Transformation Solutions, Unlocking Value for Clients

CEO Study Telecom Implementations Chris Pearson Global Business Consulting Industry Leader

21.11.2008 1 IBM Telecom Industry Agenda

. CEO Study – Enterprise of the Future . IBM’s view of the Telecom market . IP Economy . The Change agenda . World is becoming Smarter

2 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation We spoke toIBM 1,130 Telecom CEOs Industry and conducted in-depth analyses to identify the characteristics of the Enterprise of the Future

How are organizations addressing . . . . New and changing customers – changes at the end of the value chain . Global integration – changes within the value chain . Business model innovation – their response to these changes

Scope and Approach: 1,130 CEOs and Public Sector Leaders . One-hour interviews using a structured questionnaire . 78% Private and 22% Public Sector . Representative sample across 32 industries . 33% Asia, 36% EMEA, 31% Americas . 80% Established and 20% Emerging Economies Analysis: Quantitative and Qualitative . Respondents’ current behavior, investment patterns and future intent . Choices made by financial outperformers . Multivariate analysis to identify clusters of responses . Selective case studies of companies that excel in specific areas

1 2 3 4 5 Hungry Innovative Globally Disruptive Genuine, for beyond integrated by not just change customer nature generous imagination

4 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation Telecom CEOsIBM Telecom anticipate Industry more change ahead; are adjusting business models; investing in innovation and new capabilities

Telecom CEOs :

Hungry . Expect significant change (increased by 30%) …but the ability to for manage change has not kept pace – 38% feel unprepared Change . Invest significantly more than their peers in other industries in newly Innovative Beyond proposerous and informed customers but through traditonal Customer products and services Imagination . Are reaching beyond the traditional global supply chain of infrastructure / devices and accessing global delivery capabilities, Globally partners and knowledge assets to serve their local and core Integrated markets

. Have a greater focus on business model transformation with revenue Disruptive by nature model innovation the most favored; CEOs of ‘outperforming’ organizations focus on enterprise/ industry model innovation

. Do not view corporate social responsibility as a major issue, but are Genuine, nevertheless planning to increase modest investments in CSR- not just generous?: related programs

Source: 47 Telco CEO interviews

5 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation IBM Telecom Industry Expectations of significant change has increased by 30% among Telecom CEOs since 2006; change gap has more than doubled

The Change Gap in Telecom has more than doubled 2006 2008 % % CHANGE CHANGE 10 GAP* 25 GAP* 4% 8% 6% 17% 27% 27% 6% 87% 19%

67% 57% 62%

Change Needed Past Change Change Needed Past Change Success Success “ We have seen more change in the last ten years than in the previous 90.” - Ad J. Scheepbouwer, CEO KPN Telecom

Source: IBM Global CEO Study 2008; n (2006) = 48, n (2008) = 47 * Difference or ‘gap’ between expected level of change needed and past success in managing change 6 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation IBM Telecom Industry In anticipation of changes telecom executives increase focus on revenue growth and business model innovation 2007 - 2012

What do you believe will deliver the main sources of value for your company over the next 5 years and how different will they be from the previous five? Sources of value in Global Telecommunications 2002 - 2012 2002-2007 2007-2012 34% 69% Business Model Transformation 73% 65% Revenue Growth 29% 38% Synergies from M&A and consolidation 40% 35%

Opex Reductions 41% 21%

Capex Reductions 3% 4%

Other

The Past The Future

Source: The 2007 IBM Institute for Business Value (IBV) and Economist Intelligence EIU) Telecom Industry Executive Survey (n=252) 7 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation Specifically IBMtelecom Telecom providers Industry are seeking new sources of revenue and moving toward collaborative operating models

Which of the following will your company be focusing on to increase revenues over the next five years? Select up to three. Sources of value in Global Telecommunications 2002 - 2012

Converged services 82%

Collaborating extensively 72% with external partners

Enable 3rd-party access 53% to telecom capabilities

Bundled packages 49%

Move into Media and 46% Entertainment

Move into IT services 40%

Vary revenue model to 33% include advertising

0% 20% 40% 60% 80% Source: The 2007 IBM Institute for Business Value (IBV) and Economist Intelligence EIU) Telecom Industry Executive Survey (n=252) 8 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation IBM Telecom Industry

IBM’s view of the market

Virtual OTT Transnational

IT Investment Investment IT Multinational

Large national International 1950 1980 2000 2008

Timeframe

12 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation And with increasedIBM Telecom Industryvideo consumption this trend is imposing additional strain and costs on telcos providers

Global IP Traffic forecast Source: 2008: Cisco Visual Networking Index: Forecast 2007- 2012 40,000 Mobility Example: Business Internet December 2007 launch of BBC’s iPlayer 30,000 Business IP WAN Consumer Internet resulted for ISP : Consumer IPTV/CATV MOSTLY . 72% more customers using over 250MB 20,000 OVER THE TOP .100% more customers using over 1 GB

TRAFFIC Petabyte/month 10,000 additional cost for PlusNet: + 200%

0 2006 2007 2008 2009 2010 2011 2012

Massive growth of Internet traffic from OTT applications as YouTube, MySpace and Facebook is driving up costs for telcos

13 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation As services converge,IBM Telecom Industryexpect incremental growth of 2% PA, equating to $500B+ in new opportunity in 2012

2012 Global Revenues, 2007 – 2012 CAGR

2012 ’07 – ’12 Service Revenue CAGR Mobile (Internet $284B 27% Mobile Services, Advertising, Access)

Home/Office- $160B 18% Fixed based Broadband Voice (Services, Access Advertising)

IPTV $35B 66% Fixed/Mobile $33B 220% 2012 WW Converged Convergence Revenues : $ 538B Content Mobile TV $21B 96% Advertising 2007 – 2012 WW , Marketing Converged CAGR: 15% Source: Gartner, PwC Global Outlook, eMarketer, IBM analysis

14 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation ….that are spawningIBM Telecom Industrya generation of over-the-top (OTT) service providers in a new competitive space

Mobile Mobile Communications Communications

Advertising Digital Conten t New Competitive Fixed Voice Portals Commerce Fixed Voice Broadband Broadband Communications Communications Access space Access CommunicationsSearch Social networ k

Content and Content and Advertising Advertising

Portals/Search Analysis Attributes Implications Users Platform Growth Network Data Volume Platform

Users

Platforms Providers Applications/Services Rich Content IP Network

Managed Architecture, Infrastructur HW & SW e Real time Design business analytics

Scale, Mobile Volume and Communications Throughput Federated Identity / Security

Operations New Presence Fixed Voice Competitive Themes Broadband Communications space Access Developer Relations Capabilities Vault Home Zone

Innovation Content and Advertising Charging payment Experience

£$€¥

Real-time solutions production line

Change is essential

Existing structure Portfolio and production structure IP Assembly converged offerings, focused on specific highly customizable to very limited flexibility, cumbersome customer segments individual needs integration pre-configured freely configurable products products Product Voice Data IP offering Product 1 Product 2 Product 3 portfolio

Customer Facing services coordinated lifecycle & portfolio management (new process) Resources Facing Services

complex stovepipe products Production elements

BT RETAIL - CORPORATE BT CELLNET SME & CORP SALES BULK ORDER CHANNELS BTC WEB O2 ONLINE BTC STAFF BTC DIRECT CHANNELS INDEPENDENT RETAILERS/DISTRIBUTORS ETOPUP CHANNELS BTC OWNED RETAIL THE DIXONS GROUP O2 ONLINE ACCESS & ISP SERVICES WAP POD ex - BT SHOPS End User with WAP Phone

KEY 3P THE COMET GRP CONNECTED (B2B O2 Online Portal NETR, NETC, ACCESS DNS (ISC BIND) SESSION DB DATABASE JOHN LEWIS PORTAL) NJR (OVERT ... 3P DIXONS SYSTEM (ISP, GROUP PARTNERSHIP RAS) RETAINED CORPORATE GENIE WAP THIRD-PARTY SYSTEM, DIXONS STORE GROUP 3P CURRYS CUSTOMER FASTCAPODS GATEWAY INTERFACED TO.. ASDA bottom line reductionswww.connected.btcellnet.net www.O2.co.uk HEXAGON TESCO www.shop.o2.co.uk 3P 3P PC CORPORATE PROSPECTS/SU WOOLWORTHS CUSTOMER SPECTS DB RETAILERS WORLD WH SMTIH CAPODS (BT) ex - DX & MPS DECOMMISSIONED INTRANET RS COMPONENTS 3P 3P INDEPEND 3P CAR 3P THE LINK PROXY RADIUS (OSC HTTP/FTP GAMES POD THIRD-PARTY SYSTEM DIRECT SALES - DIRECT SALES - CONVERGENT ENT RETAILER PHONE SERVICES RADIATRO) USED BY BTC STAFF LEEDS GLASGOW 3P TELETECH - TELECOM S/DISTRIBUT... WAREHOUSE WAP FOOTBALL DIRECT RETAILER PIE ACCURATE ORACLE M-VENUE ORACLE SALES CONTACT MGT SALES SYSTEM FINANCIALS - DX INTERNAL ORG ONLINE SYSTEM (CMS) (VENTURA) 3P E-TOPUP INSTANCE WEB CONNECT (FOR CONTEXT) SOLUTION CLIENT RETAILER POS PROVIDER ANKER G-PORTAL POD MORET POWERTILL, 3P EDI - KEWILL STORE & Contextual Note ORACLE SALES APACHE PRESENTATION SERVICES SYSTEMS CENTRE www.btcellnet.net MRI GATEWAY / EPAY (etopup) PRISM ANALYSER CLIENT

BTC INTRANET GENIE ACTIVATIONS PAGES 3P RETAI TEAM P3 POD www.O2.co.uk LERS NETWORK WHOLESALE VIGNETTE CMS P3 PORTAL (OPENWAVE TEAMNET ORCA RETAIL SHOP MESSAGE MyPhone P3) TECHNOLOGY PLATFORM (ORDER SYSTEM GENIE A.H.E. COMPONENTS CAPTURE)

3P BT UNIFIED WAREHOUS 3P INKFISH MESSAGING AUTOMATED (TELESALES) STORE E (ONEBOX) Dig Mark End Mar 02 ORDERING NDC 3P CONTENT BROADVISION & FORTE SERVICES PROVIDERS EPAY (etopup) 3P 24/7 IM INSTANT SERVICE ACCESS / AUTHENTICATION CLARIFY - LEGEND DIGITAL 3P ANOVO JUPITER DISE ACTIVATIONS LIBERTY (ADVERTISIN MESSAGING CLARIFY DB - ONE TOUCH MARKETING - ACTIVATIONS TEAM ACTIVATIONS G) BABELFISH SERVICE ACCESS BROADVISION TEAM TEAM NACD & CALL CENTRE ACD SWITCHES ORDER FULFILLMENT CONTROL (SAC) QMAX 3P SECURICOR PSTN & BTC Mobile Network 3P SIM MANUFACTUR... 3P PARCEL FORCE AFD POST DATA REQUEST BROKERS QUICK NETWORK ACD CODE ADDRESS PAF 3P HARDWARE 3P ROYAL MAIL SEARCH SPRINGBOAR AMDOCS HORIZON CUSTOMER DB PLUS - PAF 3P THE DISPATCHER ENGINE WEBSEAL D (REGISTRATION) 3P BT COUNTING & SIM MANUFA... (LOOKSMART) NORTEL DMS PERIPHONICS IVR BUYNET WMS (COMPANION) 100 HOUSE (TCH)

FORTE FUSION MIDDLEWARE SERVICES GENESYS 3P LAISON BT BUYNET CLIENT 3P OTHER OT/DIGITAL ETOPUP (CPI) ECOMMERCE 3P THE Preston Brook & LICENCED O2 ONLINE PLATFORM SERVICES 3P HAYES... 3P TMW COUNTING... OPERATORS MARKETING SERVICES OPERATIONAL DB 3P TELETECH (First)Wath (Ventura) ACDs MIDDLEWARE HARDWARE ORDER PROCESSING (HOPs) SMS GATEWAY EMAIL SERVER COMMON BACK ACCESS SERVICES PB not on NACD BTC SMS-C SERVICES On Meridian ACD: On Avaya Definity: CUSTOMER RETENTION / SAVE Preston Brook Bradford Hepworth House (Ventura) ZT BLACKBERRY GPRS MANAGEMENT BACKUP EXTERNAL CONNECTIONS KNOWLEDGE BASE KNOWLEDGE ... HOPS Retention Centre. Live @ DV 1 October 2001, @ PB mid Alness Wath (Ventura) 3P AMEX WEB UPGRADE November 2001. Teletech Stafford A not used for First beyond Mid Thurso 3P DINERS 3P INTELECOM Nov. Ventura likely to ...retain 3P BT SUN ACCOUNTS USAFIRST O2 ONLINE www.shop.o2.co.uk/shop ABC Stafford B QUINTUS GROUP... 3P BACS

Bury FAST SAVE APACHE PRESENTATION UNITY DB UNITY QUINTUS SERVICES Jan 02 INSTALLER FAX SER ... 3P INSTALL... BROADVISION

Rim Blackberry End Mar 02 Decision Navigator Rapid

PREPAY PAGING BT CELLNET FORMERLY BT MOBILE BT CELLNET FORMERLY MARTIN DAWES (PRESTON BROOK) BT CELLNET FORMERLY CCL MANAGED BY VENTURA BT CELLNET MANAGED BY VALUE TELECOMM KANA + EXTENSIONS 3P EQUIFAX 3P DUN & 3P EQUIF... 3P E-TOPUP 3P RDW DAVOX POWERDIA BRADSTR... SCARS - SALES LLER EQUIFAX MAJOR 3P LOGICA BRITE PREPAY SOLUTION... CONTRBN ANAL APPROVE RETAILER 3P MAJOR 3P EQUIFAX QUICK REPTG SYS INTERFACE EXCHANGE KOFAX CUSTOMERS BATS ADDRESS P ... TAPI eDOCS 3P (MRI) BRITE ACD HARDWAR... 3P WORLDVIEW ANALYSER WEB CONN (MERIDIAN ... TEDS - TRACKING EASYLIFE ECT SERVER DATABASE BLACKBERRY lookup Insight insight 3P INSURAN... BORDER ALNESS CARE DELPHI CFE 3P APPS 3P RIM CONTINUUM manual MAJOR FUSION RED BABYLON JUPITER SMS PC DISE CAPTURE CBS (VALUE CUSTO... 3P HIREFONE 3P BARCLAY 3P EQUIFAX CARD DEMON TELECOM) BRITE IVR PSMS - IN PREPAY SERVICE 3P RETAILE... 3P AIRMILES 3P E-TOPUP EASSIST MGMT SYSTEM RETSO BLACKBERRY call KINGSTON RIALTO SOLUTION... MIS DB control CORPORATE JUPITER POWERDIALLER 3P AMWAY OASIS 3P BACS BACK OFFICE AUDDIS BEAMS LIBERTY BILLING (BOB) RETAIL ACCOUNTS MIS - JUPITER ICE BACSWAY TURBO 3P BACS 3P HSBC 3P MNP AGE... 3P BAN... 3P BACS DATABASE - SUN ... ADDACS (TELESMART) DISE ONLINE BMC BRITE CSS BRITE DAS RETAIL LOGIC adhoc via CD COMMUNICATIONS 3P BACS CONSUMER JUPITER SERVICES 3P BACS DOC1 - 3P AMEX PATROL MQ-SERIES RESOURCE CUSTOMER FACSYS (FSO) DISE VENTURA INST ... RESPOND MANAGER - IDENTIFICATIO ... INTEGRATED CALL customer www.btc-lumina.net BACK OFFICE COMMANDER SUITE PAGING 3P HAYES... 3P IGNITE 3P DINERS 3P FACSYS MNP CENTRE (ICC) focussed FINANCIAL... ODS 3P GRASSR... EDGE F-END billing3P BT 3P AMEX 3P VENTURA PRINT RETAIL FULFILLMENT 3P ANOVO DECISION 3P DINERS 3P NATWEST SMS PC (VT) ORDERS CUSTOMER PROFITABILITY JUPITER JD EDWARDS LINS IN PRO ... 3P PHILLIPS 3P SAMS O2 ONLINE MODEL 3P AMEX VIPER CACS LIBERTY ICC MIDDLEWARE FILENET - 3P BT BUYNET CORRESPONDENCE MARKET GENEVA (GENIE) ROYAL BLUE 3P DEBT MANAGEMENT SPYVIEW write-off NAVIGATOR RTF TO HTML 3P BELMOBILE VOUCHER COMMON HELPDESK MOSAIX (Pennine) CONVERTER (PAGING FAULT L ... 3P THE COUNTING RECOVERY... 3P OTHER SHAREWARE GENERATION VOUCHER POWERDIALLER (V ... GENIE 3P BIBET SYSTEM DATABASE HOUSE (TCH) NETWORK... BANCTEC FILENET - 3P HAYES 3P ROYAL... DOCUMENT P&F 3P DEBT GENEVA BACSESS 3P MNP AGE... MANAGEMENT RECOVERY... A 3P SCOREX 3P EQUIFAX (BARRON 3P BACS 3P INSURA... 3P VODAF MCCANN) PREFIX ZETAFAX 3P DEBT 3P SCOREX RECOVERY ONE 3P BRITISH 3P HAYES JUPITER COPY COPY P&F MEDIATION BILLS CALL 3P SHORT AGENCY APPROVAL... B PROD O2 3P BT DEVICE S 3P BRITISH TERM HIRE... MEDIATION 3P HAYES P&F APPROVAL... B 3P GRASSROOTS MOBILE NUMBER GL/AR DIALOGIC IVR 3P MNP AGE... PORTABILITY

NON-TIED SERVICE... P

MARKETING BUSINESS & OPERATIONAL Automated Revenue Interbusiness billing Refunds & Dealer BTC Regulatory Feeds from Jupiter, feeds from: Incentives: Feeds (to Oftel):

CAMIS FRONT END ANALYSIS TOOLS HOPS & JD CRM Jupiter Carrier Services Edwards. Other Lucent HOPS CAMS revenue feeds Jupiter Sun Accounts ROBS & ABS BRIO (MARKETING EPIPHANY manual via JV Adaytum ANALYTICS) (CAMPAIGN MGT) Upload. RADS (nb manual extracts)

WHOLESALE M-POWER (INC CLASS 9 MTCR SOURCE FEEDS: CAMIS (MTCR) DATAWAREHOUSE REVENUE CODING TITAN MINIFEEDS CHEQUEPOINT E-SPRIT DIVERT) NB 2G Only

DATA CLEANS CORPORATE DATA MARTS DISE ING DATA POINT Liberty ABS BT FINANCIAL SERVICES Jupiter IN-PSMS manual GENEVA REVENUE OPERATIONS TEDS FIST GATEKEEPER GENEVA (Retail) GENEVA - WHOLESALE BILLING SYSTEM Alert TRANSACTION RATING (ROBS) Brite PROCESSOR (TP) IMEI SCARS ABS SERVICE PROVIDER INTERFACE (SPI) 3P THE COUNTING Suppressions MANX ABS BILLING HOUSE (TCH) ENQUIRIES SPIM TCH BUSINESS SME SEGM MICROSTRATEGY COBRA (CASHIERS SOLO METIFY 3P OFTEL Mail Preference FIRST ENTATION ONLINE BANK REC MODEL MANILA Service & ACCT ) GPRS GENEVA Yellow Pages DIGIFONE Mortascreen BT CID (E-REPORTS)

GPRS - MIS WHOLESALE ADMINISTRATION & BILLING SYSTEM (ABS) CHURN TELFORT OMEGA DATA CENTRE (ODC) GPRS SMS ALERT SP DIRECTORIES BUNDLED FAULT MGT DRB MINUTES ENGINE TIVOLI (BME) (COMPANION) VIAG

COMMON PROJECT BT WIRELESS REFERENCE FINANCIAL O2 ONLINE GENERAL LEDGER DATABASE (CoRD) CONTROL (PFC) ABS 3P HARDWARE & SIM TRACE G-FAT (GPRS MANUFACTURERS FAULT ANALYSIS TOOL)

SIM ADMIN 3P GRASSROOTS ORACLE FINANCIALS - BTC FINANCIALS ORACLE FINANCIALS BTC SMS PRICING ABS NIM FOR CSF RADIO SUPPLY CHAIN ALERT 3P GRASSRO... GAZELLE TIVOLI SECURITY SERVER BTC GENERAL INTERNATIONAL LEDGER GOODS MVT SUPPLY CHAIN ACCOUNTS 3P SIM 3P THE PAYABLE ABS NETWORK MANUFACTUR... DATABASE... G INTERFACE IMEI BTC ACCOUNTS SUPPLIERS DB MANAGER (NIM) PAYABLE 3P VANTIVE SELF SERVICE PAGING... P11D ONLINE PORTAL 3P POLICE/ ...CU ePURCHASING Manual Revenue BT WORKS STATMAP Feeds via JVUpload PAYROLL MANAGER (eg Ventura JV UPLOAD INVENTORY transactions). NETWORK PROVISIONING & MEDIATION WINPANES E-PAYSLIPS COMPTEL - GPRS MEDIATION VOICE MESSAGING VPN MESSAGE MGT SERVICE MGT ACCOUNTS 3P DANNET PLATFORM INTERCONNECT / CAMS MANAGEMENT INCONCERT RECEIVABLE TAP-3 lookup SYSTEM (VMMS) WORKFLOW (E-RECEIVABLE) E-OVERTIME PURCHASING VOICE MESSAGING CISCO INFORMATION CENTRE (CIC) 3P BT ADMIN & BILLING (VMABS) JYRA NB NetXpert not show. Full eREQUISITIONS E-CASHIERS TRANSFERRED replacement by CISCO. Expected early Jan 2001. DCH - DATA ACCOUNT CIBERNET UK PROCEDURE (TAP-C) SDM - SITE DATA MEDIATION DIMENSION STRONGHOLD / ONLINE/WIRELESS CONTRACTS LOG CLEARING HOUSE CIC SERVICE EXPENSES 3P OTHER VIEW? LICENCED SOG - SERVICE SHORT MESSAGE OPERAT... E-ORG ORDER GATEWAY ARCHIVE BT FEATURE FIXED ASSETS PLATFORM (SMAP) NET (VPN) 3P EDS / 3P FOREIGN ELEMENT MANAGERS / PERFORMANCE MGT INET HP SMARTVIEW CONCORD NETWORK HEAL ... TOOLSUITE Interfaces to: WORLD NETWORK... (DIRECTA) Continuum CONNECT CLE... UNIVIEW

METRICA GSM NOKIA / TELLABS ECHO MOTOROLA OMC-G NMS 5000 ETNA NEM NETWORK HP OPENVIEW OSS-ERICSSON MIKOM-OMC MOTOROLA OMC-R CANCELLORS OMC MANAGEMENT / TMOS Time Recording IT Help Desk, Monitoring & Admin SYSTEM 100 OTHER GPRS GPRS NETWORK INFRASTRUCTURE NETWORK & SWITCHING SUB-SYSTEM CELL GLOBAL ROAMING TIME RECORDING INFORMATION UNICENTER MOBILE NUMBER ENVIRONMENT eQMS SHAREPOINT MICROSOFT 3P SMS BROADCAST PLATFORM SYSTEM (TRS) SYSTEMS PORTABILITY LAW REGISTER EXCHANGE OPERATORS SMS-C BARRING 3P SMS CHAT INFORMATION CENTRE NEM SECURITY (ISS) PROVIDERS PAGING DATA NETWORK PLATFORM NETWORK GPRS CHARGING (ESMEs) (www ISP based) GATEWAY 3P LOCATION BASED COMVERSE VSD - VOICE IVB CELE INTERCONNEC PROVIDER INFO PROVIDERS CARE OPTIONS IVR SMSC - SHORT TRILOG SERVICES BRITY T TRANSIT SMS CHAT PEOPLESOFT NIKU PORTFOLIO CONTINUUOUS BLUEPRINT ARIS CORPORATE LOTUS NOTES MANAGER HELP DESK MODELLER DATA NETWORK MESSAGE (CALLBACK DIRECTOR GREETIN SWITCH PLATFORM (WORMS) ONLINE (HOL) (CASEWISE) SERVICE PLUS) (CALLBACK) GS (AXE10) (X.25) (Corporate CONFIGURATION MGT Network) REDKNEE MOBILE CENTRE GGSN - GATEWAY GPRS SGSN- SERVING LOCATION CENTRE MAGPERFORMANC GPRS SUPPORT BACKBONE IP GPRS SUPPORT SUBSCRIBER TRAFFIC ALERT E CARE OPTIONS lookup MARSS VISUAL SOURCE INFORMATION BT CELLNET INTRANET WEB SITES MAPVIEWER BUSINESS eNIKU GROUPWISE NODE NETWORK NODE MSC - MOBILE NODE SAFE DIRECTORY OBJECTS EMAIL SERVER 3P ACTIVE SUITE OFFICE SWITCHING (DX) HOSTING CENTRE SIM OTA Vital O2 BT INTRANET 50 BT SITES PLATFORM MAGNET CALL MAGNET ACM MAGNET OMC SITES SAVER vitalo2.pri

APN DATABASE BASE STATION SUB-SYSTEM

REDKNEE SMS-MT OMNIX MAGNET MAGNET PLUS MAGNET IPD BASE STATION PLATFORM HLR - HOME VLR - VISITORS EIR - EQUIPMENTAUC - AUTHENTITRAFFIC LINE CARA2 CONNECT CONTROLLER LOCATION LOCATION IDENTITY CATION CENTRE(1200 SERVICE ODYSSEY REGISTER REGISTER REGISTER PLATFORM) PLATFORM SYNAXIS 2100 OTHER BT CELLNET INTERNET SITES IN: (SCP ) SERVICE GMSC - webmap.btcellnet.ne www.o2.co.uk/intuitio www.btcellnet-dimen CONTROLIN PREPAY POINT t n sions.net APPLICATIONS GATEWAY 3P TRAFFIC CELL MOBILE MOBILE USSD ROAMING192 PLATFORM FINDME MASTER BT CELLNET MAGNET DDF EXTENSION SWITCHING (TELSIS OCEAN (TELSIS OCEAN PLATFORM CONFERENCING MAGMAP MAGNMC CAMEL IN FASTSSP) FASTSSP) BASE SMS-B PLATFORM CENTRE PLATFORM CELL TRANSCEIVER (ACN/MX) STATION IN PREPAY IVR IPP BASE ORBITAL TRANSCEIVER STATION CELL MAGNET-1 MAGNET LINES MAG T LINE MAGNET RCP BASE TRANSCEIVER PREPAY SMS-C STATION PSTN / ISDN 3P BT CELLOPTS 21 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation Quote to CashIBM TelecomTransformation Industry can generate cost reduction and revenue uplift benefits* totaling $0.7-1.2B PA for $13B SP

Cost Benefits Revenue Benefits (% of Order-to-Cash Labor OpEx) (% of Revenues)

Order Fulfillment Reduction in Billing Adjustments 8.8% 15.8% 1.5% 1.9% Improved Order Management 6.0% 10.8% Increased Sales Productivity & Retention

1.2% 1.5% Increased Online Orders 4.3% 7.8% Reduction in Unbilled Revenues

Reduction in Billing Calls 0.8% 1.0% 3.3% 6.0%

Outsourcing Order Calls Revenue Acceleration

3.2% 5.8% 0.2% 0.16%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 0.0% 0.5% 1.0% 1.5% 2.0%

Opportunity to reduce 25 to 45% of Opportunity to increase near labor related Order-to-Cash OpEx term revenues by 4 to 5%

*Preliminary and illustrative – to be validated by formal assessment 22 Storm Warning | ZA Lozinski | Clouds v0.0 - September 2008 | IBM Confidential © 2008 IBM Corporation Today’s MarketIBM Telecom Challenges… Industry Require Critical Actions and Solutions

Margin erosion; Increased pressure on High value to lower value substitution productivity; labour costs, Home Zone/Nesting opportunities churn unprofitable subscribers; Energy cost reduction

Manage mergers Quickly rollout new & acquisitions service introductions (slowdown/acceleration)

Ongoing need for revenue Complexity of new services and margin growth Analytics; proactive churn

Financial environment Opex (inyear savings)

Cash is King *Average Revenue Per User

.Service providers occupy a key role in the new economic model:

– Transport/Smart Networks – IP Factory/Smart Platforms – Experience/Smart users

21.11.2008 25