Telecom Services Predictions 2011How to Start the New Decade on the Right Foot in

Latin America

José Roberto Mavignier, Industry Manager

Telecom ServicesTelecom Services

January 28, 2011

Today’s Presenters

Jose Roberto Mavignier, Latin America ICT Industry Manager

Frost & Sullivan

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Focus Points

I. A Decade in the IndustryI. A Decade in the Industry

II. Revisiting 2010 Predictions

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III. 2011 Predictions

2,0%

3,0%

4,0%

5,0%

6,0%

Colombia

Brazil

VenezuelaChileArgentina

Mexico

Latin America

Telecom Increased Importance on Latin American Economies

Telecommunications Revenues as % of Country’s GDP

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0,0%

1,0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sources: World Bank, ITU, Frost&Sullivan

2000 – 2,8% 2009 – 3,0%

2000 – 3,7% 2009 – 4,5%

2000 – 3,5% 2009 – 3,3%

2000 – 2,7% 2009 – 5,2%

2000 – 2,1% 2009 – 2,7%

2000 – 3,3% 2009 – 3,4%

A Look in the Decade: Fixed Telephony’s Rise and Fall

NUMBER OF SUBSCRIBERS AND LINES PRESENTED GROWTH.

2000 – 21,4 2009 – 24,5

Fixed Teledensity in Major Markets of Latin America (per 100 inhabitants)

2000 – 17,8 2009 – 21,6 2000 – 21,4 2009 – 20,9

2000 – 18,1 2009 – 17,2 2000 – 12,6 2009 – 17,9 2000 – 10,4 2009 – 24,2

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Sources: Subtel, CRT, CNC, ANATEL, CONATEL, COFETEL, Frost&Sullivan

TRAFFIC AND REVENUES HAVE BEEN AFFECTED.

VAS AND BROADBAND.

COMPETITION INCREASED SIGNIFICANTLY.

BUNDLE OF SERVICES.

NEW BUSINESS MODELS.

A Look in the Decade: Mobility Predominance

PENETRATION NEAR TO 1 LINE PER PERSON.

2000 – 17,6 2009 – 126,1

Mobile Teledensity in Major Markets of Latin America (per 100 inhabitants)

2000 – 13,3 2009 – 90,5 2000 – 22,1 2009 – 96,7

2000 – 5,7 2009 – 91,9 2000 – 14,4 2009 – 77,4 2000 – 22,4 2009 – 104,5

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RAPIDLY EXPANDED COVERAGE.

CLIENT-ACQUISITION SHIFTED TO ARPU INCREASE.

MERGES AND ACQUISITIONS.

CORPORATE APPLICATIONS MARKET RISING.

Sources: Subtel, CRT, CNC, ANATEL, CONATEL, COFETEL, Frost&Sullivan

MOBILE BROADBAND: EMAILS, SOCIAL NETWORKS, MOBILE ADVERTSING, M2M

A Look in the Decade: Datacomm Preparing for the Future

DATACOMM PENETRATION HAS INCREASED DRAMATICALLY.

IMPORTANT DRIVERS: INFORMATIZATION, MPLS DEPLOYMENT.

TECHNOLOGY SUBSTITUTION TOOK PLACE.

IMPORTANT DRIVERS: INTERNET USAGE, COST-REDUCTION.

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TECHNOLOGY SUBSTITUTION TOOK PLACE.

REGIONAL AND NATIONWIDE BACKBONES.

FIBER, DOCSIS 3.0, VDSL, ADSL2+ - RESIDENTIAL MARKET EVOLVING

Revisiting 2010 Predictions

How Were Frost & Sullivan’s Hits and Misses in Latin America?

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2010 Predictions: Hits, Partial Hits and Misses

ULTRA BROADBAND

BROADBAND VAS

MVNOs

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WIMAX

MOBILE MARKETING

2011 Predictions

A Snapshot of Telecom Services Market Trends in

Latin America.

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Prediction #1: Mobile Payment will Gain Traction

BANKS, CREDIT CARD COMPANIES, ACQUIRES AND OPERATORS

MARKET DEVELOPMENT GAINING MOMENTUM

Oi PAGGO: FIRST SERVICE DEPLOYED IN THE REGION

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IMPORTANT DRIVERS: 3G PENETRATION, PARTNERSHIPS AND JOINT-VENTURE PUSHES, SECURITY

MOBILE BANKING GROWING FAST

NEAR FIELD COMMUNICATION MASSIVE PROJECTS

Prediction #2: TV/INTERNET Convergence More Popular

7.3 MILLION TV SETS SOLD IN LATIN AMERICA ON Q2 2010.

GOOGLE TV / APPLE TV / YOU TUBE

IPTV INITIATIVES IN LATIN AMERICA: UNE, TELSUR, MAXCOM, GVT (FIBER, VoD)

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MULTI-PLATFORM CONTENT DELIVERY GAINING TRACTION.

PENDING REGULATORY ACTS MIGHT BE IMPACTING DRIVER

Prediction #3: Telcos Expanding Presence on IT Services

CLOUD COMPUTING KEY GROWTH AREA

SERVICE DEPENDS UPON CONNECTIVITY.

TELCOS HAVE BILLING METHODOLOGY, DATA CENTER CAPABILITY, CAPACITY

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TELCOS GAINING EXPERTISE

LACK OF A MORE COMPLETE PORTFOLIO AND EXPERTISE

GROWING NUMBER OF TELCOS IN THE MARKET

Prediction #4: Government Initiatives Getting Stronger

GOVERNMENT’S ROLE AUGMENTING IN THE REGION

BRAZIL – TAXES EXEMPTION FOR LOWER CLASSES

RESEARCH & DEVELOPMENT.

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NATIONAL BROADBAND ROLL-OUT PLANS

UNIVERSALIZATION ALSO FOR TELEPHONY

DISTANT, RURAL COMMUNITIES PROJECTS – BRAZIL, VENEZUELA, CHILE

Prediction #5: Ultra Broadband will Ignite the Market

NEW DIGITAL LIFESTYLE.

COMPETITION BEING IMPORTANT DRIVER – ATTACKERS X INCUMBENTS

PRICES WILL START TO SLOWLY DECLINE. - TELEFONICA

BUNDLE OF SERVICES.

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BUNDLE OF SERVICES.

SPECIFIC APPLICATIONS, SUCH AS CONNECTED HOMES, IPTV.

HIGH DEPLOYMENT COSTS, TECHNICAL DIFFICULTIES

VENEZUELA AND MEXICO FAR BEHIND.

Next Steps

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For Additional Information

Tatiana Brull

Corporate Communications LA

Marketing Communications Executive (+55 ) 11 3065-8445

tatiana.brull@frost.com

Cecilia Baruel

Sales Director

Brazil

(+55) 11 3065.8444cecilia.baruel@frost.com

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José Roberto Mavignier

Latin America Industry Manager

Information & Communication Technologies

(+55 ) 11 3065-8463

joseroberto.mavignier@frost.com

Fernando Serra

Sales Director

Latin America

(+54) 11 4777-1550

fernando.serra@frost.com