Retrouvez en version anglaise l’étude 2018 d’Arthur D. Little sur l’économie des Télécoms : messages clés et analyses sur l’écosystème numérique mondial et français. L’étude du cabinet de conseil Arthur D. Little édition 2018 met à jour les indicateurs économiques sur le marché des Télécoms. Vous trouverez les messages clés, les analyses sur l’écosystème numérique mondial et celui de la France.

1. Fédération Française des Télécoms
2018 « Economics of Telecoms » Report –
Update of key economic metrics
December 2018

2. 2
Agenda
1 Evolution of the global digital ecosystem
2 French digital ecosystem: dynamics and European benchmark

3. 3
All regions have been growing at a similar pace since 2014
Source: Thomson Reuters, Arthur D. Little
Notes : 1) Constant exchange rate 2017, 1USD = 0,887EUR, 2) Includes top 30 players from everywhere but Asia, North America, and Europe (i.e Oceania and South America)
Evolution of the global digital ecosystem
454 443 454 461 458 429 415 446 478 495
842 836 983
983 983
32
2008
1 089
2010
2 715
35
2 908
Europe
2009
46
1 119
1 030
44
55
2011
51
59
1 186
1 213
2012
1 263
1 599
2016
1 301
1 657
2013
1 356
1 390
20172014
1 468
1 459
2015
63
1 486
1 525
68
52
Asia
North America
2 311 2 296
Other2
3 046
3 216
3 432
3 552
3 818
2 510
+6%
Revenues of the digital ecosystem
World, 2008-2017, billions of euros1
+6%
+6%
+6%
+7%
CAGR
2014-2017
+6%
+1%
+8%
+9%
CAGR
2008-2017

4. 4
After a low point in 2014, the European digital ecosystem returned to
growth, mainly driven by telecom operators
Evolution of the global digital ecosystem
Revenues of the European digital ecosystem1
Europe, 2008-2017, billions of euros2
-1%
-4%
+7%
+41%
+1%
CAGR
2008-2017
287 288 292 295 294 283 275 296 312 324
69 60 61 59 52
37 39
40
50 47
25 29 33
33 35
41
43 46
73 72 76 75 75
69 59
62
65
680 1 1 3 4
6
8
Telecom equipment
24
20152008
429
0 23
454
2014 2017
0
0
Telecom
operators
2009 20132010
0
0 0
8
9
0
0
2016
495
IT and
software services
10
0
Internet
Content
2012
Devices
454
0
2011
443
461 458
415
478
446
+1%
Source : Thomson Reuters, Arthur D. Little
Note : 1) Panel of 180 companies corresponding to the top 30 by sector in terms of turnover 2) Constant exchange rate 2017, 1USD = 0,887EUR
+5%
+7%
+10%
+10%
+6%
CAGR
2014-2017

5. 5
The ecosystem has caught up with its pre-crisis market capitalization level
long ago, with growth driven by the Internet and Software segment
Source: Thomson Reuters, Arthur D. Little
Note : 1) Constant exchange rate 2017, 1USD = 0,887EUR
Evolution of the global digital ecosystem
CAGR
2014-2017
Market capitalization by sector
World, 2007-2017, billions of euros1
993
417
347 383 420
444 523
724
515 640
797 878
699
614 634
719 868
930
401
405
439
503
579
98
49
325
656
683
990
2011
1 101
1 490
245
2007
Content
1 753
194
2008
218
276
1 725
20172009
1 094143
257
1 708
305
Telecom
Operators
2010
1 078
1 212
4 514
156
2 665
240
270240
3 979
2016
326
1 335
211
271
1 136
1 161
2012
2 869
1 030
1 315
2013
1 316
1 465
2014
1 345
2015
275
Telecom
Equipment
1 433
1 416IT / Software
1 841
Internet
1 544
1 047
3 703
3 299
3 484
5 106
5 739
6 187
7 410
Devices
+1%
+13%
+13%
+11%
+12%
+13%
+45%
+6%
CAGR
2007-2017
+8%
+2%
+10%
+10%
+26%
+1%

6. 6
Agenda
1 Evolution of the global digital ecosystem
2 French digital ecosystem: dynamics and European benchmark

7. 7
83%
(+4)
1%
(0)
1%
(0)
1%
(0)
0%
(0)
83%
(-4)
3%
(-1)
7%
(+4)
74%
(-2)
6%
(+2)
3%
(0)
4%
(0)
52%
(-1)
2%
(-1)
16%
(0)
12%
(0)
18%
(+2)
Telecom operators are essential to the French digital ecosystem
5 content
providers
5 Internet OTT
players
5 telecom
operators
5 equipment
vendors
5 device
manufacturers
Revenues1,2
€74 billion (-€1Bn v. 2016)
Direct Employment
163 000 (-3 000 v. 2016)
Investments3
€10 billion (+€1Bn v. 2016)
Taxes4
€4 billion (+€0,6Bn v. 2016)
Relative size of players in the digital ecosystem 2016-2017
France, 2017 (v. 2016)
Source : Diane, annual reports, Arthur D. Little
Note : 1) Revenues declared in France or from literature search, 2) Data adjusted to take into account the estimated actual turnover of international players in France, 3) Nokia's
mobile division investments are integrated into Microsoft following the acquisition of the mobile division in 2014, 4) Corporation tax, taxes and similar disbursements
French digital ecosystem: dynamics and European benchmark R E I T
y compris filiales
13%
(0)
7%
(+1)
14%
(-4)

8. 8
Telecom operators have faced a sharp increase in their tax rates, as
opposed to equipment vendors and internet players
Source : Diane, annual reports, Arthur D. Little
Note : 1) Corporation tax, taxes and similar disbursements, 2)Revenues declared in France or from literature search, 3) Data adjusted to take into account the estimated actual
turnover of international players in France
French digital ecosystem: dynamics and European benchmark
Internet OTT playersTelecom operators Equipment vendors
0,5%
Device manufacturers Content providers
6,2%
6,9%
8,1%
2,2%
2,5%
0,2%
5,9%
0,5% 0,6%
+1,9 pts
+0,3 pts
+0,3 pts
-1,0 pts
+0,1 pts
2013
2017
Taxes1 to Revenues2,3 ratio per type of players
France, 2013 v. 2017, %
R E I T
y compris filiales

9. 9
The share of telecom services in French households’ spending is low and
has decreased over the last years, contrary to other expense items
Source : INSEE, Arthur D. Little
Share of telecom services expenses in French households’ total spending
France, 2008-2017, % of total spending
ClothingLeisureTransportation Food OtherHealthcare
9%
Housing
15%
Telecom services
24%
26%
14% 14%
16% 15%
17%
4% 4%
10%
3%
2%
13%14%
20172008
French digital ecosystem: dynamics and European benchmark R E I T

10. 10
Contrary to other key regulated sectors, telecom services have witnessed
a sharp fall in prices over 2010–2017
Source: INSEE, Arthur D. Little
Consumer price index evolution on selected products
France, 2010–2017, Base 100 in 2010
129
132
114
117
107
62
102
60
65
70
75
80
85
90
95
100
105
110
115
120
125
130
135
20172010 2011 20152012 2013 20162014
Electricity
Rail
Postal services
Inflation
City gas
Telecom services
Highway services
French digital ecosystem: dynamics and European benchmark R E I T

11. 11
R E I T
Prices of telecom services in France remain the lowest among large
Western countries
Source: Operators, Arthur D. Little
Note: 1) Triple play offers only; unlimited calls to landline at least; unlimited broadband internet through xDSL or fibre; television included, excluding additional packs; operators with
market share > 10%, 2) Unlimited calls (whenever possible or else >500 minutes), unlimited SMS/MMS, at least 5 GB Internet; packages without devices, packages without
commitment; operators with market share > 10%
Offer benchmark – Main operators
Selection of countries, November 2018, € incl. taxes/month
9€ 10€
23€
60€ 61€
Fixe (Triple Play)1 Mobile2
15€
23€ 25€
38€ 40€
78€
Benchmark
Mobile 50 Go
French digital ecosystem: dynamics and European benchmark
NA

12. 12
Operators increased their investments despite lower turnover, but could
not maintain employment levels
Source: ARCEP, DARES, Insee, Arthur D. Little
Note: 1) Investment efforts: operators’ investments (excluding frequency acquisition)/revenues of operators 2) Provisional ARCEP figures for 2017
3) ARCEP figures 4) ARCEP figures including part of indirect jobs 5) Provisional ARCEP figures for 2017 corresponding to revenues collected from final client
Employment, revenues and investments of French telecom operators
France, 2010–2017, base 100 in 2010
83
89
83
149
179
60
70
80
90
100
110
120
130
140
150
160
170
180
2010 2011 2012 2013 2014 2015 2016 2017
CAGR
2010-2017
- 1,6 %
- 2,6 %
- 2,6 %
5,9 %
8,7 %
French digital ecosystem: dynamics and European benchmark R E I T
Revenues5
Operators’ direct jobs3
Sector jobs4
Operators’ investments
(excluding frequency acquisition)2
Investment effort1

13. 13
Telecom operators’ investments have peaked in 2016 and 2017 – €81
billion were invested over the period
Investments of network operators1
France, 2007–2017, billions of euros
3,8 4,3 3,7 4,4 5,0 4,9 4,7 4,7 5,5 6,2 6,6
2,4 2,2
2,2
2,1
2,3 2,5 2,6 2,4
2,3
2,7
3,0
2014201320112007
6,5
2008 2009 2010 2012 2015 2016 2017
6,2
9,6
6,5
5,9
7,17,3 7,4 7,3 7,8
8,9
€81 billion
(excluding frequency acquisition)
Before very
high speed
Investment phase
including very high
speed
+ 11% CAGR between 2014 and 2017
Source: ARCEP, Arthur D. Little
Note: 1) Investments excluding frequency acquisition
French digital ecosystem: dynamics and European benchmark R E I T
Mobile investments Fixed investments
ou
278 TGV trains
ou
ou
ou
6 nuclear power
plants
716 high
schools
1524 km of
highways
(i.e Paris - Budapest)
26 Stades de
France
2017 investments are equivalent
to…

14. 14
159
(6%)271
(11%) 1 261
(51%)
72
(3%)
133
(5%)
411
(17%)
177
(7%)
2017
Investments keep growing in spite of a heavy specific taxation
Source: Operators, FFT, Arthur D. Little
Note: 1) Perimeter: corporate tax on top 5 companies (set reconfigured in 2012 with corporate tax corresponding to Numéricable + SFR) & FFT members specific taxes 2) VOD &
private copy
Telecom operators’ taxation
France, 2013 and 2017, millions of euros and % of total taxes
2 484
1 223
(49%)
1 261
(51%)
2013
1 223
(39%)
1 923
(61%)
2017
3 146
Specific
tax
2013
Corporate
tax
+0%
+52%
Variation
13-17
Corporate tax1
IFER copper IFER antenna
TOCE (France TV)
Frequencies + FH
COSIP (CNC)
Other2
French digital ecosystem: dynamics and European benchmark
98
(3%)
1 923
(61%)
408
(13%)
118
(4%)
206
(7%)
194
(6%)
199
(6%)
R E I T

15. 15
Increased investments and taxes lead to lower cash flow despite
productivity efforts
Source: Companies, literature search, ARCEP, Arthur D. Little
Note : 1) Top 5 French telecom operators including Orange, SFR, Bouygues Telecom, Free and EI Telecom 2) Estimated operational FCF
(EBITDA – CAPEX) 3) ARCEP figures representing sector investments, excluding frequency acquisition 4) Taxes = Corporate + Specific Taxes
Economic performance of major French telecom operators1
France, 2013–2017, billions of euros
Revenues EBITDA
Operational
FCF2
2013 2017
40,3 38,9
-3%
2013 2017
13,112,0
+9%
2013 2017
4,7
3,5
-26%
30% 34% 12% 9%
x% % of revenues
2017
9,63
2013
7,33
+32%
18% 25%
Capex
+€1,1billion
Of EBITDA
French digital ecosystem: dynamics and European benchmark
Taxes4
6% 8%
2017
51%
2013
61%
49%
39%
2,5
3,1
+27%
Corporate tax
Specific tax
R E I T
+€2,3 billion
of investments
-€1,2 billion
of operational FCF

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