The voice services market: how to master the challenges?

1. The voice services market: how to master the challenges? International Carrier Sales & Solutions DTAG Istvan Révész/Judit Gerloczy Albers, Istanbul 19.04.2012 1

2. The Voice Services Market. Deutsche Telekom Group profile and figures. We aim to become a global leader in“Connected Life and Work”. René Obermann Employees Company Products Facts and Figures Global Group Deutsche Telekom is one of the world’s leading service companies in the telecommunications industry • Our strengths • Products and services for the fixed network, mobile communications, the Internet and IPTV for consumers, and ICT solutions for business customers and corporate customers. • By the numbers • In 2010, Deutsche Telekom reported revenue of EUR 62.4 billion (more than half was generated outside of Germany). Adjusted EBITDA totaled EUR 19.5 bio, free cash flow 6.5 bio • Major factor in success: • At June 30, 2011, the total headcount stood at about 241,000. 2

3. The Voice Services Market. Market sizing. Total Voice Market (in bn. €) per Region Asia & Pacific Middle East Eastern Europe Latin America Africa Western Europe USA & Canada -3% 5,9 5,4 5,3 5,2 5,2 5,1 1,1 1,1 +0,3% 1,1 1,1 1,1 1,2 1,0 0,7 0,7 - 6,6% 0,7 0,7 0,7 1,2 1,0 -14% 0,8 0,6 0,7 0,7 0,1 0,1 0,1 0,1 0,1 0,1 -1,8% 0,7 0,7 0,7 0,7 0,7 0,6 +2,1% 1,4 1,4 1,4 1,4 1,4 1,5 +1,3% +1,0% 0,4 0,4 0,4 0,4 0,4 0,4 2010 2011 2012 2013 2014 2015 Description • Although traffic is still growing in total, price regulation effects (mainly Europe) and the shift to pure VoIP connection leads to a decrease of the total market volume of – 3% CAGR. • US/Canada still falling prices lead to a decrease of market volume, but market is relatively small anyway. • CEE still suffering from economic crisis and regulatory interventions lead to a sharp decrease in voice market (CAGR -6,6 %) • Western Europe: harsh decline of CAGR -14% in the voice market mainly based on regulatory impacts in the mobile markets. • Middle East with stable growth rates for Voice (both for prices and minutes). Asia with stable growth rate of 1,3%. Latin America still profiting from growing minutes and stable price development. Africa is growing although growth is smaller than expected (+1,0% CAGR) 1004-003_ChartPool CI-CD.ppt

4. The Voice Services Market. Market segment pricing. Development (2003 – 2010) Forecast (2011 – 2015) Conclusions • Wholesale players face continuing price declines due to competitive pressure, particularly from VoIP carriers. • In 2009, wholesale prices experienced more severe declines (-8.5 %) than world average retail prices (-3.7 %). • Combined with slowing traffic growth, these price declines served to force wholesale market revenues downward. • Wholesale prices often vary tremendously from carrier to carrier and from day to day. • IP players will face to find a balance between high volume growth and lower costs to support margins and ensure profitability. Global Wholesale Price per Minute (TeleG.) US dollars per minute Global Wholesale Price per Minute (TeleGeography) US dollars per minute Average Wholesale Rates by Country (TeleGeography) US cents per minute Total Wholesale Voice Traffic (TeleGeography) Billion voice minutes 370 2006 342 317 2010 +9% 295 276 -22% -50% -29% 12.4 -55% 11.4 8.9 6.6 6.9 2.8 1.1 3.3 2.0 0.5 Africa Asia Europe Latin America North America 1004-003_ChartPool CI-CD.ppt

5. New Invest Mandatory. Absolute Margin Decrease. PSTN Next Generation Network Asia South Am North Am CEE MEA WE Market Consolidation + + + + The Voice Services Market. Market Overview and Strategic Imperative. Market Rates Revenue in bn US$ -3% 5.9 5.1 Voice Carriers MUST EITHER become bigger and more efficient OR leave the market Voice Traffic Manual Workflow Automation Source: TeleGeography 2010, ICSS calculation Strong Regulatory Intervention. Fierce Competition. 1004-003_ChartPool CI-CD.ppt

6. Ovum “ICSS has a growing portfolio of international voice outsourcing customers that are increasing its economies of scale and proving its ability to execute in this area. Customers looking for wholesale/network outsourcing should consider Deutsche Telekom ICSS.” The Voice Services Market.How to tackle the challenges?The answer is: DTAG ICSS DT your reliable partner – together keeping ahead of the game! Ease of Doing Business: Automate Voice Outsource 1004-003_ChartPool CI-CD.ppt

7. Deutsche Telekom ICSS - Voice Trading & Factory • Financial stability and reliability • Commitment to voice business; continuous investment in networks, systems, tools • Local market access: 22 offices worldwide • Scale: >27bn minutes (Under Top 5 Voice Carriers) • Quality focus: mobile orig. traffic from own operations Voice Outsource The Voice Services Market. Voice Outsource – DT the Ideal Partner. • Dedicated Team of Synergy Experts • Consultative Approach • Excellent team, diverse skill set • Long term voice outsourcing experience • Excellence in synergy analysis and implementation Customer Feedback “After 111 days I can say, perfect implementation, great service management work, active and good commercial cooperation as well” “Voice partnership is working very well, and targets are again overachieved” Consolidation Reference Cases 1004-003_ChartPool CI-CD.ppt

8. The Voice Services Market. New Approach to old problems - GBET is the answer Automation • Carrier-to-carrier information bottlenecks anddata exchange inefficiencies currently cost the industry over $6 billion every year, so it is time to streamline and automate the Business-to-Business aspects of the industry • GBET was launched at ITW June 2011 by major players in the industry:Deutsche Telekom-ICSS, Telia Sonera, PCCW, iBasis, Telarix, Verizonand currently has over 50 members • GBET is a voluntary association of carriers cooperatively working to establish solution-based best practices and processesfor electronic exchange of commercials, operational and financial information • Best practices and processes allow each carrier’s back-office to cost effectively interface with one another in order to reduce cost, maximize revenue and better manage present and future challenges and opportunities. • Membership is free of charge and comes without any commercial obligations, register at • www.gbetcommunity.com 1004-003_ChartPool CI-CD.ppt 8

9. The Voice Services Market. GBET Solutions Automation • Pricelist: reduce quantity of offers, varied format and increased accuracy of data by simplifying and automating the buy and sell processes. • Billing, Settlements & Disputes: establish processes to protect revenue and profit margin through accurate rating, invoice validating and bill verification,reduce settlement timeandestablish end-to-end audit and dispute management standards • Trouble Tickets: focus on the synchronization of trouble ticket format within the industry • eTRA:approved contracts, standards and templates for all service providers andvendors • eMarketPlace: a single source, multi vendor platform allowing automated pricing and quotations, streamline process from quote to provisioning, customise products and rates based on business rules, expand market reach to markplace providers. 1004-003_ChartPool CI-CD.ppt 9

10. Thank you for your attention! Questions? judit.gerloczy@telekom.de 1004-003_ChartPool CI-CD.ppt 10

11. 5 1 2 4 3 7 8 9 6 Baseline – Financial Plan Efficiency – Financial Plan Delta Impact Business & Network Review High Level Feasibility Assessment Synergy Assessment Efficiency Project • Revenue (+ 3 %) • Reciprocal business • Revenue assurance • Direct Cost (- 3 %) • Economies of scale • Bargaining power • Indirect Cost (- 80 %) • Network and Operations • IT systems • Billing, Contract process • General, Admin., HC • Capex (-100 %) Transparency Efficiency Levers (Generic) • Customer Base • Revenue Mix (Product/Region) • Termination Cost (Product/Region) • Indirect Cost • Network / IT Architecture • Asset Base • Financial Plan • Road blockers • Tax, Legal, Regulatory, Labour • Migration & Integration Plan Business Case Preparation Synergy Case (Generic) Capex 11.500 Capex 10.000 1.000 500 Capex 0 0 0 Voice Outsource The Voice Services Market. Efficiency Improvement Case. Transparency Feasibility 1004-003_ChartPool CI-CD.ppt