eSIM will make the provision of connectivity services very attractive for firms outside the telco industry, so called OTTs.

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Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM?
June 2017

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eSIM will make the provision of connectivity services very attractive for firms outside
the telco industry, so called OTTs.
eSIM Impact on Telco Market
New eSIM features enable fully digitalized customer relationship.
▪ For the first time, all interactions with customer can happen exclusively online. No need for SIM card logistics.
▪ Activation of profile and connectivity happens on-the-go, there is no time lag between sale and usability.
▪ eSIM enables profile management of multiple devices.
Through eSIM, Digital Customer Management becomes key to providing connectivity services.
▪ Interactions with connectivity provider will multiply. More devices per customer and more interactions per device.
▪ Customer can switch eSIM profiles and does his own subscription and service management.
▪ Customer is used to excellent customer service from e-commerce and expects the same for telco services.
OTTs in pole position to enter the market can be identified via few key criteria:
▪ A compatible business model and digital capabilities are primary factors to identify possible entrants.
▪ Secondary factors “Existing Payment Service” and “Existing ID Verification" generate competitive advantage.
24/7
Telco market is attractive for OTTs for its recurring revenues and the opportunity to complete their service portfolio.
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

3. 3
The eSIM will fully digitalize customer relationship and will enable connectivity
management of multiple devices.
eSIM Features
Combined SIM & Subscription Delivery at Point of Sale Split eSIM & Subscription Provisioning in the Future
SIM
SIM +
Subscription
OEM
SIM
vendor
eSIM
eSIM
vendor
OEM
Subscription
▪ SIM either bought at point of sale or online and shipped to customer
▪ SIM has to be plugged in manually, activation takes time
▪ All customer interactions can happen exclusively online
▪ Activation of profile on-the-go, no time lag between sale and usability
Today’s MNOs MNOs + ?
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

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Factors MNOs OTTs
Smooth and intuitive
digital user experience
Agile and scalable
IT infrastructure
Cost-efficient and
excellent (self-)service
Through eSIM, Digital Customer Management becomes the number one success
factor in providing connectivity services.
Importance of Digital Customer Management
Customer is used to excellent services from
e-commerce companies. He will expect the
same level for future telco services:
▪ Profile management of several
personal devices 24/7
▪ Instantaneous activation and
push of profiles
▪ Adaption of telco services to
personal preferences
▪ Increased number of eSIM enabled
devices per customer which all can be
added and deleted from customer profile
▪ Interactions per device more frequent as
telco services needs to be managed
among all devices (e.g. parallel ringing,
message/voice forwarding)
▪ General shift of customer service to digital
channels
24/7
100% Digital
Relationship
Digital Capabilities as Key to SuccessMore and Digital Customer InteractionsEnhanced Customer Expectations
Connectivity
Provider
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

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A compatible business model and above-average digital capabilities are identifiers
for possible OTT entrants to the telco market in the eSIM era.
Criteria to Identify Potential Market Entrants
Primary Factors Secondary Factors
Factors
Adaptable and Compatible
Business Model
Excellent
Digital Capabilities
Existing Payment
Service
Existing ID
Verification
Assessment
Criteria
▪ No conflict of interest with
current business model or
strategy, e.g. through
existing relations with MNOs
▪ Previous experience with
expansion into business
fields unrelated to core
business
▪ Business model further
developed than industry
standard
▪ Existing customer base
target group for connectivity
services
▪ Cost-efficient and excellent
digital customer (self-)
service
▪ Experience in the seamless
delivery of digital products
▪ Smooth and intuitive digital
user experience
▪ Access to customers on
their primary devices, e.g.
smartphones or other digital
channels
▪ Lower contract signing
barriers through available
payment credentials
▪ Seamless and reliable
purchase process in place
▪ Previous experience with
subscription services
▪ Pre-existing electronic ID
verification in place, either
via video verification or
Personal ID
▪ ID verification via already
existing face-to-face
customer relationship instore
1234 5678
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

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Identification of Potential Entrants
Majority of companies selected on base of Interbrand Best Global Brands Ranking 2016
Digital
Capabilities
Compatible
Business Model
Possible entrants come from a wide range of sectors. Some have already made a
move and are currently testing initial services.
ID Verification =
Payment Service =123
4
567
8
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

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Bundling opportunities and being a prime contact for mobile contracts make firms
excellent candidates. Dependence on operators is, however, detrimental.
Exemplary Assessment of Potential Entrants
Strengths + Attractive bundling of
music streaming and
corresponding connectivity
+ Fruitful cross-selling of
aviation, rental cars and
accommodations
+ Direct customer interaction
over-the-counter and
onboard
+ Prime contact point and
existing tools for mobile
contract and tariff
comparison
+ Delivery and independent
structuring of offerings,
opening business
opportunities
+ Potential bundling of
connectivity and prime
service or fire hardware
+ Experience in the
seamless delivery of digital
products
+ Digital service excellence
Challenges - Own MVNO services
would undermine strategy
of zero-rating at as many
MNOs as possible
- Development of inter-
national full MVNO costly
and far from current
operations when
compared to other
candidates
Fitness
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

8. 8
Competence Center New Telco
Mücke, Sturm & Company supports its clients based on profound knowledge and
expertise about the most important areas of digital transformation, such as eSIM.
Contact
Head Office Munich
Theresienhöhe 12
80339 Munich
Germany
▪ Telco and eSIM Expert
▪ 18 Years of Proven
Experience in Telco Industry
T +49 89 461399 0
F +49 89 461399 777
www.muecke-sturm.de
▪ Expert for Digital Customer
Management
▪ 15 Years of Proven Experience
in Optimizing Customer-facing
Processes
Axel Meiling
Associate Partner
Nicolas Bell
Associate Partner
Munich
Hamburg
Essential eSIM Project Experience
Supporting a major European telco group, and consulting
other stakeholders, MS&C knows the pain points of
developing and implementing eSIM strategies.
Profound eSIM Knowledge
MS&C has gained profound eSIM expertise in conducting
the Global MNO eSIM Study, the State of eSIM
Implementation in Europe and several other publications.
Extensive eSIM Network
As a keynote speaker on all relevant congresses, MS&C
maintains far-reaching contacts to all major telco
stakeholders and investors throughout Europe.
Flash Insight: Are OTT Attackers in Pole Position to Make Use of eSIM? – June 2017

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