Key Note VERDIKT conference 2010

1. What's hot in the mobile world?
VERDIKT, 1 November 2010
Dagfinn Myhre
SVP & Head of Research Agenda
Telenor Group

2. Our industry is experiencing a rare expansion in
the importance of our services

3. Among the largest mobile operators in the world
More than 180 million mobile subscribers*
Aproximately 40 000 employees
Present in markets with 2 billion people
Nordic
Vimpelcom
Norway
Sweden Russia
Denmark Ukraine
Kazakhstan
Georgia
Uzbekistan
Tajikistan
Central and Armenia
Eastern Europe Asia
Kyrgyzstan
Thailand Cambodia
Hungary Malaysia Vietnam
Serbia
Montenegro Bangladesh
Pakistan
India
Telenor Group is an international provider of tele, data and media communication services
• Mobile operations in 11 markets across the • Among the top performers on Dow Jones
Nordic region, Central and Eastern Europe Sustainability Indexes
and Asia
• A stake of close to 40% in VimpelCom Ltd, • Revenues 2009: NOK 98 bn
operating in 10 markets
• Headquartered in Norway • Listed on the Oslo Stock Exchange

4. Telenor Group mobile operations
Nordic
Norway
Sweden
Denmark
VimpelCom Ltd.
Russia
Ukraine
Kazakhstan
Central and Georgia
Eastern Europe Asia
Uzbekistan
Tajikistan
Hungary Thailand
Armenia
Serbia Kyrgyzstan
Malaysia
Cambodia
Montenegro Vietnam
Bangladesh
Telenor Group holds 39.6% of the economic
ownership in VimpelCom Ltd.
Pakistan
India

5. Mobile customer yearly growth 2002 - 2009
174
164
143
115
83
53
31
22
2002 2003 2004 2005 2006 2007 2008 2009

6. Industry changes will create continued
opportunities for growth
Our industry has changed…
• From monopoly to market competition
• From national to global players
• From telecom to data technology
• High growth
Yesterday Today Tomorrow
…and the change will continue
at high speed
• Growth flattening
• Increased competition
• Continued technological development with
explosion in mobile data traffic
• Stronger focus on partnerships and the enabler role
• Software based services
• Customer power will grow
• Communities and social networks

7. Growth is driven by technology shifts, innovative
services and changing customer behavior
Evolution in site capacity from GSM to LTE Five-year evolution in device prices
- downlink, sum of voice and data
Total capacity per site (Mbps)
96 Internet/
Voice-only Feature phones
smartphones
45
28
SE w595 Nokia N97 iPhone
9 Nokia 1112 Nokia 6300
1 4,5
Plain GSM GSM/EDGE 3G Rel.99 Turbo-3G LTE 1800 LTE 2600 50% 30% 20%
Year 1995 Year 2010 (15MHz) (HSPA) (10 MHz) (20 MHz)
(10 MHz) (10 MHz) (15MHz)
Changes in customer behavior: Social networks and the
New services way young people communicate
-

8. New competitive dynamics and
interdependencies
Device User experience
Online Content
Operating User Communi- Services Market
Hardware
System Interface cation Device Apps
apps market
Example: Apple App store
Device
vendors Core competence Recent moves
Example: Google Android
Internet Recent Core
companies moves competence
Example: Orange App shop
Mobile Recent
Core competence
operators moves

9. Google: Mobile first
• Most important segment for
internet companies in the
future
Three important trends
1. Improvements of hardware in
mobile devices
2. Increased number of
connections between services
Eric Schmidt – CEO Google
February 2010 3. New services in the cloud

10. Changing mobile industry
– usefulness and user experience important
• Major players lead the way
• Mobile applications important
• Large memory, high quality screens, music, camera, 3G, WiFi, GPS …

11. Innovation is key to our future
We innovate in services that will change the shape of communication
and our business - and we do this in close cooperation with our
customers and partners in an open landscape of research and
exploration

12. Innovation across three horizons
- balance between shorter and longer term initiatives
Horizon 3
Uncertainty
Horizon 2 Create options
for future
Horizon 1 business
Develop new
business
Expand and
defend core
business
Time horizon

13. Customer driven innovation
‒ Customer and brand
experience
‒ Based on the daily need of
people and business
‒ Co-creation and open
innovation processes with
customers

14. Mature markets ….

15. Emerging markets ….

16. Mobile consumer behaviour segmentation model
May overlap
Source: Forrester Research

17. Network effects
When the customers value from a
product depends on who else has
adopted the product we speak of a
network effect
M. Katz and C. Shapiro, AER, 1985

18. Spreading of new services (Norway)
MySpace
Facebook
Twitter

19. Social networks go mobile
• Facebook and Twitter dominate
• Comprehensive service
innovation for social networking
on mobile phones
• More than 200 mobile operators
in 60 countries offer mobile
Facebook solutions*
• There are more than 150 million
active users currently accessing
Facebook through their mobile
devices*
• People that use Facebook on
their mobile devices are twice as
active on Facebook than non-
mobile users*
* Facebook 2010

20. Telenor research shows that you want what
your friends want
• Understand social
influences on service
adoption
• Better user experience
• Better service offering

21. Creating value through service innovation
Access to the Internet
The mobile broadband opportunity
• Consumers will gradually embrace the mobile Internet,
with large country differences
• Access to the Internet will contribute significantly to
productivity, FDI, GDP growth, job creation and
government revenues
Internet users (% of population)
South Korea 96.8%
Norway 85.7%
North America 73.9%
Europe 50.1%
World average 24.7%
Asia 18.5%
India 7%
-

22. Access to the Internet
It’s about access anywhere, anytime

23. Access to the Internet
A broad range of social benefits
Increasing Internet use has
extensive social benefits:
• Education
• Healthcare
• Access to government services
• Rural development
Source: The Boston Consulting Group

24. Creating value through service innovation
Open innovation
Innovation with partners
• Opening up fixed and mobile networks through
significant investments
• Opening up the value chain
• Partnering spanning from enabling new applications to
close cooperation on innovations

25. Open Innovation
Service enablement

26. Open innovation
Location based services
TV2 Skattelisten Darkslide.
Shows register of Shows all public
taxplayers based Flickr pictures at
on your location a given location

27. Open innovation
Augmented reality
Theodolite Peaks
London Tube Wikitude

28. Creating value through service innovation
Financial services
The financial services opportunity
• Telecom and banks/card companies are increasingly
teaming up to create new services
• Serving the unbanked - low and variable cost structure
through telecom distribution
• Telenor has positioned itself to launch innovative
services with high impact in one of the most untapped
markets in the developing world
Example: Pakistan
• Telenor Pakistan purchased 51% of Tameer bank, a
microfinance bank, in 2008
• Enabling Telenor Pakistan to offer branchless banking

29. Financial services
Services based on mobile handsets
Share Discover
Purchase Read

30. Creating value through service innovation
Internet of Things
The IoT opportunity
• Internet of Things a potentially significant market
• Telenor becomes a vital part of the customers’ own
product offering
Example:
• Global M2M connectivity provider with dedicated
organization, product and services - supporting national
OpCo value chains
• Separate entity with global focus established in 2008

31. Internet of Things

32. Internet of Things
ICT in healthcare
• Healthcare systems
• Medical sensors
• Automatic warning aid
• Smart house
• Robots
• Tracking technologies

33. Internet of Things
Telenor Home Monitoring Trial
• Identify drivers and inhibitors
• Identify organizational effects
and potential for cost
reductions
• Evaluate the system’s impact
on the client’s and close
relatives’ well being
• Identify aspects crucial to user
accept and adoption

34. Further research challenges
- who will take part?
• Understanding the markets,
customers and brand positions to
deliver excellent customer
experience
• Open innovation in the new
converged landscape – service
innovation
• Internet of Things – platforms,
ecosystems and business models
• ICT in healthcare – services,
platforms and cost benefit
• Mobile payment - how to make
payment more convenient and
secure
• SFI/NFR application together with
NHH and several large partners:
– Center for Service Innovation - CSI

35. Growth comes from
truly understanding the needs of people
to drive relevant change