Focused technology choices - Analyst & Journalist Briefing 2014

FOCUSED TECHNOLOGY CHOICES

Joachim Horn, Group CTIO

How we win

Focused Technology

Choices

Value Champion

Step-change Productivity

Winning People & Culture

Selectively push new technologies

& innovation

Quality up –where it matters for our customers

Drive down costs continuously in all

areas

Key focus areas

2

Total drop rate all countries Projects on time

50%

100%

2012 2013 2014

Fix the basics: network and IT quality

Priority 1 incidents all countries

0.3

0.5

0.7

Drop

Rat

e (%

)

2011 20140

20

40

2011 2014

New technologies Quality up Cost down

3

Cell availability whole network (Kazakhstan)

Quality perception (Kazakhstan)

0%

30%

60%Tele2

Activ

Beeline

Kcell

• Continue to fix the basics in design and operations

• Continuously increase quality where it matters for the customer

• Voice over LTE (VoLTE) and HD Voice

• Data experience in LTE

• Focus on customer perception

• Outside-in KPI’s• Tight collaboration with

customer service

Quality up - where it matters for the customers

CTIO customer complaints for technical reasons

Jan 2014

Aug2014

Target

Aug2013

Aug2014

90%

100%

Aug2013

Aug2014

%


4

Customers want more data when moving to LTE

Tota

l Dat

a Us

age

3GLTE

Jan2012

Oct2014


Today LTE stands for ~70% of all data usage in Tele2 Sweden

5

Dilemma: more data, higher quality, same cost

How to deal with + exponential traffic growth+ good quality for our

customers + cost efficient transition to

new technologies


6

Total resource cost

LTE more cost efficient than 2G and 3G

3G

4G

CTIO resources

Drive down costs continuously in all areas

80%

90%

100%

• Push for scale• Invest in spectrum

and backhaul• Consolidation of data

centers• Focus on LTE

• Near/Offshoring

• Sharing sites and transmission

• Get rid of legacy fast

0

600 KistaRiga

2012 2017 2012 2017

Cost

/Mb

2013 2017 Cells

Busy hour traffic volume per cell

MBy

te


7

-115 -107 -99 -91 -83 -75 -67 -59 -51 -43 -35-115 -107 -99 -91 -83 -75 -67 -59 -51 -43 -35

13%

11%

20%

18%

38%

Customer care Service & device portfolio

Network coverage Service quality

Cost & billing

Good coverage becoming even more important for the end user

17%10%

13%21%

39%

2012 2013

75% indoor coverage without U900

Source: Nokia

95% indoor coverage

with U900

100

%


8

5Low frequencies and fiber backhaulensure scalability and cost efficiency

* Depending on radio plan, it is much easier to fully utilize capacity of 800/900 MHz compared to 2600 Mhz**Weighted coverage and capacity

Building a 800/900 MHz network is typically 5x more cost efficient**

compared to 2.6 GHz

70 % more data capacity*

Owned, co-built, dark fiber or λ-lease will ensure scalability for future

Microwave is acceptable alternative in rural areas

1

10

100

1,000

2G 3G 4G 5G

Mbi

t/s

5 000

40% fiber

80% fiber

Fiber required for speed and capacity at the lowest cost to scale


2.6 GHz 1.8 GHz 800/900 MHz

9

800 Mhz 900 Mhz 1800 Mhz 2100 Mhz 2600 Mhz Comment

Sweden 10 20 35 20 40 Joint Ventures with Telia 2100 MHz and Telenor 800/900/1800/2600 MHz

Estonia 10 11 24.3 30 Estonia also have 4.4 MHz in 450 MHz and 1*30 MHz in 2300 MHz (TDD)

Latvia 10 11 24.8 20 20

Lithuania 10 11.6 24.6 20 20

Croatia 5 12 15

Norway 5 20

Kazakhstan 11 5 20

Netherlands 10 20 4G only

Tele2’s frequency portfolio2G 3G LTE


10

Current IT legacy structure

New technologies every 10th year

Selectively push new technologies and innovation

2G Launched 1990

3G Launched 2001

4G Launched 2010

5G Planned 2020


11


New technologies every 10th year 4G is adopted faster than 3G


2G Launched 1990

3G Launched 2001

4G Launched 2010

5G Planned 20201 2 3 4 5 6 7 8 9 10 11

3G

4G

Years from launch

Data

usa

ge

Threat of Legacy• Complexity• Maintenance efforts• Higher OPEX• Reduced flexibility• Low speed / time to market


12


How to cope• Retire legacy fast• IT Blueprint• Focus on LTE• All IP, virtualization, cloud

technologies• Drive 5G definition

New technologies every 10th year 4G is adopted faster than 3G


2G Launched 1990

3G Launched 2001

4G Launched 2010

5G Planned 20201 2 3 4 5 6 7 8 9 10 11

3G

4G

Years from launch

Data

usa

geAPI:s

Siebel

Singl.eview

ANALYTICS EDW

Customer Touch points

SALES CRM

REAL TIME CHARGING BILLING

Threat of Legacy• Complexity• Maintenance efforts• Higher OPEX• Reduced flexibility• Low speed / time to market


Tele2 IT Blue print

13

Latency lower in LTE than in 3G

0

60

120

%

Superior user experience in LTE

Data completion success rate higher in LTE

Jan 2013 Oct 2014

LTE

2G3G

Speed higher in LTE than in 3G

%

Average MOS• 4.1 VoLTE (23.85)• 3.9 3G (12.65)

MOS

VoLTE quality higher in LTE

141203 141207

LTE3Gm

s

0

30

60

141104 141204Thro

ughp

ut (M

bit/

s)

LTE3G

100%


14

Customers at Tele2 spend more time on LTE

2014


15

LTE is just at its beginningMany new features will easily bridge the time till 5G will be required

VoLTE and Video over LTE LTE roaming

Carrier aggregation

Coordinated multipoint

Further enhanced inter-cell interference coordination

Mobility load balancing

Now 2020

5G


16

5G is not just a new radio access layerHolistic user/service centric approach and focus on E2E

Massive traffic growth and high density

demand

Wide variety and variability of services

consumedNew use cases

Standardization Development Trials/Testing

Accelerated evolution of 4G advanced and its ecosystem

5G2015 2016 2017 2018 2019 2020

Stringent demands for real-time

communications


NGMNIndustry White Paper defining

end-to-end requirements

17

Summary

Selectively push new technologies

& innovation

Quality up –where it matters

for our customers

Drive down costs continuously in

all areas

18

Investor Relations

Focused technology choices - Analyst & Journalist Briefing 2014