Digital transformationthrough mobile technology_

Dr Mike ShortVP TelefónicaMike.short@telefonica.com

Full network operations (21)

Service reach (152)

€57 billion revenue

24 countries

313 million customers

120,000employees

A world leading provider of integrated mobile, fixed & ICT services

Telefónicaa leading company in global telecoms

1973 1983

Motorola DynaTAC8000X

20031999 2007 2013

Motorola International

Motorola StarTAC

Nokia 8110

Motorola Razr

Nokia N80

Nokia 1200

Apple iPhone

Samsung Galaxy SIII

BlackBerry Z10

Samsung Galaxy S4

First mobile

call

4G

Nokia2110

1993

NokiaCommunicator

O2 Xda

The mobile phone turns 40

2014

3G2G1G

Everyone now has the power to innovate in a digital world thanks to the marriage between the two great innovation platforms of the 21st century: internet and mobile.

Dr. Mike Short, VP Telefónica,

Financial Times, April 2013

Smartphone users still risingAs people convert from mobiles to smartphones there’s a huge upside still to happen

Smartphones Mobile phones

Global Mobile Users 2013 estimates

1.5Bn

5Bn

4Bn

3Bn

2Bn

1Bn

Source: Morgan Stanley Research estimates.One user may have multiple devices. Subscription numbers may be higher than User numbers.

differently_

see the world

analog_

from

digital_to

unconnected_from

connected_

to

We’re communicating more than sleeping

The average UK adult is now spending more time using media than they are sleeping. 8h 41m communicating versus 8h 21m sleeping

8hrs 41m

Source Ofcom August 2014

We’re even better connected_

6 million UK 4G mobile subscribers

73% of premises are in areas with 4G coverage

4G Mobile Superfast Broadband

Public Wifi 11m O2 wifi users 10,000 hotspots

26.1 million superfast fibre broadband connections

Up 58%

Smart metering_

A stepping stone to the smart home

Coverage targets

80%

2015

97%

2017

99%

2021

Smartphones are used everywhere

97%

85%

72%

64%

61%

61%

59%

52%

44%

28%

16%

Home

On the move

Work

In-store

Coffee Shop

Public Transport

Restaurant

Social Gathering

Airport

Doctors

School

Source: Google Survey on Internet Usage, H1 2013

Time spent per day by O2 UK smartphone users, by application

Source: UK Smartphone Data 2012 (O2 users only)

25 mins

17 mins

16 mins

14 mins

12 mins

11 mins

10 mins

9 mins

9 mins

3 mins

Browsing the internet

Social networks

Listening to music

Playing games

Making calls

Email

Texting

Watching TV/Films

Reading books

Taking photos

128TOTAL MINUTES PER DAY

Not so long ago, people just danced at concerts.Now they click, video, share & tweet_

Media + Data Upload + Sharing from mobiles =Ramping fast and is still in early stages

Explosive growth but still early stage.

Photos Video Audio Data uploadRamping fast Still emerging Still emerging

NowFirst

2009 2010 2011 2012 2013 2014 20150.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.9%2.4%

6.0%

10.0%

15.0%

Mobile traffic as % of total Internet trafficGlobal mobile Internet traffic as a % of total Internet traffic 2009-2013

Source: Statcounter Global Stat 5/13.

Forecast

Actual Q1 14

YouTube uploads reach 100 hrs per minute6 years ago it was nada.

2007 2008 2009 2010 2011 2012 20130

20

40

60

80

100

120

Source: YouTube

100hrsper min

No. hours of video uploaded to YouTube every minute

Technology cycles

Mainframe computing

1960s

Still early cycle on smartphones & tablets. Now wearables coming on strong, faster than the typical 10-year cycle.

1970s 1980s 1990s 2000s Today

Mini computing

Personal computing

Desktop Internet computing

Mobile Internet computing

Wearable/Anywhere Internet computing

Sensor-enabled wearable technologyWhere technology meets fashion

3rd party appsAPI partnersAccessories

Development Platform

Less distracting when receiving alerts, reminders and messages

Attention-getting

Voice or gesture control

Hands-free

Low power consumptionInstant wakeBackground working/sensing

Always on

Wifi3G/4GBluetoothNFC

Connected

GPSAccelerometerCompassCamera

Environment aware

Source: MIT, KPCB

AttractGetting online and being seen through all channelsBoth internal and external audiences

Work smarterProductivity and

efficiency

Business growthSell and serve

smarter

Serving customers better. Getting closer to them: being more responsive and interactive

Retain

Outsourcing the business model and IT to be more efficient, agile and productive Grow

The Digital Business

Social Media of businesses use social media*

74%

IoD and O2 survey

Is your web site mobile ready?

Businesses are moving to ‘mobile first’

Source: Constant Contact, June/July 2014

More than ¾ of small businesses are using mobile technology

Up from 66% in 2013

77%

34%

60%

Mobile web sites are leading the charge

Have interest in mobile-optimising their web site in the next 6 months

32%

Other areas to explore

Business messaging

Location-based marketing

O2 Wifi gives us a channel for direct communication with customers and visitors

Large carousel

Search bar

Promo boxes

Apps of the day

Personalised page

Screen fold

0-15 16-24 25-34 35-44 45-54 55-64 65+

4%

25%28%

22%

14%

5%2%

With a growing audience reach and profile

Gender and age distribution

39%

61%

Over 3m active on their smartphones and tablets in leading venues like Debenhams, over the last 30 days.

11m registered O2 Wifi users

Mobile cloud services

Moving to digital through the cloud

Connectivity. Devices. Digital

Technology enables you to do most things anywhere through connectivity_

Summary_

Consumer behaviour, expectations and distribution channels are all changing. Businesses need to respond to stay ahead

Digital  technology is a key enabler for better engagement , improving customer relationships and business transformation

Web mobility , Apps and Cloud based services are all providing new and cost effective solutionsInternet of things and video solutions will add to this.

Is your Business digital?

webcasts.com/powerhour

Virtual online events• Inspiration: Finding (and protecting) time to work on our

businesses

• Discovery: how technology can help improve your overall productivity and allow your business to stay ahead of the game

• Know how: Boost your digital business knowledge about the latest O2 digital products and learn how they can make your business more efficient

thebusiness.o2.co.uk

Thank you