Patrick LopezVP, NETWORKS INNOVATION

TELEFONICA

CONNECTING THE UNCONNECTED IN LATAM

Internet Para Todos

21countries

346

The need for the industry

to transform

IP

SOURCE: CISCO VNI GLOBAL IP TRAFFIC FORECAST,

2016-2021

0

50

100

150

200

250

300

2016 2017 2018 2019 2020 2021

96

122

151

186

228

278

24%CAGR

2016-2021

EX

AB

YT

ES

PE

R M

ON

THTotal Traffic Growth

0

10

20

30

40

50

60

EX

AB

YT

ES

PE

R M

ON

TH

2016 2017 2018 2019 2020 2021

File Sharing 2% 2% Audio 8% 5% Web/Data/VoIP 30% 14% Video 60% 78%

Total Traffic GrowthMOBILE

SOURCE: CISCO VNI GLOBAL IP TRAFFIC FORECAST,

2016-2021

SOURCE: SOURCE: CISCO VNI MOBILE, 2017

REGIONS

0 10 20 30 40 50 60 70 80 90 100

MIDDLE EAST & AFRICA 96%

71%

66%

64%

52%

44%

ASIA PACIFIC

LATIN AMERICA

CENTRAL & EASTERN

EUROPE

WESTERN EUROPE

NORTH AMERICA

Total Traffic Growth

SOURCE: STRATEGY & RESEARCH AND

ANALYSIS

Telecom Industry DecreaseAVERAGE ARPU COMPOUND ANNUAL CHANGE RATE

0

5

10

15

20

25

30

35

40

45

2006 2011 2016

-1% -2%

-6% -6%

-4% -1%

-4% -4%

-6% -10%

10 YEAR

2006-16

5 YEAR

2011-16

NORTHERN

AMERICA

WESTERN

EUROPE

MIDDLE EAST LATIN AMERICA

ASIA

0

10

20

30

40

50

60

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

161

183198

216229 233 233 236

244 250

SOURCE: GSMA: THE MOBILE ECONOMY, 2017

2.5%CAGR

2014-2020

4.7%CAGR

2008-2014

CapexGLOBAL

MOBILE

$U

S B

N

75%

VIDEO

X2 EVERY 2 YEARS

TRAFFIC

$20/€20s

ARPU

UNLIMITED

VOICE, DATA, MESSAGING

2020 Outlook

How we transform

Reorganize the valuechain

Build a virtualizedand programmable

network

Modular open network fabric

We Need a Change of Paradigm

JOINED

OPENCELLULAR

CONTRIBUTING

ONLIFE

PROGRAMMABLE

EDGE

COMPUTING

PLATFORM

JOINED PEOPLE

AND PROCESS

CO-CHAIR ML

GROUP

JOINED

TIP

BOARD

DEPLOYING

OPEN CELLULAR

IN THE FIELD

CO-CHAIR EDGE

COMPUTING

GROUP

Adapt, Personalize, Uncover New Markets

Voice

Data

Messaging

Video

IoT

VPN

Gaming

Rural

Voice

Data

Messaging

Video

5GDISTINCT EXPERIENCES

NEXT BATTLE

PERSONALIZED SERVICES

2G 3G 4GCOVERAGE AVAILABILITY CAPACITY

FOR GRANTED

VOICE DATA VIDEO

RURAL

MARKET

DILEMMA

Improve our rural intelligence

Assemble innovative networks

Explore innovative commercial models

Test alternative operating models

Our services don’t reach rural costumers

Our operations are not fit for rural

needs

Demand is unclear

Telco tech is not optimized for low

density

PROBLEM APPROACH

POPULATION

DENSITY

DISTRIBUTION

Data Mining: Satellite imagery

Estimation Model: Neural networks to identify and count households

Clustering (DBSCAN) to group households into settlements

Training Sample: Census data to train and iterate the model

INTERNET COVERAGE

BY TECHNOLOGY &

OPERATOR

Data Mining: Geolocate mobile sessions

Estimation Logic: Generate internet coverage polygons by technology as perceived by mobile internet users

Training Sample: Telefonica coverage and infrastructure information + reported regulatory data

INTERNET UNSERVED

POPULATION

DISTRIBUTION

Geolocate population distribution by internet coverage status, by technology (LTE, 3G, Wifi, 2G/Edge)

Improve Rural

IntelligenceMETHODOLOGY SNAPSHOT

Assemble Innovative

Networks1. Commoditized, open and modular radio

nodes for low cost connectivity

2. Open Compute SDN NFV edgecomputing platform

3. People and Process

4. OpenCellular deployments

5. Machine learning and AI

Innovative

Commercial and

Operating ModelsOPERATOR OF MOBILE RURAL

INFRASTRUCTURE

• Leveraging 3rd parties as channels to extend network, operations and sales

• Local market knowledge, operations and relationships

• Nimble, efficient operating model

• Revenue share helps align incentives

We believe there is a large opportunity

to connect the unconnected and underserved

The industry needs to change to address it

We need your help to innovate

If you build it, we will deploy it

Conclusions

(…and buy it)