Multi-play bundling: building successful offerings

Transcription

1 Multi-play bundling: building successful offerings European Summit 2013: Enabling innovation, driving profitability Multi-play bundling: building successful offerings 10 October 2013 Martin Scott and Cesar Bachelet EVENT PARTNER:

2 Multi-play bundling: building successful offerings 2 Introduction Operator case studies Key take-away points

3 Multi-play bundling: building successful offerings 3 Why we are talking about this... Retention Upsell New customers

4 Percentage of FBB connections Percentage of FBBhouseholds Multi-play bundling: building successful offerings The UK has, and will have, strong triple-play take-up, but France continues to lead in Europe Penetration of bundles that include both pay-tv and fixed voice services, European countries, % 50% 25% 0% Penetration of bundles that include mobile voice, European countries, % 70% 60% 50% 40% 30% 20% 10% 0% 4 France Italy UK Poland Germany Spain Czech Republic Romania France Italy UK Poland Germany Spain Czech Republic Romania

5 Multi-play bundling: building successful offerings 5 Introduction Operator case studies Key take-away points

6 (EUR33.90) (EUR39.90) (PLN49.00) (PLN49.90) (PLN128.00) (EUR79.99) (PLN PLN39.90) Multi-play bundling: building successful offerings Orange has taken very different approaches for its Open propositions in France and Poland Orange France Open propositions Orange Poland Open propositions 6 Open Mini (EUR36.99 for 12-month SIM-only) Open Jet 4G/H+ Fibre (EUR94.99 for 24-month contract) Open double-play (PLN83.90) Open quintuple-play (PLN207.80) 1 hour of calls + 50MB data channels F2F to >100 countries 20Mbps Deezer Unlimited domestic + M2F to >100 countries + 5 GB data channels + DVR F2F to >100 countries + F2F domestic calls to 100 countries F2M 20Mb fixed broadband 200Mbps 200 minutes domestic + 500MB data + F2F to Poland and selected countries Additional shared data 500 minutes domestic + 1 GB data + 84 channels F2F calls to Poland and selected countries 10Mbps

7 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Market share of post-paid mobile customers bundle subscribers (million) Multi-play bundling: building successful offerings 7 Take-up of Open has grown rapidly in France Orange France Open subscribers, Sep-10 to Jun-13 25% 5 20% 15% 10% 5% 0% Subscribers Mobile market share

8 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 H1/10 H2/10 H1/11 H2/11 H1/12 H2/12 H1/13 Q-on-q percentage point change EUR (billion) EBITDA margin (%) Multi-play bundling: building successful offerings Orange s Open bundles minimised subscriber defection to Free, but has contributed to minor margin erosion 8 Evolution of Orange France market share, Sep-10 to Jun-13 Orange France revenue and EBITDA margin, H1/11 to H1/ Open launch Free launch % 40% 35% 30% 25% 20% 15% 10% 5% 0% Mobile market share Fixed broadband market share Revenue EBITDA margin

9 Market share of postpaid mobile customers Open subscribers (thousand) Multi-play bundling: building successful offerings But the take-up of Open has been much lower in Poland so far Orange Poland Open subscribers, Dec-12 to Jun % 1.5% 1.0% 0.5% % Dec-12 Mar-13 Jun-13 Subscribers Mobile market share 0

10 H1/11 H2/11 H1/12 H2/12 H1/13 Q-on-q percentage point change Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 EUR (billion) EBITDA margin (%) Multi-play bundling: building successful offerings Open is beginning to stem loss of market share for Orange Poland Evolution of Orange Poland market share, Mar-12 to Jun Orange Poland revenue and EBITDA margin, H to H % 35% 30% 25% 20% 15% 10% 5% 0% 10 Mobile market share Fixed broadband market share Revenue EBITDA margin

11 Multi-play bundling: building successful offerings 11 Free Mobile offers two very simple tariffs Free Mobile tariffs 2H + SMS illimités EUR2.00 per month (free to Freebox subscribers) Illimité EUR19.99 per month (EUR15.99 to Freebox subscribers) 3GB mobile data 2 hours of F2M calls in France / F2F calls to France and 41 other countries + unlimited SMS Unlimited F2M calls in France / F2F calls to France and 41 other countries + unlimited SMS

12 Subscribers (million) Market share Multi-play bundling: building successful offerings Free gained more than a 10% share of French mobile subscribers within 18 months 12 Free mobile and fixed broadband subscribers, Dec-11 to Jun % 20% 15% 10% 5% 0% Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Free Mobile subscribers Free fixed broadband subscribers Free mobile market share Free fixed broadband market share

13 H1/11 H2/11 H1/12 H2/12 H1/13 Quarternly net additions (thousand) Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 EUR (billion) EBITDA margin (%) Multi-play bundling: building successful offerings The launch of Free Mobile had a halo effect on its fixed business Fixed broadband net additions in France, Sep-11 to Jun-13 Free (Iliad) revenue and EBITDA margin, H to H Mobile launch % 40% 35% 30% 25% 20% 15% 10% 5% 0% Orange SFR Others Free Numericable Revenue EBITDA margin

14 Multi-play bundling: building successful offerings Consumers can tailor their Movistar Fusión bundle with a range of optional extras Movistar Fusión bundles Movistar Fusión Mini 4G (EUR42.23) Movistar Fusión Fibra Máxima (EUR72.48) (Optional extras) domestic minutes + 100MB data + Domestic F2F 10Mbps Unlimited domestic + 1GB data + 10 channels Domestic F2F calls minutes off-peak F2M calls / 50 minute peak domestic F2M calls 100Mbps Additional shared data Additional mobile lines Spotify TV channels

15 Market share of postpaid mobile customers Movistar Fusión subscribers (million) Multi-play bundling: building successful offerings The penetration of Movistar Fusión bundles is increasing steadily Movistar Fusión subscribers, Dec-12 to Jun % 14% 12% 10% 8% 6% 4% 2% 0% Dec-12 Mar-13 Jun-13 Subscribers Mobile market share

16 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Q-in-q percentage point change EUR (billion) OIBDA margin (%) Multi-play bundling: building successful offerings Movistar Fusión bundles have had a positive impact on Telefónica s profitability 16 Evolution of Telefónica Spain market share, Mar- 12 to Jun-13 Telefónica Spain revenue and OIBDA margin, Mar-12 to Jun Fusion launch % 50% 40% 30% 20% 10% 0% Mobile market share Fixed broadband market share Revenue OIBDA margin

17 Multi-play bundling: building successful offerings Value-added services link the various components of PT s M4O bundle more closely than a typical bundle 17 PT s M4O bundles Fixed voice Fixed broadband (DSL or fibre) Music Box MEO GO! MEO Cloud TV (IPTV or satellite) Mobile

18 Market share of post-paid mobile customers M4O subscribers (million) Multi-play bundling: building successful offerings 18 The launch of quad-play has been a success for PT M4O subscribers, May-13 to Aug-13 40% 35% 30% 25% 20% 15% 10% 5% % May-13 Aug Subscribers Mobile market share

19 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Percentage point change EUR (billion) EBITDA margin (%) Multi-play bundling: building successful offerings 19 M4O is having a positive effect for PT within a short time Evolution of PT s market share, Mar-12 to Jun-13 PT revenue and EBITDA margin, Mar-12 to Jun M4O launch % 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Mobile subscribers Fixed broadband subscribers Revenue EBITDA margin

20 Multi-play bundling: building successful offerings ZON Iris Fibra bundles offer subscribers a high-end user experience at a low incremental cost ZON Iris Fibra user interface 20

21 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Iris Fibra subscribers (thousand) Percentage of subscribers Multi-play bundling: building successful offerings 21 High-end Iris Fibra bundles now represent over 40% of ZON s triple-play base ZON Iris Fibra subscribers, May-13 to Aug % % 40% 35% 30% 25% Subscribers Penetration of cable base % 15% 10% 5% Penetration of fixed broadband base Penetration of triple-play base 0 0%

22 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Q-on-q percentage point change EUR per month EBITDA margin (%) Multi-play bundling: building successful offerings Iris Fibra bundles have helped ZON to mitigate its pay-tv subscriber losses while boosting profitability 22 Evolution of ZON market share, Sep-10 to Jun-13 ZON monthly ARPU and EBITDA margin Iris launch % 40% % 30% 25% 20% 15% 10% 5% 0 0% Fixed broadband market share ZON cable market share ZON pay TV market share ARPU EBITDA margin

23 Multi-play bundling: building successful offerings Some operators are taking a fresh approach to TV and how consumers perceive a bundle BSkyB s Awesome Foursome campaign Virgin Media Collections bundles Canadian telco Telus bundles BSkyB s Awesome Foursome campaign 23

24 Multi-play bundling: building successful offerings 24 HKT capitalises on its connectivity to offer a range of Smart Living solutions HKT Smart Living solutions Connectivity Services Devices Home network service to create a customised network Home theatre and entertainment Home automation (lighting, curtains and temperature control) HKT launched Smart Living in September Smart TVs Audio equipment Home monitoring IP cameras Home automation controls It offers a range of DIY and customised digital home solutions. A standard AV management package costs HKD (EUR1895), which is the same price as its standard home automation package. The solutions are showcased in its flagship store in Mongkok.

25 Multi-play bundling: building successful offerings 25 Introduction Operator case studies Key take-away points

26 Multi-play bundling: building successful offerings 26 Recap of the operators that we ve covered Orange Open in France and Poland pre-emptive curated bundles and then a quick-responder strategy appear to have worked well in France. The more-flexible approach in Poland does not seem to have gained significant traction yet but the flexibility is attractive to consumers. Iliad ( Free ) in France counterbalancing a competitive (and disruptive) mobile bundle with high-margin fixed bundles has been a winning combination for Iliad but it depended on falling MTRs and high mobile tariffs to begin with. Telefónica (Movistar) in Spain curated bundles appear to have allayed fixed subscriber erosion to some extent and margin looks healthy. Portugal Telecom s M4O the high-end quad-play strategy has had a strong start despite some initial PR wobbles. The next-generation bundling approach has helped customers engage with the price tag. BSkyB in the UK, and others consumers perceptions of services and hirepurchased/rented devices may sit on a continuous spectrum. Devices are core part of the bundle. HKT in Hong Kong not directly translatable to Western markets at this price point, but shows what can be offered.

27 Multi-play bundling: building successful offerings 27 Key messages Bundling is a trade-off between retention and profitability. The take-up of multi-play bundles is strongly dependent on country-specific conditions and individual operators strategies Operators (particularly incumbents) should consider pursuing a next-generation bundling strategy as an alternative to discount-based bundling. A few questions for discussion What are some of the key service adjustments that operators can make to improve value and offer next-generation bundles? Which are the other key operators that lead the bundling space and that we haven t yet discussed today? Build-your-own, or prescribed bundles which approach is more effective for your customers?

28 Multi-play bundling: building successful offerings 28 Contact details Cesar Bachelet Senior Analyst Martin Scott Principal Analyst Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Paris Tel: +33 (0) Fax: +33 (0) Johannesburg Tel: Fax: Singapore Tel: Fax: