Analyzing opportunities in Latin AmericaInternet Market Research & Outlook

June 2011

Did you know?

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The GDP of the State of São Paulo is bigger than Argentina, Chile and Uruguay combined.

São Paulo State 633GDP (Billion US$)

Argentina370

GDP (Billion US$)

Chile203

GDP (Billion US$)

Uruguay40

GDP (Billion US$)

Did you know?Brazil’s estimated growth for 2011 is larger than the GDP of all Central America and the Caribbean combined (That’s 19 countries!)

331 BillionBrazil’s GDP Increase in 2011

281 BillionCentral & Caribbean total GDP for 2011

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Did you know?Brazil’s growth in GDP for 2011 is larger than the growth in GDP of the rest of Latin America.

BrazilGDP Increase in 2011

Rest of Latin America

GDP Increase in 2011

331 Billion USD

324 Billion USD

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61% LATAM

Internet usersPopulation

GDP Nominal %

44% BRAZIL

66% LATAM

Credit cards

76% BRAZIL

E-commerce

39% LATAM

24% LATAM

61% BRAZIL

56% LATAM

39% BRAZIL

34% BRAZIL

Brazil Vs the rest of LATAM

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Brazil is getting TOO HOT

$4.91 $3.7332%

$41,990 $17,555140%

$90.90 $45.00102%

$3,500 $4,700-26%

Big Mac Honda Civic

Monthly apartment rent (75 m2) in São Paulo and New York

Taxi to/from airport in São Paulo and New York

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Becoming difficult to start a new business

$2,000 (Santiago)

$5,000 (São Paulo)

$9,300 (NewYork)

30.1%

70.0%

18.8%

6.7%

35.1%

34.6%

$30,000

$63,000

$73,500

Monthly office rent (150 m2)

Jr. Programmer annual salary Effective corporate taxes on new investments

Labor taxes

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Expected growth for Latam 2010-2015

GDP – PPP

2010 USD 6,384 Billion

2015 USD 8,360 Billion

Net: 1976Bn – 30.1%

Internet users

2010 215 Millon

2015 310 Millon

Net: 95M – 44.1%

E-commerce spending

2010 USD 27.6 Billion

2015 70.1 Billion

Net: 42Bn – 154%

Online ad investments

2010 USD 2 Billion

2015 USD 4.9 Billion

Net: 2.9Bn – 145%

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Chile, probably the easiest country to start a business

"Ease of doing business" Ranking 128 62Average time to register a firm (days)

120 22

Costs of starting a business $ 750 $ 460 Programmer (annual) $ 63,000 $ 30,000 Office (monthly for 150 m2) $ 5,000 $ 2,000 Labor tax 70% 30%Effective Corporate tax on new investments

35% 7%

Tax incentivesNo general incentives to foreign investments or e-commerce

Pre-investment (up to US$ 60,000 per project) , Human Resources (up to US$ 25,000), Fixed Assets (up to US$2,000,000), R&D (35% of certified contracts and tax reductions on the remaining 65%).

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Latam Asia

Google the king of search Market Share: USA 71%, UK 93%, Latam 90%, China 24%, Japan 38% Facebook the king of social networks FB Penetration: USA 39%, Europe 25%, Latam 20%, Asia 4%

Lower language barries

Compared to Asia, Latam has various advantages if you want to replicate internet business models that proved successful in the US and Europe.

Virtually the same time zone• NY vs Sao Paulo: +1 hours• London vs Sao Paulo: -4 hours• NY vs Beijing : +12 hours• London vs Beijing: +7 hours

Smaller distances• NY to Sao Paulo (non stop):

9 hours 30 minutes• NY to Beijing (non stop):

13 hours 30 minutes + JET LAG!

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To keep in mind…

Brazil looks great but look beyond: • The rest of Latam represents 54% of regional GDP• Cheaper, faster and bigger incentives to start up in Chile

Real growth opportunities in all the region by 2015: • E-commerce net increase of 42 Billion USD• Online Ads Investments will grow 150% to 2.9 Billion USD• 95M net new internet users. Total present 310mm

Don’t forget about Hispanics in the U.S. • 50 million Hispanics (30 million online) with buying power of

1,330 billion by 2014

Business models in Latam can scale using very similar techniques due to the similarity of platform penetration (Google, Facebook, Twitter) compared to Asia and Russian internet. (Tencent, Yandex, Vkontakte, Baidu)

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Rodrigo TeijeiroFounder and CEO

rodrigo.teijeiro@fnbox.comTwitter @RodrigoTeijeiro

Want to know more? Visit www.fnbox.com

“fnbox is a Latin American technology company focused on creating global and scalable Internet businesses.”

TARJETASTELEFONICAS .COMLIDER EN TARJETAS TELEFONICAS PREPAGAS

TARJETASTELEFONICAS .COM

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Appendix

GDP (Nominal) in Billions

SAO PAULO (2008) 632.70

Argentina (2010) 370.269

Chile (2010) 203.323

Uruguay (2010) 40.272

ARG + CHI + URU 613.864

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AppendixGDP (nominal)

Country 2010 2011e IncreaseBrazil 2,090.31 2421.63 331.32

Country 2011e GDP (nominal)Dominican Republic 54.912Guatemala 46.383Costa Rica 40.297Panama 29.799El Salvador 23.169Trinidad and Tobago 22.466Honduras 17Jamaica 14.976The Bahamas 7.787Haiti 7.724Nicaragua 7.05Barbados 4.224Belize 1.468Antigua and Barbuda 1.174St. Lucia 1.04Grenada 0.728St. Vincent and the Grenadines 0.593

St. Kitts and Nevis 0.557Dominica 0.392Central America & the Caribbean 281.739

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AppendixCountry 2010 2011 Increase GDP (nominal) 2010-2011Brazil 2,090.31 2,421.64 331.323Mexico 1,039.12 1,167.12 128.003Argentina 370.269 456.817 86.548Colombia 285.511 307.845 22.334Venezuela 290.678 294.271 3.593Chile 203.323 231.302 27.979Peru 152.83 167.846 15.016Ecuador 58.91 65.032 6.122Dominican Republic 51.626 54.912 3.286Guatemala 41.471 46.383 4.912Uruguay 40.272 43.265 2.993Costa Rica 35.78 40.297 4.517Panama 26.778 29.799 3.021El Salvador 21.7 23.169 1.469Bolivia 19.373 22.778 3.405Trinidad and Tobago 20.59 22.466 1.876Paraguay 18.475 22.143 3.668Honduras 15.347 17 1.653Jamaica 13.694 14.976 1.282The Bahamas 7.538 7.787 0.249Haiti 6.632 7.724 1.092Nicaragua 6.551 7.05 0.499Barbados 3.963 4.224 0.261Suriname 3.682 3.889 0.207Guyana 2.215 2.397 0.182Belize 1.396 1.468 0.072Antigua and Barbuda 1.105 1.174 0.069St. Lucia 0.985 1.04 0.055Grenada 0.674 0.728 0.054St. Vincent and the Grenadines

0.561 0.593 0.032

St. Kitts and Nevis 0.531 0.557 0.026Dominica 0.376 0.392 0.016REST OF LATAM     324.491

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Appendix

Big Mac prices Country US$Brazil $ 4.91 United States $ 3.73 Argentina $ 3.56 Chile $ 3.34 Mexico $ 2.50

Taxi FaresCity From/to Airport US$Sao Paulo $ 90.00 New York $ 45.00 Buenos Aires $ 37.00 Santiago $ 24.00 Mexico City $ 15.00

Average Apartment (75 m2)City US$New York $ 4,700.00 Sao Paulo $ 3,500.00 Buenos Aires $ 960.00 Santiago $ 650.00 Mexico City $ 650.00

HONDA Civic LXCountry US$Brazil $ 41,990 Argentina $ 27,050 Chile $ 24,480 Mexico $ 21,550 USA $ 17,855

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Appendix

Office (150 m2)

City US$

New York $ 9,300.00

Sao Paulo $ 5,000.00

Buenos Aires $ 2,500.00

Santiago $ 2,000.00

Mexico City $ 1,700.00

City Jr. ProgrammerCountry Manager*

New York $ 73,500 $ 179,000 Sao Paulo $ 63,000 $ 157,500 Mexico City $ 31,500 $ 118,000 Santiago $ 30,000 $ 110,000 Buenos Aires $ 27,000 $ 79,000

Country Labor tax (excluding personal income tax)

Effective Corporate Taxes on new investments

Argentina 41.0% 43.1%Brazil 70.0% 35.1%Chile 30.1% 6.7%Mexico 41.0% 17.5%USA 18.8% 34.6%

*For US the average wages are for COO positions.

*Other countries are average wages for a Country Manager

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Appendix

Sources

Slide 2Instituto Brasileiro de Geografia e Estatística (IBGE). Regional accounts 2004-2008. http://goo.gl/eUIS2International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 3International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 4International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbSlide 5Internet World Stats.U.S. Census Bureau. International Database. http://goo.gl/sbMOGInternational Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbAmericaEconomia Intelligence

Slide 6International Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbThe Economist. Big Mac Index. http://goo.gl/bbmvEHonda International sites

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Appendix

Sources

Slide 7Payscales.comCato Institute. New Estimates of Effective Corporate Tax Rates on Business Investment. http://goo.gl/pDGOQ

Slide 8Doing Business (World Bank Group):Chile. http://goo.gl/W2xKcBrazil. http://goo.gl/ei7xpApexBrasil. http://goo.gl/DhMiAInvest Chile (Corfo). http://goo.gl/NKqjESlide 9Internet World StatsInternational Monetery Fund (IMF). World Economic Outlook Database, April 2011. http://goo.gl/u5ffbeMarketer. The Global Media Intelligence Report 2010Slide 10Socialbakers. http://goo.gl/i9HqS

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Data sources

http://1.bp.blogspot.com/_dr3S8zqPnj4/TTVmjYCaGhI/AAAAAAAATjw/pHzIthd47NE/s1600/market-share-large-1024x768.png

http://www.searchenginebite.com/google-has-90-share-in-search-market-of-latin-america.html/

http://oxstones.com/latin-america-will-see-the-highest-e-commerce-growth-worldwide-through-2015/

http://www.imf.org/external/pubs/ft/weo/2011/01/weodata/weorept.aspx?pr.x=59&pr.y=14&sy=2009&ey=2016&scsm=1&ssd=1

&sort=country&ds=.&br=1&c=205&s=NGDPD%2CPPPGDP&grp=1&a=1

http://www.etforecasts.com/products/ES_intusersv2.htm

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