BREKO Broadband Study 2015 Key results for European decision-makers - - PowerPoint PPT Presentation

Sources: BREKO network operators across Germany, if not indicated otherwise

BREKO Broadband Study 2015

Key results for European decision-makers

Market survey among BREKO carriers

Regional network operators are driving innovation and investment in Germany

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Market survey 2015

The BREKO member survey is representative for the fixed broadband market in Germany

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BREKO in a nutshell:

• 130 network operators (230 member

companies in total)

• > € 1.5 billion investments each year
• Uniting more than 70% of broadband

network operators in Germany and thus representing the “voice of competition”

• The leading fibre association in Germany
• Building the network: a strong partner for

cities and municipalities

Investment record: Alternative network operators significantly increase their investments once again

4 (Source: BNetzA, BREKO Research)

€ 7.4 bn investments in 2014

€ 3.2 bn € 4.2 bn € bn

2.6 2.4 2.7 3.3 3.3 2.9 2.8 3.0 2.8 2.9 3.2 3.1 3.4 3.8 3.8 3.9 3.2 3.1 3.3 3.6 3.7 4.2 5.7 5.8 6.5 7.1 7.2 6.1 5.9 6.3 6.4 6.6 7.4 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Deutsche Telekom competitors (incl. cable) total

BREKO network operators invest in the future

• f broadband
• Investment rate (turnover):

22 %

• Investment rate (EBITDA):

103 %

• Compared to:

− Deutsche Telekom:

− 14 % (turnover) − 38 % (EBITDA)

− Unitymedia KabelBW:

− 25 % (turnover) − 40 % (EBITDA)

− Vodafone:

− 16 % (turnover) − 53 % (EBITDA)

0.0 0.5 1.0 1.5 2.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 (exp.)

1.5 bn 1.5 bn 1.35 bn 1.55 bn 1.7 bn 1.8 bn 5

€ bn

BREKO members lead in fibre deployment

850 000 households in urban areas 1.6 mn households outside urban areas

• f new NGA* subscriptions
• utside urban areas are

provided by BREKO companies

*Next Generation Access: > 30 Mbps, here even > 50 Mbps

78.5% 39.1% 13.8% 82.3% 48.7% 20.5%

städtisch halbstädtisch ländlich

NGA deployment 2013 – 2014

(Source: TÜV Rheinland)

55 %

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urban semi-urban rural

Status quo FTTB/H deployment in Germany

0.96 mn hh 47 % 0.48 mn hh 24 % 0.6 mn hh 29 % BREKO operators Deutsche Telekom

• thers

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• f FTTB/H deployment by

alternative network operators

(Source: BNetzA, BREKO Research, status: mid-2015) hh = households (homes passed)

Infrastructure objective in Schleswig-Holstein is effective

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Schleswig- Holstein Mecklenburg- Vorpommern* Berlin* Hamburg Bremen* Bavaria Baden- Württemberg*

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2 23 % 14 % 2 %

National average: 4.5 % households reached with FTTB/H (homes passed) *below 1 %

(Source: BREKO Research, Länder Broadband Competence Centres, status: mid-2015)

Bavaria: € 1.5 bn of public funding do not lead to increased FTTB/H deployment

Brandenburg* Lower Saxony Saxony- Anhalt* Hesse* Thuringia* Saxony* Saarland* Rhineland- Palatinate* North Rhine- Westphalia

3 7 % 2 %

2009 2010 2011 2012 2013 2014 2015 expected

Fixed line network “to go”

Data usage: the indicator of the digital economy

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3.6 bn GB 4.6 bn GB 5.5 bn GB 7.0 bn GB 8.8 bn GB 10.9 bn GB

27.0 GB 24.4 GB 21.2 GB 17.0 GB 15.1 GB 12.6 GB

• f mobile internet usage

takes place in WiFi “networks”

(Source: Mobidia 01-12/2014)

• f Germans do not want

to give up fixed line network

(compared to only 65% in 2012 and 80% in 2013) (Source: D21) (Source: BNetzA, BREKO Research)

5.70 % 4.15 % 3.05 % 2.23 % 1.41 %

35.0 GB

12.6 bn GB

290 MB mobile ~ factor 100

Demand for high-bitrate connections increases:

Need for upload speed will multiply by factor 15

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7 24 105 30 80 170 Present 2018 2020 Upload Download

BREKO companies’ expected demand until 2020

grows evermore important in the medium term

• nly satisfied by FTTB/H

networks

Mbps

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• Fibre networks play a key role to preserve and increase

prosperity

97.5 151.5 238.1 31.5 48.4 75.6

50 100 150 200 250

Residential area Mixed area Industrial estate Demand 2013 Demand 2018

Mbps

(Source: MLR Baden-Württemberg)

Broadband needs 2018

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% very important important less important not important

Broadband is the number one location factor

12 Source: IHK Karlsruhe 2014

for 63 % of businesses the desired bandwidth is currently not available at their location (2009: 43 %) for more than 60 % of businesses the availability of fast internet has a significant and decisive impact on the next decision to choose a location Criteria for the choice of location

Competition and diversity put Germany in a good position

especially compared to the United States

• Investment

dominant cable network operators in the United States currently invest roughly 1% of their turnover

• Broadband coverage

comparable high-speed supply in Germany and the United States

• Monopoly structure in the

United States

75% of US households cannot choose their broadband connection

• Prices

EU: € 34 vs USA: $ 70 for a 30-100 Mbps connection

13 (Source: Studie Stiftung neue Verantwortung e.V., 06/2015)

Lessons from the United States: De-Regulation leads to

• less investment
• higher prices
• limited choice and quality of service

Regulation is not a barrier: Deutsche Telekom’s margin is highest in the regulated home market

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EBITDA margin group EBITDA margin Germany EBITDA margin United States EBITDA margin Europe EBITDA margin systems solutions

31.0% 40.5% 25.0% 35.0% 7.3% 29.0% 39.7% 20.0% 33.0% 8.8% 29.0% 39.5% 19.0% 34.0% 9.0%

2012 2013 2014

(Source: Deutsche Telekom Annual Report)

Alternative network operators shoulder about three quarters of the deployment of ultrafast fibre connections Local and regional network operators are driving innovation and investment in Germany BREKO network operators stand ready to further intensify their fibre roll-out

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The BREKO Broadband Study shows: