Portugals Telecom Market an overview

1
Portugals Telecom Market an overview

• Presentation June 1st, 2005
• Carlos Almeida Fernandes
• Senior Business Adviser
• Innovation Norway - Lisbon

2
Portugal

• The country and key figures

3
The Country
Area 92 152km2 Population 10,4 million (2002)
Active Pop. 5,4 million (2002)
Capital Lisbon Language Portuguese Currency E
uro GDP 129 336 million EUR (2002) GDP per capi
ta 13 677 EUR (2003) GDP growth rate 1,5 (2004
)e Inflation 2,5 (2004) Unemployment 6,5 (20
04)
4
Portugal in Figures
5
The ICT Sector

• Overview

6
ICT in Portugal

• The ICT sector in Portugal counts on over 7,600
  companies, from highly-innovative manufacturers
  to niche market software development houses
  working on embryonic solutions. The sector is
  currently employing in Portugal more than 100.000
  people.
• The country has proved a perfect testing ground
  for new technologies, from interactive television
  to 3G mobile applications, since the relatively
  small market is quick to assimilate novelties
• Portugal has also contributed with its share of
  innovation, such as the sophisticated single
  network of ATM machines that covers the country,
  universally integrated, with services such as
  utilities bill payment, mobile phone top up,
  concert, events and train tickets are also bought
  via the Multibanco.

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ICT in Portugal

• The Portuguese have embraced new technology and
  have Internet and mobile phone penetration rates
  significantly above European Union (EU) averages.
  
• Portugal Telecom is the leading operator in all
  market segments, including mobile and cable TV
  sectors, and its position was strengthened when
  it acquired the national network from the
  government in 2002.
• The national electricity companys Oni is the
  leading alternative operator, followed by Novis,
  which is owned by Portugals largest economic
  group, the Sonae Group.

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Why Portugal?

• Creating a dynamic workforce, with excellent
  skills, has been a priority in the past few
  years. Currently 390 000 students are enrolled in
  higher education institutions. Engineering skills
  and technical expertise are readily available.
• Being innovation a pillar of a knowledge-based
  society, Portugal is moving ahead towards the
  creation of a dynamic chain of ICT RD centres,
  characterised by a young, high-skilled and
  enthusiastic researcher workforce.
• RD in ICT is mainly driven by foreign direct
  investment, essentially through partnerships with
  internationally recognised centres of excellence.
  Multinationals running important Portuguese RD
  or design centres include Alcatel, Siemens and
  Vodafone.

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ICT spending

• Portugal spent 1,9 of GDP in Information
  Technologies (1,1 below EU15 average) and 4,4
  of GDP in Telecom Technologies (1,2 above EU15
  average)

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Telecom Market Revenue
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Market Trends

• The market is continuously launching enhanced
  services whilst new services have been surpassing
  expectations. Companies are working hard on
  deployment of next-generation services content
  development in order to strengthen their business
  capabilities, as proved by previous breakthroughs
  such as the worlds first pre-paid product for
  the mobile market or the the first rollout of
  digital interactive TV services, including
  digital video recording functionality, for
  interactive TV consumers.
• Market differentiation has been based on price
  competitiveness, innovation and quality, in
  addition to the development customer care
  structures.

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Internet Data

• Usage, penetration, applications

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Internet Users
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Internet Data

• At the end of the quarter, ADSL accounted for
  approximately 40 of all broadband customers.
  
• The internet access service penetration rate in
  the 1st quarter of 2004 reached 75.7, or 6.2
  more than the figure observed at the end of 2003.
  Note that the rate is calculated based on total
  service customers, regardless of the access type
  used
• The broadband internet access modes together had
  a penetration rate of about 6,3
  
• In the 2nd quarter of 2004, ADSL connections had
  a growth of 26, while cable connections grew
  7,9
  
• 27 of the people say that the high price is the
  main barrier for having broadband

Source Anacom
15
Internet Data company use
Source IDC
16
Broadband subscribers
OECD Broadband subscribers per 100 inhabitants,
by technology, December 2004
OECD average
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(No Transcript)
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Country Broadband Coverage
50 of population more than 70 coverage
20 of population less than 70 coverage
18 of population less than 10 coverage
12 of population less than 10 coverage
Portugal Telecom plans to have the whole
territory with broadband coverage by the end of
2005
Source UMIC
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Action Plan eEurope 2005

• In tune with the Action Plan eEurope 2005, the
  Government approved
  
• Action Plan for the Information Society, where
  the massification of broadband was identified as
  a national priority
  
• National Broadband Initiative, that is
  structured in 5 axles, which will be developed by
  a set of initiatives and key-projects.
  

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Wireless Broadband

• In 1999, 11 licences for Local Multipoint
  Distribution Services (LMDS) services in the WLL
  were issued. These services are also known as
  Fixed Wireless Access (FWA) services. Three
  frequency bands were made available for voice
  telephony and low-speed Internet connections
  3600-3800MHz. The 24.5-26.5GHz band was set aside
  for multimedia services. Six slots in the
  27.5-29.5GHz bands were also set aside for two
  licences, with priority given to TV signal
  transmission.
• The regulator reports that no licensee has fully
  met their roll out obligations but it has not
  revoked any licences. Altogether, FWA connections
  are used by less than 1 of the population. In
  August 2004, the Regulator submitted to the
  government a framework proposal for FWA
  including
• the reformulation of the FWA licensing model,
  ensuring to all operators the continuity in the
  use of the frequency bands allocated as long as
  they are effectively being used
• considering the possibility of allocating new
  use rights to the companies that apply to it,
  with a defined geographic basis
  
• applying the principle of equal treatment
  between PTC and the other operators
  
• reformulating the radio rates system.

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Mobile Services

• The mobile market

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Mobile Services

• Portugals market was one of the fastest growing
  in Europe with mobile penetration having
  surpassed fixed-line penetration in late 1999
  
• With a penetration close to 100 it remains well
  above the EU average of 84,5
  
• Prepaid cards were introduced in Portugal before
  anywhere else in the world and continue to
  account most subscriptions 
  
• During 2003 the use of SMS reached approx. 2,3
  billion SMS sent. The monthly average of SMS sent
  per user was 21,6 in 2003. WAP and GPRS services
  were not very successful
• Mobile connections rose by 3 in 2004
• Service revenue grew to 3,3 billion Euros in
  2004
  
• By the end of 2009 it is expected to top 4
  billion Euros
  
• Mobile Number Portability was introduced in
  January 2002. Some 17,948 mobile numbers were
  ported by October 2003. All operators agree on
  the fact that number portability in Portugal is
  satisfactory from a technical point of view.
  However, entrants still complain that
  administrative charges for porting are
  excessive.
•  

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A 95 penetration rate
Penetration rate in EU25
Source
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Mobile subscribers per operator
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SMS and WAP services
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UMTS Services

• UMTS services were officially launched in the
  first half of 2004 by Vodafone in January, TMN
  in April and Optimus in June. Portugal is one of
  the few countries where all the operators decided
  to launch 3G services approx. at the same time.
  Oniway, the operator owned by Oni (65) and
  Telenor (20), the only 3G new entrant, left the
  market in 2002.
• The three operators have invested around 500
  million Euro in this technology so far
  
• There are no consensual figures regarding number
  of UMTS users, but the operators estimate that by
  the end of 2005, 10 of their clients will be 3G
  users.
• Main barrier to more users is still the high
  costs of handsets and services
  
• Operators have now launched handsets at a
  minimum of 179 Euros, and are offering videocall
  services until end June
  
• The main challenges in this market will be to
  develop and introduce new contents, capable of
  grabbing new users, more innovative services and
  applications, and security-related features.

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UMTS Subscribers
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VoIP on wireless networks

• The main requests from users are quality of
  service (QoS), easy to use and low cost
  
• QoS is dependent of the capacity of the
  bandwidth mobile network technology is not yet
  fully prepared for a good use of voice over IP
  this will change with the evolution of the 3G
  technology HSDPA High Speed Downlink Packet
  Access and HSUPA High Speed Uplink Packet
  Access these upgrades will not be available
  before 2007
• WiFi technology has a coverage limit this
  doesnt happen with the TDD-CDMA and WiMAX
  technologies, used by some operators
  
• With WiFi there is a reduction in cost by using
  VoIP however, WiFi or dual mode phones are
  expensive
  
• It is still not very easy and practical to use
  (download specific software, install, start
  Internet session, and initiate call..)
  
• WiFi networks are not very used due to the
  problems and difficulty in connecting, resulting
  from the lack of roaming agreements between the
  operators

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• Main Opportunities and Challenges
• Where can Norwegian Companies be Successful?

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Main Opportunities

• UMTS market needs a push new and innovative
  contents, applications able to grab new users
  solutions able to lower cost of services
  partnerships and service relations with
  operators
• WiFi and VoIP on wireless increase QoS more
  benefits for actual costs applications easy to
  use technology transfer to develop 3G networks
  
• Areas needing further development DTT High
  Debit ADSL (max today is 8 Mb/s WiFi networks
  (are still limited) WiMAX, VoIP and home
  gateways.

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Innovation Norway-Lisbon

• The Office Team and Projects

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Innovation Norway
Innovation Norway promotes nationwide industrial
development profitable to both business economy
and Norways national economy, and helps release
the potential of different regions by
contributing towards innovation,
internationalisation and promotion.
We give local ideas global opportunities
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Innovation Norway-Lisbon
Rita Martins Commercial Manager (1990)
Carlos Almeida Fernandes Senior Market
Adviser (1999)

Good network of contacts at business and
Governmental levels.

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Some references
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ICT some success cases

• Telenor Market studies and assistance in
  selecting partner for UMTS
  
• Telelink Establishment of company in Portugal
  and contracts with Operators
  
• Port IT Assistance in tender with National
  Telecom Authority and contracts with Operators
  manages NP platform
  
• TTYL Market studies and contacts with local
  companies
  
• Conax Market info and contacts with local
  companies
  
• Stepstone Market study and establishment

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Some issues to be taken into account

• Doing business in Portugal a cultural approach

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Key Characteristics and Advice

• Uniform country no major cultural differences
• Confidence is a key word. Business will not
  happen until confidence is established.
  
• English is widely spoken and well accepted for
  business
  
• Bureaucracy still very present, also in larger
  companies.
  
• Often conclusions are made over lunch, or
  dinner
  
• Much improvisation. Less preparation than in
  Northern countries

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Key Characteristics and Advice, ctd

• Be patient and long term. Decisions take time.
• Social contact is very important. Invest your
  time.
  
• To arrive late is considered normal.
• To have a local partner is very important in
  many sectors.
  
• Formalities. Dress well
• Make breaks at the table that allow you to
  socialise. This shows respect for the Portuguese
  culture, and also provides the opportunity for
  positive feedback and deals.
• Communicate clearly, written conclusions are a
  basis for follow up and next step. Allow for
  repeated visits. Follow up is vital
  

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Thank you for your attention!

• Contacts
• Innovation Norway Tel [phone]
• Av. Dom Vasco da Gama, 1 Fax [phone]
• 1400-127 Lisboa Mail lisbon.trade_at_invanor.no
• carlos.fernandes_at_invanor.no