1. Making 3G Work in Vietnam Presented by: Marc Daniel Einstein Senior Industry Analyst October 5th, 2008 Hanoi, Vietnam

2. 2 Today’s Agenda Section 1: Vietnamese Mobile Market Overview Section 2: 3G Market Overview Section 3: 3G Services & Applications Section 4: Making 3G Work in Vietnam

3. 3 Section 1: Vietnamese Mobile Market Overview

4. 4 Vietnam’s Telecommunications Market in Context Vietnam’s Mobile Market is at a medium level of maturity for an emerging market. “The Digital Divide”

5. 5 Vietnam Mobile Market Forecast Vietnam will continue to be one of the fastest growing mobile markets in terms of net subscriber additions. Vietnam will have 4% of all AP subs by 2013.

6. 6 Vietnam Mobile ARPU Evolution As most of Vietnam’s future mobile market growth will come from the rural and youth Segments, we believe that the blended market ARPU will breach the US$3 level by 2013 We predict that the 2013 ARPU will only be 25% of its 2005 value

7. 7 Asia Pacific ARPU vs. EBITDA Margin Comparison This decline, however, does not necessarily correspond to low profitability, especially for emerging market incumbent operators Emerging Market Incumbents Emerging Market Challengers Developed Market Operators

8. 8 But Low ARPUs are Starting to Take a Toll While some emerging market operators in Asia are maintaining of slightly improving EBITDA margins via wireless broadband strategies and network outsourcing, many are experiencing large declines in ARPUs which are putting pressure on margins. +3.3% +1.2% -1.5% -4.1% -9.0% -20.9% -21.0%

9. 9 Section 2: 3G Overview

10. 10 KEY CHALLENGES:  High Handset Prices  Lack of Subscriber Adoption  Large Markets Still Untapped  QoS/Indoor Coverage 3G Deployments 3G Deployments –Asia Pacific

11. 11 3G Subscriber Update Japan & South Korea comprised 80% of the APAC 3G Subscriber Base in 2007 ‘000 subscribers

12. 12 3.5G vs. 4G Technology Comparison LTEHSPA+ LTE will offer significant advantages over 3.5G in terms of data rates, latency, transmission time interval, and is more flexible with spectrum blocks. Latency Data Rates TTI Spectrum 144/57Mbps DL/UL 42/11Mbps DL/UL 10ms50ms 2ms.05ms 5MHz BlocksFlexible

13. 13 LTE Time to Market LTE is still in the laboratory and early field testing phases as vendors such have publicly demonstrated live LTE handovers. Going forward we expect limited deployments in 2011 with wider-scale launches by 2012. 2008 2009 2010 2011 2012 Lab Testing Field Testing Network Deployment First-Mover Launches Wide-Scale Deployment

14. 14 Section 3: Making 3G Work in Vietnam

15. 15 APAC Household Penetrations Rates The “Digital Divide” Low-bandwidth, high ARPU wireline broadband markets are ripe for competition from 4G, even in developed markets.

16. 16 PLDT – Wireless Broadband Strategy Exhibit: PLDT’s Broadband Service Portfolio Exhibit: PLDT’s Broadband Subscriber Uptake by Service, 2005-2007 The PLDT has been able to diversify its revenue streams in the broadband market by deploying wireless solutions for last-mile connectivity: GPRS/EDGE, HSPA, WiFi and eventually WiMax are all used to compensate for low fixed-line penetration (~4%) In 2007 wireless broadband subscribers overtook wired subscribers (only case in the world) Product bundling: New subscribers can purchase a laptop with a wireless data card and service plan from the operator

17. 17 Clearwire – Wireline to Wireless Churn Clearwire, one of the largest WiMAX operators in the world and based in the USA reported that a surprising 59% of its wireless broadband subscriber base actually churned from a fixed-line broadband service, driven by both lower price points and the added feature of mobility.

18. 18 Mobile Advertising – Blyk Mobile Blyk Mobile, an MVNO in the UK, is the first operator globally to introduce a 100% ad- funded mobile service. The service allows 16-24 year olds to receive 243 text messages and 43 voice minutes to any network in the UK every month, and additional minutes cost and messages cost £0.15 and £0.15 respectively. The company has picked up advertisers such as McDonalds, Microsoft and Adidas and boasts 100,000 subscribers. SIM, 217 texts & 43 minutes FREE every month Advertisement s + 16 -24 years old Mobile operator

19. 19 Section 4: Making 3G Work in Vietnam

20. 20 What does 3G Mean for Vietnam? Vietnam’s mobile market has rapidly caught up with other emerging markets in Asia but the broadband market still lags behind. Emerging market wireless operators are facing pressure on margins which will entice them to aggressively enter the broadband market. 3G technology has reached a point where it can adequately compete with wireline service in Vietnam. Service offerings should first focus on ACCESS then VAS. A higher broadband penetration is crucial to Vietnam’s competitiveness in the global economy and so it is ultimately in the government’s best interest to promote wireless broadband usage.

21. Thank you! Marc Daniel Einstein, Senior Industry Analyst Email: marc.einstein@frost.com Tel: +6569800983marc.einstein@frost.com