1. Jan ten Sythoff London, 17th March 2004 Fixed-Mobile Substitution / Convergence © 2003 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

2. Today’s presentation 3Overview of the Voice Markets 3Some Facts and Figures 3Examining Drivers of Substitution… 3…and some Restraints 3Location Based Billing 3Converged Solutions 3The Ultimate Converged Solution 3Implications For Carriers

3. Overview of the Voice Markets Voice still provides the majority of revenue in both fixed and mobile telecommunications (depending on region) 75 - 90% of total mobile revenues 55 - 65% of total fixed revenues Fixed markets still dominated by incumbent with 60-85% share, but declining Mobile market dynamic changing from acquisition to retention Regional markets differ in terms of maturity and degree of competition

4. Some Facts and Figures 190,000 less lines 500,000 less lines

5. Mobile Minutes as Percentage of All Voice Minutes, 2002 2003 - 29% 2001 - 14%

6. Drivers of Substitution and Convergence Fixed-line Competition Increasing Mobile Competition Wi-Fi / Bluetooth Technology 3G Capacity coming on-line Fixed line Saturation Mobile line Saturation Mobile Added Value Services SUBSTITUTION & CONVERGENCE Location based Billing

7. Location Based Billing Success of O 2 Germany with Genion Also introduced as part of Business Converged Solution 3G networks will make location based billing easier to do But… A high percentage of calls made from home or office zone Difficulties in defining the zone / coverage Integrated operators - cannibalisation

8. Converged Solutions Integrated Offering Basic Service One Device Integrated device - could enable all fixed & mobile voice & data communication Call discounts Mobile PBX - profile management, conference call, call transfer Call forwarding Single bill, single number Value Added Servi. Unified communications, LBS, invoice analysis, single point of contact Line rental discounts

9. Converged Devices Motorola MPx Communicator 9500 Highly integrated communications device Access both cellular and wireless local area networks Opportunity for fixed operators to win back voice traffic BUT: WLAN Quality of Service and network capacity Handover between cellular and local area networks (technically and commercially) High device costs and limited range

10. Some Implications for Carriers Mobile operators: 3G network capacity coming on-line: drive data over substitution Location based billing Create low cost image of mobile (M2M lower cost that M2F) Fixed Operators Move into mobile Explore different converged service possibilities Develop innovative pricing plans - target sensitive segments Integrated Operators Develop strategy for fixed and mobile to work together Migrate traffic to higher value mobile Offer innovative converged solutions

11. Thank you - Any Questions? Ask on the telephone - press * 1 on your keypad Ask online - use the Q&A tab on the left of your screen For any enquiry on this report, please contact: John Gibson on  +44 (0)20 7343 83 94  john.gibson@frost.com