When Is The World Going To Deploy LTE?

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

TBR’s 4Q12 Telecom Infrastructure Services (TIS) Benchmark Research Highlights and Outlook

Technology Business Research (TBR) Quarterly Webinar Series

4.17.13

TBR

2 TBR Quarterly Webinar Series | 4.17.13 | www.tbri.com | ©2013 Technology Business Research Inc.

Chris AntlitzNetworking & Mobility Practice Analyst

Email: [email protected]: @chrisNMP

Webinar Presenter

mailto:[email protected]

TBR


Key Developments

Key Developments

LTE deployment in the Americas and China will drive TIS revenue in 2013

The professional services market is starting to recover, but EMEA remains challenged

Huawei and ZTE are redoubling efforts to grow managed services businesses

LTE deployments in North America, Japan and South Korea were key TIS growth catalysts in 4Q12; CALA and China will contribute to growth in 2013

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TIS

TIS Overview

• Opportunity model

• Market share

• Margin analysis

TBR identifies the largest and fastest-growing services segments, enabling vendors to adjust their services strategy and tactics to capitalize on the best market opportunities.

TBR’s research in Telecom Infrastructure Services (TIS) helps vendors identify growth opportunities and grow market share

Opportunity• More than $82 billion annual

spend by Global Communication Service Providers on professional, managed, deployment and maintenance services

• Identify leaders, strategies and growth opportunities in TIS industry to capture share from competitors and hold off rivals

TBR’s Quarterly TIS Benchmark covers the top 41 TIS suppliers by service type and region

DeploymentMaintenance

Professional ServicesManaged Services

North AmericaCALAEMEAAPAC

TIS Overview

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TIS Company Coverage

Accenture

Agilent

Alcatel-Lucent

Amdocs

American Tower

Atos

Bechtel

Bouygues Construction

Capgemini

CGI

China Communications Construction

Ciena

Cisco

Convergys

Crown Castle

CSG Systems

CTDI

EMC

Ericsson

Fujitsu

General Dynamics

HP

Huawei

Hyundai Engineering & Construction

IBM

Indus Towers

Infosys

Jabil

Juniper

Microsoft

NEC

Nokia Siemens Networks

Oracle

Orascom Construction Industries

Samsung

SAP

SBA Communications

Tata Consultancy Services (TCS)

Tech Mahindra

Wipro

ZTE

TIS Company Coverage

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Ericsson is pulling further away from the pack as close competitors Alcatel-Lucent and NSN remain focused on restructuring

Market Overview: Tier 1 TIS Market Leaders

• Ericsson continues to outperform thanks to services-led approach.

• Alcatel-Lucent and NSN sales falling, but margins improving.

• Accenture, HP and IBM suffering from professional services slowdown.

EricssonHuawei

Alcatel-Lucent

NSN

Cisco

IBM

HP

Amdocs

China Comm

Accenture-10%

-5%

0%

5%

10%

15%

$- $1.00 $2.00 $3.00 $4.00 $5.00

Year

-to-

Year

Rev

enue

Gro

wth

TIS Revenue for All Lines of Business

Ten Largest TIS Suppliers: 4Q12 Revenue (Billions USD)

SOURCE: TBR AND COMP ANY DATA

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Tier 2 TIS suppliers are either consolidating via M&A or increasing specialization to better compete against Tier 1 vendors

Market Overview: Tier 2 TIS Market Leaders

• NEC and Jabil participated in strategic M&A to boost their market positions and better compete against Tier 1 vendors.

• Expect more M&A to occur as industry consolidates, i.e. Oracle.

• ZTE to be resurgent in 2013 after credit lifeline.

Fujitsu

ZTE

SAP

Oracle

NEC

TCS

Atos

Jabil

EMC

Bechtel-10%

0%

10%

20%

30%

40%

50%

60%

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80

Year

-to-

Year

Rev

enue

Gro

wth

TIS Revenue for All Lines of Business

Second Tier TIS Suppliers: 4Q12 Revenue (Billions USD)

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NOTE: SECOND TIER INCLUDES SUPPLIERS RANKED 11-20.

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Vendors servicing niche markets or heavily involved in software support services tend to reap the highest TIS margins

Market Overview: TIS Operating Margin Leaders

• Cisco is a leader in TIS margins due to its near monopoly in routers and switches and role as strategic partner in key operator accounts.

• Software vendors like Microsoft and Oracle obtain high TIS margins because they sell lucrative maintenance services to their install bases, which are highly scalable and typically provisioned remotely instead of on-site.

American Tower

Cisco

EMC

TCSCrownCastle

Infosys

Tech Mahindra

Oracle

Microsoft

Ciena

15%

20%

25%

30%

35%

40%

45%

50%

$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30

TIS

Ope

rati

ng M

argi

n

TIS Operating Income for All Lines of Business (In Billions USD)

TIS 4Q12 Operating Margin Leaders


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LTE buildouts in North America, Japan and South Korea continued to fuel growth in deployment services revenue

Segment Views: Deployment Services

• As Japan and South Korea LTE deployments reach completion, NSN to shift focus to United States, where T-Mobile and U.S. Cellular starting LTE rollout.

• Alcatel-Lucent suffering from lack of LTE deals in key markets outside of North America.

• Engineering firms playing pivotal role in tower deployments.

EricssonChina Comm NSN

BechtelHuawei

Fujitsu

ZTE

Alcatel-Lucent

Cisco

Jabil

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

$- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60

Year

-to-

Year

Rev

enue

Gro

wth

TIS Deployment Revenue

Ten Largest TIS Suppliers: 4Q12 Deployment Revenue (Billions USD)

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Maintenance services market growth remains slow and steady, supported by new infrastructure builds such as LTE

Segment Views: Maintenance Services

• Tier 1 vendors are shifting more toward remote technical support and away from field maintenance to boost margins.

• Alcatel-Lucent and NSN restructuring unlocks opportunities for close rivals Ericsson, Huawei and ZTE to consolidate market positions.

• LTE and IP deployments will support maintenance services market going forward.

EricssonOracle

NSNCisco

Huawei

Alcatel-LucentFujitsu

SAP

ZTE

Jabil

-15%

0%

15%

30%

45%

60%

$- $0.20 $0.40 $0.60 $0.80 $1.00

Year

-to-

Year

Rev

enue

Gro

wth

TIS Maintenance Revenue

Ten Largest TIS Suppliers: 4Q12 Maintenance Revenue (Billions USD)


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Demand for professional services is starting to bounce back after weak sales in the first nine months of 2012, as operators stress opex reductions

Segment Views: Professional Services

• Operators still selective on consulting projects they put out for bid.

• Projects that are getting awarded are longer duration and converting to revenue at a slower rate, which is impacting vendor results, especially Accenture, HP and IBM.

• Despite weakness in 2012, the need for professional services remains strong.

NSNEricsson

IBM

Alcatel-Lucent

Amdocs

Accenture

HP

China CommCisco

Huawei

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

$- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20

Year

-to-

Year

Rev

enue

Gro

wth

TIS Professional Services Revenue

Ten Largest TIS Suppliers: 4Q12 Professional Services Revenue (Billions USD)

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Alcatel-Lucent’s and NSN’s shift away from certain types of managed services will allow Ericsson, Huawei and ZTE to consolidate their positions

Segment Views: Managed Services

• Ericsson remains the go to vendor for end-to-end network operations outsourcing.

• NSN and Alcatel-Lucent exiting field operations contracts due to low margins, which is impacting revenue.

• Huawei and ZTE are being aggressive to scale up their managed services businesses.

Amdocs

Ericsson

IBM

Huawei

NSN

Alcatel-Lucent

Accenture

HPCSGSystems

SAP

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

$- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20

Year

-to-

Year

Rev

enue

Gro

wth

TIS Managed Services Revenue

Ten Largest TIS Suppliers: 4Q12 Managed Services Revenue (Billions USD)

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Tier 1 LTE deployments in the U.S. fueled TIS growth for most vendors in 4Q12 and will support TIS growth in the region through 2013

Geographic Views: North America

• LTE deployments lifting most vendors’ revenues.

• NSN outlier due to T-Mobile ramp up and fast U.S. Cellular rollout.

• Cisco aims to become strategic partner in key accounts.

Alcatel-Lucent

Cisco

IBM

EricssonNSN

OracleAccenture

HP

Bechtel Amdocs

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

$- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20

Year

-to-

Year

Rev

enue

Gro

wth

TIS North America Revenue

Ten Largest North American TIS Suppliers: 4Q12 Revenue (Billions USD)

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European operators remain cautious on capex outlays, but are investing in opex reduction to stay competitive, which supports the TIS market

Geographic Views: EMEA

• Opex reduction is of utmost importance, especially in Europe.

• Huawei taking market share in Europe.

• Alcatel-Lucent and NSN are exiting certain countries in Africa.

Ericsson

Alcatel-Lucent

Huawei

NSNIBM

Accenture

HP

ChinaComm

Atos

ZTE

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

$- $0.30 $0.60 $0.90 $1.20 $1.50 $1.80

Year

-to-

Year

Rev

enue

Gro

wth

TIS EMEA Revenue

Ten Largest EMEA TIS Suppliers: 4Q12 Revenue (Billions USD) TBR


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LTE network builds in Japan and South Korea drove APAC TIS revenue in 4Q12, particularly for Nokia Siemens and Ericsson

Geographic Views: APAC

• Japan and South Korea driving TIS in APAC; NSN and Ericsson key beneficiaries.

• All eyes on China Mobile LTE deployment in 2013.

• India remains wildcard on LTE deployment.

NSN

Fujitsu

China Comm

Ericsson

Huawei

ZTE

NEC

Alcatel-Lucent

HP

IBM

-20%

-15%

-10%

-5%

0%

5%

10%

15%

$- $0.30 $0.60 $0.90 $1.20 $1.50

Year

-to-

Year

Rev

enue

Gro

wth

TIS APAC Revenue

Ten Largest APAC TIS Suppliers: 4Q12 Revenue (Billions USD) TBR


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CALA operators are pushing forward with network upgrades and new deployments as governments in the region encourage development

Geographic Views: CALA

• LTE rollouts just beginning; will ramp up in 2013.

• Latin American governments encouraging network investment.

• NSN decline due to exit from Oi managed services contract in Brazil.

NSN

Alcatel-Lucent

Cisco

ZTEHuawei Ericsson

Oracle

HP

Amdocs

China Comm

-45%

-30%

-15%

0%

15%

30%

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60

Year

-to-

Year

Rev

enue

Gro

wth

TIS CALA Revenue

Ten Largest CALA TIS Suppliers: 4Q12 Revenue (Billions USD) TBR


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Conclusions

Conclusions

LTE deployment in the Americas and China will drive TIS revenue in 2013

The professional services market is starting to recover, but EMEA remains challenged

Huawei and ZTE are redoubling efforts to grow managed services businesses

TBR


TBR Networking & Mobility Practice Syndicated Topics 1Q13: Telecom Vendors

Quarterly Topics TBR Value Proposition Related Reports

Network Function Virtualization

• Determine which vendors are the early leaders in technologies such as software-defined networking and self-organizing networks.

• Evaluate vendor network function virtualization (NFV) road maps.

Alcatel-Lucent, Cisco, Ericsson, IBM, Juniper, NSN, Samsung, ZTE

LTE Deployments

• Identify which vendors are LTE leaders in revenue and contract count.

• Determine in which regions LTE is being deployed.• Anticipate the next regional shift of LTE revenue.

Alcatel-Lucent, Cisco, Ericsson, NSN, Samsung, ZTE

Enterprise Solutions

• Determine which vendors are expanding their addressable markets to cater to the enterprise sector.

• Identify which vendors are making a strategic push into enterprise services, such as consulting and systems integration.

• Analyze which vendors are likely to succeed and which are most likely to spread themselves too thin by catering to the enterprise.

Alcatel-Lucent, Ericsson, Huawei, NSN, Samsung, ZTE

Consolidation

• Track developments in vendor M&As, identifying which players need to acquire to enhance their portfolios or enter new markets.

• Analyze the impact of operator consolidation on the telecom infrastructure and services markets.

Alcatel-Lucent, Cisco, Ericsson, Juniper, NSN, Samsung, ZTE

TBR conducts a major review of the telecom industry on a quarterly basis and identifies key topics to integrate into its syndicated reports

TBR


Chris Antlitz

Analyst, Networking and Mobility Practice

[email protected]

@chrisNMP

Questions?

For further information, please contact:

Kate Price James McIlroyPractice Manager, Networking & Mobility Vice President of [email protected] [email protected]

Q & A

@TBRincwww.slideshare.net/TBR_Market_Insightwww.youtube.com/user/TBRIChannel





TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

About TBR

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When Is The World Going To Deploy LTE?

Technology

emea remains

technology

drive tis

professional

lte deployment

north america

redoubling

strategic