The Telecom Recovery – A Service Perspective

1. The Telecom Recovery – A Service Perspective Adam Drobot Senior Vice President – Applied Research Telcordia Technologies 732 699-2100

2. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

3. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

4. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

5. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

6. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

7. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

8. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

9. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

10. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

11. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

12. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

13. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

14. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

15. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

16. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

17. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

18. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

19. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

20. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

21. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

22. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

23. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

24. The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

25. The Telecom Recovery – A Service Perspective • Worldwide growth in Telecoms – 0% < CAGR < 10% • Complex patterns of WINNERS and LOSERS • Fierce competition and transition to new order! Policy &Regulatory Regimes Demographics & Economics Geography Value Chain Organization Technology Options Financial Markets Competitive Landscape Local/Global Brownfields & Greenfields Consumer & Customers

26. Disaster and Attrition OPM & A Positive Attitude The Telecom Recovery – A Service Perspective 250 200 150 100 50 0 Deep freeze Survival Unbounded Optimism Spring in the air? 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Standard & Poor’s -- SP500telco

27. Where are we now? • Of the world’s 100 largest companies, 12 are service providers for an industry that is about 3.5% of world GDP. That’s pretty good!

28. US Revenue Growth • Slow • Wireless and data growth are offsetting wireline decline! Revenue totals for: BellSouth Cingular SBC Verizon

29. Other Measures (US) • This slide shows ratios of various financial measures to revenues • Note the lack of trends, except in CAPEX • In particular, net cash from operations held up

30. EU company revenues • EU companies have stronger revenue growth than U. S. • This holds even before currency adjustments

31. Other European performance measures • This slide shows other measures as ratios of revenues – note the great difference in pattern from the U. S. companies • Losses mostly from Vodafone • Cash from operations holding fairly constant

32. Hot topics and hard problems • Converged networks – New services and new business models • Economic growth – New customers • Identity management – Database explosion • Trusted systems – Security and privacy • Technology investments – Riding the curve • Software – Cost and reliability