmented approach – often

utilize sub brands

› Fast followers on new products &

services

› Selected strategic partnerships

› High focus on market innovation

› One-for-all offerings and targeted

distribution

› First to market with new offerings

› Several strategic partnerships

› High focus on operational

efficiency

Offering-led Transfomation

› Selective customer experience

efforts & simplification focus

› Extensive campaigns & promotions

› Vast distribution network

› Rely on extensive high-quality

service portfolio & converged

offerings

› Few strategic partnerships -

extensive own VAS offering

Quality-led Progression Market-led Adaptation

Differentiate on

high-performing networks

and brand preference

Differentiate on

uniquely designed offerings

redefining customer value

Differentiate on

quick adaptation

to market conditions


The Strategies leverage the growth codes

Differentiate on high-

performing networks

and strong brand

preference



Quality-led Progression

This type of strategy is driven by the ability to create a Network Performance gap to competitors in

the market through the Gap Minding Code. This is coupled with the ability to “Showcase” this gap

through a simple and understandable manner to the end-user. The effect of coupling those two

codes together creates a Brand Preference to attract high ARPU segment. Further, to be able to

attract consumers there needs to be a focus on creating Innovative Offerings that captures

Customer Value effectively. Finally because this strategy creates a solid base for value creation,

frontrunners deploying this strategy would be looking out for partners that share a common mind-set

to advance innovation and build upon their respective expertise.


Frontrunners in practiceAmerican Operator

› Significant lead in data coverage

› Showcasing extent of coverage visually

against the competitors

Quality ledProgression

36%revenue growth

over 5 years



Differentiate on quick

adaptation to market

conditions



Market-led Adaptation

This type of strategy is driven by and understanding of market needs and end-user preferences.

Frontrunners deploying such strategy will always look to understand, measure and manager User

Experience through Streetwise Metrics. Because this type of strategy is quick to adapt to market

conditions and the need of targeted segments, they need to showcase their User Experience to a

selected set of segments. Their ability to mirror offerings that are successful as they are introduced

by competitors but add value through further capturing some leftover customer need is vital to their

success hence their application of the above codes in harmony.


Frontrunners in practiceGlobal Operator

› Fast follower

› Tailored bundling for targetted segments

› Innovative billing

› Re-use strategy into other markets

Market LedAdaptation

28%YoY subscriber growth

in targetted segment



Differentiate on being

first to market with

uniquely designed

offerings



Offering Led Transformation

This type of strategy is driven by the ability to be internally capable of researching, understanding

and mirroring customer needs in the offerings presented. They do understand the need of creating a

gap in terms of network performance but targeted towards the segments that that innovative offering

is directly impacting. Their unboxing considers very strongly who the end-user is and how to deliver

on a perceived high quality of service. They also do not consider the OTT players as a threat but

leverages their offerings in expanding bundle variety to cater for a specific segment with more

options within.


Frontrunners in practiceAsian Operator

› Embracing innovation

› Improved brand sentiment & NPS

through strategic partnering and

improved network performance

› Attractive plans targetting pre-paid

users

Offering LedTransformation

13%YoY growth

in total revenue


The Strategies put varying emphasis on the growth codes

Offering-led Transformation

Differentiate on being first to market

with uniquely designed offerings


Differentiate on high-performing

networks and strong brand

preference


Differentiate on quick

adaptation to market conditions

“Streetwise Metrics”

Measure and Manager User Experience

“Co-Partnering”

Create Strategic Partnerships for innovation

“Unboxing”

Create Innovative Offerings

“Showcasing”Market your Performance Leadership

“Ecosystematic”Embrace Innovation

“Gap Minding”

Create Performance Gap to Competitors

Drive Usage Monetize Usage


Frontrunners emerging

Strategy Type

No. of frontrunners

Offering-led Transformation



2014 2015

20

30 est.

Market Share

No. of frontrunners

2014 2015

20

30 est.

Market share position: #3



2013

12

2013

12


Strategy type overview

Total

communications

provider

Quality of

service

Customer

experience

Core products &

servicesEfficiency

Offering-led

Transformation

Quality-led

Progression

Market-led

Adaptation

Ensure excellent network

performance as the

foundation for growth

Offer great and consistent

customer experience to

foster loyalty and growth

Leverage capabilities to

grow from existing

products & markets

Ensure efficient

operations to maximize

value

Expand to or utilize full

range of services to

capture a bigger share of

the market


Quality of service is the foundation of growth

Superior network

performance as a

differentiator

Big investments, you have to be

committed in outspending your rivals.- COO, Frontrunner Asia-Pacific

Improve network

performance to meet

customer

expectations

You need to have a credible

network, it’s a must have. - CSO, Frontrunner North America

Frontrunners

leverage network

performance in

one of two

different ways


Successful Operators: Strategies & Growth codes

UNDERSTANDING THE CUSTOMER

ATTRACTIVE MARKET OFFERs

› Frontrunners are outperforming

their peers

› ..and stimulating the market

› Growth Codes 2.0 identifies

clear strategies and tactics for

success

› The number of front runners is

set to rise


About this study


framework

Generic competitive

strategies

Distinctive emphasis No distinct emphasis

Cost emphasis Mixed emphasis

Cost economyFocused cost

economy

Sales

Leadership

Broad Quality &

Sales Leadership

Innovation & Operations

Leadership

Strongest correlation with return & growthWeakest correlation with return &

growth

May yield positive

returns pending

market conditions

Broad scope Narrow scope Narrow scope Broad scope Broad scope

Differentiation emphasis

Growth Codes 2.0 | Commercial in confidence | © Ericsson AB 2014 | 2015-04-27 | Page 35Source: Frontrunners’ communicated strategies


Growth codes presentation

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