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8/8/2019 Presentacion Pallete En

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An overview of the Lat in American Telecom Market

Telefnica LatinoamricaJos Mara lvarez-PalleteCEO & Chairman Telefnica Latinoamrica


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Lat in America: a growth opportunity

Trends in t he Telecom sector: the race for

transformation

Final remarks

1.

2.

3.


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Real GDP per capita (1980 = 1)

OECD Latin America & Caribbean

Past global economic and financial crises havecurtailed Latin Americas growth prospects

Source : Javier Santiso, OCDE : Latin America, a key driver for UK and Spain Feb 2010

For two decades, Latam and theOECD grew at the same pace

Global recession in the beginning ofthe 80s had a strong long lasting

effect in Latam

After manyyears of poor

growth, in2002 the

futureappeared

gloomy forLatin America

In 1983 most of Latin America fell into a perverse dynamic of poor growth

Real GDP per Capita (1980=1)


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Real GDP per capita (1980 = 1)

OECD Latin America & Caribbean

But since 2002, Latin America has shown higher growtrates than most OCDE countries

Source : Javier Santiso, OCDE : Latin America, a key driver for UK and Spain Feb 2010(1) GDP per capita PPP 2002 2009 FMI Developed Countries vs Western Hemisphere (Latin America Carribean) (2) Source IMF Western Hemisphere Population 2002 2009

Latin America escaped the trap, and went back to a sustainable high-growthpath

Real GDP per Capita (1980=1)

+27% 1

+39% 1

In the period from 2002until 2009, Latin Americaspopulation grew in almost50 mill ion people 2 and itsGDP per capita grew39% 1


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Likewise, Latin America is recovering faster than advanceconomies from the recent world financial crisis

Less dependence of the US

Improvement of solvency rates

Fiscal & current accountssurplusBetter financial stance than

other emerging economies

Indicators already showposit ive trends

Currency Rates

Country Risk

Capital Inflows

>70% Latam GDP Investment Grade 1

(1) Standard & Poors Rating: Long Term Debt in Foreign Currency(2) Source: IMF

Brazilian jobs figurespoint to swift recoverySeptember, 17, 2009

Brazil last month recorded the biggestmonthly jump in new jobs providingfurther evidence that it isemergingfrom a short recession and mayreturn t o growt h as early asnext year.Figures from the employment ministryshowed a net 242,126 formal jobs werecreated in August .

GDP Growth (% , Constant Prices) (2)


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The region is also building a solid social structure

Since 2002, more than 50 million people in Latin America havelifted themselves out of povert y

PopulationMillions

Dec-10E Dec-50E

729

+ 140 MM

Source: UN

1.- Minimum for the development of the middle class

Economic

growt h gaveway to humandevelopment

>5% GDP growth in the last four years Unemployment reduced from 11% to

7.5% since 2002

During the

crisis, realeconomy hasremainedstrong

Stable unemployment rate

Strength of a growing middle class Better performance of consumption rates

than in previous crises

80% of urban populat ion.5 of t he biggest cit ies in t he

world

28% of populat ion < 14years old

In Brazil, the upper andmiddle income class surpassthe low income in number


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Access to information and communication technologiehas improved dramatically

LatamAverage

100%

25%

Latamaverage

Mobile Penetrat ion ratesAccesses / Pop

Fixed BroadbandAccesses / Household
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transforming Latin America in one of the mostdynamic societies in the internet

55% upload videos andphotos to the web

60% belong to asocial network

73% usemessenger

More than half of allinternet users access

the web every day

179 million internet users in Latam(*)30,5% of population

(*) Fuente: Internet World Statistics 2009

82% usewebmail

Latin America is addicted to the web


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Latin America offers thus a solid base to build thefuture of the telecom industry

The regions growth will be driven bymobile

The fixed line business will evolvetowards BB.


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MBB in particular will grow rapidly throughout theregion, especially in Brazil, Chile and Argentina

(1) Source: AnalysysMason

What is the potential of mobile broadband in

Latinamerica?

Mobile Broadband penetration per head of the population(Caribbean and Latin America 2009-2014 (1)

0%

2%

4%

6%

8%

10%

Brazil Chile Argentina Average Venezuela Colombia Mexico Peru

2009

2014

The MBB penetrationrate will increase from0,9% in 2009 to 5,4% ofthe population in 2014

The MBB market willgenerate almost 5 Billion

in 2014

In 2009, there were 5million MBB connectionsin CALA. By 2014, that

figure will increase to 34million.


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and Telefonica is ready to take the challengeTelefnicas dist inct ive assets in Latin America place us in a privileged posit ion

to take advantage of the opportunit ies that this new scenario will offer

Sept. 2009

25.1 MM Fixed lines

129,3 MM Mobiles7.6 MM Internet

1,7 MM TV

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268 Million accessesworldwide, 164 of which arein Latin America (*)Key integrated operator in theregionMore than40 connectedcountries45.0000 Km of optical fiberand 7 data centers

88 Billion Euros invested inLatam since 1990

Fixed market rankingMobile market ranking

(*) Includes fixed line, FW, internet, mobile, TV and wholesale
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transformation

Final remarks

1.

2.

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Years to reach the first 150 million customers

The growing speed of massif adoption of newtechnologies has determined a new world order

89 yrs 38 yrs 17 yrs 14 yrs 7 yrs 5 yrs

The pace of transformation of the Telecom sector isfaster every day

Fuente: Forbes
http://lifeinthenhs.files.wordpress.com/2009/02/facebook.jpghttp://www.ipodtotal.com/imagenes/noticias2/ipod-classic-mano.jpghttp://members.chello.nl/mlampers/images/IBM%20PC-XT-1.jpghttp://www.elcoloquiodelosperros.net/numero23/spot23.jpghttp://rienzie.com/img/telefonomovil.jpg


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600,000 newusers every day

1day

1minute

1second

10 hours ofnew videosuploaded

50 Million blogsupdated every

second!!!

so fast, we now are talking seconds instead ofyears
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Information technologies have transformed the way wlive, communicate and access services

New devices Social Networks Internet 3.0

New services EBook Cloud computing


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and thus, the fundamentals of our business havechanged dramatically

New bigger moreversatile screensNew mobileterminals

x4 Increase of BB capacityMassif deployment of MBBNew profile of usage: theimportance of uploadcapacity vs download

High speedgrowth ofdata traffic

Zetabytes/Year

+2 Zetabytes

Digital Content2.

4.

All you needavailable fromany device atanytime

Broadband1.

New devices Applicat ions3.


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The mobile industry will be particularly dynamic:internet is shifting the ground rules of the business

Mobile data revenuesUSD billions

40% CAGR2003 Vs2007

Today Telecom operatorscontrol most of t he mobile

data business

Players of the mobile data business

but the ground rules arechanging and we have an

unparallel opportunity togrow


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The challenge for a Telecom operator is to takeadvantage of this new scenario

Open innovat ion is the key t o success

Telefnica haslaunched aunique andintegratedplatform

Application developers,pioneering start-ups and

small softwarecompanies will be able to

offer theirground-breaking applications andservices to more than 160

mill. customers.

RegionalNodes

SDPT-Latam

&Huawei


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because there will be plenty of growth opportunitiesin our sector

M2M markets Telecom operators roles

Automation & monitoring

Automotive

Security

Payments & POs

Transportation & logistics

Healthcare

Providing the connection toremote devices

Managing data transmission

through GSM, GPRS, EDGE andRFID

M2M platform development

Telecom sector analysts forcast more than 250 million M2M lines in 2012.


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and smart grid devices will further broaden thislandscape of opportunities


Smart grid devices rationalize the use ofenergy adjusting it to each customers

consumption patterns and making supplymore reliable. They can help reduce energy

consumption up to 15%

Charging connectivit y

(home and public)Optimization of chargetiming

In-home display with real-

time usage/ pricingstatisticsUsage aware appliancesHome security &automation

Automation of the grid, remotemonitoring and loss reductionReal time outage notificationRemote disconnectionOperational improvements fordistribut ion companies

Consumer Applications1 2 3Grid Applications anddata analyt ics/ management

Electric vehicle

PowerCo


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and smart grid devices will further broaden thislandscape of opportunities


Smart grid devices rationalize the use ofenergy adjusting it to each customers

consumption patterns and making supplymore reliable. They can reduce energy

consumption up to 15%

Charging connectivit y

(home and public)Optimization of chargetiming

In-home display with real-

time usage/ pricingstatisticsUsage aware appliancesHome security &automation

Automation of the grid, remotemonitoring and loss reductionReal time outage notificationRemote disconnectionOperational improvements fordistribut ion companies

Consumer Applications1 2 3Grid Applications anddata analyt ics/ management

Elect ric vehicle

PowerCo

Telecom operatorswill enable the useof M2M devices

providingcommunication

services.


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transformation

Final remarks

1.

2.

3.


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In summary:

Information and communication technologies havedramatically changed theway we live in a very short period of time.

Telecom operators need toquickly t ransform their business st rategies

accordingly to meet growing consumer needs and take full advantage of theopportunities that this new scenario offers.

The mobile business is part icularly dynamic.Mobile broadband will bringabout the next wave of growth.

We expect Lat in Americas telecom industry t o grow fast in the near future :the region is building a solid social structure, is recovering fast from the recentfinancial crisis and has a vigorous society in the internet.

Telefonica is best placed to take full advantage of the next wave of growth ofthe Telecom Industry, specially in Latin America where it has unique assets.


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