1. Content, Networks and Next Gen Services: Competing in the era of Convergence Kirill Polyakov Member of Board, Avant Mobile JSC

2. 2 Pace of change in mobile is accelerating Customers Regulation Competitors Technology VoIP WiFi/WiMax DSL Integrated fixed/mobile Internet players Termination rates Licensing rules Mobile payments Growing choice of services Value and simplicity Converged mobile internet broadband offerings Mobile Industry

3. 3 It’s Real!!! Source: Verisign

4. 4 Would Avant Mobile retain its leading positions in the future? Customer gets far more choices and sets rules of the game The ecosystem is changing fast –Content –Access –User experience –Monetization Customer needs –Changing communication needs –Simplicity –Value for money

5. 5 MarketOffer Voice Dominated MultipleServices MarketStructure Few players/ RegulatedFragmented/Deregulated/ Highly Competitive A B C D voice-relatedvoice-related person-relatedperson-related lifestyle-relatedlifestyle-related The opportunities for changing the customer value proposition will depend on the market conditions

6. 6 How new Internet “goods” would affect rules of the game? Internet model Mobile model Users 2 bn 1 bn Free content funded by advertising Google rules Mobile operators and content providers loose power Subscription based paid access to content Mobile operators and content providers rule Mobile Internet

7. 7 Voice was the fuel of mobile world. Lessons from fuel retail industry MarketOffer Fuel Dominated MultipleServices MarketStructure Few players/ RegulatedFragmented/Deregulated/ Highly Competitive A B C D Establishing NetworkEstablishing Network “OilCo Push”“OilCo Push” Establishing NetworkEstablishing Network “OilCo Push”“OilCo Push” Fuel differentiationFuel differentiation “Consumer Pull”“Consumer Pull” Fuel differentiationFuel differentiation “Consumer Pull”“Consumer Pull” Efficient channels of tradeEfficient channels of trade Distribution effectivenessDistribution effectiveness Price CompetitivenessPrice Competitiveness Efficient channels of tradeEfficient channels of trade Distribution effectivenessDistribution effectiveness Price CompetitivenessPrice Competitiveness VolumeVolume MarginMargin ProfitabilityProfitability Strategic Focus

8. 8 Adding “dry goods” to a standard fuel (voice!!!) offering is an excellent example to learn from Pump outside a store AttendantService Un-manned Kiosk Shop time Retail sophistication Destination One Stop Shop We are here!!!

9. 9 Strategic Aspiration: Customer Needs Cheap “est” Hot “est” Easy “est” Big “est” (lowest prices) (service) (selection) (fashion) Black Hole

10. 10 The importance of convenience Cheap “est” Hot “est” Easy “est” Big “est” (lowest prices) (service) (selection) (fashion) Black Hole Quick “est”

11. 11 “EST” Retailing EasyEST retailers: –create ideas –provide assurance (having what the customers want, in-stock, and providing guarantees) –offer an enriching experience –provide information to help customers understand their options and make decisions easily –focus on efficiency for the customer through: -the clarity of offer -appropriately edited assortments -well merchandised and accessorised presentations -a transparent shopping experience.  They are organised for people who know what they want

12. 12 Strategic Aspiration: Delivery Focus on 5 critical factors essential to deliver this aspiration. Retailers call them the 5 C’s of consumer efficiency: -Checkout: this is the last moment of truth with the customer. Nothing wastes customers perceived (or Real) time more than inefficient handling at check out -Clarity: in terms of what you offer and stand for -Choice: edited to be just right -Control: allow the customer to be in control and have the options to be in control -Communications: making sure the right message gets to the customer at the right time Currently the key Checkout process in our industry is cumbersome (premium SMS). Hopefully situation will change to better with wider adoption of more convenient subscription payments

13. 13 Summary Avant Mobile can retain it leading positions only in cooperation with operators, Internet companies and other content providers “Mobile” business model with subscription based payments will prevail when Internet and Mobile converge Customer is a king. We should learn from retail industry to serve customer needs. British Petroleum is a good teacher