Digital Europe: How?February 2014

Michael TsamazOTE Group Chairman and CEO

Competitiveness

Industry value

Market structure

Revenues

Investments

Regulation

OTT players

Alarming trends for the continent's digital economyDeclining in whole ICT sector

Eroding market capitalization vs. North America

Fragmentation and lack of scale

Declining vs. growing data traffic

270 bln needed for high-speed NGNs

Harsh framework

Additional pressure

Declining revenues

Western EuropeWestern Europe

North AmericaNorth America

Asia-PacificAsia-Pacific

IP traffic Telecoms revenues

2008 2008

2008 2008

20082008

2016e

2016e

2016e

2016e

2016e

2016e

+35%

-10%

+40%

+836%

+966%

+1006%

Source: European Commission (Sept.2013)

Behind in investments

Source: OECD Communications Outlook 2013. Asia: Japan, South Korea, Australia, New Zealand. Data

estimated for 2012 and 2013.

Telecommunications investment in EUR per capitaEUR

US

EU

Asia Pacific

180

170

130

Asia Pacific: Japan, South Korea, New Zealand, Australia. Source: OECD.

OTTs versus Telcos: No level playing field

Income taxes in Europe

European investments

European employees

11,000

Very low

Little or none

22,000

1.2bn In the next 4 yearsOnly in Greece 1bn (2012)For taxes & other social contributionsOnly in Greece

Source: OTT data for largest EU countries (DE, FR, UK), plus EU HQs (Amazon Luxembourg, Google Ireland)

Regulation stifles growth

Favouring non-investing unbundlers

Return on Capital: Incumbents vs. Unbundlers

EU regulation complex & intrusive vs. US & AP

The myths of

• Ladder of investment

• Essential facility• Spectrum auction

Source: Bernstein Research, BCG. 1 BT, DT, Orange, TEF. 2 BSkyB, Iliad, Jazztel, TalkTalk, United Internet

Source: OECD, McKinsey

The Greek challengesChallenging macros

Aggressive pricing

Incumbent main investor

Regulation

Enhanced FMC offerings

Market consolidation/partnering

Challenging telco market

• Private consumption: -30%• GDP: -25%

2008-2013

The Greek challenges

Regulation

• Pricing

• IP transformation / VoiP

• Vectoring

• Universal service

ICT can lead Europe back to the top

ICT = Growth and employment Vision for EU’s ICT

Key priority

• 21% of GDP growth

• 10pp up in broadband penetration = 0.9-1.5 pp up in annual pc growth

• Productivity growth: 31% Europe 59% USA

• 2.6 new jobs for every one lost

Regain leading position within next 10 years

•Telecom network infrastructure (fiber, LTE, Intelligent networks)

•Software and hardware

•Internet Services

• EU policies alignment for

consistency and credibility of

decision-making

Source: McKinsey, ifo, European Commission.

Key measures to restore EU competitiveness, investment & growth

Digital infrastructure development

Digital infrastructure development

Digital infrastructure development Regulated telecoms markets

Digital infrastructure development Market consolidation and cooperation

Digital infrastructure development Spectrum policy

BOOST

DEREGULATE

EASE

HARMONIZE

ICT can lead Europe back to the top