THE DELTA PERSPECTIVE

Managing COVID-19’s impact on the telecom industry

Delta Partners journal

Issue #4: April 7th – April 13th 2020

CONTEXT AND DISCLAIMER

COVID-19 is a global pandemic affecting countries and industries around the world at an unprecedented scale.

In this context, we continue to compile insights and experiences telecom operators are going through during these
complex times1,so we can make them available to players around the globe with the hope that it can help them better
prepare in their respective geographies.

In any event, telecom operators are advised that the situation is rapidly changing. While this report reflects the best
available information and advice we can provide at this moment in time (13 th April), operators should also continually
assess and adjust their modus operandi and action plan based on the evolution of their local realities.

While the COVID-19 is certainly an enormous challenge for all communities, it is also an opportunity for telecom
operators to genuinely help societies emerge stronger during this unprecedented situation.

The insights we share are sourced from interviews with client executives, primary
research conducted with our network of 100+ contacts, proactive monitoring of
daily developments by telecom operators worldwide by our Research Practice
and other publicly available data.

Delta Partners remains at your disposal in any way that we can help
successfully navigate these uncertain times.

Note: 1 As of the time of this publication

 COVID-19 STATUS DASHBOARD – April 13th, 2020

# of countries # of countries # of countries

Total cases 2.0m+ 46 30+ 212
with 3k+ cases in lockdown affected

COVID-19 cases of top countries Focus: top 20 countries by cumulative confirmed cases
(# COVID-19 confirmed cases, as of 13 Apr 2020)
# cases Recovered New cases New cases Country
Country (‘000) (%) 1 week ago today measures
USA 587 6% 30,331 26,641 Lockdown
586,941 Lockdown
Spain 170 38% 5,029 3,268
Italy 160 22% 3,599 3,153 Lockdown
France 137 20% 5,171 4,188 Lockdown
Germany 130 49% 3,252 2,218 Lockdown
XX% UK 89 n/a 3,802 4,342 Lockdown
China 82 95% 39 108 Lockdown
Iran 73 63% 2,274 1,617 Lockdown
Turkey 61 6% 3,148 4,093 Lockdown
170,099 Belgium 31 22% 1,123 942 Lockdown
Netherlands 27 1% 952 964 Lockdown
Switzerland 27 53% 557 273 Lockdown
159,516 Canada 26 30% 1,155 1,297 Lockdown
Brazil 23 1% 929 1,238 Lockdown
136,779
Russia 18 8% 954 2,558 Lockdown
XX%
130,072 Portugal 17 2% 452 349 Lockdown
Austria 14 52% 246 96 Lockdown
Sweden 11 3% 376 465 Social dist.
1 11 21 31 41 51 Ireland 11 0% 370 992 Lockdown
South Korea 11 71% 47 25 Social dist.
# of days since reaching 40 cases
: new country in top-20 vs. last week

The US is now the epicenter of the global pandemic (>7x cases vs. China), while Asia starts to regains its footing. Global
growth in new cases should decelerate from next week, even as the next wave takes hold in LATAM and African markets.

Source: World Health Organisation, Worldometer, press clippings, Delta Partners analysis
Telecom operators continue to adapt their service offerings, but are beginning to feel
increasing pressure on their business operations

Areas of focus this week already highlighted last week New areas of focus identified this week

Main areas affected / expected to witness impact

A B C
Customer
Value proposition Customer data Retail and care
engagement

D
Macro
Regulatory updates Economic trends
environment

E
Infrastructure
Network Hardware / equipment Devices
& hardware

Operating
Organizational structure Workforce management
processes

F G
Financial
P&L performance Financing CAPEX
management

Source: Delta Partners analysis

Summary of key developments observed over the past few weeks
in countries that have been significantly hit for 4+ weeks

Week 1 Week 2 Week 3 Week 4 What’s next for operators?

Customer “Keeping the world connected”: tactical New tailored offers • Connectivity remains core, but
engagement approach taken offering freebies, granting as per new normal operators are exploring new
more data, waiving charges, etc. (gaming, e-learning, ways to differentiate
e-commerce, etc.) • What is CX in the ‘new normal’?

Macro Additional spectrum First wave of opera- Initiative expanded • Will there be a ‘softened’ view
environment released to existing tors in cooperating across markets to around data privacy?
operators with gov’t, sharing cover EU, US, Asia, • More regulatory scrutiny as an
cust. location data Australia and Africa ‘essential service’ potentially

Infrastructure Recent network traffic Proactive network Traffic levels start to • How might network capacity
& hardware growth (voice, data) capacity mgmt. by normalize in some management change as remote
comparable to annual operators – no major countries (supported working / learning become
growth levels service outbreaks by actions taken) mainstream ‘options’?

Operating Operators adapting to the new normal: Operators report an Extended lockdown • Will telecom operators undergo
process physical retail outlets and (outsourced) increase in the use of compels operators to accelerated digital transforma-
call centers closed due to lockdowns their digital channels drive channel digitiza- tion across the organization
tion & automation (beyond channels)?

Financial Future CAPEX plans Operators anticipate • Need to manage larger scale of
mgmt. (e.g. 5G) on revision degree of financial financial hardship for long term
to ensure financial impact – mixed
• Are telecom operators truly
stability sentiments to-date
‘defensive stocks’?

Source: Delta Partners analysis

Key trends spotted this week and recent operator developments (I of V)
(April 2, 2020 – April 9, 2020)

Delta Partners tracks telecom operators’ reactions in affected areas by COVID-19 in over 50 countries.
The below cases are a summarized representation of best practices/key activities
A
• On top of subsidized connectivity, telecom operators are starting to
tailor offers addressing the digital shift in consumer behaviour…
- Gaming (e.g. O2 UK partnership with AirConsole)
- E-commerce (e.g. du UAE)
- E-learning (e.g. Globe, Ucom Armenia, Verizon, T-Mobile US), with
dedicated connectivity support for education (e.g. SKT, LG Uplus)
VALUE - Cybersecurity (e.g. SFR, UPC Switzerland)
PROPOSITION
• … and taking proactive steps to address customer financial hardship
- Overall lowered prices (e.g. Ncell, Vodacom)
- Temporary low-cost packages (e.g. Vodafone Australia)
- Billing credits for the recently unemployed (e.g. Telstra)
- Waiver, postponement, instalments for bills (e.g. Optus, Claro, Oi)
- No disconnection over 60 days (Keep Americans Connected)

B
• More telecom operators are cooperating in sharing location data to
manage the COVID-19 pandemic (e.g. Australia, Ghana, Mexico
CUSTOMER announced initiatives this week) – see next slide
DATA
• Enhanced support via in-house big data / geolocation tools (e.g. SFR,
(Zoom-in on next slide) Robi Axiata, Telia Group, Telefonica Group)

• Development of apps to enhance contract tracing (e.g. Telkom SA)

Source: Interviews with telecom operators, press clippings, Delta Partners analysis
 B Zoom-in: Almost 50 countries around the globe have announced mobile customer data
sharing initiatives to support public health

90%+ of public health initiatives to ‘track the virus’ have been, voluntary or mandated, using mobile operators’ customer
location data. Apple & Google’s initiative in North America as the most notable alternative

Passed legislation mandating

Aggregated / anonymized data telecom operators to share
provided to monitor / visualize customer data with govt. entities
population movements

Sharing big data / geolocation

analysis tools and engaging in
joint development with gov’t
Enabling interoperability of
public health apps across
Operating Systems + built-
in contact tracing on OS

Telecom operators obliged to provide geolocation

data to government database for contact tracing
Note: Initiatives incl. customer telco data sharing with local governments and development of dedicated mobile apps or other tools; Google’s in-house initiative to develop community mobility reports not
included since it is not done in collaboration with local governments. Source: Delta Partners analysis
Key trends spotted this week and recent operator developments (II of V)
(April 2, 2020 – April 9, 2020)

Delta Partners tracks telecom operators’ reactions in affected areas by COVID-19 in over 50 countries.
The below cases are a summarized representation of best practices/key activities
C
• Acceleration in digital channel adoption (both voluntary and involuntary)
due to physical channel closures (see Weekly Feature)
- Downloads of My T-Mobile app in Czech Republic increased by
89% in last 14 days in March vs. February

• Transition towards digital KYC / verification processes to enable

activation of new mobile connections
- E.g. Poland – Orange offers e-signing of contracts
- E.g. India – exploring options for a ‘paperless activation process’

RETAIL AND • Enhancing remote customer support for traditional on-premise

CARE technician support (e.g. Cox Communications, Verizon)
- Customers can choose preferred mode of communication (call,
text, and/or video chat) with technician
- Easy setup for video chats: a smartphone is sufficient
- Use of AR to guide customers through setups, common issues

• Other initiatives taken to boost customer support:

- Increase number of customer care staff (e.g. Telstra, P4)
- Re-purposing retail outlets as support centers (e.g. P4)
- Pick-up/delivery directly to customer homes for device repairs (e.g.
Telecom Slovenia)

Source: Interviews with telecom operators, press clippings, Delta Partners analysis
Key trends spotted this week and recent operator developments (III of V)
(April 2, 2020 – April 9, 2020)

Delta Partners tracks telecom operators’ reactions in affected areas by COVID-19 in over 50 countries.
The below cases are a summarized representation of best practices/key activities
D
• Belgium officially designated telecom services as “essential services”
- Operators have full discretion over scope of store re-openings
- Store operations must adhere to social distancing requirements
- No new sales allowed – shops can only serve existing customers
- Operators are also required to first assess feasibility of remote
repair (by staff or customer) vs. in-store appointment

• Other regulatory initiatives to ensure consumers stay connected incl.:

- Mandated launch of remote work/learning offers with minimum
REGULATORY bandwidth requirement and price ceiling (e.g. Pakistan)
UPDATES - Mandated zero-rating of select websites with COVID-19
information (e.g. South Africa)
- Lower service pricing / VAT (e.g. Cameroon, Vietnam, Kenya)
- Prioritization of traffic for remote working, e-education, e-health /
priority call routing for individuals/entities combating COVID-19
- Approval of active mobile infrastructure sharing (e.g. Peru)

• Regulators continue to release additional spectrum and/or frequency

bands to expand network capacities (e.g. South Africa), while 5G
spectrum auctions remain on the backburner (e.g. India)

Source: Interviews with telecom operators, press clippings, Delta Partners analysis
Key trends spotted this week and recent operator developments (IV of V)
(April 2, 2020 – April 9, 2020)

Delta Partners tracks telecom operators’ reactions in affected areas by COVID-19 in over 50 countries.
The below cases are a summarized representation of best practices/key activities
E
• Network traffic growth continues as stay-home periods prolong
- Higher traffic levels become the ‘new normal’ (vs. one-off spike)
- Management of high-bandwidth applications such as video have
NETWORK helped reduce traffic load (e.g. by ~4% reduction in Australia)

• More operators are looking into improving network capabilities through

temporary deployments (e.g. cellsites on wheels), bandwidth expansion

F
• Telecom operators are bracing themselves for a dent in revenues due to
constrained growth in gross adds and delayed payments
P&L - E.g. Reliance Jio, Bharti Airtel, and Vodafone Idea added ~0.5m
PERFORMANCE subs cumulatively in March 2020 vs. typical avg. (2.5m – 3.0m)

(Zoom-in on next slide) • US telecom operator share prices have fallen in line with the market at
~15%. Other asset classes (InfraCos or tech players) have managed to
protect their value with lower decreases – see next slide
G
• Analysts expect telecom operators to demonstrate financial resilience,
with the option to rebalance financial priorities in terms of cutbacks on
FINANCING CAPEX and/or shareholder remuneration
- AT&T has committed to dividend/pension payouts
- XL Axiata has committed to IDR 500 bn share buyback program

Source: Interviews with telecom operators, press clippings, Delta Partners analysis
While telecom operators have been impacted largely in line with market, InfraCos and FAANG
have outperformed the market, demonstrating their resilience and relevance in the new normal

% change in US stock prices during COVID-19 sell-off Reference companies

(%, February 19 2020 – March 27 2020)

Category Company % change

7.2%
Crown Castle (1.2%)
SBA 3.7%
InfraCo Equinix 5.5%
Digital Realty 11.3%
Cogent 16.5%
Facebook (18.2%)
Amazon 4.1%
Tech & Media
Apple (30.7%)
(FAANG)
Netflix 5.4%
Google (18.0%)
-11.5%
T-Mobile (13.5%)
Telecoms AT&T (19.8%)
-15.8%
-16.4%
Verizon (14.2%)
Market average S&P 500 (16.4%)
InfraCos FAANG Telecoms S&P 500

Source: Capital IQ, Delta Partners analysis

Key trends spotted this week and recent operator developments (V of V)
(April 2, 2020 – April 9, 2020)

Delta Partners tracks telecom operators’ reactions in affected areas by COVID-19 in over 50 countries.
The below cases are a summarized representation of best practices/key activities

• CAPEX initiatives to cope with increased network demand

- Singaporean operators will receive support from the government through ‘immediate
investments’ to upgrade networks and increase national capacity
- Thai operator AIS will deploy dedicated CAPEX to the healthcare sector to support
OTHER AREAS efforts combating COVID-19: this includes 5G network installation at hospitals and
OF FOCUS robot deployment for telemedicine

• Workforce management initiatives by some telecom operators

- Increased wages for frontline staff (e.g. Charter, BT)
- Digital / virtual check-ins with workforce to ensure physical wellbeing (e.g. Globe)

Source: Interviews with telecom operators, press clippings, Delta Partners analysis
Delta Partners has developed tailored products to address some of the key NON-EXHAUSTIVE
challenges that operators are facing

DELTA PARTNERS COVID-19 REACTION PACK

Govt support initiatives: Overarching commercial Network capacity management

COVID-19 geo based mgmt. response to COVID-19 and augmentation
Population mobility index 1
First containment Support society amid the crisis
measures
2 Serve our clients
Second containment
measures and manage channel disruption
3 Network
Avoid mid-term financial damage Traffic
resource
4 prioritization management
Time Adapt to new normal

Consumer and SMB Customer based management

bad debt prediction model (CBM) approach adjustments

Targeting Campaigns

Comms.
Time of
channels
1&2 3 4 5 6 7 8&9 the day
& style
COVID-19 at risk probability (score-1-9)
 Weekly deep dive
COVID-19 has accelerated digital channels adoption
– are telecom operators ready?
Driven by the #StayAtHome situation, online interactions across operators have skyrocketed
in Q1, and expectations is to lead to a sustainable trend – a ‘new normal’

Adoption of Telcos digital care and e-commerce channels

(% of telco subscriber base)
DIGITAL CHANNELS
BECOME MORE
IMPORTANT THAN EVER

Meet new set of customer

needs
Adoption
growth

Decrease dependency on
assisted channels
(retail/call center)

Time

PRE-COVID-19 COVID-19 POST-COVID-19 Optimize cost to serve

(amid a slower topline)
Low/moderate ‘Forced’ adoption as stores ‘New norm’ with digital
adoption of digital close and call centers as default care / e-
channels in status quo become overloaded comm. option
While every operator today has a digital channel proposition, the reality is that the experience
is not where it should be
Recent customer feedback1 on Telcos’ apps XX : app rating 2

• App loads too slowly • Virtual assistant unable to help beyond

• Problem with bill payments basic questions
• Chatbot is a search tool vs. an interactive • Inaccurate usage data
3.9 care channel 3.9 • Too many notifications

• Login authentication problems (e.g. • Faulty credential storage, login

multiple login failure, faulty OTP) authentication failure
• Slow app processing / frequent crashes • Easy to make bill payments
3.9 • Errors in prepaid recharges 3.8 • Slow app loading at times

• Login credentials do not sync across web • Difficulty in accessing info. on plans and
and app usage
• Failure to process payments • Slow / faulty top-up process
3.8 • Frozen screens, broken links 3.5 • Difficulty in adding devices

• Faulty basic features (e.g. log-in, check • Login authentication failure

usage)
• Frequent app crashes
• Removal of well-received features (e.g.
cost to switch) • Failure to process payments
2.8 2.3

vs. average rating of leading tech apps

4.5
Note:: 1 Based on customer feedback submitted between February 2020 to present; 2 As of 13 Apr 2020. Source: Google Play Store, Delta Partners analysis
Why is this happening? Five key themes observed from experience

Customer Lack of customer • Inside out development whiteout involving the customer
focus • One-size fits all rather than persona driven approach

• Attempt to “achieve it all” vs. focus on most critical

Too broad scope journeys, simplifying the experience for the customer

• Organizational separation across individual digital

Lack of coordinated channels and offline channels resulting in a fragmented,
strategy inconsistent proposition

• Once built, the propositions carved in stone

Static development • No testing, no innovation, no evolution

• Separation between front-end and back-end limits

Siloed tech front/ innovation, slows down time to market and creates poor
Back-end back-end performance
So what? Two main levers for operators to act on

AI
AI assistants Chat
assistants
A

Streamline the experience,

Web/App focusing on what really matters & Social
bringing the customer at the centre

Online sales E-care

Align org Measure

Embrace true Agilize Tech
structure and experience &
digital way of architecture &
governance performance in
working & increase
model to a structural
mindset to capacity to
ensure manner to
fast-track ensure solid
consistency / rapidly identify
execution performance
proper focus gaps

Adjust enablers and build new capabilities

B
Delta Partners can help you accelerate digital channels readiness to address immediate
needs and prepare for the future

Delta Partners advantage

A
Tools & frameworks to assess current experience across apps / chatbots
Streamline the
experience,
focusing on what Digital channels evolution blueprint and library of best practices within the Telecom
really matters & industry and beyond
bringing the customer
at the centre
Proven customer experience journey design methodology

B
Future proof digital channels Tech architecture blueprint

Deep understanding digital channels org issues and proven ways to address them
Adjust enablers and
build new
capabilities
Proven business + technology operating model leveraging agile playbook

Deep analytical approach at measure customer experience

 #StayAtHome

www.deltapartnersgroup.com

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