Towards

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Towards Social Responsibility
Global Compact Leaders Summit 2007Geneva,
Switzerland / 5-6 July 2007 Rafael Orduz C.E.O.
Bogota Telecommucations Company
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The two main questions...

• What has your experience been with implementation
  of the Global Compact and its principles? Has it
  added value? If so, how?
• Looking into the future, what is your advice to
  improve the implementation and value of the
  Global Compact principles at the Corporate
  level? through collaborative / partnership
  initiatives?

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Introduction

• For decades etb was a regional monopoly in
  Bogotá...
• It offered only one service fixed local
  telephony.
• Without competitors etb had no necessity of a
  commercial division...
• Instead of customers it had users.
• Its capital was totally governmental.
• Given the dynamics of the telcossector
  (technology regulation markets) the company
  had to radically change its strategy.

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Introduction

• Today etb competes with several foreign and
  Colombian companies...
• ...in different services lines including internet
  access, VoIP, networking.
• 12 of its capital is in the Colombian stock
  exchange...
• ...while 88 belongs to the city of Bogota.
• As connectivity has become a crucial issue for
  the socialeconomic development, etb has a huge
  opportunity in both developing
• Social responsibility
• Corporate efficiency (including profits
  generation)
• Etb has been commited with the Global Compacts
  principles MDG.

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Introduction

• The institutional environment for etb has been
  favourable both at the national and at the local
  level.
• Security macroeconomic stability -basic flags
  of President Uribes government- have positively
  contributed to etbs performance...
• By reducing unemployment and increasing GDPs
  growth rate.
• Extreme poverty in Colombia has been reduced
  thanks mainly to the increase in the coverage of
  basic education, social security....
• ...and the number of new households served by the
  public utilities companies.

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Introduction

• At the local level, the government of Bogota has
  been implementing an ambitious development plan
  based on the Millenium Development Goals (MDG)...
• ... showing remarkable results after three years
  (2004-07) in terms of poverty reduction gt
  improvement of the HDI.
• In that context, etb has been implementing a
  strategy of making communications services and
  connectivity available to the poorest...
• ...generating value and profits for its
  shareholders.

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Agenda

• Colombia Bogotá MDG and first results
• Etb Strategy and Global Compact principles
• Connectivity Business and Social Responsibility
• Challenges

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1. Colombia Bogota MDG and first results

• In the last four years Colombia has been growing
  at relatively high rates...
• ...making possible the reduction of open
  unemployment from 15 to 10.5 in four years...
• ...and increasing the per capita income from US
  2700 to US 3050.
• The poverty line dropped from 56 to 45 between
  2002 and 2006.

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1. Colombia Bogota...

• The generation of 1.4 million new places in the
  basic education...
• ...and 8,7 million additional in the subsidized
  health system help to explain this improvement.
• In the case of Bogota, the eight MDG are integral
  part of the present administrations strategy.
• The reduction of extreme poverty and hunger has
  been the main goal of the strategy (Bogota
  without Hunger)...
• ... based on alliances with the civil society
  (Bogotá without indifference)...
• ...which have effectively contributed to improve
  the HDI in the city.

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1. Colombia Bogota...

• The developments both in the country and in the
  city of Bogota have contributed to etbs
  performace in the last years...
• .. and the adoption of a CSR policy based on the
  Global Compact principles and the MDG.
• Nevertheless, there is a huge challenge both in
  Colombia and Bogotá because of the relatively
  high Gini index gt high income concentration.

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Colombia a snapshot of ICT use...
Population 42100.000
Internet Penetration 15.9 Internet users
6700.000 Home computers 16
GDP per capita US3.050
Colombia
Number of Celular users 29 million
Human Development Index 70th Place Average
Human Development 7th place
Source www.portafolio.com.co corte 2006 , DANE
CENSO 2005, CRT Informe Semestral. Mayo 2007
www.siust.gov.co
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Perfil de Bogotá
Bogota a snapshot
Population 2005 6.700.000
Demographic density 4200 inhabitants/Km²
DFI 2005 US 3.232 mill.
Total Exports 2005 US3.918 mill.
GDP per Cápita 2005 US 4.288
GDP growth rate 6,8
Calificación de riesgo Duff Phelps AAA
Telephony penetration 2006 36
Broad Band conexions 2006 315.600 (50 of
Colombian market)
Internet penetration 2006 17,1
Incluye Cundinamarca Fuentes Invest in Bogotá,
Dir. Estudios e Investigaciones - CCB, Dane,
Banco de la República y SHD, CRT, SUI
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2. Etb Strategy Corporate Social Responsability

• The telcos sector is highly dynamic
• Technology
• Regulation (market opening)
• Market (MA, new companies...)
• Etb was the typical communications company
• Regional monopoly
• One service company fixed local telephony
• Totally owned by the state (city of Bofgotá)

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2. Etb Strategy Corporate Social Responsibility

• In the last years etb has adopted a simple
  strategy in order to grow and generate profits
  for its shareholders
• Substituing decreasing revenues from traditional
  telephony through datainternet access
• Protecting revenues from traditional telephony
  markets through services bundling.
• Reducing operational costs.
• Etb owns 25 of the third mobile player company
  in the Colombian market
• Etb owns 40 of the second largest call center in
  the country.

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2. Etb Strategy Corporate Social Responsibility
One consequence is the revenues - restructuring
( US Mill) of etb
...and a global Ebitda of 51... profits for
etbs share-holders
2005
2006
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L.D.
Local
DI
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Etb has complemented its strategy by adhering to
the Global Compacts principles in 2005...
...and supporting the MDG...
In order to develop and apply a policy of
Corporate Social Responsibility
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Within the MDG etb has concentrated on the 8...
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Etb developed a CSR policy based in three main
areas...
Sustainable Development

Sustentabilidad
Development and economic growth
Improving quality of life and social welfare
Environmental
Fundamen-
tabilidad
Social
Economic
Gobernabilidad
Cooperatividad
Taking care of the environment and its resources
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VALUES
10 principles

• Respect the protection of internationally
  proclaimed human
• rights and
• Not complicit in human rights abuses

• Promote and realize in good faith the right of
  workers
• Elimination of all forms of forced or compulsory
  labour,
• Abolition of child labour and
• Elimination of discrimination in respect of
  employment and
• occupation

• Support a precautionary approach to
  environmental challenges
• Undertake initiatives to promote greater
  environmental
• responsibility
• Encourage the development and diffusion of
  environmentally
• friendly technologies

• Work against corruption in all its forms,
  including extortion and
• bribery.

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The CSR policy looks for a tight and productive
relationship between etb and different interest
groups
Customers
Community
Competition

• Workers and their families
• Unions

State
Shareholders
Gobernabilidad
Suppliers
Mass media
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CSR towards interest groups...

• INSTIT. FRAME
• Bogota Without Hunger
• Program of Equality of Woman and gender.
• Citizen Service.
• .

• PROGRAMS OF SOCIAL MANAGEMENT
• Internet for
• Communities.
• Know and enjoy the World of ETB.
• Participation and
• Social Control.
• Quality towards the Client.

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• ENVIRONMENTAL
• MANAGEMENT
• Relationship with Environmental Authorities
• Cooperation with other public utilities companies

• ENVIRONMENTAL MANAGEMENT
• Environmental Culture Institutional Plan of
  Environmental Management
• Integral management plan of solid residuals
• Efficient use of energy and water.

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• ORGANIZ.
• PROGRAMS
• Family Well-being programs
• Schools, scholarships, club, aid and medical
  service.

• ORGANIZ.
• PROGRAMS
• Industrial security and Occupational Health
• Personalized attention to workers parents with
  incapacity

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• HUMAN MANAGE-MENT
• Professional Development,
• Work shops Formation Center

• HUMAN MANAGEMENT
• Performance Management,
• Ability Development.

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• COMMUNICATION
• Corporative Communication
• Online Information system

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3. Connectivity Business Social Responsibility

• According to ITU there are now 1 billion internet
  users around the world...
• ...based in industrialised economies, countries
  of recent industrialisation and elites in the
  developing countries.
• The next billion of internet users will
  necessarily come from the poor areas in the DC.
• Connectivity is a key to overcome poverty.
• Although the penetration rates are still low, etb
  has become the first operator allowing access to
  internet.

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Etb has become one of the major suppliers of
internet access in Colombia...
Accumulated number of broad band subscribers
(etb)
TACC 147
...and the first in the Bogotá region
Fuente Vp. Comercial ETB
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Fuente Internet World Stats (www.internetworldsta
ts.com) World Broadband Statistics
Q4 2006 - Point Topic
Although the penetration rate is still low, the
Colombian growth rate was the tenth worldwide
250
200
150
100
50
0
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3. Connectivity Business and CSR...

• Operators in Colombia have to bill according to
  the purchasing power of the customer...
• Therefore, Bogotá has 6 levels where 1
  corresponds to the poorest.
• Levels 5 and 6 subsidize levels 1,2 and 3.
• 80 of etbs fixed lines are located in levels 1,
  2 and 3.
• 70 of the internet subscribers are in 1, 2 and 3
  areas.
• Within the CSR policy etb started to implement
  the strategy Internet entre tod_at_s, mainly for
  the 1,2 and 3 levels.

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Internet entre tod_at_s
The Portales Inter_at_ctivos are massive access
points that offer citizens a novel and
innovating experience of how to use technologies
of information and communication (TIC).
Internet entre tod_at_s is a program that aims to
democratize the massive access to TICs through
the Portales Interactivos mainly for vulnerable
populations.
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3. Connectivity Bussiness and CSR...

• Internet entre tod_at_s is a project that involves
  several actors
• Communities
• Schools
• Equipment providers
• Governmental agencies
• Etb.
• The project will include 200 locations by the end
  of 2010.

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Internet entre tod_at_s Impact on persons
quantity of locations
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4. Conclusions - Challenges

• Etb has developed a CSR policy based on the
  adherence to the Global Compact principles and
  the MDG.
• The CSR policy has been a necessary complement to
  etbs basic strategy.
• In an open and highly competitive market the CSR
  has created value to etb by
• Positioning its brand (top of mind a trusty
  company) gt increasing sales revenues
• Tightening the relationship with different
  interest groups

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4. Conclusions - Challenges

• In a country with a still low internet
  penetration rate, etbs brand is associated with
  being the first in the central region.
• In order to provide connectivity to the poorest
  tight cooperation will be needed between
• Operators and government legislators
• Operators and suppliers (providers)
• Operators and other private companies.

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Towards Social Responsibility
Thank You
www.etb.com.co www.etb.net.co rafael.orduzm_at_etb.co
m.co responsabilidadsocial_at_etb.com.co