Brasilia, November18th 2009

aChanging Broadband Landscape in Latin America

Creates Mass Market Adoption Opportunities

Pyramid Research snapshot

Mobile and Broadband Market Trends in Latin America

Pyramid Perspective

Agenda

Cross-functional

Consulting Work

• Business planning

• Analysis of end-user

preferences

• Competitive intelligence

• Market entry strategy

• Custom Market sizing

• Analysis of business models

and value chain

+23-year history of advising companies and

regulatory agencies s in the converging

communications, media and technology

industries

Structured research methodology

We examine the macroeconomic and

regulatory environment, technology

trends, and performance of both service

providers and equipment vendors.

Bottom-up approach to market sizing

End-user surveys to validate adoption

trends and anticipate shifts in demand

Regional Research Teams (In depth

country-level perspective covering

AsiaPac, EMEA, Latin America)

Communications, Media & Technology

Research Team

(Global Analysis and Benchmarking)

• Telco & Cable Transformation

• Wireless Broadband

• FMC

• Content Business Models

• Networks & Managed

Services Strategies

• Country profiles

• Telecom adoption and

revenue forecasts of 100+

countries (convergence, fixed

broadband, IPTV, mobile)

Research Coverage Areas Primary Client Types

Mobile Communications

Fixed Communications

Internet Services

Media & Content

Mobile & Fixed Operators

Vendors & Equipment

Manufacturers

Media & Content Providers

Cable Companies & ISPs

Financial & Consulting

Firms

Pyramid Research Snapshot

North America

CanadaUSA

Latin America

ArgentinaBoliviaBrazilChileColombiaCosta RicaDominican RepEcuadorEl SalvadorGuatemalaHondurasMexicoNicaraguaPanamaParaguayPeruPuerto RicoUruguayVenezuela

Western Europe

AustriaBelgiumDenmarkFinlandFranceGermanyGreeceIcelandIrelandItalyLuxembourgNetherlandsNorwayPortugalSpainSwedenSwitzerlandUK

Central &Eastern Europe

BulgariaCroatiaCzech RepublicHungaryPolandRomaniaRussian Fed.SlovakiaSloveniaUkraineUzbekistan

Asia-Pacific

AustraliaCambodiaChinaHong KongIndonesiaIndiaJapanKoreaMalaysiaNew ZealandPakistanPhilippinesSingaporeTaiwanThailandVietnam

Africa/Middle East

AlgeriaBahrainBotswanaCameroonCongo - DRCCote d’IvoireEgyptGhanaIranIsraelJordanKenyaKuwaitMauritiusMoroccoMozambiqueNamibiaNigeriaOman

QatarSaudi ArabiaSenegalSouth AfricaTanzaniaTunisiaTurkeyUgandaU.A.E.Zimbabwe

Pyramid’s coverage extends to more than 95 markets, including 19 countries

in Latin America

Pyramid Research snapshot

Broadband Trends in Latin America

- Overall Landscape of Broadband Trends in the Region

- Inhibitors for Mass Market Adoption of Connectivity Services

- Affordability of Broadband – Case Study of Brazil

- Solutions to Increase Broadband Penetration into Lower Income Segments

- Mobile Broadband as a Complement or Substitution to Bridge the Gap?

Pyramid Perspective

Agenda

xDSL67%

Cable23%

Other6%

Fiber1%

WiMAX3%

FIXED BROADBAND LINES BY

TECHNOLOGY, LATIN AMERICA

A solid pace of fixed broadband growth is projected for Latin America with

CAGR at 11.5% over the next 5 years…

2009: 37m

2014: 64m

Source: Pyramid Research Latin America Fixed Forecasts, Q2 2009

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

FIXED BROADBAND LINES, 2006 – 2014,

LATIN AMERICA

Fix

ed b

roadband lin

es

(millions)

6

xDSL60%

Cable23%

Other6%

Fiber6%

WiMAX5%

37M

64M

ACCESS LINES BY TYPE, 2009-2014

LATIN AMERICA

0

100

200

300

400

500

600

700

800

900

2009 2010 2011 2012 2013 2014

Fixed broadband connections

CAGR 2009-2014

12%

Mobile connections 5%

Fixed-line connections -1%

Source: Pyramid Research

… nevertheless broadband access in Latin America is still in its infancy

compared to mobile telephony, partly caused by high connectivity prices

and low PC penetration

7

Subsc

ripti

ons

(m)

MOBILE PENETRATION, BY COUNTRY,

2009 (estimated at year-end)

0% 20% 40% 60% 80% 100% 120%

Costa Rica

Bolivia

Peru

Mexico

Brazil

Colombia

Chile

Venezuela

Uruguay

Argentina

El Salvador

Regional

Average, 89%

658M

838M

6% 8%

FIXED VS. MOBILE PENETRATION, BY REGION

(2008)

0% 20% 40% 60% 80% 100% 120% 140%

Western Europe

Central Eastern

Europe

North America

Latin America

Asia Pacific

Africa / Middle

East Mobile Penetration

Fixed Penetration

Mobile platforms have become the primary means to acess the network

for voice services…

3X

5X

2X

5X

4X

8X

SOURCE: Pyramid Research Forecasts.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Other

Cable Modem

DSL

Mobile Broadband

SOURCE: Latin America MBPC Survey

DISTRIBUTION OF BROADBAND ACCOUNTS IN LATIN AMERICA

2005-2014

…and we see it becoming more important for broadband connectivity

as well

10

At current broadband prices and PC penetration levels, fixed broadband is

available to only about 20% of the households in Latin America

Fixed Broadband Accounts / Households YE2009

(estimated)

3%

12%

20%

20%

25%

34%

Bolivia

Peru

Latin America

Brazil

Mexico

Chile

PC Penetration as % of Households YE2009

(estimated)

13%

19%

35%

39%

28%

60%

Bolivia

Peru

Latin America

Brazil

Mexico

Chile

Broadband Access

Efficiency

57%

63%

23%

51%

89%

57%

11

2%

7%

13%

15%

28%

39%

43%

59%

0% 10% 20% 30% 40% 50% 60% 70%

Elite Service

Demographics

Public Incentives

Economy

Infrastructure

BB Pricing

PC Penetration

PC Price

MAIN INHIBITORS OF BROADBAND ADOPTION

IN EMERGING MARKETS

Pyramid Research asked operators in emerging

markets to comment on the main factors

inhibiting broadband growth. Answers provided

by 59% of operators in emerging markets

pointed to the PC price as the main inhibitor,

followed by PC penetration at 43% and

broadband price at 39% of respondents.

Operators in general felt that pricing for PCs

had to drop well below the US$500 level in

order to encourage wider adoption.

For fixed operators, another gating factor

for the adoption of broadband services is the

availability (or lack thereof) of quality last

mile infrastructure to enable broadband

provision, particularly in areas outside business

centers and upscale residential areas. Operators

have had to invest millions in updating their

copper infrastructure and shortening the loops

in order to make broadband access available to

more households and SMEs.

The main inhibitors for Broadband access in emerging markets are

associated with pricing which operators feel can be further reduced

Source: Pyramid Research 2008

12

MAIN INHIBITORS OF BROADBAND ADOPTION

IN MATURE MARKETS

7%

14%

17%

22%

28%

30%

53%

0% 10% 20% 30% 40% 50% 60%

Elite Service

PC Penetration

Infrastructure

Economy

BB Pricing

Public Incentives

PC Price

Operators in developed markets also believe that broadband penetration

could be higher if PCs and Internet access were made more affordable with

support from the public sector

Pyramid Research asked operators to

comment on the main inhibitors for

broadband adoption in mature markets.

Answers provided by operators in

mature markets were consistent with

answers provided in emerging markets,

with entry level PC prices and entry level

broadband prices again ranking as the

number one and number three inhibitors,

respectively.

While PC penetration appears to be an

important inhibitor in emerging markets,

operators in mature markets share the

opinion that local governments can do

more to stimulate broadband uptake

among the lower income segments of

their markets.

Source: Pyramid Research (2008)

13

Mexico stands out in driving fixed broadband mass market adoption in Latin

America

Service Type: PCs + Fixed Broadband (ADSL)

Target Market: residential customers without

PCs

Telmex understood higher adoption of the

service is dependable on mass market

affordability of PCs.

Telmex also identified an economic necessity as

lower income segments were often secluded

from having credit access to purchase a first

computer.

Service Positioning: Instant credit approval, no

credit card is required, reasonably priced PCs

with low-cost financing, BB is optional

Available at 12, 24, or 36 month-plans.

No subsidies, PCs sold at cost, low financing

charges

25% incentive discount is offered to existing and

new broadband clients.

The company acted quickly to customize the

bundling and financing programs facilitating the

purchase over monthly installments.

Key Takeways:

Volume of PCs sold. Telmex stands as the largest PC retailer

in Mexico, having sold approximately 400,000 units in 2008.

Yearly PC sales growth has ranged from 20% to 25%, so

broadband access. To date, Telmex sold nearly 2 million

PCs, a global reference considering the nature of its primary

business.

Nearly 100% of PC buyers will be converted into

broadband subscribers. Although the PC financing does not

require a BB subscription, 50% of all PC buyers are currently

broadband clients, 30% will choose the PC + BB bundle, and

20% will select broadband within 3 months to benefit from

the 25% discount offered.

14

Pyramid Research’s Perspective on Mass Market Broadband Affordability

Based on current broadband adoption levels (around 40% of population) in developed

markets, per head spend in broadband connectivity is between 2-3% of income.

Overall spend in telecom services and entertainment represents up to 7% of personal

income in developed markets.

Assuming developing markets are likely to allocate a greater proportion of their income

to telecom services, Pyramid estimated target prices for broadband services.

We define target prices as an amount, no greater than 5% of income, that would be

needed for broadband service to be affordable to the majority of the population in

emerging markets, including Latin America.

15

Broadband Affordability and Penetration by Income Group - Brazil

Affordability is one of the main inhibiting factors of broadband adoption.

Residential broadband costs, on average, R$90 per month for 2Mbps.

Broadband access is not affordable to households in band E; it is a marginal

spend for income band D.

In band A broadband penetration is highly affordable, and has a penetration rate

of nearly 90%. The cost of broadband represents less than 1% of an A

household’s monthly income.

1%2%

4%

8%

10%

19%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Band A Band B Band C Average Band D Band E

Broadband Affordability by Income Band (cost of

broadband as percentage of income)

D

36%

C

17%

B

7%

A

4%

E

36%

Brazil’s Household Distribution By Income Bands

Total Households: 54.4m

b/w 2x and 5x min.

wages/monthClass D

DefinitionSocioeconomic

Band

< 2x min

wages/monthClass E

b/w 5x and 10x min.

wages./monthClass C

b/w 10x and 20x

min. wages/monthClass B

>20x minimum

wage/monthClass A

Source: Pyramid Research (2009)

16

Source: Pyramid Research

36%

36%

17%

7%

4%

0% 15% 30% 45% 60%

Band A (>R$9,300)

Band B (R$4,650-

R$9,300)

Band C (R$2,325-

R$4,650)

Band D (R$930-

R$2,325)

Band E (<R$930)

Brazil’s Household Distribution By Monthly Income/per cap

At R$26 per month, broadband would be affordable to roughly 64% of

Brazil’s households

Broadband Target Price per Month

(not to exceed 5% of income in bracket)

Less than R$26

R$26 - R$65

R$258 and above

R$65 - R$129

R$129 - R$258

At current pricing levels (between R$65 and R$130) lesser than 1/3 of households

in Brazil can afford to pay for high-speed broadband on a monthly basis.

Mobile Operators are seeing mobile broadband as a product with massive

appeal and start to offer netbooks without costs

Netbook Offered by Telcel in Mexico

• Telcel México offers a netbook without costs

for a monthly subscription of US$50. While

competing with fixed operators, Telcel also

offer wireless routers that connect to its 3G

network allowing many computers to be

pluggged to share the subscription.

•Entel Chile offers netbooks HP without costs

for a monthly subscription of US$63 with

unlimmited data. Claro Chile also promotes

netbooks without costs for US$51 per month

with data limitted 1GB.

Source: Pyramid Research

3G+ phones

Mobile Broadband is a form of connectivity that competes and complements

other access technologies. MOBILITY and PERSONALIZATION are the main

attributes / differentiators in the battle with fixed technologies

Source: Pyramid Research (2009)

Fixed Mobile

CablexDSL FTTx WiMAX Others EVDOUMTS HSPA WiMAX LTE

Datacards laptopsRouters/TVs desktops Laptops

Browsing Music/Video Advertising

Access Mobile Banking GPS

Browsing Hosting IPTV

Security Home connected Others

Pla

tfo

rmD

evic

es

Se

rvic

es

18

12% 10%9%

16%13%

11%

34%

26%

76%

26%

60%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Latin America Brazil Mexico Chile Colombia Panama

Fixed Broadband

Mobile Broadband

Mobile broadband subscribers will grow 3X faster than fixed broadband in

Latin America for the 2009-2014 period

48% of all mobile subscribers in 2014 will be using 3G+ technology – over 260 million subs.

FIXED BROADBAND AND MOBILE BROADBAND SUBSCRIBER CAGR, LATIN AMERICA 2009-2014

Source: Pyramid Research Forecasts, Latin America, Q3 2008

20

Migrations towards 3G+ is gaining momentum. UMTS/HSPA technology is

becoming the dominant mobile broadband platform in Latin America

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014

Su

bs

(mil

lio

ns)

4G

3G

2.5G

2G

1G

MOBILES SUBSCRIPTIONS BY GENERATION, LATIN AMERICA 2006-2014

Expected introduction of LTE

Introduction of HSPA

CAGR 2009-2014

8%

-29%

0%

47%

78%

Source: Pyramid Research

There are few LTE trials being

performed in Latin America in

2009.

Mobile broadband starts

becoming the preferred means

for broadband connectivity in

2010.

7.0

0.5 0.7 0.3 0.5

27.1

8.6

3.6 2.6 1.5

Brasil

Me

xic

o

Arge

ntin

a

Co

lom

bia

Ch

ile

2009 2014

Pyramid projects mobile broadband subscriptions to grow rapidly

and by 2012 it will represent 10% of total mobile access in Brazil

Source: Pyramid ResearchMobile Broadband includes: Datacards (PCMCIA/USB)+Handsets with modem

Mobile Broadband Access (datacards), By Country,

Millions, 2009 vs. 2014

Drivers of mobile broadband

adoption in Latin America:

Spectrum availability

Competitive pressure from

existing players

Threat of new entrants

Device, new form factors

Education

Universality policy

Content

Personalization drive

Penetration for datacard subscriptions for Latin America is on track to reach by

2011 current penetrations levels observed in Europe

Mobile Broadband (Datacards) subscriptions for selected markets in LATAM

5.0%

5.1%

0% 4% 8% 12% 16%

Spain

UK

Belgium

Average Europe

France

Italy

Norway

Average LA

Brazil

Argentina

México

Estimated 2011

Confirmed 2008

Fuente: Pyramid Research, Julio 2009

22

All types of Web 2.0 applications are already available to Internet users in

Latin America

Web 2.0 services

Faceforce is a mashup application that includes functions for:

Contact level : Facebook profile + actions like Send a Message; Send

a Gift; Write on Wall; Message; view their Full Profile; Poke)

Lead level

Account level

Social sites CommunicationsContent development

and exchange

Productivity

applications

Filters and

Integrators

Source: Pyramid Research, July 2009

23

Notebooks (>$500) Netbooks ($300-500) Netbooks (<$300)

• LG E series • LG X series

• Pavillion

series

• Dell Mini com

TV tuner ou GPS

embutido

•Dell Mini 10

•Nokia

Booklet

•LG P series

•Latitude

series

One of the main enablers for 3G Internet has been the constant evolution of

access devices: the supply market offers abundance in variety and price

ranges, and many devices already offer “personalized” features

• HP mini

Source: Pyramid Research, Subscription Computing Report, 2009

24

Availability of over 1,900 embedded devices effectively drive mass market

interest towards mobile broadband adoption

135 PC CARDS 165 USB MODEMS

Source: GSM Association

150 WIRELESS

ROUTERS

550 NOTEBOOKS 750 HANDSETS 150 EMBEDDED

MODULES

25

-

5

10

15

20

25

2009 2014 2009 2014 2009 2014 2009 2014 2009 2014 2009 2014

Argentina Brasil México Colombia Chile Perú

Desktops Laptops

Installed base of desktop PCs and laptops, Latin American markets, 2009 vs 2014

Millio

ns

The rise of laptops is a enabler for mobile conectivity services. In Latin

America, laptops will represent 55% of the total PC installed base by 2014

CAGR = 20%In Mexico, the

instaled base of

PCs will reach

34m in 2014,

58% will be

laptops

26

Source: Pyramid Research, July 2009

Bundles of broadband subscription with financing of PCs are enabling growth of

broadband into lower income and youth segments. Over 120 carriers currently

offers subscription computing programs

Source: Operadores, Pyramid Research, 2009

Mo

bil

e C

arr

iers

Fix

ed

Carr

iers

27

We see increasing competition between fixed and mobile broadband service

providers

US$1.6bn

D

E

V

I

C

E

I

N

C

L

U

D

E

D

A

C

C

E

S

S

O

N

L

Y

US$17

US$11

US$26

$129/mo (US$38)

Netbook - $1999 (US$594.28)

Abono - $99/mo (US$24.43)

FIXED BROADBAND MOBILE BROADBAND

$105/mo

US$33

TeleCentro (3play)

$159/mo

US$45.42

BAM+BAF $149 (US$44)

US$16

BROADBAND

MARKET

US$23

US$88

$119/mo (US$35)

COMPETITIVE MAP OF THE BROADBAND MARKET IN ARGENTINA, 2009

28

Fixed and mobile broadband will represent the single largest growth

opportunity in Brazil over the next five years, just like everywhere else

Subscribers BrazilLatin

AmericaWorld

Mobile voice 6% 6% 7%

Mobile Data

(Datacard)34% 39% 39%

Fixed voice 1% -1% 1%

Fixed

broadband10% 12% 11%

SUBSCRIBER CAGR PER REGION, 2009-2014 REVENUE CAGR PER REGION, 2009-2014

Revenue BrazilLatin

AmericaWorld

Mobile voice 6% 4% 3%

Mobile data 25% 21% 34%

Fixed voice -1% -2% -7%

Fixed

broadband13% 12% 9%

29

Pyramid Research snapshot

Mobile and Broadband Market Trends in Latin America

Pyramid Perspective

Agenda

The world’s largest operators focus on broadband to position for growth

31

AT&T’s deal with Apple to be the exclusive iPhone

network provider in the US has led to increased ARPU,

reduced churn and a stronger postpaid base: > 40% of

iPhone customers are new to AT&T.

EVDO operator Verizon Wireless plans to complete a

nationwide LTE rollout in 2-3 years, with 20-30

markets completed in 2010. LTE will be used initially

for data (for data cards), but eventually the operator

expects to completely migrate EVDO voice customers to

VoIP over LTE.

WiMAX operator Clearwire and cable operator Comcast

partnered to offer “High-Speed 2go,” a bundle of fixed

and mobile broadband as well as a Wi-Fi router for

$49.99 per month with a one-year contract. For an

additional $20 per month, customers can receive

nationwide mobile broadband coverage over the EVDO

network provided by Sprint.

Orange is particularly focused on digital content and

developing a comprehensive three-screen strategy

that combines the television, PC and handset. The

operator expects to profit from growing consumer

demand for premium content over the three media by

leveraging synergies between its networks, services

and content distribution capabilities.

Both mobile and fixed broadband are core parts of

Vodafone’s growth strategy. It sells a variety of

mobile broadband plans for prepaid and contract

customers that include 1GB, 3GB and 5GB of usage per

month and also offers bundles that include data cards

and netbooks. In addition, the operator now has

Vodafone-branded DSL service with 50-65% coverage in

Germany, Spain and Italy.

Telefónica’s growth strategy includes promoting

bundles that now comprise up to four services while

leveraging newly built next-generation networks. In

Spain, for example, the operator offers IPTV with HD,

multiroom, VoD and DVR services.

Source: Pyramid Research

Thanks to improvements on the access and device fronts, richer and more

sophisticated content is becoming available on mobile networks, requiring

more bandwidth

6Mbps

3Mbps

< 1Mbps

32

Mobile broadband will complement fixed early on in Latin America but will

become more of a substitute going forward

MOBILE BROADBAND COMPUTING SERVICE ADOPTION

Early adopters:

Enterprise users , high-end

urban consumers getting

bundles

Late adopters:

Mass-market uptake driven

by embedded devices, 4G,

prepaid and bundles

Early majority:

Those without existing

fixed alternatives

Complement Substitute

Adopti

on

3G

+ p

enetr

ati

on o

f popula

tion (2010 f

ore

cast

)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Broadband penetration of households (2010 forecast)

South Africa

China

India

South Korea

Philippines

Czech Republic

France

Germany

Ukraine

UK

Canada

USA

Peru Turkey

100%

80%

60%

40%

20%

0%

AustraliaHong Kong

Indonesia

Malaysia New Zealand

Singapore

Taiwan

Thailand

Japan

Complementary service positioning:

Mature wireless and broadband markets

Substitution service positioning:

Strong wireless, weak fixed broadband markets

Russia

Hungary

Poland

Slovakia

Italy

Netherlands

Venezuela

Argentina

Costa Rica

Mexico

Spain

Eqypt

Morocco

Nigeria

Israel

Chile

Vietnam

Bolivia

Brazil

Portugal

SERVICE POSITIONING FRAMEWORK

AT&T: “In the long-term, if you don’t have

mobile broadband, you don’t have broadband.”

Source: Mobile Broadband Computing Services: Complement or Substitute for Fixed Broadband? March 2009

33

As the market for Internet access matures in Latin America, mobile

broadband will be positioned as a real alternative for connectivity means

Mobile Broadband (datacards) as a percentage of total broadband market,

selected markets, 2009 y 2014

21%

10%6%

3%

16%

24%

39%

34%37%

40%42% 42%

55%

0%

10%

20%

30%

40%

50%

60%

70%

Chile Colombia México Perú Argentina LATAM Brasil

2009 2014

34

38%

% o

f to

tal b

road

ban

d a

ccess (

Fix

ed

+ M

ob

ile)

Source: Pyramid Research, July 2009

Few takeaways:

Private and public sectors CAN and SHOULD partner closely for ICT development.

The expansion of broadband and affordable access to the Internet must be seen as top

priorities for human capital development the Americas.

Mobile technology has an important part to play in ICT & human capital development.

Mobile technologies are a very cost-efficient way of providing access where other

technologies are not available, especially where fixed technologies have very limited coverage.

In several African countries, for instance, 2.5G and 3G networks are used to deliver video

downloads for school teachers which they can use in their classes.

In Latin American markets, where fixed broadband penetration remains under 20%, mobile

broadband services can be positioned as a substitute to fixed broadband access

Mobile broadand is on track to repeat the success of conventional mobile telephony in the

1990’s, and can be a main engine for ICT development in emerging markets.

Successful mass market initiatives to promote broadband adoption look at the complete

solution, including device hardware, connectivity access, applications software, enriched

content, and training (Philippines’ Smart Schools project, Nigerias’s MTN school project).

35

36

Thank you

Cristiano Laux

Manager, Global ICT Consulting

Tel: +1 (617) 871-1921

e-mail: claux@pyr.com

Source: Pyramid Research Latin America Fixed Forecasts, Q3 2009

0%

10%

20%

30%

40%

50%

60%

2006 2007 2008 2009 2010 2011 2012 2013 2014

PC HOUSEHOLD PENETRATION, 2006-2014,

LATIN AMERICA

Penetr

ati

on o

f house

hold

s

60%

39%35%

80%

68%

55%

0%

20%

40%

60%

80%

100%

Chile Brazil Latin America

2009 2014

PC HOUSEHOLD PENETRATION, 2009 & 2014,

BY COUNTRY

Penetr

ati

on o

f house

hold

s

Despite challenging economic conditions, PC adoption in South American

households will remain steady. We expect PC households in Latin America

to grow at a 8% CAGR in the next five years

37

Mobile data revenue will increase at a CAGR of 19%

from 2009 to 2014.

The evolution of radio access networks will enable

and support new services and applications that will

make mobile broadband the main revenue growth

driver for mobile operators in South America.

With 15% of mobile services revenue coming from

data in 2008, the region has entered a stage when

data services are essential to the whole mobile

business model.

Messaging and value-added services are the two

main components of mobile data revenue today,

and while messaging will remain the primary source

of data revenue, new content and advanced mobile

devices are encouraging South Americans to

embrace high-speed services and applications in

greater numbers.

38

In South America, Mobile data revenue will triple over the next five years,

driven by mobile broadband, to reach 35% of total mobile revenue by 2014

MOBILE DATA REVENUE BY SERVICE

SMS69%

MMS2%

Mobile broad-band

9%

Other20%

SMS36%

MMS2%

Mobile broad-band

28%

Other34%

Total data revenue 2008: US$7.5bn

Total data revenue 2014: US$22.8bn

* Other includes messaging revenue (excluding SMS and MMS) plus revenue

from non-messaging applications, such as ringtones, graphics/images, games,

Internet access, music and video.

Source: Pyramid Research

Operator

Total

subscriber

s (fiscal year-

end 2008 –

000s)

Total

revenue

(US$

millions –

FY2008)

Primary mobile

technologies

Future

mobile

technology

Potential 3G+ spectrum

bands (MHz)

Mobile

technology

timeline

Vodafone 302,600 $60,295 GSM, GPRS, EDGE, UMTS, HSPA HSPA+, LTE 800, 900,1800, 2100, 2600 Underway

China Mobile 457,250 $58,930 GSM, GPRS, EDGETD-SCDMA,

LTE900, 2300 Underway

T-Mobile 128,300 $52,332 GSM, GPRS, EDGE, UMTS, HSPA LTE 900, 1800, 2100, 2600 18-23 months

Telefónica 195,599 $49,543 GSM, GPRS, UMTS, HSPA HSPA+, LTE 900, 1800, 2100, 2600 12 months

AT&T 77,009 $49,335 GSM, GPRS. EDGE, UMTS, HSPA HSPA+, LTE 700, 850, 1900 Underway

Verizon Wireless 86,157 $49,332 CDMA2000 1x, EV-DO LTE 700, 850, 1900 6-12 months*

Orange 121,800 $43,331 GSM, GPRS, EDGE, UMTS, HSPA LTE 800, 900, 1800, 2100, 2600 24 -36 months

Sprint 49,265 $30,427 CDMA, EVDO Rev. A Mobile WiMAX 800, 900, 1900, 2500 Underway

NTT Docomo 54,115 $37,046 GSM, GPRS, PDC, FOMA, HSPA LTE 2100, 2600 12 -18 months

América Móvil 182,724 $26,789 GSM, GPRS, EDGE, UMTS, HSPALTE (WiMAX

for BB)700, 1700, 1900, 2100 24-36 months

Zain 63,535 $7,441 GSM, GPRS,EDGE, UMTS, HSPA HSPA+, LTE 900, 1800, 1900, 2100 6-24 months

Bharti 85,651 $6,571 GSM, GPRS, EDGE UMTS/HSPA 800, 900, 1800, 2100, 2600 12-24 months

Digicel ** 9,200 $1,730GSM, GPRS, EDGE, CDMA,

EVDO, mobile WiMAX

Mobile/Fixed

WiMAX and

LTE likely

800, 900, 1800, 1900, 2500,

350024 months

Source: Pyramid Research, operators

Most of the world’s leading Carriers will deploy LTE in the next three years,

while upgrades to HSPA+ are already underway

39

* Verizon plans to launch LTE commercially in 2010 in 20-30 US markets and to have nationwide coverage by 2013.

** Revenue for Digital Group Limited does not include sister company Digicel Holdings. Digicel has a mobile WiMAX network in Grand Cayman.

OperatorTotal subscriptions

(fiscal year-end 2008)

Total revenue

(US$ millions; FY2008) Primary fixed access technology

Vodafone 302,600,000 $60,295 DSL

T-Mobile 128,300,000 $52,332 PSTN, DSL, fiber

China Mobile 457,250,000 $58,930 PSTN, DSL, fiber

Verizon

Wireless86,157,000

$49,332PSTN, DSL, fiber

AT&T* 77,009,000 $49,335 PSTN, DSL, fiber

Orange 121,800,000 $43,331 PSTN, DSL, fiber

Sprint 49,265,000 $30,427 HFC (through partnership)

Telefónica 195,599,000 $49,543 PSTN, DSL, fiber, MMDS, HFC, satellite

NTT Docomo 54,155,000 $37,046 PSTN, DSL, fiber

América Móvil 182,724,000 $26,789 PSTN, DSL, fiber, WiMAX, HFC

Bharti 85,651,000 $6,571 DSL

Zain 63,535,000 $7,441 WiMAX

Digicel 9,200,000 $1,730** WiMAX

They have also embraced a multitude of last-mile fixed access technologies,

hence strengthening the endorsement of fixed-mobile convergence

40

*AT&T Broadband, AT&T’s spun-off cable TV service operating on an HFC network, was acquired by Comcast in 2001.

** Revenue for Digicel Holdings does not include sister company Digital Group Limited. Source: Pyramid Research, operators

41

Toward application-

focused, Google-like, ad-

supported models for

telcos?

Free

broadband

access offers

Increasing

emphasis on

ad-supported

models

Net neutrality

debate: toward

multilevel

Internet access

Broadband

access

commodification

Broadband access is becoming heavily discounted, and operators are moving

toward application-centric models to avoid marginalization

GLOBAL MONTHLY FIXED BROADBAND ARPU BY

TECHNOLOGY

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

xDSL Cable FTTx

AR

PU

2008 2009 2012 2014

23%

15%

31%

Source: Pyramid Research Global Fixed Forecast, Q2 2009