Mobile services IDATE International Conference Montpellier (France), 23 November 2005

1. Mobile servicesIDATE International ConferenceMontpellier (France), 23 November 2005 Frédéric Pujol Head of the mobile services division, IDATE f.pujol@idate.org

2. Mobile services in Western Europe • Mobile subscribers and distribution • EU15 + Norway & Switzerland Source : IDATE (in « 3G economics » report)  2 billion mobile subscribers worldwide of which 1.4 billion using GSM technology  Western Europe mature market seeking new revenue streams

3. ARPU (Average Revenue Per User) Close to 85% of data ARPU= SMS & MMS in 2005 Western European: total ARPU Non messaging data ARPU Source : IDATE (in « 3G economics » report) Voice represented 83% of the total ARPU in 2004 and will account for 71% in 2010 Source : IDATE (in « 3G economics » report) Non messaging data ARPU will grow from 15% of total ARPU in 2004 to 35% in 2010

4. Western Europe • Differences between European mobile markets MoU (Minutes of Usage) reflect price levels Source : IDATE (in « 3G economics » report)

5. ARPU - Trends • Western Europe (€) • USA (2004) €42 Cingular, T-Mobile €51.6 Sprint PCS €56.7 Nextel €46.7 Q2 2005 Italy Germany • South Korea • €33.5 (Q2 2005- Merill Lynch) • €36.5 (SKT Q3 2005) France UK Sweden Source : IDATE (in « 3G economics » report)

6. ARPU - Japan  Average ARPU 2004: €52 (DoCoMo & au) 3G ARPU: FOMA/DoCoMo: €70 – 34% data KDDI: €53 – 26% data Vodafone: €44 – 22% data

7. 3G development 3G growing faster than GSM in the early 90s 100 WCDMA networks launched worldwide (11/2005) 3G expected to reach 25 million subscribers at end 2005 Hutchison is the first 3G operator 3G represents 4% of mobile subscribers in Western Europe Source : IDATE (in « 3G economics » report) Major mobile operators have launched 3G

8. 3G issues • Real launch of 3G by major players in Western Europe • 3G brings higher data rates, capacity (and unlimited packages for voice) • Flat-rate tariffing for data: • KDDI : € 30 A trend in Western Europe – which tariff ?

9. Mobile operators: M&A - Financial results • USA: Cingular/AT&T Wireless, SPRINT/Nextel • Recent M&A in Western Europe: • Financial results: EBITDA margins generally in the 30-50% range Cash available for 3G investments

10. Mobile VoIP • New technologies now enable end-to-end mobile IP communications (UMTS TDD, UMTS FDD: release 6, CDMA 2000 EV-DO rev.a, Flash-OFDM, I-Burst, WiMAX) • A real threat: • New technology enablers • Dual-mode terminals • FMC • Existing services • Wireless VoIP network technologies and availability: • Impact on voice ARPU likely • Western European mobile operators seem reluctant to introduce dual-mode handsets

11. Mobile data services . Future growth generators ?

12. New mobile services: music • Music • From ringtones to full track downloading • Mobile music value chain: • Main questions • DRM (Digital Rights Management) • Which business model ? • Player and memory also included in the terminal is there a risk for a camera phone effect ?

13. New mobile services: mobile TV • Mobile TV • Streaming TV on 3G is attractive but is not a medium-term solution • Requires too much bandwidth on 3G networks • Broadcast mode is necessary • New frequency bands are necessary • A host of experiments being conducted • Choice of the technology(DVB-H, T-DMB, S-DMB, MediaFlow, MBMS)? • DVB-H and T-DMB in Western Europe • Content? Dedicated or not? • Which business model? • Relationship between the mobile sector and the media sector for broadcasting?

14. Japan 1/3 • General situation • Penetration rate of 69% in May 2005 – 37% are 3G subscribers • Decreasing ARPU levels: ARPU to move into Yen 6000 (€ 43.5) range • Increasing competition with more pressure from KDDI and potential new entrants • Number portability’s expected impact on churn • Situation of DoCoMo: • The first WCDMA (UMTS) operator • Still controls 56% of mobile subscribers in Japan Revenues and profits down  i-mode: transition from 2G to 3G and the impact for data flat rate • Felica Networks (JV with Sony) • Retention strategy ? • From wallet-type to credit card functionality • Interest from KDDI & Vodafone

15. Japan 2/3 • KDDI’s impact • Controls 27% of mobile subscribers in Japan  Very aggressive on data pricing (flat-rate) and 3G growth with CDMA 2000 1X/ EV-DO • Services • Games (« EZ Game Street ») • Music downloading (« Chaku-uta full ») • Mobile auctions • Blogs • Analogue TV €30

16. Japan 3/3 • New entrants • 2 new mobile licenses in the 1.7 GHz band (paired spectrum): • Softbank BB • eAccess • These two players are already in the DSL business in Japan • one new mobile license in the 2 GHz frequency band (unpaired spectrum: TDD technology likely – IMT 2000 mandatory?): • IP Mobile (TD-CDMA tests) • Willcom (evolution of the PHS network) • Livedoor (iBurst technology from ArrayCom) • Yozan will open a commercial WiMAX service at 5 GHz before end 2005  Licenses awarded to Softbank, eAccess and IP Mobile in November 2005

17. 1 2 3 4 5 Key questions Impact of FMC, data flat rate & mobile VoIP? Regulatory environment? MVNOs, newcomers in the mobile sector Termination rates, SMS Impact of new mobile services (TV, music...) on ARPU? Which role for Internet players: Google, MSN, eBay...? Mobile broadband: which applications/cost for HSDPA?