IE IMBA Application: Question H - by Alicia M. Rivas

H. What do you believe are the greatest challenges facing the sector or industry you would like to specialize in at IE? What role do you hope to be able to play in this sector or industry in the medium term?

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Executive Summary: Mobile Telecommunications Industry and the role I hope to be able to play

Situation

Challenges

My Role

- Mobile Telecommunications has transformed the world by giving access to faster critical information through voice calls, text messages and the Internet; all now available in the palm of your hand by telephones, and more so recently with the rise of Smartphones

-Mobile Telecoms, being a young industry, has portrayed incredible growth for the past years functioning primarily as an enabler of development and economic growth by fulfilling communication and information needs. Therefore, we now have the possibility to reduce distances, timings and costs fostering positive direct impacts on worldwide productivity

-As a result, we have now more efficient global markets where consumers have the tools to make smarter consumption decisions based on immediate information; thus, pushing competition, innovation and development to new levels

-Telecom Industry has faced several challenges that differ from peculiarities and symptoms among regions based on service penetration and their technological adaptation curve. Their main differences are basically shadowing their economic status within the world

-Economic stability, educational barriers, data penetration impacts on traditional Voice & SMS revenues, supporting data penetration through increased subsidies and CAPEX over diminished revenues, high competitive grounds and regulative pressures are some of the issues that make the Industry such a challenging one to work in

-I hope to become part of Mobile Industry´s solution by :

• Obtaining new skills

• Learning from others

• Generating creative ideas

• Understanding consumers

• Thus, leading the creation and execution of solutions

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Mobile telecommunications is then, a service that provides instant information by allowing the possibility to make phone calls, send text messages or navigate the

internet through electronic devices.

Over time, this has simplified daily activities by reducing: distances, time-to-market and costs resulting in higher quality of life for people and increased performance to

all other industries.

“Telecommunications is the exchange of information over significant distances by electronic means”*

* Source: techtarget, http://searchtelecom.techtarget.com/definition/telecommunications

Telephone invented,

1876

First dial telephone,

1891

Princess Phone

Introduced,

1958

1st Touch

Tone telephone,

1960

First e-mail message,

1972

First Cellular phones,

1984

Worldwide Web is born,

1998

The “Thin Phone, 2000

The “Web Phone”,

2000

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Mobile Telecoms in addition to being a facilitator of productivity; is also an additional source for public funds, providing relevant impact on economic growth. However, the expectation is to become not only an enabler of growth; but also, a more significant economic player

1.0%0.3% 0.3% 3.6%

2.0%2013 Telecom GDP Impact ($BN) *

* Source: GSMA Intelligence

**Mobile Ecosystem: Infraestructure and Support Services, Mobile Network Operators, Handset Manufacturers, Distributors and Retailers, Content and Services

672196

174

1325 2367

135.735.4

57.3

107.3

Mobile ecosystem contribution to public funding

2013 Public Funding (US$BN)* 335.7

Forecast on

Telecoms

GDP Impact

2013 2014 2015 2016 2017 2018 2019 2020

2000

2500

3000

3500

4000

4500

2367

2634

28823113

33283560

3803

4055

Forecast on

mobile

ecosystem

contribution to

public funding

Mobile ecosystem**

($BN) *

3.6%

4%

4.2%

4.4%4.6%

4.8%

4.9%

5.1%

2013 2014 2015 2016 2017 2018 2019 2020

300

350

400

450

500

336

359

379398

414430

447465

($BN) *

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As a result, other industries become highly productive as they are provided with more and better tools to better understand markets and new demands for higher quality products by consumers. Thus, we find new optimized and innovative solutions as never seen before.

Need Information?

Someone has always the answer.

Quick business meeting?

Make a conference call.

Interview abroad?

There are no borders.

Market your product?

Social media knows better.

Looking for best prices?

Compare.

Want to know more from clients?

Follow them.

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Now the CHALLENGE relies on maintaining continued growth and profitability in an actual business model

where some regions have reached almost full maturity while others lack capacities for adopting new

technologies

“Alice: This is impossible.The Mad Hatter: Only if you believe it is,”Lewis Carroll, Alice in Wonderland

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Region #1

Africa and Southern Asia

Characteristics*

1 • Unique subscriber penetration on average on one third of the population

• Market predominantly prepaid (no contract) – 90% of connections still using 2G**

• Smartphones are less than 10% of total connections

• Promoting voice & SMS subscriber penetration:

• Increase basic services penetration (Voice & SMS) where prices are higher than purchasing capabilities

• Increase network coverage on remote areas where even basic needs such as electricity are lacking

• Remaining Profitable:

• Increase customer base over the world´s most challenging economic region compromising revenues from basic services to become affordable

• Increased CAPEX needed to comply with network coverage demands where having more subsidy costs and lower prices are necessary to increase penetration

• Increasing technological adoption:

• Overcoming illiteracy barriers for adoption

• Providing affordable devices which means additional subsidy costs

Challenges

30%

Unique Subs Penetration,2012*

7%

Smartphone % of total connections, 2012 average*

3%

Contract Penetration %

of population, 2012 average*

Network % of total

connections , 2012 average*


** 2G Techonology Network: Allows digital phone calls and messaging but limited data rates – difficult to support demand for internet/e-mail

***3G Technology Network: Allows phone calls, messaging, and data - better internet experience

89% - 2G**

11% - 3G***

Region #1: Africa and Southern Asia – Characteristics and Challenges

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Region #2 : Emerging Markets

China, Brazil, Russia, South Africa

Eastern Europe, Latin America, Asia

Characteristics*

2 • Unique subscriber penetration has increased steadily from 7% in 2000

• Contract based clients are still relatively low growing at great pace & 3G*** adoption begins to take off.

• Smartphones are now almost a quarter from total connections

• Promoting voice, SMS & data subscriber penetration:

• Increasing penetration while balancing rural demand for low prices and actual revenues coming from mature urban areas.

• Promoting data penetration balancing revenues from traditional voice & SMS businesses that are beginning to suffer from data adoption (substitution) combined with lower data prices driven by the need to increase penetration.


• In addition to opportunity costs coming from affordable voice, SMS and data prices, managing sustainable revenue is needed to foster additional CAPEX to complete urban demands for 3G and 4G-LTE**** networks.

• Increasing Technological adoption:

• Device affordability is still difficult ,and with Smartphones being a solution to increase revenues, it places pressure for faster adoption rates that lead to increase subsidy costs throughout the entire value chain.

Challenges

48.00%

Unique Subs Penetration,2012*

22%


17%



Network % of total



** 2G: Allows digital phone calls and messaging but limited data rates – difficult to support demand for internet/e-mail, ***3G: Allows phone calls, messaging, and data - better internet experience, ****4G-LTE: All-IP services (including voice, messaging) - faster broadband internet, lower latency

77% - 2G**

23% - 3G***

Region #2: China, Brazil, Russia, South Africa, Eastern Europe, Latin America, and Asia Characteristics and Challenges

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Region #3 : Europe

Characteristics*

3 • Unique subscriber penetration has reached an incredible 81%

• Contract based clients lies in 51% & 3G*** adoption is half way through.

• Smartphones are reaching the 40% threshold

• Obtaining continued growth:

• Promoting growth without depending on revenues coming from an increased consumer base.

• Relying on economic performance in highly competitive grounds that are continuously pushing the already downward trend of low prices.

• Depending on growth solely on revenues coming from data where traditional voice & SMS businesses are now a secondary source of revenue.


• In order to profit further from data, new infrastructure is needed for the adoption of 4G-LTE**** networks; meaning increasing CAPEX while undergoing economic and core business declines

• Adaptability to bring other sources of revenue from product and channel diversification. Examples: APPS , mobile financial services, product bundling, B2B***** support, and M2M****** integration.

Challenges

81.00%Unique Subs Penetration,2012*

39%


51%



Network % of total


* Source: GSMA Intelligence ** 2G: Allows digital phone calls and messaging but limited data rates – difficult to support demand for internet/e-mail, ***3G: Allows phone calls, messaging, and data - better internet experience, ****4G-LTE: All-IP services (including voice, messaging) - faster broadband internet, lower latency. *****B2B: Business to Business. ******M2M: Machine to Machine.

51% - 2G**

49% - 3G***

Region #3: Europe – Characteristics and Challenges

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Region #4 : North America,

Eastern Asia, Australasia &

the Nordics

Characteristics*

4 • Unique subscriber penetration has reached to 78%

• Contract based clients reach up to 83%

• 3G*** adoption goes up to 84% and 4G**** becomes part of the landscape

• Smartphones are half of total connections

• Obtaining continued growth:

• Region #4 is a great example of a region who overcame challenges faced in other markets, with the main difference of having supportive government regulation and a more easy competitive arena.

• Growth depends on innovation - bringing new forms of profits from undiscovered sides of all industries. Creative thinking needs to be encouraged in order to consider other levels of technological integration that would not only provide gains for their own region but also for the rest of the world

Challenges

78.00%Unique Subs Penetration,2012*

51%


83%



Network % of total


* Source: GSMA Intelligence ** 2G: Allows digital phone calls and messaging but limited data rates – difficult to support demand for internet/e-mail, ***3G: Allows phone calls, messaging, and data - better internet experience, ****4G-LTE: All-IP services (including voice, messaging) - faster broadband internet, lower latency.

12% - 2G**

84% - 3G***

4% - 4G****

Region #4: North America, Eastern Asia, Australasia & the Nordics – Characteristics and Challenges

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Lower HHI Index portrays an example on the trend for

increasing market competition. Now, operators are not only competing by

compromising revenue among each other; but also,

from other third parties.

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

4000

4500

5000

5500

6000

6500

7000

7500

8000 Africa Americas Asia Europe Oceania

+ Structured & Integrated Process

Other challenges worth noting is the growth of the competitive environment this industry entail in addition to complicated regulators. It is practically a war field for innovative services, unique products and low prices that prompts continued large investments for sustainability

Herfindahl-Hirschman Index**

*Source: GSMA Intelligence

**HHI is a commonly accepted measure of competition giving “0” for evenly distributied competition to “10,000“ for no competition. An increase in HHI means a decrease in competition while a decrease in HHI means an increase of competition

▼-10%

▼-1%▼-9%▼-4%▼-3%

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My role

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+ Global Experience & Networking

+Technological Savvy & Creativity

+Passion

= Strengths & Opportunities

What role do I hope to be able to play in this industry in the medium term?

Become part of Mobile Industry´s solution to

actual challenges

Newly obtained skills through

IMBA

Adding to actual experience, new global insights

and ideas

Creativity

Consumer Understanding

Leadership

“It’s kind of fun to do the impossible.” - Walt Disney

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+Passion

= Strengths & Opportunities Mobile

Industry´s

Solution

Newly obtained skills through

IMBA

Looking forward to have a master’s degree that would challenge me to develop skills necessary to be part of the solution: • Learn new ways to view at problems from different angles - assessing risks and detecting

opportunities.• Develop higher critical thinking to provide appropriate answers and courses of action.• Develop higher communication skills that would allow me advice properly the best solutions.• Learn new managerial tools that would help me come through as a balanced leader.

Learn and develop new skills to provide correct solutions

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+Passion


Industry´s

Solution

Adding to actual experience, new global insights

and ideas

Providing solutions not only comes from personal experience; but also from others. Having an international exposure with global leaders can facilitate:• The possibility to debate your own experiences and receive constructive feedback • The possibility to grasp new ideas • The creation of new networks and potential global business partners • Learn from global experiences for a proper background on how to give solutions in any region of

the world.

Learn from the best in the world for better insights and ideas

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+Passion


Industry´s

Solution

Creativity

Creativity is nourished with every new personal challenge, when leaving your own comfort zone and undergoing completely new experiences pushes you to overcome limitations:• Creativity is the weapon to solve any challenge• Growth can be obtained when thinking for non-traditional solutions • Diversification can occur as much as your creativity permits• Success stories are obtained with the born of an idea, especially in an industry that promotes

innovation

Apply creativity

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+Passion


Industry´s

Solution

Consumer understanding

Even though the goal is profitability and ensuring continued growth; at the end, the main purpose is to increase the quality of life of consumers:• Learning the tools to understanding needs, preferences and consumer patterns provides the

intelligence to propose ideas that can increase revenues while fulfilling consumer needs• Thinking in consumers also gives chance to consider positive social sides like supporting

government action, improving homeland security, education and even health that can also be new sources of profit.

• Teaching others that consumers are first, results always in a win-win situation

Consumer understanding: being profitable while increasing the quality of life of consumers

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+Passion


Industry´s

Solution

Leadership

Knowledge and creativity to provide solutions is worthless if not capable to convince and materialize ideas:• Motivating and convincing others that your idea is the best solution is winning the first battle• Coordinate and lead others to execute your idea means winning the war• Experienced, motivated and packed with the necessary tools provides the human capital strength to

lead others to more opportunities of growth

Leadership to not only think the solution; but also to execute accordingly

Alicia Marcela RivasE-mail: [email protected] Sources: GSMA Intelligence: www.gsmaintelligence.com