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Telecom for beginners 2007

Telecom for beginners 2007

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Published by Clueless78
Investor's guide to understand telco stocks and underlying company statistics
Investor's guide to understand telco stocks and underlying company statistics

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Published by: Clueless78 on Aug 13, 2008
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Europe
Telecommunications

6 December 2006

Industry and technology
primer

Guy Peddy

Research Analyst
(44) 20 754 58490
guy.peddy@db.com

Matthew Bloxham, CFA

Research Analyst
(44) 20 754 58163
matthew.bloxham@db.com

Gareth Jenkins

Research Analyst
(44) 20 754 75849
gareth.jenkins@db.com

A real mixed bag: confusing simplicity!

The telecom sector can appear confusing: the stakeholders are many and often
have contradictory objectives. Balancing government/political designs, huge
employee numbers, an increasing competition without limiting investment in an
environment of technological evolution and substitution, can appear
overwhelming. However, fundamentally the drivers of telecom business models
are simple: penetration, customers and ARPU whilst balancing investment levels.

Deutsche Bank AG/London

All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from
local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Investors should consider this report as only a single factor in making their investment decision.

Independent, third-party research (IR) on certain companies covered by DBSI's research is available to customers of
DBSI in the United States at no cost. Customers can access this IR at http://gm.db.com, or call 1-877-208-6300 to
request that a copy of the IR be sent to them.

DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1

Telecom for beginners 2007 Primer

Pan-European Telecoms Team

Guy Peddy

guy.peddy@db.com

+44 20 754 58490
Carola Bardelli

carola.bardelli@db.com

+39 0286379-708
Matthew Bloxham

matthew.bloxham@db.com

+44 20 754 58163
Gareth Jenkins

gareth.jenkins@db.com

+44 20 754 75849
Vivek Khanna

vivek.khanna@db.com

+44 20 754 72905

Sales Contact

Audrey Wiggin

audrey.wiggin@db.com

+44 20 754 50707
Jonathan Smith

jonathan-d.smith@db.com

+44 20 754 74383

Com

pany

Research

Industry Focus

Second edition: Revised and updated for 2007 and beyond

This is the second edition of our Telecom for Beginners report, first published in
January 2004. This comprehensive report aims to show how the telecom sector
has developed over time. We focus on the influences on returns, and we examine
some of the key issues for the future and we have consciously avoided drawing
any company specific conclusions.

Structured into discreet parts: Environmental/Technological/Reference

There are three distinct sections to this report. In section 1 we examine the
telecom business model, highlighting the relationship between penetration, ARPU
and revenue, explain the history of telecoms over the past three decades and how
the sector had ended up where it is, and assessed the wider telecoms
environment showing how operators, equipment manufacturers and content
providers interrelate. We study the evolution of the regulatory model, probably the
single most important driver of pricing and competition industry, and finally we put
telecoms into a wider industry context with some macro comparisons. We have,
where relevant, attempted to use standard business analysis tools (such as the
BCG matrix and Porters’ 5 forces) to highlight themes.

In section 2 we look at some of the key technologies in the industry, starting with
a basic explanation of the electro-magnetic wave (i.e. the signal), followed by an
assessment of voice technologies (switching, PTSN and VoIP), mobile
technologies 1G to 3G, HSDPA and Bluetooth) and broadband technologies DSL,
fibre, WIMAX/WiFi and satellite). We also review trends in convergence (TV, IPTV,
mobile TV, gaming and music).

Finally, in section 3 we summarise basic statistical facts about each European
country and a basic SWOT analysis of the industry. We also include those
databases that are often forgotten: licence payments and types, European
telecom IPOs, key events for large capitalized operators over the past few years, a
breakdown of government ownership and a list of recent M&A transactions and
finally we end the note with an ever-expanding glossary.

Something for everyone

This primer is aimed at everyone - those that have been involved in the sector for
years and those who are new, and to generalists who like to occasionally dip in
and out of the sector. It has been fun to write, but is by no means exhaustive, and
we are always open to suggestions on how we improve it going forwards.

6 December 2006 Telecommunications Telecom for beginners 2007

Deutsche Bank AG/London

Page 3

Table of Contents

Section 1: Environmental..................................................................5

The telecoms business model..........................................................6

History of European telecoms........................................................31

The telecoms environment.............................................................47

Regulation........................................................................................57

Telecoms in a macro context..........................................................77

Section 2: Technological.................................................................82

Basics of Electronic Communication.............................................83

Technology: Traditional voice........................................................86

Technology: Mobility.......................................................................93

Technology: Bandwidth................................................................105

Technology: Convergence............................................................116

Section 3: Reference......................................................................129

Country: Austria.............................................................................130

Country: Belgium...........................................................................131

Country: Denmark.........................................................................132

Country: Finland............................................................................133

Country: France.............................................................................134

Country: Germany.........................................................................135

Country: Greece.............................................................................136

Country: Ireland.............................................................................137

Country: Italy.................................................................................138

Country: Japan...............................................................................139

Country: Netherlands....................................................................140

Country: Norway...........................................................................141

Country: Portugal..........................................................................142

Country: Spain...............................................................................143

Country: Sweden...........................................................................144

Country: Switzerland....................................................................145

Country: US....................................................................................146

Country: United Kingdom.............................................................147

6 December 2006 Telecommunications Telecom for beginners 2007

Page 4

Deutsche Bank AG/London

Appendix A: European telecoms SWOT......................................148

Appendix B: European UMTS licenses........................................149

Appendix C: AWS auctions...........................................................152

Appendix D: License lives.............................................................162

Appendix E: European IPOs..........................................................166

Appendix F: European operator key dates..................................168

Appendix G: Government ownership..........................................183

Appendix H: European M&A.........................................................184

Glossary..........................................................................................186

6 December 2006 Telecommunications Telecom for beginners 2007

Deutsche Bank AG/London

Page 5

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