1. Emerging New Digital Valley on the Map – Lithuania
Antanas Juozas Zabulis Omnitel
President and CEO
Conference “Lithuania in the EU: The Values We Defend, the Changes We Pursue”
9 – 11 June, 2004
Vilnius City Hall

2. Executive summary WHERE WE ARE
Knowledge economy is named strategic priority for Lithuanian economic development
Political will, legal, social & business framework in place
Unique and effective partnership among businesses & the state
Booming ICT sector, growing exports of IT services and complex solutions
Yet lagging country’s e-readiness but improving very rapidly
CHANGES AND STRATEGY WE PURSUE
to continue competitive growth
to leverage knowledge economy potential
to secure welfare of our people

3. Lithuanian e-readiness 2004
Lithuanian ICT sector Where do we stand now?
Fastest growing economy in Europe - GDP up by 9%
# 38 Global E-readiness ranking [Economist Intelligence Unit]
Overall ranking 5.35 (the highest - Sweden 8,7; the lowest Azerbaijan - 2,37)
# 40 Growth Competitiveness index [World Economic Forum]
# 40 Business Competitiveness index [World Economic Forum]
Lithuanian e-readiness 2004
7.10
6.75 8
5.35
5.37
5.79
5.75 6
2.76 4 2
Overall
Connectivity
Business
Consumer &
Legal &
Social &
Supporting
ranking
environment
business
policy
cultural
e-services
adoption
environment
Ranking factors

4. Lithuanian ICT sector Strong political will
Knowledge economy – TOP PRIORITY for country’s economic development
Lisbon Declaration
National Agreement signed on consensus basis by all political parties
Long term economic development strategy approved
Knowledge economy development strategy
Lithuanian Science & Technology White Book
E-business concept
E-Government concept
Strategic goals by ICT sector sales of products & services will comprise
25% of GDP
Share of ITC services from 6.1% in 2003 to 17.5% in 2015
Share of ITC products from 1.4% to 7.7%
50% of total exports

5. Lithuanian ICT sector Effective governing framework
Self-governance & PPP initiatives
Public institutions & authorities
Knowledge Society Council [President]
Information society development commission [Government]
Information society development committee
[Parlament]
Infobalt association
Alliance “Window to the Future”
National Communications Regulator
Information society development committee under the Government of Lithuania
Knowledge Economy Forum
Ministry of Internal Affairs
Ministry of
Transportation
Ministry of Economy
Ministry of …

6. Legal framework in compliance with EU
Lithuanian ICT sector Safe & attractive business harbour
Legal framework in compliance with EU
Law on Electronic signatures
Law on Copyright and Related Rights
Law on Personal data protection
Law on Electronic communications
Attractive investment climate
Active copyright agencies to protect intellectual property rights
Telecommunication market de-monopolized since 2003
Fastest growing economy with very low inflation
Investment incentives, clusters, free economic zones
Highly skilled and relatively inexpensive labour
Cultural & geographic proximity to the key markets

7. Public sector investment towards knowledge economy, mEUR
Lithuanian ICT sector Growing R&D investments
Joint efforts of business & state on Lisbon agenda:
investment program for 3% of the state budget into R&D by 2008
focus on investments to create the knowledge economy
Total R&D comprised 100 mEUR in 2002 (0.69% of GDP)
Public sector investment towards knowledge economy, mEUR 60 42 46 45 30
EU funds
23,5 30 15
9,5
7,5
State budget
1999
2000
2001
2002
2003
2004

8. Lithuanian ICT sector Growth of Mobile and E-banking
240% growth of mobile users during
200% growth of e-banking users during last 18 months

9. Strong study and research infrastructure with
Lithuanian ICT sector Knowledge society potential
Strong study and research infrastructure with
21 universities and colleges
~8,800 students
incl. 1,950 in universities & 1,000 studying for MSc degree
~1,200 graduates per year
4.9% of total graduates in sciences, 20.7% of which – engineers (EU-15: 14,6%; EU new members: 8.8%)
Highly qualified and affordable IT specialists
Over 15,000 employed in IT sector alone
Average annual programmer’s salary – 12,000 EUR (EU-15: ~ 60,000 EUR)
Knowledgeable society
40-50% of population aged years has higher education (EU-15: 19-22%)

10. Modern telecom infrastructure
Lithuanian ICT sector Connectivity
Modern telecom infrastructure
1Q 2004 mobile penetration of 72% per capita*
estimated to reach 82% in 2004**
fixed line penetration of 50.2% per households
PC ownership
98.2% of companies with >250 employees, 84.4% of total
27.4% of households in large cities, 19.9% of total
Internet penetration
95.5% of companies with >250 employees, 65.5% of total
99% of business have web pages
11.7% of connected households in large cities, 7.7% of total
27% of people use Internet at least semiannually, 26% monthly, 23% weekly
* NRA data
** Omnitel estimate
Source: Infobalt

11. Total investments made by all Lithuanian Telecommunication Operators:
Lithuanian ICT sector Building Information Highway
Today Lithuania has most advanced fixed and mobile infrastructure in the Baltic States.
Investments into Lithuanian Telecommunications Infrastructure made by TeliaSonera majority owned companies Omnitel and Lietuvos Telekomas:
~ 900 million Euros.
Total investments made by all Lithuanian Telecommunication Operators:
~ 1,2 billion Euros.
To compare - total amount of all EU Structural funding planned in a Single Programming Document for the next 3 years:
~ 792 million Euros.
Source: Omnitel

12. Role of Omnitel Bringing innovations to the Country
First in Lithuanian to introduce GSM (1995)
First commercial Internet provider (1995)
One of the first in the world to introduce GPRS (2001), as well as MMS, Bluetooth (2002)
The first in the world to launch and operate Motorola’s latest base stations Horizon II (2003)
The 4th company in Europe and the 7th in the world to have implemented on its network the latest GPRS technology CS3/CS4 (2003). GPRS data transfer rates are increased up to 70%
GSM Association Worldwide Awards Nominee (2003, 2004)
UMTS trial (2004)

13. Role of Omnitel Constant Innovation
Omnitel portal – the most popular multi-channel personalized portal providing most convenient electronic communication tools, opportunities to manage GSM services, information and electronic entertainment.
‘SIM plus’ card with particularly broad possibilities, enabling each subscriber to personalize services received.
EXTRA ID - reusable pre-paid card, e-ticket and e-discounts.
Electronic Pre-paid top-up (via SMS, ATM, ID cards, Internet) reached 36% of total top-up amount.
Omnitel introduced a project e-city with to transfer city communications to the electronic environment.
Mobile parking in Vilnius and Kaunas.
Service of monitoring moving objects, using GPS satellite positioning system, and their control.
Household information management system 'House' developed for monitoring, testing and receiving information to the mobile phone on the status of household energy, heating, water supply and other equipment.
Omnitel mobile data messaging exceeds Eastern Europe average by more than 200% and Western Europe average by 30%
Source: Omnitel

14. Role of Omnitel Growth of non–voice services
Source: Omnitel

15. Private & Public partnership - “Window to the future”
Key challenge Internet Connectivity – how to break through?
Private & Public partnership - “Window to the future”
Knowledge Society Development Initiative was initiated in 2002 by leading ITT companies and Banks
The Goal – to reach EU average Internet penetration level in Lithuania (39% in 2002)
Now it is main Public/Private Knowledge Society program with central and local Governments and leading ITT Business acting together
More than 170 free Inter access points established
adults trained on Internet basics
Internet penetration growth from 10% up to 21% was achieved only in three quarters!

16. Private & Public partnership - “Window to the future”
Key challenge Internet Connectivity – how to break through?
Private & Public partnership - “Window to the future”
Expansion of the project using Budged and EU Structural funds:
1000 Public Access Points to be Established
Adults trained
Free distance learning and e-services content on Internet
Personal Income Tax Deduction when buying PC and Internet to the households
According TNS Gallup Lithuania had the fastest Internet penetration growth rate (25%) between EU accession countries during (for the same period Estonia Internet penetration growth was 9,1%, Latvia - 9,5%)
Unique model of effective Business and Governement Partnership respected by experts and top official of World Bank, EU Commission DG Information Society and UNESCO

17. Total ICT sector valued at ~1,237 mEUR Growth by 27-30% in 2002-2003
Lithuanian ICT sector Booming sector within booming economy
Total ICT sector valued at ~1,237 mEUR
7.5% of the Lithuanian GDP
Growth by 27-30% in
GDP grew in 2003 by 9%
Export of ICT services grew by 28.6% to 45 mEUR
Total country’s exports grew by 9.1%
Source: Infobalt

18. Largest Lithuanian IT company sales 2003, mEUR
Lithuanian ICT sector Key players
10 out of 18 top Baltic IT companies are in Lithuania
Top 10 companies increased their exports from 40% to 80% in 2003
Largest Lithuanian IT company sales 2003, mEUR 55 19 8 16 9 10 20 30 40 50 60
Sonex group
Alna group
Informacines technologijos
Blue Bridge
New Vision
IT service revenues
Lithuanian telecommunication
company sales 2003 est., mEUR
Tele2 5
Other 58
Bite
(TDC)
Omnitel
(TeliaSonera)
109
223
Lietuvos
Telekomas
(TeliaSonera)
Other revenues
Total sales
235
Source: Prime Investment, company reports, Omnitel estimates, Infobalt

19. Lithuanian ICT sector Key IT exporters & their clients

20. Lithuanian ICT sector Lithuanian ICT sector success factors
Highly educated and skilled workforce
Adaptiveness
Northern Europe culture
European business ethics
Very quality conscious
Versatile in English, Russian, German and Polish
Low cost
Good understanding of eastern neighbors culture mentality(Russia, Ukraine, Belarus)
Ability to employ IT workforce from Belarus, Russia and Ukraine
Investments into Quality assurance and project management
Strategic focus in competitive advantage areas
Proactive exploration of foreign markets

21. UNCTAD/WTO International trade center (World Trade Organization)
What is next?
“Lithuania is one of the potential markets for transfer of IT product development from Western countries”
Gartner
“Lithuania has the potential to become the “Sunrise Valley of Europe” and to make its presence felt both in Europe and in the global market.”
UNCTAD/WTO International trade center (World Trade Organization)

22. THANK YOU!