0 Infobalt 2002 Darius Masionis, Chief Executive Officer UAB Bite GSM Global role of mobile companies in the world

1  About Bitė GSM  Slowdown on the global market  European telecommunication sector development  What can we expect in the future of telecoms?  Conclusions Outline

2 Bitė GSM in brief Bite GSM was established in 1995 Full scale provider of mobile and internet services GSM 900 and 1800 mobile network Data and Internet license Roaming with 155 operators in 74 countries 427 employees TDC is 100% shareholder

3 Bite is 100% owned by TDC Mobile International, the member of TDC group TDC Tele Danmark TDC Mobile International TDC Switzerland TDC Internet TDC Internet TDC Directories TDC Cable TV TDC Cable TV TDC Services 100% 78.7%100% TDC group consists of 20 companies, operating in 12 Europe countries In first half of 2001 Bitė GSM has been listed by independent international experts as one of the most effectively operating companies in TDC group

4 TDC Mobile International Bité (100%) Talkline (100%) Polkomtel (19.6%) UMC (16.3%) Connect Austria (15.0%) TDC Mobil (100%)

5 A capital markets’ perspective on the recent evolution Early 2000 Number of customers Increased penetration Third generation, m.data Optimistic growth prognosis Long term growth, UMTS Hype over new economy Consolidation Early 2002 Increase ARPU, reduce customer acquisition costs Penetration peak Mobile data disappointment Heavy debts, growth slowdown Cash, short term return Back to balance sheet approach Consolidation

Nokia Credit  Suisse 2002  perspective Data as the ARPU driver Estimations seen in 2000 and 2002

7 Slowdown ahead in the absence of a new killer application Source:WEFA-WMM; Dataquest; ITU Annual revenue and GDP growth for telecoms operating in EU15

8 In wireless: concentration around six large groups European market share (subscribers), percent Telefonica, Spain Deutsche Telecom Telecom Italia France Telecom/ Orange British Telecom Vodafone SourceEMC Database; Company websites; Eurotel Analysis Aggregate share of six largest operators is over 70% of European Market

9 In wireline: incumbents will face challenges along three horizons Level of uncertainty Magnitude of opportunities Characteristics Challenges clearly identified Incumbents have a chance to achieve positive outcome through excellent execution Challenges identified, but still unclear dimensions Incumbents have to set-up enhanced capabilities to face challenges Challenges/opportunities unclear Broadband access Infrastructure competition SME battle Price decline Wireless substitution Attacker consolidation Broadband content/ services New attackers (new business models) Technology innovation Technology substitution Magnitude of threats Horizon 1Horizon 2Horizon 3 Regulatory issues (e.g., rebalancing, separation of network) Potential real threat

10 Search of growth opportunities Development within current businesses Expansion within the value chain Deployment of intangibles into other industries Continues to be top priority –Current markets –New markets Option to explore –Content provider –Content owner/ developer –Device design, offering and installation –Service outsourcing for clients –Redeploying intangibles into adjacent industries

11 The landscape of the European Telecom Industry will evolve towards larger and more focused players via restructuring at BU level rather than at group level Future European landscapeEuropean landscape today Small Integrated Large IntegratedFocused Wireline Wireless Data Wireline Wireless Data Small Integrated Large IntegratedFocused Incumbents maintain local positions Possibly some turnaround plays Incumbents maintain local positions Possibly some turnaround plays Some small players will shred data assets Some large players will grow internationally Increased focus Some small players will shred data assets Some large players will grow internationally Increased focus Some small players will shred wireless assets Possible moves to complete/develop pan- European coverage and regional plays Increased focus Some small players will shred wireless assets Possible moves to complete/develop pan- European coverage and regional plays Increased focus

12 Integrated players should opt to become multifocused operators with a value-added corporate role Financial holding Operationally integrated company Integrated multi- focused player with value adding corporate center Operational Strategic Group configuration Development of synergies and shared skills Management of critical resources Financial Role of corporate center Degree of Business Unit Integration Unrelated, autonomous businesses Same business systems and dynamics For telecom players that will remain integrated, this is the configuration to adopt Current situation for many Telco's, leading to significant discounts in many cases Not suited for value adding, integrated model

13 Consequences and implications Balance sheet restructuring and focus on earnings Focus or multi-focus strategy in the context of sector restructuring Search of growth opportunities Balance sheet restructuring is a first priority for players with high debt levels Performance improvement needed to address the turnaround play Responding to changed priorities from the capital markets perspective: from growth to ROI, EBITDA. Cash is king: efforts to reduce Capex and Opex Corporate strategy: decide on core areas to strengthen, businesses on which control will be maintained, revise value of options developed Have an M&A roadmap in place to strengthen core-areas and, potentially, to divest non-core areas Organizational model for the corporation and role of the corporate center Cope with the growth challenge; organic, inorganic, business building Explore activities to grow new business and leverage skills and intangibles Develop and cultivate networks of partners. Critical for new businesses

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