Ranking The World's Best MNOs. 2009. Portio Research Ltd

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Ranking The World’s Best Mobile Operators

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Contents Introduction ............................................................................................................................12 Performance Measurement 1 – MNO ARPU PPP ................................................................18

Formula and Rationale ....................................................................................................................... 18 Rankings ............................................................................................................................................ 19 MNO Strategies ................................................................................................................................. 23

Nextel Brazil .................................................................................................................................... 23 3 The UK ......................................................................................................................................... 26 Rogers Canada ............................................................................................................................... 29

Performance Measurement 2 – ARPU as a Percentage of Disposable Income ...............33 Formula and Rationale ....................................................................................................................... 33 Rankings ............................................................................................................................................ 34 MNO Strategies ................................................................................................................................. 38

MTN Nigeria .................................................................................................................................... 38 Zain Sudan ...................................................................................................................................... 41 Maroc Telecom Morocco ................................................................................................................. 43 Safaricom Kenya ............................................................................................................................. 45

Performance Measurement 3 – Revenue Growth of the MNO ...........................................49 Formula and Rationale ....................................................................................................................... 49 Rankings ............................................................................................................................................ 51 MNO Strategies ................................................................................................................................. 55

life:) Ukraine .................................................................................................................................... 55 BITE Lithuania ................................................................................................................................. 60 Oi Brazil ........................................................................................................................................... 64

Performance Measurement 4 – MNO Profitability...............................................................69 EBITDA Margin .................................................................................................................................. 69 MNO Strategies ................................................................................................................................. 75

Globe Telecom The Philippines ...................................................................................................... 75 Djezzy Algeria ................................................................................................................................. 78 KPN The Netherlands ..................................................................................................................... 82

Additional Reference Material ............................................................................................................ 86 Average Profit Per User (APPU) ..................................................................................................... 86 Formula and Rationale .................................................................................................................... 86

Performance Measurement 5 – MNO Growth vs. Market Growth .....................................89 Formula and Rationale ....................................................................................................................... 89 Rankings ............................................................................................................................................ 90 MNO Strategies ................................................................................................................................. 94

Wind Italy ........................................................................................................................................ 94 TDC Denmark ................................................................................................................................. 97 Vodafone Ireland ........................................................................................................................... 100

Performance Measurement 6 – Significance of the MNO ................................................104 Formula and Rationale ..................................................................................................................... 104 Rankings .......................................................................................................................................... 105 MNO Strategies ............................................................................................................................... 109

du The UAE ................................................................................................................................... 109 Movistar Venezuela ....................................................................................................................... 114 Mobily Saudi Arabia ...................................................................................................................... 118

Performance Measurement 7 – Successful Growth of Revenue from Data Services ...124 Formula and Rationale ..................................................................................................................... 124 Rankings .......................................................................................................................................... 125 MNO Strategies ............................................................................................................................... 129

Smart Communications The Philippines ........................................................................................ 129 Telkomsel Indonesia ..................................................................................................................... 133 NTT DOCOMO Japan ................................................................................................................... 138

Performance Measurement 8 – Measuring Subscriber Loyalty ......................................144



Formula and Rationale ..................................................................................................................... 144 Rankings .......................................................................................................................................... 145 MNO Strategies ............................................................................................................................... 149

KDDI Japan ................................................................................................................................... 149 SingTel Singapore ......................................................................................................................... 153 Chunghwa Telecom Taiwan .......................................................................................................... 158

Performance Measurement 9 – Postpaid Penetration Measure ......................................163 Formula and Rationale ..................................................................................................................... 164 Rankings .......................................................................................................................................... 164 MNO Strategies ............................................................................................................................... 169

Telefonica Moviles Peru ................................................................................................................ 169 Comcel Colombia .......................................................................................................................... 172 Vodafone Egypt ............................................................................................................................. 175

Performance Measurement 10 – Technology Measure ....................................................180 Formula and Rationale ..................................................................................................................... 180 Rankings .......................................................................................................................................... 181 MNO Strategies ............................................................................................................................... 186

Vodacom DR Congo ..................................................................................................................... 186 MTN Sudan ................................................................................................................................... 189 Etisalat Misr ................................................................................................................................... 192

Other Leading MNOs’ Strategies ........................................................................................197 China Mobile .................................................................................................................................... 198 AT&T The US .................................................................................................................................. 202

Summary and Conclusions .................................................................................................206 Traditional KPIs................................................................................................................................ 208 Ranking 1: Traditional Approach ...................................................................................................... 212 Ranking 2: Normalised Approach .................................................................................................... 217 Ranking 3: Blended Approach ......................................................................................................... 227 Notes covering a few anomalies, outliers and interesting observations ........................................... 231 Objective Analysis of Regional Performance in Three Core Areas of Success ............................... 234

Overall Ranking 1 – Best MNOs by region for size and growth ..................................................... 236 Overall Ranking 2 – Best MNOs by region for extracting revenues from subscribers ................... 237 Overall Ranking 3 – Best MNOs by region for advancing non-voice mobile services ................... 238

Methodology .........................................................................................................................241 Appendices ...........................................................................................................................249

Glossary ........................................................................................................................................ 251 Portio Research Classifications ..................................................................................................... 262 Companies Mentioned in this Report ............................................................................................ 263 About the Authors.......................................................................................................................... 268 Also available from Portio Research Limited ................................................................................. 270



List of Figures

Figure 1: Performance Measurement Indices Used to Measure the Performance of MNOs Worldwide ......................................................................................................................... 12

Figure 2: Monthly ARPU vs. Monthly ARPU PPP – Worldwide Markets (In USD, 2008) ................. 18Figure 3: Top 20 MNOs Worldwide – MNO Monthly ARPU PPP (2008) ......................................... 19Figure 4: Top 3 MNOs Worldwide – MNO Monthly ARPU PPP (2008) ........................................... 22Figure 5: MNOs’ Monthly ARPU and Monthly ARPU PPP – Brazil (In USD, 2008) ......................... 23Figure 6: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – Brazil (In

Percent, End-2008) ........................................................................................................... 24Figure 7: MNOs’ Blended Monthly Churn – Brazil (In Percent, 2008) .............................................. 24Figure 8: MNOs’ Monthly ARPU and Monthly ARPU PPP – The UK (In USD, 2008) ...................... 26Figure 9: MNOs’ 3G Subscriber Base – The UK (In Million, End-2008) ........................................... 27Figure 10: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – The UK (In

Percent, End-2008) ........................................................................................................... 27Figure 11: MNOs’ Monthly Data ARPU – The UK (In USD, 2008) ..................................................... 28Figure 12: MNOs’ Monthly ARPU and Monthly ARPU PPP – Canada (In USD, 2008) ..................... 29Figure 13: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – Canada (In

Percent, End-2008) ........................................................................................................... 30Figure 14: MNOs’ Gross Postpaid Subscriber Additions – Canada (In Million, 2008) ........................ 30Figure 15: Data Revenue as a Percentage of ARPU – Rogers Canada (In Percent, 2008) .............. 31Figure 16: Scatter Plot of Monthly ARPU vs. Monthly Disposable Income – Worldwide Markets

(2008) ............................................................................................................................... 33Figure 17: Top 20 MNOs Worldwide – ARPU as a Percentage of Disposable Income (2008) ........... 34Figure 18: Top 3 MNOs Worldwide – ARPU as a Percentage of Disposable Income (2008) ............. 37Figure 19: Subscriber Base and Penetration – Nigeria (2006-2008) .................................................. 38Figure 20: Factors Hampering Quality of Service in Nigeria ............................................................... 39Figure 21: Demographic Break-out – Sudan (End-2008) ................................................................... 41Figure 22: Subscriber Base and Monthly ARPU – Morocco (2006-2008) .......................................... 43Figure 23: Utilisation of 3.5G Networks by Maroc Telecom (June 2007- February 2008) .................. 44Figure 24: MNOs’ Subscriber Base – Kenya (In Million, End-2008) ................................................... 45Figure 25: Safaricom’s Strategies ...................................................................................................... 46Figure 26: Safaricom’s Targeted Marketing Strategy ......................................................................... 46Figure 27: Top 10 MNOs Worldwide – Total Revenue & Revenue Growth (2008) ............................. 50Figure 28: Top 20 MNOs Worldwide – Revenue Growth of the MNO (2008) ..................................... 51Figure 29: Top 3 MNOs Worldwide – Revenue Growth of the MNO (2008) ....................................... 54Figure 30: MNOs’ Market Share – Ukraine (In Percent, 2006-2008) .................................................. 55Figure 31: MNOs’ Total Revenue – Ukraine (In USD Million, 2006-2008) .......................................... 56Figure 32: life:)’s Success Strategies ................................................................................................. 56Figure 33: life:)’s Innovative Products ................................................................................................. 57Figure 34: life:)’s Range of Services ................................................................................................... 58Figure 35: MNOs’ Total Revenues – Lithuania (In USD Billion, 2007-2008) ...................................... 60Figure 36: BITE’s Success Strategies ................................................................................................ 61Figure 37: BITE’s Key Milestones (2003-2008) .................................................................................. 62Figure 38: MNOs’ Subscriber Base – Brazil (In Million, End-2008) .................................................... 64Figure 39: Key MNOs’s Total Revenues –Brazil (In USD Billion, 2006-2008) ................................... 65Figure 40: MNOs’ Revenue Growth – Brazil (In Percent, 2007-2008) ................................................ 65Figure 41: Oi’s Revenue Growth Strategies ....................................................................................... 66Figure 42: Oi’s Subscriber Acquisition Strategies ............................................................................... 66Figure 43: Oi’s Services ..................................................................................................................... 67Figure 44: Factors Affecting EBITDA Margin ...................................................................................... 69Figure 45: MNOs’ EBITDA Margin and Market Share (In Percent, 2008) ........................................... 70Figure 46: Top 20 MNOs Worldwide – MNO Profitability (2008) ........................................................ 71Figure 47: Top 3 MNOs Worldwide – MNO Profitability (2008) .......................................................... 74Figure 48: EBITDA Margin and Total Revenue – Globe Telecom (2006-2008) .................................. 75Figure 49: Globe Telecom’s Success Strategies ................................................................................ 76Figure 50: Globe Telecom’s Service Innovations ............................................................................... 77Figure 51: MNOs’ Subscriber Base – Algeria (In Million, End-2008) .................................................. 78



Figure 52: EBITDA Margin and Total Revenue – Djezzy Algeria (2006-2008) .................................. 79Figure 53: MNOs’ Monthly ARPU – Algeria (In USD, 2008) ............................................................... 80Figure 54: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base of the MNO –

Algeria (In Percent, 2007 & 2008) ..................................................................................... 80Figure 55: EBITDA Margin and Total Revenue – KPN The Netherlands (2006-2008) ...................... 82Figure 56: KPN’s Success Strategies ................................................................................................. 83Figure 57: Market Share of MNOs – The Netherlands (2008) ............................................................ 83Figure 58: KPN’s Segment Strategies ................................................................................................ 84Figure 59: Top 10 MNOs Worldwide – Monthly APPU and Monthly ARPU (In USD, 2008) ............... 86Figure 60: Top 10 Countries Worldwide – Y-o-Y Subscriber Growth (2007 to 2008) and Penetration

(End-2008) ........................................................................................................................ 89Figure 61: Top 20 MNOs Worldwide – MNO Growth vs. Market Growth (2008) ................................ 90Figure 62: Top 3 MNOs Worldwide – MNO Growth vs. Market Growth (2008) .................................. 93Figure 63: MNOs’ Market Share – Italy (In Percent, December 2006-December 2008) ..................... 94Figure 64: Wind’s Strategies .............................................................................................................. 95Figure 65: TDC’s Success Strategies ................................................................................................. 97Figure 66: Revenue by Business Segment – TDC (2008) .................................................................. 98Figure 67: Vodafone Ireland’s Success Strategies ........................................................................... 100Figure 68: MNOs’ Market Share - Ireland (2007 & 2008) ................................................................. 101Figure 69: Top 10 MNOs Worldwide – Market Share (In Percent, End-2008) .................................. 104Figure 70: Top 20 MNOs Worldwide – Significance of the MNO (2008) .......................................... 105Figure 71: Top 3 MNOs Worldwide – Significance of the MNO (2008) ............................................ 108Figure 72: Demographic Break-out – The UAE Worldwide (End-2008) ........................................... 110Figure 73: du’s Key Success Factors Summarized Worldwide ........................................................ 110Figure 74: du’s First-time Products in The UAE Market .................................................................... 111Figure 75: du’s Strategic Marketing Initiatives .................................................................................. 112Figure 76: MNOs’ Subscriber Base – Venezuela (In Million, End-2008) ......................................... 114Figure 77: Movistar’s Success Strategies ......................................................................................... 115Figure 78: MNOs’ Market Share – Venezuela (2007 & 2008) .......................................................... 116Figure 79: MNOs’ Market Share – Saudi Arabia (2007 & 2008) ....................................................... 119Figure 80: Mobily’s Success Factors ................................................................................................ 120Figure 81: Mobily’s First Time Services ............................................................................................ 121Figure 82: Subscriber Base – Mobily (In Million, 2006-2008) ........................................................... 121Figure 83: Voice Revenue as a Percentage of Service Revenue – Worldwide (In Percent, 2004-

2013F) ............................................................................................................................ 124Figure 84: Top 20 MNOs Worldwide – Data Revenue Measure (2008) ........................................... 125Figure 85: Top 3 MNOs Worldwide – Data Revenue Measure (2008) ............................................. 128Figure 86: MNOs’ Subscriber Base – The Philippines (In Million, End-2008) ................................... 129Figure 87: Data Revenue Measure – Smart Communications (2006-2008) .................................... 130Figure 88: SMS Volume – Smart Communications (In Billion, 2006-2008) ...................................... 131Figure 89: SMS Revenue – Smart Communications (In USD Billion, 2006-2008) ............................ 131Figure 90: SMS Revenue as a Percentage of Data Revenue – Smart Communications (In Percent,

2006-2008) ..................................................................................................................... 132Figure 91: Voice Tariff-per-Minute to per-message SMS Cost Ratio of Asian MNOs (April 2009) ... 132Figure 92: MNOs’ Subscriber Base – Indonesia (In Million, End-2008) ............................................ 133Figure 93: Data Revenue Measure – Telkomsel Indonesia (2006-2008) ....................................... 134Figure 94: SMS Revenue – Telkomsel (In USD Billion, 2007 & 2008) ............................................. 135Figure 95: SMS Revenue as a Percentage of Data Revenue – Telkomsel

(In Percent, 2007 & 2008) ............................................................................................... 135Figure 96: Telkomsel’s Initiatives in Mobile Content Market ............................................................. 136Figure 97: MNOs’ Subscriber Base – Japan (In Million, End-2008) ................................................. 138Figure 98: Data Revenue Measure – NTT DOCOMO Japan (2006-2008) ....................................... 139Figure 99: FOMA and i-mode Subscribers – NTT DOCOMO (In Million, End-2008) ........................ 140Figure 100: NTT DOCOMO’s Strategies ............................................................................................ 141Figure 101: NTT DOCOMO’s Handset Series Launched in 2008 ...................................................... 142Figure 102: Top 10 MNOs Worldwide – Monthly Churn Rate and EBITDA Margin

(In Percent, 2008) ........................................................................................................... 144Figure 103: Top 20 MNOs Worldwide – Measuring Subscriber Loyalty (2008) .................................. 145



Figure 104: Top 3 MNOs Worldwide – Measuring Subscriber Loyalty (2008) ................................... 148Figure 105: MNOs’ Subscriber Base – Japan (In Million, End-2008) ................................................. 149Figure 106: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base –

Japan (In Percent, 2008) ................................................................................................ 150Figure 107: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base –

KDDI (In Percent, Q1 2008 – Q4 2008) .......................................................................... 150Figure 108: KDDI’s Total Customer Satisfaction Policy ...................................................................... 151Figure 109: KDDI’s Retention Measures ............................................................................................ 152Figure 110: MNOs’ Subscriber Base – Singapore (In Million, End-2008) ........................................... 153Figure 111: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base –

Singapore (In Percent, 2008) .......................................................................................... 154Figure 112: SingTel’s Subscriber Satisfaction and Retention Strategies ............................................ 155Figure 113: SingTel’s Postpaid Plans ................................................................................................. 155Figure 114: SingTel’s Customised Services ....................................................................................... 156Figure 115: MNOs’ Subscriber Base – Taiwan (In Million, End-2008) ................................................ 158Figure 116: Chunghwa Telecom’s Subscriber Satisfaction Strategies ............................................... 159Figure 117: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base –

Taiwan (In Percent, 2008) .............................................................................................. 159Figure 118: Chunghwa Telecom’s Initiatives ...................................................................................... 160Figure 119: Benefits of Postpaid Subscriptions for MNOs .................................................................. 163Figure 120: Top 10 Mobile Markets Worldwide – Postpaid Subscribers and Mobile Penetration (In

Percent, 2008) ................................................................................................................ 164Figure 121: Top 20 MNOs Worldwide – Postpaid Penetration Measure (2008) ................................. 165Figure 122: Top 3 MNOs Worldwide – Postpaid Penetration Measure (2008) ................................... 168Figure 123: MNOs’ Subscriber Base – Peru (In Million, End-2008) .................................................... 169Figure 124: Telefonica’s Strategies .................................................................................................... 170Figure 125: Postpaid Subscriber Base – Peru (In Million, End-2008) ................................................. 170Figure 126: MNOs’ Subscriber Base – Colombia (In Million, End-2008) ............................................ 172Figure 127: Comcel’s Strategies ........................................................................................................ 173Figure 128: Postpaid Subscriber Base – Colombia (In Million, 2006-2008) ....................................... 173Figure 129: Vodafone Egypt’s Success Strategies ............................................................................. 176Figure 130: Postpaid Subscriber Base – Egypt (In Million, End-2008) ............................................... 176Figure 131: Vodafone Egypt’s Product Portfolio ................................................................................. 177Figure 132: Advantages of Technology Evolution .............................................................................. 180Figure 133: Evaluation of an MNO based on Network Technology and Mobile Penetration .............. 181Figure 134: Top 20 MNOs Worldwide – Technology Measure (2008) ................................................ 182Figure 135: Top 3 MNOs Worldwide – Technology Measure (2008) .................................................. 185Figure 136: Vodacom DR Congo’s Success Strategies ..................................................................... 186Figure 137: MNOs’ Market Share – DR Congo (End-2008) ............................................................... 187Figure 138: Capital Expenditure – Vodacom (In USD Million, 2003-2008) ......................................... 187Figure 139: Vodacom’s Network Expansion in DR Congo ................................................................. 188Figure 140: MTN Sudan’s Success Strategies ................................................................................... 189Figure 141: Subscriber Base – MTN Sudan (In Million, 2006-2008) .................................................. 190Figure 142: Capital Expenditure – MTN Sudan (In USD Million, 2006-2008) ..................................... 190Figure 143: MTN Sudan Pay as You Talk – Option Plans .................................................................. 191Figure 144: MNOs’ Subscriber Base – Egypt (In Million, End-2008) .................................................. 192Figure 145: Network Deployment – Egypt .......................................................................................... 193Figure 146: Market Share – Egypt (In Percent, December 2006 - December 2008) .......................... 193Figure 147: Etisalat’s Strategies ......................................................................................................... 194Figure 148: MNO Choice – Egypt (December 2007)* ....................................................................... 195Figure 149: Monthly Churn – MobiNil (In Percent, Q1 2007 – Q4 2008) ............................................ 195Figure 150: Top 5 MNOs Worldwide – Subscriber Base (In Million, End-2008) ................................. 198Figure 151: China Mobile’s Success Strategies ................................................................................. 199Figure 152: China Mobile’s Industry-specific Applications .................................................................. 200Figure 153: Capital Expenditure – China Mobile (In USD Billion, 2008-2011F) .................................. 201Figure 154: Top 10 MNOs Worldwide – Monthly Average Profit Per User (In USD, 2008) ................ 202Figure 155: AT&T’s Success Strategies ............................................................................................. 203Figure 156: Top 20 MNOs Worldwide – Overall Ranking Using Traditional Approach (2008) ........... 213



Figure 157: Top 20 MNOs Worldwide – Overall Ranking Using Normalised Approach (2008) ......... 218Figure 158: Top 20 MNOs Worldwide – Overall Ranking Using Blended Approach (2008) .............. 227Figure 159: Regional Count of Top 10 Operators for Different Approaches ...................................... 230Figure 160: Focus Areas of the Three Overall Rankings .................................................................... 235Figure 161: Methodology for Calculating MNO Score for a Performance Measurement Index .......... 243Figure 162: Methodology for Calculating Normalised Overall MNO Score ......................................... 244Figure 163: Assignment of weights to different Performance Measurement Indices .......................... 245Figure 164: Methodology for Calculating Traditional Overall MNO Score .......................................... 246Figure 165: Methodology for Calculating Blended Overall MNO Score .............................................. 246Figure 166: Focus Areas of the Overall Rankings and Constituting Performance Measurement Indices .

................................................................................................................................... 247Figure 167: Methodology for Calculating Overall MNO Rankings – 1, 2 & 3 ...................................... 247



List of Tables

Table 1: Top 50 MNOs Worldwide – Total Revenue (In USD Billion, 2008) ................................... 13Table 2: Top 50 MNOs Worldwide – Subscriber Base (In Million, End-2008) ................................. 14Table 3: Top 50 MNOs Worldwide – Monthly ARPU (In USD, 2008) ............................................. 15Table 4: MNOs Worldwide Ranked 1 to 20 – MNO Monthly ARPU PPP (2008) ............................ 20Table 5: MNOs Worldwide Ranked 21 to 50 – MNO Monthly ARPU PPP (2008) ......................... 20Table 6: MNOs Worldwide Ranked 51 to 170 – MNO Monthly ARPU PPP (2008) ........................ 21Table 7: MNOs Worldwide Ranked 171 to 204 – MNO Monthly ARPU PPP (2008) ...................... 22Table 8: MNOs Worldwide Ranked 1 to 20 – ARPU as a Percentage of Disposable Income

(2008) ............................................................................................................................... 35Table 9: MNOs Worldwide Ranked 21 to 50 – ARPU as a Percentage of Disposable Income



(2008) ............................................................................................................................... 37Table 12: MNOs Worldwide Ranked 1 to 20 – Revenue Growth of the MNO (2008) ....................... 51Table 13: MNOs Worldwide Ranked 21 to 50 – Revenue Growth of the MNO (2008) .................... 52Table 14: MNOs Worldwide Ranked 51 to 170 – Revenue Growth of the MNO (2008) ................... 53Table 15: MNOs Worldwide Ranked 171 to 204 – Revenue Growth of the MNO (2008) ................. 54Table 16: MNOs Worldwide Ranked 1 to 20 – MNO Profitability (2008) .......................................... 71Table 17: MNOs Worldwide Ranked 21 to 50 – MNO Profitability (2008) ....................................... 72Table 18: MNOs Worldwide Ranked 51 to 170 – MNO Profitability (2008) ...................................... 73Table 19: MNOs Worldwide Ranked 171 to 204 – MNO Profitability (2008) ..................................... 74Table 20: MNOs Worldwide Ranked 1 to 20 – MNO Growth vs. Market Growth (2008) .................. 91Table 21: MNOs Worldwide Ranked 21 to 50 – MNO Growth vs. Market Growth (2008) ............... 91Table 22: MNOs Worldwide Ranked 51 to 170 – MNO Growth vs. Market Growth (2008) .............. 92Table 23: MNOs Worldwide Ranked 171 to 204 – MNO Growth vs. Market Growth (2008) ............ 93Table 24: MNOs Worldwide Ranked 1 to 20 – Significance of the MNO (2008) ............................. 106Table 25: MNOs Worldwide Ranked 21 to 50 – Significance of the MNO (2008) .......................... 106Table 26: MNOs Worldwide Ranked 51 to 170 – Significance of the MNO (2008) ........................ 107Table 27: MNOs Worldwide Ranked 171 to 204 – Significance of the MNO (2008) ...................... 108Table 28: MNOs Worldwide Ranked 1 to 20 – Data Revenue Measure (2008) .............................. 126Table 29: MNOs Worldwide Ranked 21 to 50 – Data Revenue Measure (2008) ........................... 126Table 30: MNOs Worldwide Ranked 51 to 170 – Data Revenue Measure (2008) ......................... 127Table 31: MNOs Worldwide Ranked 171 to 204 – Data Revenue Measure (2008) ....................... 128Table 32: MNOs Worldwide Ranked 1 to 20 – Measuring Subscriber Loyalty (2008) .................... 146Table 33: MNOs Worldwide Ranked 21 to 50 – Measuring Subscriber Loyalty (2008) ................. 146Table 34: MNOs Worldwide Ranked 51 to 170 – Measuring Subscriber Loyalty (2008) ............... 147Table 35: MNOs Worldwide Ranked 171 to 204 – Measuring Subscriber Loyalty (2008) ............. 148Table 36: MNOs Worldwide Ranked 1 to 20 – Postpaid Penetration Measure (2008) ................... 166Table 37: MNOs Worldwide Ranked 21 to 50 – Postpaid Penetration Measure (2008) ................ 166Table 38: MNOs Worldwide Ranked 51 to 170 – Postpaid Penetration Measure (2008) .............. 167Table 39: MNOs Worldwide Ranked 171 to 204 – Postpaid Penetration Measure (2008) ............ 168Table 40: MNOs Worldwide Ranked 1 to 20 – Technology Measure (2008) .................................. 183Table 41: MNOs Worldwide Ranked 21 to 50 – Technology Measure (2008) ............................... 183Table 42: MNOs Worldwide Ranked 51 to 170 – Technology Measure (2008) .............................. 184Table 43: MNOs Worldwide Ranked 171 to 204 – Technology Measure (2008) ............................ 185Table 44: Top 10 Operators by Subscribers – Regional (End-2008) .............................................. 208Table 45: Top 10 Operators by Total Revenues – Regional (2008) ............................................... 209Table 46: Top 10 Operators by Monthly ARPU – Regional (2008) ................................................. 210Table 47: Top 20 Operators by different KPIs - Worldwide (2008) ................................................. 211Table 48: MNOs Worldwide Ranked 1 to 20 – Overall Ranking Using Traditional Approach (2008)

...

................................................................................................................................... 213Table 49: MNOs Worldwide Ranked 21 to 50 – Overall Ranking Using Traditional Approach (2008)

................................................................................................................................... 214



Table 50: MNOs Worldwide Ranked 51 to 170 – Overall Ranking Using Traditional Approach (2008) ............................................................................................................................. 215

Table 51: MNOs Worldwide Ranked 171 to 204 – Overall Ranking Using Traditional Approach (2008) ............................................................................................................................. 216

Table 52: MNOs Worldwide Ranked 1 to 20 – Overall Ranking Using Normalised Approach (2008)

. ................................................................................................................................... 219

Table 53: MNOs Worldwide Ranked 21 to 50 – Overall Ranking Using Normalised Approach (2008) ............................................................................................................................. 219



Table 56: Top 3 Operators Worldwide for Performance Measurements – Normalised Approach (2008) ............................................................................................................................. 222

Table 57: Key Strategies Identified for Performance Measurements – Normalised Approach ....... 223Table 58: Regional Mix of MNOs in Top 20 List for Each Performance Measurement – Normalised

Approach (2008) ............................................................................................................. 225Table 59: MNOs Worldwide Ranked 1 to 20 – Overall Ranking Using Blended Approach (2008) 228Table 60: MNOs Worldwide Ranked 21 to 50 – Overall Ranking Using Blended Approach (2008)

...

................................................................................................................................... 228Table 61: MNOs Worldwide Ranked 51 to 170 – Overall Ranking Using Blended Approach (2008)

.

................................................................................................................................... 229Table 62: MNOs Worldwide Ranked 171 to 204 – Overall Ranking Using Blended Approach (2008)

................................................................................................................................... 230Table 63: Top 10 Regional Operators by Overall Ranking 1 (OR1) ................................................ 236Table 64: Top 10 Regional Operators by Overall Ranking 2 (OR2) ................................................ 237Table 65: Top 10 Regional Operators by Overall Ranking 3 (OR3) ................................................ 238Table 66: Top 20 Worldwide Operators by Different Overall Rankings .......................................... 239



Chapter 1 Introduction



Introduction Around the world, the market conditions that mobile network operators (MNOs) operate in vary considerably depending on different economic and developmental factors. Therefore, key performance indicators (KPIs) reported by MNOs cannot simply be taken at face value as a means for evaluating their performance or comparing their successes against those of other MNOs in different markets. A level playing field is required to judge the performance of MNOs through the use of suitable performance measurement indices. This study involves evaluating the performance of MNOs using ten all-new performance measurement indices (PMIs). These are shown in the figure below.

Figure 1: Performance Measurement Indices Used to Measure the Performance of MNOs Worldwide

Source: Portio Research Ltd.

The rationale behind the selection of these PMIs has been explained later in the report. These PMIs cover a wide range of performance indicators and include normalising factors such as PPP (Purchasing Power Parity), GDP (Gross Domestic Product) growth, population growth, market penetration, number of years of operation, technology employed, etc. MNOs worldwide have been ranked on these ten performance measurement indices and an overall ranking of 204 major mobile network operators worldwide has been calculated from these results. This study also includes a brief analysis of the strategies adopted by high-ranking MNOs after each individual performance measurement chapter.

Standard KPIs

In this report, we have taken a different approach and normalised each performance measurement index to create a level playing field for MNOs. By doing this we eliminate the undue advantage gained by certain MNOs because of varying market environments. However, industry practice is to evaluate operators on the basis of the following three KPIs:

We have taken a different approach and normalised each performance measurement index to create a level playing field for MNOs.

MNO Ranking

MNO Growth vs. Market Growth

Revenue Growth of the MNO

Postpaid Penetration Measure

Data Revenue Measure

MNO ARPU PPP ARPU as a Percentage

of Disposable Income

Technology Measure

Significance of the MNO

Measuring Subscriber Loyalty

MNO Profitability



• Total Revenues • Subscriber Base • ARPU

Total Revenues: The revenue generated by an operator gives an indication of the success of the business model deployed to drive revenues. Total revenues have two components: service revenues and equipment (or handset) revenues. Mobile service revenue is further divided into two segments: voice services and data services. In emerging markets, an MNO focuses on voice services; whereas in developed markets, the focus is on complementing voice services with a range of value added voice and data services. Handset sales – as a source of revenue generation – have more relevance for CDMA-based operators and for MNOs providing handsets at subsidised costs to push the uptake for new services. Operators innovate with these products and service offerings to increase their revenues. The table below shows the 50 MNOs worldwide with the highest total revenue.

Table 1: Top 50 MNOs Worldwide – Total Revenue (In USD Billion, 2008)

Rank

MNO

Total Revenue (In USD Billion)

Rank

MNO

Total Revenue (In USD Billion)

1 China Mobile 57.5 26 TIM Brasil 7.7 2 AT&T The US 49.3 27 Bouygues France 7.6 3 Verizon The US 49.3 28 VimpelCom Russia 7.4 4 NTT DOCOMO Japan 43.9 29 MegaFon Russia 7.1 5 Sprint The US 30.4 30 Turkcell Turkey 7.0 6 KDDI Japan 27.2 31 Bharti Airtel India 6.6 7 T-Mobile The US 22.0 32 Claro Brazil 6.4 8 Orange France 15.8 33 Rogers Canada 6.0 9 SoftBank Japan 15.2 34 T-Mobile The UK 6.0

10 Movistar Spain 14.2 35 Vodacom South Africa 5.9 11 Telecom Italia 14.1 36 Telstra Australia 5.7 12 SFR France 13.6 37 Wind Italy 5.6 13 Telcel Mexico 12.3 38 O2 Germany 5.3 14 T-Mobile Germany 11.4 39 Orange Spain 5.2 15 Vodafone Germany 10.9 40 E-Plus Germany 4.7 16 SK Telecom South Korea 10.8 41 KPN The Netherlands 4.6 17 O2 The UK 10.4 42 LG Telecom South Korea 4.5 18 Vodafone Spain 10.3 43 Telus Mobility Canada 4.4 19 Vodafone The UK 10.0 44 Bell Mobility Canada 4.2

20 China Unicom 10.0 45 Reliance Communication India 4.2

21 Vodafone Italy 9.1 46 Movistar Venezuela 4.1 22 Vivo Brazil 8.8 47 Optus Australia 4.1 23 Orange The UK 8.8 48 MTN South Africa 4.0 24 MTS Russia 8.0 49 Telkomsel Indonesia 4.0 25 KTF South Korea 7.8 50 Orange Poland 3.8

Limitations

Total revenue helps visualise the scale of an MNO’s operations. However, it fails to indicate how successful an operator has been in growing its total revenues. It also fails to take into consideration the state of GDP growth of the country; as higher GDP growth provides more chances for an operator to grow its revenues. Market conditions, such as mobile penetration, also need to be considered to evaluate an operator’s performance in the



market, as emerging markets generally yield low revenue per user compared to developed markets. Therefore, comparing MNOs on the basis of total revenues generated – without considering the market conditions of their country of operation – might not be an effective way of evaluating the operators’ efforts at increasing their revenues. Subscriber Base: The size of an MNO’s subscriber base highlights the popularity and perception of its brand in the minds of users in the market, and illustrates the extent of its hold over and strength within the local wireless market. The rate of subscriber growth also informs us whether an operator is gaining or losing popularity in the market. The table below highlights the 50 MNOs worldwide that have developed the largest subscriber bases.

Table 2: Top 50 MNOs Worldwide – Subscriber Base (In Million, End-2008)

Rank

MNO

Subscribers (In Million)

Rank

MNO

Subscribers (In Million)

1 China Mobile 457.3 26 KDDI Japan 30.6 2 China Unicom 179.0 27 TCI Iran 29.8 3 Bharti Airtel India 85.7 28 AIS Thailand 27.7 4 AT&T The US 77.0 29 Comcel Colombia 27.4 5 Verizon The US 72.1 30 Vodacom South Africa 26.5 6 Telkomsel Indonesia 64.7 31 Orange France 26.4 7 MTS Russia 63.4 32 Excelcomindo Indonesia 26.0

8 Reliance Communication India 61.3 33 Globe The Philippines 24.7

9 Vodafone India 60.9 34 Oi Brazil 24.4 10 Telcel Mexico 56.4 35 Movistar Spain 23.6 11 NTT DOCOMO Japan 54.2 36 Kyivstar Ukraine 23.5 12 Sprint The US 49.3 37 Vodafone Italy 23.1 13 VimpelCom Russia 46.1 38 SK Telecom South Korea 23.0 14 Vivo Brazil 45.0 39 MTN Nigeria 21.4

15 MegaFon Russia 43.6 40 GrameenPhone Bangladesh 21.0

16 T-Mobile Germany 39.1 41 MobiNil Egypt 20.1 17 Claro Brazil 38.7 42 SoftBank Japan 20.0 18 Turkcell Turkey 37.0 43 O2 The UK 19.5 19 TIM Brasil 36.4 44 Telenor Pakistan 19.4 20 Vodafone Germany 36.2 45 SFR France 19.4 21 Smart The Philippines 35.6 46 Vodafone The UK 19.2 22 Telecom Italia 34.8 47 DTAC Thailand 18.7 23 Idea Cellular India 34.2 48 Mobily Saudi Arabia 18.2 24 T-Mobile The US 32.8 49 MTS Ukraine 18.1 25 Mobilink Pakistan 31.6 50 E-Plus Germany 17.8

Limitations Although subscriber base is an industry standard used to evaluate an MNO, we believe it does not present a fair picture of efforts made by an operator in a particular market. We intend to support this argument by highlighting the huge dependence that subscriber base has on the population of a country. For instance, the top two operators in the above table are from China - the country with the highest population. The fact that two operators with the highest subscriber base are from a country with the highest population cannot be mere coincidence. This means that an operator could have a large subscriber base even without doing anything extraordinary in the market.



ARPU: The ARPU (Average Revenue Per User) achieved by an operator reflects the popularity of the services it offers. This KPI can be used to judge the acceptance level of an operator’s offerings among its subscribers. High ARPU levels suggest that the operator has been successful in penetrating its services with innovative and user friendly features. The table below shows the 50 MNOs worldwide with the highest ARPU.1

Table 3: Top 50 MNOs Worldwide – Monthly ARPU (In USD, 2008)

Rank

MNO

Monthly ARPU

(In USD)

Rank

MNO

Monthly ARPU

(In USD) 1 3 The UK 74.2 26 Orange France 50.5 2 Bouygues France 63.9 27 Swisscom Switzerland 50.2 3 Vodafone Ireland 63.7 28 T-Mobile The US 50.0 4 O2 Ireland 63.6 29 Mobistar Belgium 47.6 5 Orange Switzerland 61.5 30 Vodafone Spain 47.5 6 Rogers Canada 60.5 31 TDC Denmark 47.0 7 Orange Austria 60.5 32 Orange The UK 46.9 8 Netcom Norway 59.4 33 Vodafone Australia 46.7

9 Telus Mobility Canada 59.2 34 Partner Communications (Orange) Israel 46.7

10 3 Austria 58.5 35 Movistar Spain 44.7 11 Meteor Ireland 58.0 36 O2 The UK 44.1 12 Nextel Brazil 58.0 37 KPN The Netherlands 43.2 13 KDDI Japan 57.4 38 Telstra Australia 43.1 14 Telenor Norway 57.2 39 Telenor Sweden 42.7 15 NTT DOCOMO Japan 57.0 40 Sonofon Denmark 42.0 16 Sunrise Switzerland 55.8 41 Cellcom Israel 41.7

17 Proximus (Belgacom) Belgium 55.6 42 Mobilkom Austria 41.6

18 SFR France 54.7 43 Nextel Argentina 41.0 19 Etisalat The UAE 54.3 44 SoftBank Japan 40.6 20 Sprint The US 53.7 45 3 Italia 40.1

21 Vodafone The Netherlands 52.8 46 SK Telecom South Korea 40.0

22 Telia Denmark 52.1 47 Vodafone The UK 39.7 23 Verizon The US 51.6 48 Elisa Finland 38.8 24 Bell Mobility Canada 51.3 49 Optus Australia 38.5 25 AT&T The US 50.6 50 T-Mobile The UK 38.3

Limitations

Like subscriber base, ARPU too is subject to various local conditions, creating a favourable bias towards some MNOs. In a particular market, ARPU is directly linked to the disposable income of users. This explains why most of the operators in the above table are from Europe and North America, wherein operators can easily generate high ARPU from their higher-earning subscribers. However, if an MNO has been successful in generating comparable ARPU in low income markets, such as those in Africa, it deserves extra credit for this. Apart from disposable income, ARPU worldwide varies according to the PPP (Purchasing Power Parity) of a country. ARPU is reported in USD after conversion from the local currency; however, this conversion does not take PPP into consideration, which gives an edge to operators in those countries whose non-PPP exchange rates are high.

1 Please note: Unless otherwise stated, ARPU stands for average revenue per user per month.



The key features of this report include the following: • A comparative analysis of the performance of 204 MNOs worldwide using ten all-

new performance measurements. • A brief description of why each performance measurement index has been used to

evaluate the MNOs. • An overview of the strategies employed by 33 MNOs who ranked highly across

different performance measurement indices. • An overall ranking of all 204 MNOs assessed in this report, calculated on the basis

of their results across the ten performance measurement indices.

Please note: From an initial assessment of 700-plus MNOs, this complex report has involved extensive data collection for 204 mobile network operators worldwide. Obtaining data for over 200 operators is an understandably lengthy process, and during our collection window in Q1 2009 the latest complete set of available data was for full year end-2008. For this reason, MNOs in this report are ranked on their full year 2008 performance, not 2009.



Chapter 2 Performance Measurement 1 – MNO ARPU PPP



Performance Measurement 1 – MNO ARPU PPP MNO ARPU (Average Revenue Per User) is an important measure of an operator’s performance and its ability to tap the market potential. Operators worldwide have focused on extending the utility of mobile services to increase mobile usage per subscriber and thereby increase ARPU. However, an operator’s efforts are not truly reflected through ARPU values in terms of USD. These values do not take into account the purchasing power of subscribers in different countries, and therefore an observer might overlook the different levels of effort required for pushing the same value of mobile products and services in different countries. The figure below compares the ARPU and ARPU PPP (Purchasing Power Parity) for some of the markets during 2008.

Figure 2: Monthly ARPU vs. Monthly ARPU PPP – Worldwide Markets (In USD, 2008)


The figure shows that markets such as Brazil, Egypt and South Africa – despite having low ARPU compared to developed markets in Western Europe and North America – have ARPU PPP in the ‘above USD 25’ bracket. Therefore, the efforts of MNOs operating in these countries are commendable. As a result, we need to normalise the ARPU values with PPP factor to provide a just picture of an operator’s performance at promoting its services and driving revenues, compared to operators in other markets. Formula and Rationale

The formula used for the calculation of this performance measurement is given below:

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Value = MNO ARPU (In USD) * Purchasing Power Parity Factor for the Country



Purchasing Power Parity – the normalising factor used in this index to compare MNOs worldwide – when multiplied with real ARPU, scales the ARPU values for MNOs depending on the PPP of the market of operation. An operator might get ahead of the competition using a variety of different approaches, such as a focus on pushing data services, attracting postpaid subscribers, subsidising handsets to enable Value-added service (VAS) uptake, targeting the enterprise segment, effecting network upgrades to create new opportunities of revenue generation. Regardless of whether an MNO is operating in a developed or an emerging market, the operators ranking high in this performance measurement index are the ones who have innovated with their offerings to suit the market requirements. As such there is great value in looking at their strategies. Rankings

The figure below shows the Top 20 MNOs based on this performance measurement index.

Figure 3: Top 20 MNOs Worldwide – MNO Monthly ARPU PPP (2008)2


The rankings of MNOs based on this performance measurement index are given below.

2 Please note: The scores were calculated to four decimal places with each MNO securing a distinct value. Due to rounding off to one decimal place, a few MNOs appear to secure the same score. For a full and detailed explanation of our calculations in this report please see the Methodology section.

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Table 4: MNOs Worldwide Ranked 1 to 20 – MNO Monthly ARPU PPP (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Nextel Brazil 10.00 11 SingTel Singapore 7.53 2 Nextel Argentina 9.48 12 Orange Austria 7.51 3 Nextel Peru 8.08 13 Bouygues France 7.51 4 3 The UK 7.89 14 Telefonica Slovakia 7.46 5 Rogers Canada 7.77 15 3 Austria 7.42 6 Vodafone Czech Republic 7.74 16 Sprint The US 7.42 7 SK Telecom South Korea 7.72 17 Starhub Singapore 7.38 8 Telus Mobility Canada 7.70 18 MTN Syria 7.37 9 Orange Slovakia 7.67 19 Verizon The US 7.31

10 Partner Communications Israel 7.55 20 Bell Mobility Canada 7.29


Rank

MNO

Score

Rank

MNO

Score

21 O2 Czech Republic 7.26 36 Vodafone The Netherlands 7.07 22 AT&T The US 7.26 37 Movistar Spain 7.04 23 T-Mobile Slovakia 7.25 38 M1 Singapore 7.03 24 Cellcom Israel 7.24 39 Promonte Montenegro 7.01 25 T-Mobile The US 7.23 40 Meteor Ireland 6.99 26 Vodafone Ireland 7.22 41 Movistar Venezuela 6.97 27 O2 Ireland 7.22 42 Tele2 Croatia 6.94 28 Proximus Belgium 7.20 43 KTF South Korea 6.94 29 Vodafone Spain 7.19 44 Orange Switzerland 6.92 30 T-Mobile Czech Republic 7.17 45 Vodafone Australia 6.92 31 KDDI Japan 7.17 46 Pelephone Israel 6.91 32 NTT DOCOMO Japan 7.15 47 Orange France 6.91 33 LG Telecom South Korea 7.13 48 Netcom Norway 6.88 34 Hutch Thailand 7.12 49 Mobistar Belgium 6.83 35 SFR France 7.10 50 T-Mobile Croatia 6.82




Rank

MNO

Rank

MNO

Rank

MNO

51 Cosmote Greece 91 Vodafone Portugal 131 T-Mobile Montenegro 52 Telenor Norway 92 Telenor Sweden 132 Vodafone Italy 53 Vodafone Hungary 93 Asiacell Iraq 133 Globacom Nigeria 54 Telstra Australia 94 Zain Iraq 134 China Mobile 55 Taiwan Mobile 95 Vodafone The UK 135 Vodacom South Africa 56 SmarTone Hong Kong 96 Vodafone New Zealand 136 Sibir Telecom Russia 57 FeT Taiwan 97 TIM Brasil 137 Tele2 Lithuania

58 Vodafone Egypt 98 CSL New World Mobility Hong Kong 138 BITE Lithuania

59 Sunrise Switzerland 99 PCCW Mobile Hong Kong 139 Omnitel Lithuania 60 Orange The UK 100 Movilnet Venezuela 140 Telecom Italia 61 Orange Spain 101 TDC Denmark 141 MTS Belarus 62 Pannon Hungary 102 T-Mobile The Netherlands 142 HTIL Hong Kong 63 Digitel Venezuela 103 Mobily Saudi Arabia 143 Kyivstar Ukraine 64 DiGi Malaysia 104 VIPnet Croatia 144 Wind Italy 65 T-Mobile Hungary 105 T-Mobile The UK 145 3 Sweden 66 Maxis Malaysia 106 Tunisiana Tunisia 146 Claro Brazil 67 VIP Serbia 107 Tunicell Tunisia 147 Iusacell Mexico 68 Telenor Serbia 108 MegaFon Russia 148 Celtel DR Congo 69 mt:s Serbia 109 Wind Hellas Greece 149 Telcel Mexico 70 Celcom Malaysia 110 VimpelCom Russia 150 MTS Russia 71 KPN The Netherlands 111 Elisa Finland 151 DTAC Thailand 72 Mobiltel Bulgaria 112 MTN South Africa 152 Globul Bulgaria 73 Mobilkom Austria 113 Polkomtel Poland 153 Claro Argentina 74 TCI Iran 114 Entel PCS Chile 154 Bharti Airtel India 75 Etisalat The UAE 115 Telia Sonera Finland 155 Beeline Ukraine 76 Zain Jordan 116 Vivatel Bulgaria 156 Maroc Telecom Morocco 77 O2 The UK 117 MobiNil Egypt 157 Telia Sonera Sweden 78 Zain Sudan 118 Vodafone Romania 158 O2 Germany 79 Chunghwa Taiwan 119 Movistar Chile 159 MTS Ukraine

80 Telia Denmark 120 Telecom Personal Argentina 160 Claro Chile

81 Orange Poland 121 TMN Portugal 161 Turkcell Turkey 82 3 Italia 122 MTN Iran 162 Vodafone India 83 Vodafone Greece 123 Cell C South Africa 163 Base Belgium 84 Optus Australia 124 Velcom Belarus 164 Vodafone Germany 85 Swisscom Switzerland 125 Sonofon Denmark 165 Movistar Colombia 86 MTN Nigeria 126 DNA Finland 166 Oi Brazil 87 Etisalat Misr Egypt 127 Optimus Portugal 167 Tigo DR Congo 88 T-Mobile Austria 128 Movistar Argentina 168 AIS Thailand 89 PTC Poland 129 Vivo Brazil 169 Zain Nigeria 90 SoftBank Japan 130 Brasil Telecom 170 Tigo Colombia




Rank

MNO

Rank

MNO

Rank

MNO

171 Safaricom Kenya 183 Movistar Mexico 195 MTN Afghanistan

172 E-Plus Germany 184 Reliance Communication India 196 Globe The Philippines

173 T-Mobile Germany 185 Claro Peru 197 life:) Ukraine 174 Comcel Colombia 186 Djezzy Algeria 198 Nedjma Algeria

175 Tele2 Sweden 187 Telkomsel Indonesia 199 GrameenPhone Bangladesh

176 Telefonica Peru 188 Vodafone Turkey 200 Telenor Pakistan

177 Telecom Mobile New Zealand 189 MTN Sudan 201 Mobilink Pakistan

178 Idea Cellular India 190 Zain Kenya 202 True Move Thailand 179 Avea Turkey 191 China Unicom 203 Excelcomindo Indonesia 180 du The UAE 192 Meditel Morocco 204 Banglalink Bangladesh 181 Tele2 Russia 193 Smart The Philippines 182 Vodacom DR Congo 194 Sun The Philippines

The figure below shows the Top 3 MNOs judged on this performance measurement index.

Figure 4: Top 3 MNOs Worldwide – MNO Monthly ARPU PPP (2008)


Nextel

Argentina

Nextel Brazil

Nextel Peru

1

2 3



MNO Strategies

Nextel Brazil

Ownership: NII Holdings Ltd.

Launched: 1997

Subscriber Base: 1.8 million (31st December 2008)3

Market Environment – Brazil:

ARPU: USD 58.0 (Monthly, 2008)

ARPU PPP: USD 103.6 (Monthly, 2008)

Market Share: 1.2 percent (31st December 2008)

Brazil Mobile Penetration: 76.7 percent (31st December 2008)

Technology: iDen

• The largest market in the Latin American region • Dominated by the big four – Vivo, Claro, TIM and Oi • Predominantly a prepaid market with nearly 81.4 percent of total mobile subscribers

in the prepaid segment by end-2008 • 3.5G is operational in the market • Mobile number portability already introduced

The figure below shows the ARPU and ARPU PPP of MNOs in Brazil.

Figure 5: MNOs’ Monthly ARPU and Monthly ARPU PPP – Brazil (In USD, 2008)


Nextel’s Strategies Nextel Brazil is headquartered in Sao Paulo and offers its services in all the major business centres of the country including Rio de Janeiro, Sao Paulo, Belo Horizonte and Brasilia. It is the only Brazilian MNO to operate through iDen technology (developed by Motorola). The

3 Please note: From an initial assessment of 700-plus MNOs, this complex report has involved extensive data collection for 204 mobile network operators worldwide. Obtaining data for over 200 operators is an understandably lengthy process, and during our collection window in quarter one 2009 the latest complete set of available data was for full year end-2008. For this reason, MNOs in this report are ranked on their 2008 performance, not 2009.

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operator generates ARPU greatly above both the country’s average and that of its counterparts. This trend could be attributed to the following strategies:

• Attract a high proportion of postpaid subscribers • Attract and retain high value subscribers • Focus on the enterprise segment • Offer high value products

Attract a high proportion of postpaid subscribers Brazil is predominantly a prepaid market where most of the operators have nearly 80 percent prepaid subscribers. However, Nextel is the exception with nearly a full quota of postpaid subscribers. This unconventional approach in the Brazilian market has helped the operator to generate higher ARPU compared to the country’s other MNOs.

Figure 6: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – Brazil (In Percent, End-2008)


Attract and retain high value subscribers Nextel has further enhanced its services and products to attract new users and retain its existing high value subscribers, which in turn helped the operator to generate more revenues and higher ARPU with prolonged contracts.

Figure 7: MNOs’ Blended Monthly Churn – Brazil (In Percent, 2008)


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Focus on enterprise segment Nextel has developed various enterprise solutions which have helped enterprises to improve their productivity. The operator also develops customised wireless business solutions. Furthermore, it has built a superior customer support team to assist these businesses in implementing its solutions and managing these applications. Recently, it introduced the BlackBerry Curve 8350i Smartphone in to the local market. The device, combined with the operator’s Push-to-Talk service, makes it ideal for businesses in the country. Offer innovative services and high value products The operator offers Motorola and BlackBerry handsets to its users, which include both enterprise and non-enterprise subscribers, and these devices tend to be more expensive than handsets offered by Nextel’s competitors. However, it also offers several value added services on these handsets enabling an enriched service experience for subscribers. One such solution developed by the operator is Nextel Direct Connect, a long range walkie-talkie service which initiates communication at the press of a button. It empowers the users to set up an instant conference which speeds up communication compared to other normal calls, and it enables the users to achieve efficiency. The table below highlights the importance of factors which enabled the operator to generate high ARPU.

Factors Identified Nextel Brazil Focus on postpaid subscribers

Focus on enterprise segment

Retention of high valued subscribers

Innovative services

Nextel has built a superior customer support team to assist businesses in implementing and managing enterprise solutions.



3 The UK

Ownership: Hutchison Whampoa Limited

Launched: 2003

Subscriber Base: 4.8 million (31st December 2008)


ARPU PPP: USD 62.8 (Monthly, 2008)


The UK Mobile Penetration: 125.5 percent (31st December 2008)

Technology: WCDMA

Market Environment – The UK: • One of the largest mobile markets in Europe with nearly 76.4 million subscribers at

end-2008 • The UK is a highly competitive wireless market and is approaching saturation • Market is dominated by four big players namely – O2, Vodafone, T-Mobile and

Orange • World’s most successful MVNO, Virgin Mobile is based in The UK • 3G network launched by all five MNOs • Competition has led to lower voice and data plan prices and the promotion of

bundled packages

The figure below shows the ARPU and ARPU PPP of MNOs in The UK.

Figure 8: MNOs’ Monthly ARPU and Monthly ARPU PPP – The UK (In USD, 2008)


3’s Strategies 3 was the first operator to launch 3G networks in the UK. The company bought the largest 3G licenses reserved for any new entrant in the UK and started its operations in March 2003. Since then it has offered several innovative and interesting services to its subscribers over its high speed networks. The operator generates the highest ARPU among all MNOs in the country; this feat can be attributed to the following reasons:

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• Leader in 3G market • Focus on higher valued postpaid subscribers • Innovative approach to mobile broadband, content and new services

Leader in 3G market The company pioneered 3G services in the UK. It has endeavoured to offer better user experiences to its subscribers in terms of data services use over its high speed networks, such as 3G and HSDPA. The MNO has also collaborated with other operators to expand its 3G network coverage. By end-2008 it had nearly 4.8 million 3G subscribers - the second highest in the country. The figure below compares the 3G subscriber bases of UK MNOs.

Figure 9: MNOs’ 3G Subscriber Base – The UK (In Million, End-2008)


Focus on higher valued postpaid subscribers The operator has shifted its focus to the postpaid segment and limited its activities for the prepaid segment. This move has led to higher ARPU as the postpaid subscribers tend to spend more than their prepaid counterparts. The operator increased its postpaid subscriber base to nearly 68 percent of total subscribers by end-2008 as compared to 62 percent a year ago. As shown in the figure below, this number is the highest for any operator in the UK.

Figure 10: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – The UK (In Percent, End-2008)


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Innovative approach to mobile broadband, content and new services 3 is known to offer innovative services to its subscribers in the UK. To popularise and increase the uptake of these services it follows an interesting strategy of offering value added services bundled with voice and SMS services at relatively cheap rates, along with fixed free minutes and text messages. This incentivises subscribers to stick to its network, and thereafter it promotes other data services among its customers. The strategy of providing more value for money has also helped in bringing down monthly churn to 2.6 percent in 2008, compared to 3.6 in 2007. The figure below highlights the use of its data services with monthly data ARPU of USD 24.3 in 2008, again highest among the UK’s operators.

Figure 11: MNOs’ Monthly Data ARPU – The UK (In USD, 2008)


3 has always set benchmarks in the UK wireless market with its innovative and user friendly services. These include:

• 3 Skypephone: 3 and Skype launched a service in October 2007 which allows 3’s subscribers to make Skype to Skype calls and send Skype instant messages from mobile handsets to other Skype users for free.

• Google Maps and Search: The company offers Google Search and Google Maps on its Planet 3 mobile portal.

• WePay: The operator’s “WePay” service credits users’ account with a fixed amount for every call or SMS they receive.

The table below highlights the importance of factors which enabled the operator to generate high ARPU.

Factors Identified 3 The UK Leaders in 3G

Focus on postpaid subscribers

Innovation

15.2

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3’s strategy of providing more value for money has also helped in bringing down monthly churn to 2.6 percent in 2008, compared to 3.6 in 2007.



Rogers Canada

Ownership: Rogers Communications

Launched: 1985



ARPU PPP: USD 60.52 (Monthly, 2008)4

Market Environment – Canada:


Canada Mobile Penetration: 66.8 percent (31st December 2008)

Technology: GSM and WCDMA

• Dominated by three players – Bell Mobility, Telus Mobility and Rogers Wireless (all of which made our Top 20 for this performance measurement)

• Wireless data use is quite expensive when compared to other major markets • Higher prices for data-plans led to higher ARPU in the country • Operators are increasing their focus on subscriber retention • Increased demand for data services has led to network upgrades

The figure below shows the ARPU and ARPU PPP of MNOs in Canada.

Figure 12: MNOs’ Monthly ARPU and Monthly ARPU PPP – Canada (In USD, 2008)


Rogers’ Strategies Rogers Canada is the largest mobile network operator in the country with nearly 8 million subscribers by end-2008. Canada is a high ARPU market, a fact which can be attributed to the high percentage of postpaid subscribers and expensive data plans. Rogers has adopted certain strategies which enable the operator to generate higher revenue per user. These are mentioned below:

• Focus on postpaid subscribers • Promotion of data services in both consumer and enterprise segments • Roll out of several Smartphones

4 Please note: The conversion factors for PPP in the US and Canada are 1.

51.3

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Focus on postpaid subscribers The operator has the highest percentage of postpaid subscribers in the country. Furthermore, it has launched various strategic plans to attract more postpaid subscribers and prolong their contracts. Rogers was successful in reducing postpaid churn from 1.2 percent in 2007 to 1.1 percent in 2008. The figure below compares the percentage of postpaid subscribers of the three major MNOs in Canada.

Figure 13: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base – Canada (In Percent, End-2008)


The operator’s postpaid monthly ARPU witnessed an increase of 5 percent in 2008 compared to that in 2007. The success of Rogers’ strategy to increase the percentage of postpaid subscribers is reflected in the figure below, which clearly shows that in 2008 Rogers experienced the highest number of gross postpaid additions.

Figure 14: MNOs’ Gross Postpaid Subscriber Additions – Canada (In Million, 2008)


Promotion of data services in both consumer and enterprise segments Canadian operators, including Rogers, charge comparatively higher prices for mobile data services compared to other major operators worldwide; this is somewhat responsible for the country’s higher ARPU. Rogers has been able to grow the demand for its data services among its subscribers, a trend which is depicted in the figure below. The data revenue generated by Rogers’ subscribers in the year 2008 stood at approximately USD 893 million. In 2008, the operator’s data revenue increased by nearly 39 percent over 2007, and

72.380.3 82.3

0

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34

51

68

85

Bell Telus Rogers

Pos

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d S

ubsc

riber

s as

a

Per

cent

age

of T

otal

Sub

scrib

er

Bas

e (In

Per

cent

)

Operator

0.30

0.480.54

0.0

0.1

0.2

0.3

0.4

0.5

0.6

Bell Telus Rogers

Gro

ss P

ostp

aid

Sus

bscr

iber

A

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ons

(In M

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Operator



represented 16 percent of the network’s revenue, compared to 13 percent in 2007. This growth in revenue was due to increased uptake of services pertaining to mobile Internet.

Figure 15: Data Revenue as a Percentage of ARPU – Rogers Canada (In Percent, 2008)


The operator has targeted those subscribers which are more likely to use services such as voicemail, caller line ID, text messaging and other data services. Apart from the consumer segment, it has promoted its services among the enterprise segment by offering services such as mobile business solutions, corporate voice plans etc. Roll out of several Smartphones Rogers activated more than 1.2 million Smartphone devices in 2008. Approximately 57 percent of these activations were done for existing subscribers who upgraded their plans and signed multi-year contracts. These included both voice and data plans for most users thus enabling the operator to generate an above average ARPU. Furthermore, to better the experience of data services use for its subscribers, Rogers introduced higher speeds of 7.2 Mbps over its 3.5G networks. Smartphones accounted for 41 percent of device upgrades in 2008 for the operator, compared to 12 percent a year ago. The operator launched iPhone 3G in July 2008 and within six months had activated nearly 0.4 million devices. It introduced various voice and data plans specifically for iPhone 3G which offered data usage from 400 MB to 2 GB, and unlimited voice minutes in the evenings and at weekends. The table below highlights the importance of factors which enabled the operator to generate high ARPU.

Factors Identified Rogers Canada Focus on postpaid subscribers

Promotion of data services Roll out of Smartphones

11.2

14.4

17.5

0

5

10

15

20

2006 2007 2008

Dat

a R

even

ue a

s a

Per

cent

age

of A

RP

U (I

n P

erce

nt)

Year

Rogers activated more than 1.2 million Smartphone devices in 2008. The operator launched iPhone 3G in July 2008 and within six months had activated nearly 0.4 million devices.



Chapter 3 Performance Measurement 2 – ARPU as a Percentage of Disposable Income



Performance Measurement 2 – ARPU as a Percentage of Disposable Income The revenue generated per subscriber by an MNO in a market depends on the disposable income of the users in the country and the operator’s ability to create revenue generating streams to cash-in on these opportunities. The more adaptive and pro-active operators are regarding the modeling of products, services, and pricing plans to suit local needs, the greater their chances to generate revenues. With the increasing maturity of developed as well as emerging markets in using voice as well as non-voice services, operators are offering products such as video calls, multimedia services, and information-related offerings. However, as far as judging an operator’s ability to tap market potential is concerned, ARPU is not a fair measure of an operator’s performance on a worldwide level. As ARPU alone may not accurately reflect an operator’s innovativeness to boost ARPU levels in a low income market, the ARPU as a percentage of disposable income may be a better permormence measure. Formula and Rationale

The formula used for the calculation of this performance measurement is given below: The figure below shows a scatter plot of a country’s monthly ARPU against ‘disposable income per head’ for the year 2008.

Figure 16: Scatter Plot of Monthly ARPU vs. Monthly Disposable Income – Worldwide Markets (2008)


0

10

20

30

40

50

60

70

0 500 1000 1500 2000 2500 3000 3500

Mon

thly

AR

PU

(In

US

D)

Disposable Income per head per month (In USD)

Monthly ARPU Linear (Monthly ARPU )

Value = MNO ARPU (In USD) / Disposable Income per Person per Month (In USD)

The UK

The US

China India

Russia

Australia

South Africa

France Japan

Israel

Germany

Venezuela



The figure above indicates that there is a strong correlation between the disposable income of a country and ARPU. However, we can see there are some markets showing above average performance (plots lying above the linear correlation line) both in high ARPU as well as low ARPU markets. Therefore, to keep track of how innovative an operator may be in these markets, we will instead use ARPU as a percentage of disposable income. Limitations: This performance measurement index may be a bit biased for emerging countries with low penetration. As the mobile services in these markets have been primarily taken up by the early adopters (or urban population) who are willing to pay a premium for the services, the ARPU might be on the high side compared to what it would have been if the penetration were higher. Also, African markets have lower wireline penetration and wireless is proving a more effective and cost effective mode of telecommunication. Therefore, wireless is growing swiftly in these markets and is grabbing a larger share of the available spending power. Rankings


Figure 17: Top 20 MNOs Worldwide – ARPU as a Percentage of Disposable Income (2008)5




MTN

Nige

ria, 1

0.0

Zain

Suda

n, 9.2

Glob

acom

Nige

ria, 8

.9

Safar

icom

Keny

a, 8.3

Zain

Nige

ria, 7

.8

Zain

Keny

a, 7.5

Maro

c Tele

com

Moro

cco,

7.0

Nexte

l Bra

zil, 6

.8

MTN

Suda

n, 6.7

Zain

Jord

an, 6

.7

Gram

eenP

hone

Ban

glade

sh, 6

.7

Nexte

l Arg

entin

a, 6.5

Nexte

l Per

u, 6.4

MTN

Afgh

anist

an, 6

.4

Voda

fone E

gypt,

6.4

Zain

Iraq,

6.2

Asiac

ell Ir

aq, 6

.2

Tunis

iana T

unisi

a, 6.2

Tunic

ell T

unisi

a, 6.2

Etisa

lat M

isr E

gypt,

6.2

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10



Table 8: MNOs Worldwide Ranked 1 to 20 – ARPU as a Percentage of Disposable Income (2008)

Rank

MNO

Score

Rank

MNO

Score

1 MTN Nigeria 10.00 11 GrameenPhone Bangladesh 6.68

2 Zain Sudan 9.19 12 Nextel Argentina 6.54 3 Globacom Nigeria 8.92 13 Nextel Peru 6.42 4 Safaricom Kenya 8.31 14 MTN Afghanistan 6.38 5 Zain Nigeria 7.84 15 Vodafone Egypt 6.37 6 Zain Kenya 7.49 16 Zain Iraq 6.23 7 Maroc Telecom Morocco 7.04 17 Asiacell Iraq 6.23 8 Nextel Brazil 6.83 18 Tunisiana Tunisia 6.21 9 MTN Sudan 6.73 19 Tunicell Tunisia 6.21

10 Zain Jordan 6.72 20 Etisalat Misr Egypt 6.19


Rank

MNO

Score

Rank

MNO

Score

21 Meditel Morocco 6.18 36 Telenor Pakistan 5.74 22 MTN Syria 6.14 37 Djezzy Algeria 5.72 23 Etisalat The UAE 6.09 38 Mobilink Pakistan 5.72 24 Bharti Airtel India 6.07 39 Smart The Philippines 5.62 25 Banglalink Bangladesh 6.05 40 Sun The Philippines 5.59 26 MobiNil Egypt 6.02 41 Globe The Philippines 5.57 27 Vodafone India 6.00 42 TIM Brasil 5.53 28 Hutch Thailand 5.96 43 du The UAE 5.49 29 China Mobile 5.93 44 DiGi Malaysia 5.49 30 MTN South Africa 5.91 45 Maxis Malaysia 5.48 31 Cell C South Africa 5.85 46 Celcom Malaysia 5.48 32 Idea Cellular India 5.84 47 China Unicom 5.46 33 Telkomsel Indonesia 5.82 48 Vivo Brazil 5.45 34 Vodacom South Africa 5.80 49 Brasil Telecom 5.45

35 Reliance Communication India 5.79 50 Excelcomindo Indonesia 5.44




Rank

MNO

Rank

MNO

Rank

MNO

51 Movistar Colombia 91 Vodafone Hungary 131 T-Mobile Montenegro

52 Telecom Personal Argentina 92 3 The UK 132 Vodafone Spain

53 DTAC Thailand 93 Pannon Hungary 133 Orange Austria 54 Nedjma Algeria 94 Claro Chile 134 Vodafone Portugal 55 Movistar Venezuela 95 T-Mobile Hungary 135 Polkomtel Poland 56 Movistar Argentina 96 Movistar Mexico 136 3 Austria 57 Tigo Colombia 97 Orange Slovakia 137 True Move Thailand 58 Comcel Colombia 98 Kyivstar Ukraine 138 Proximus Belgium 59 Claro Brazil 99 Pelephone Israel 139 Movistar Spain 60 Turkcell Turkey 100 KDDI Japan 140 SingTel Singapore 61 AIS Thailand 101 MegaFon Russia 141 Bell Mobility Canada 62 Mobily Saudi Arabia 102 NTT DOCOMO Japan 142 MTS Russia 63 SK Telecom South Korea 103 VimpelCom Russia 143 Globul Bulgaria 64 Digitel Venezuela 104 Telefonica Slovakia 144 SFR France 65 Telefonica Peru 105 Celtel DR Congo 145 Starhub Singapore 66 Entel PCS Chile 106 Tigo DR Congo 146 Telia Denmark 67 Claro Argentina 107 Vodacom DR Congo 147 KPN The Netherlands 68 Movistar Chile 108 MTN Iran 148 Vodafone Ireland 69 Iusacell Mexico 109 Vivatel Bulgaria 149 O2 Ireland 70 Claro Peru 110 Taiwan Mobile 150 TMN Portugal 71 Oi Brazil 111 Vodafone New Zealand 151 SoftBank Japan 72 Vodafone Czech Republic 112 FeT Taiwan 152 Vodafone Australia 73 Telcel Mexico 113 Beeline Ukraine 153 Optimus Portugal 74 Avea Turkey 114 Orange Poland 154 Orange The UK 75 Movilnet Venezuela 115 Velcom Belarus 155 Orange France 76 Promonte Montenegro 116 VIPnet Croatia 156 Cosmote Greece 77 LG Telecom South Korea 117 T-Mobile Slovakia 157 Telenor Sweden

78 Partner Communications Israel 118 Rogers Canada 158 Mobistar Belgium

79 Tele2 Croatia 119 MTS Ukraine 159 Orange Spain 80 TCI Iran 120 PTC Poland 160 Meteor Ireland 81 VIP Serbia 121 Chunghwa Taiwan 161 TDC Denmark 82 mt:s Serbia 122 Telus Mobility Canada 162 Telstra Australia

83 Telenor Serbia 123 Vodafone The Netherlands 163 O2 The UK

84 KTF South Korea 124 Bouygues France 164 Netcom Norway 85 T-Mobile Croatia 125 Sibir Telecom Russia 165 M1 Singapore 86 Mobiltel Bulgaria 126 BITE Lithuania 166 Elisa Finland 87 O2 Czech Republic 127 Tele2 Lithuania 167 Telenor Norway 88 Vodafone Turkey 128 Omnitel Lithuania 168 Telia Sonera Finland 89 Cellcom Israel 129 Vodafone Romania 169 T-Mobile The Netherlands 90 T-Mobile Czech Republic 130 MTS Belarus 170 3 Italia




Rank

MNO

Rank

MNO

Rank

MNO

171 Sprint The US 183 T-Mobile The UK 195 PCCW Mobile Hong Kong

172 Verizon The US 184 Telecom Mobile New Zealand 196 CSL New World Mobility

Hong Kong 173 Vodafone Greece 185 SmarTone Hong Kong 197 life:) Ukraine 174 Vodafone The UK 186 Sunrise Switzerland 198 Tele2 Sweden 175 Orange Switzerland 187 T-Mobile Austria 199 O2 Germany 176 Sonofon Denmark 188 Wind Hellas Greece 200 Vodafone Germany 177 DNA Finland 189 3 Sweden 201 Base Belgium 178 Optus Australia 190 Vodafone Italy 202 HTIL Hong Kong 179 Tele2 Russia 191 Swisscom Switzerland 203 E-Plus Germany 180 AT&T The US 192 Telia Sonera Sweden 204 T-Mobile Germany 181 T-Mobile The US 193 Telecom Italia 182 Mobilkom Austria 194 Wind Italy

The figure below shows the Top 3 MNOs judged on this performance measurement.

Figure 18: Top 3 MNOs Worldwide – ARPU as a Percentage of Disposable Income (2008)


Zain Sudan

MTN Nigeria

Globacom

Nigeria

1

2 3



MNO Strategies MTN Nigeria Market Environment – Nigeria

• Nigeria is witnessing a stupendous growth in its mobile subscriber base and is one of the leading mobile markets in the Middle East and African region.

• The market experienced tremendous growth during 2006-2008 – with the subscriber base growing at a CAGR (Compound Annual Growth Rate) of 50.5 percent.

• Focus of the Nigerian operators is on low income consumers and per second billing is prevalent.

• Power infrastructure expansions in Nigeria have been inadequate to cope with the subscriber growth and required network capacity expansion to support the desired Quality of Service (QoS).

• Provision of Unified Access Service licenses – which allow subscribers to roam outside the immediate service area of their operator – has lowered the entry-level barrier for entering operators and therefore intensified competition.

• The rising concern of the Nigerian regulatory body regarding sub-standard QoS among Nigerian MNOs led to its intervention in 2007. The regulatory body put a ban on the promotional campaigns run by the MNOs till it was convinced that the required level of quality had been reached. The factors which hampered QoS in the country are explained in the figure below.

Figure 19: Subscriber Base and Penetration – Nigeria (2006-2008)


27.838.3

63.0

23.526.2

43.1

0

10

20

30

40

50

0

10

20

30

40

50

60

70

2006 2007 2008

Pen

etra

tion

(In P

erce

nt)

Sub

scrib

er B

ase

(In M

illio

n)

Year

Subscriber Base Penetration

Ownership: MTN Group (76.1 percent)

Launched: 2001


ARPU (estimated): USD 16.5 (Monthly, 2008)

Disposable Income per Person per Month: USD 30.3 (2008)


Nigeria Mobile Penetration: 42.6 percent (31st December 2008)




MTN’s Strategies

• Overcoming challenges related to Quality of Service (QoS): MTN Nigeria overcame the challenge of providing high quality service – while achieving high rates of subscriber growth – by making huge network investments. Failure in ensuring QoS and the ensuing high rate of dropped calls and data service failures would have resulted in a huge opportunity cost. The main steps taken for ensuring high QoS are given below:

Aggressive capital investment program to expand network capacity, including new site construction and upgrades of existing sites

Launch of 3.5G network to increase voice capacity Increase in network resilience through the addition of redundancy rings and

the introduction of new technologies such as ASON (Automatically Switched Optical Network)

MTN’s digital microwave transmission, the 3,400km Y’elloBahn – the most extensive digital microwave transmission infrastructure in Africa – helped significantly in enhancing call quality on MTN’s network.

• Differentiated offerings – ‘One Network’: MTN Nigeria provides its subscribers with connectivity to the group's 'One Network', allowing seamless roaming for MTN subscribers in Cameroon, Benin and Ghana.

‘One Network’ enables the subscribers to recharge their prepaid accounts while traveling in the participating countries by buying vouchers in these countries. Subscribers are charged local rates in the country they are calling from and there are no charges for receiving calls.

The success of this service prompted the operator to expand it across all 21 MTN operations in the Middle East and African region in the first quarter of 2009.

• Popularising non-voice services: The operator offers services such as ring back tones to create demand for data services and counter declining ARPU. MTN Nigeria was the first Nigerian operator to launch 3G products in 2006. It looks to leverage

Figure 20: Factors Hampering Quality of Service in Nigeria


Explosive Subscriber

Growth

Intensifying

Competition and Reduction in

Tariffs

Network

Congestion and Regulatory Interference

Nigeria experienced extra-ordinary growth after 2001 as a result of network expansion by the MNOs

It became a leading market in Africa in subscriber-terms

With MTN Nigeria and Meditel looking to increase their share of subscriber additions, tariffs were slashed to attract more subscribers

This resulted in high voice and data traffic which challenged the network capacity.

Heavily burdened operator networks saw a significant drop in quality of service; this situation forced regulatory bodies to intervene

During 2007, the regulatory body started strict monitoring of MNO’s QoS and instructed them to maintain desired levels of quality.



high speed networks to create more opportunities for revenue generation by pushing data services targeted at enterprise users.

The following table shows the strategies that led to the success of the operator.

Factors Identified MTN Nigeria

Overcoming QoS challenges

MTN’s One network

Popularising non-voice services



Zain Sudan Market Environment – Sudan

• Handset prices are a major barrier to increasing mobile penetration • During the period 2005-2008, the price of acquiring a SIM has been slashed from

over USD 50 to approximately USD 1.56

• Low ARPU market with about four-fifths of the subscriber base using entry-level handsets

• Increasing competition between Zain Sudan, MTN Sudan, and Sudatel Telecom (CDMA)

• Low penetration level (24.0 percent) presents latent growth opportunity for operators. • Young demographics, with approximately 21 percent in the 15-25 years age group.

6 Source: http://www.arabianbusiness.com/544237-connecting-sudan 7 Please note: The figures may not add up to 100 percent because of rounding-off errors. 8 Source: https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

Figure 21: Demographic Break-out – Sudan (End-2008)7

Source: CIA – The World Factbook8

41.1%

20.9%

28.6%

8.8%0.5%

Below 15 years 15-24 years 25-49 years 50-74 years Above 74 years

Ownership: Zain Group (61.0 percent), Celtel International (Zain Group’s subsidiary, 39 percent)

Launched: 1997


ARPU: USD 16 (Monthly, 2008)



Sudan Mobile Penetration: 27.0 percent (31st December 2008)

Technology: GSM and EDGE

http://www.arabianbusiness.com/544237-connecting-sudan�

https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html�



• With the civil disturbance under control in Darfur (in southern Sudan), and the Government of Southern Sudan, in late 2007, allowing Zain and MTN to expand their mobile services there, the country may witness swift growth in subscribers in the next couple of years.

Zain’s Strategies • Encouraging high usage among prepaid subscribers: Sudan is primarily a

prepaid market with both major operators Zain and MTN having above 95 percent prepaid subscribers as of year-end 2008. Zain – in addition to drawing subscribers to postpaid plans – is trying to attract prepaid subscribers towards high usage and to reward loyalty through a number of appealing prepaid plans. The operator provides low call rates during off-peak hours and also offers low charge rates for communication within a chosen community.

• Targeting youth segment: Zain Sudan targets the youth segment, primarily university students, through dedicated packages such as ‘Lamatna’. The service provides the facility of ‘community charging’ to students. The service also provides discounts for calling and texting within a community, with an added feature of bonus SMS and voice minutes. The service became popular among the targeted group and attracted 0.1 million subscribers within the first two months of launch in mid-2008.9

• Using music services for driving ARPU: Zain has been successful in creating mass interest for music-based services. Ring Back Tone (RBT) has emerged as a killer application in this low ARPU market. RBT garnered 0.6 million users in two months of launch in the second half of 2008. By end-2008, the service was being used by more than half of the subscribers of Zain Sudan.

10

• Bringing down the entry barriers: The re-branding of Mobitel to Zain in September 2007 was accompanied by a reduction in service pricing by about 6-7 percent, provision of rewards and step-charging. The operator also launched ultra-low cost handsets to lower the entry barrier.

The operator has also added more value to the service by introducing options such as karaoke.

• Encouraging inter-state calls while roaming: Zain Group has provided a ‘One Network’ service across 16 countries in the Middle East and African region since April 2009. The service enables travellers to use their local SIM card to make calls at local rates and receive incoming calls at USD 0.22/minute (50 piasters/minute).11

It also facilitates recharges using local airtime cards while using their home network service functionality.

Factors Identified Zain Sudan

Encouraging high usage among prepaid subscribers

Targeting youth segment

Pushing music services

Bringing down entry-barriers

Zain’s One Network offering

9‘Source: http://comm.ae/2009/01/21/feeling-the-squeeze/ 10 Source: http://comm.ae/2009/01/21/feeling-the-squeeze/ 11 Source: http://www.sd.zain.com/autoforms/portal/home

Sudan is primarily a prepaid market with both major operators Zain and MTN having above 95 percent prepaid subscribers as of year-end 2008.

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Maroc Telecom Morocco Market Environment – Morocco

• Morocco is predominantly a prepaid market with prepaid subscribers forming approximately 95.5 percent of its subscriber base.

• Maroc Telecom and Medi Telecom are the two major operators in the market; Maroc Telecom had approximately 65.0 percent market share as of end-2008.

• Despite subscriber additions primarily coming from the low income segments, ARPU has been steady.

• Major MNOs launched 3.5G networks in mid-2007 – with a full launch in major

towns/cities following in mid-2008; the Moroccan market is showing encouraging signs for the uptake of data services.

• Operators are pushing the utilisation of 3.5G networks forward by offering unlimited voice and data offerings.

Maroc Telecom’s Strategies

• Attracting users for new offerings: Maroc Telecom has lowered the access fee and basic plans to swiftly penetrate the low income groups. With penetration passing 60 percent in 2008, this strategy is intended to lower the entry level barriers. This move encourages subscribers to sample new services at attractive prices, and therefore gives the operator more chance of selling new products.

Figure 22: Subscriber Base and Monthly ARPU – Morocco (2006-2008)


15.920.0 22.3

11.9 11.7 11.1

0

2

4

6

8

10

12

0

5

10

15

20

25

2006 2007 2008

Mon

thly

AR

PU

(In

US

D)

Sub

scrib

er B

ase

(In M

illio

n)

Year

Subscriber Base Monthly ARPU

Ownership: Vivendi Universal (53.0 percent), the Kingdom of Morocco (30 percent)

Launched: 1994





Morocco Mobile Penetration: 64.8 percent (31st December 2008)




• Increasing ARPU – Complimenting voice services with data services: International MMS and personalised ringtones: Maroc Telecom

launched International MMS and personalised ringtones in 2007. The move was intended to encourage the youth segment to adopt data services.

Leveraging high-speed networks for launching value-added offerings: Maroc Telecom launched 3.5G mobile Internet services in June 2007, and has since launched more services based on its high-speed networks to push voice and data revenues. 3.5G networks have improved the efficiency of the networks in providing voice services. Also, for increasing the popularity of new product offerings based on 3.5G networks, the operator enables 3.5G handset users to make video phone calls at the same per-minute rate as voice-only calls; and to browse the company's Mobile Zone portal and download videos, music, games and ringtones at faster rates (up to 3.6Mbps),as well as to access high speed Internet services.

The launch of a 3.5G network provides an opportunity for Vivendi, a major stakeholder in the firm, to push its music and video games content.

Unlimited voice and data offerings: The operator intends to increase the appetite of Moroccan subscribers for mobile services through unlimited access plans. This will help the MNO to promote its advanced data services in the near future.

Factors Identified Maroc Telecom Morocco

Attracting users for new offerings

High-speed networks

Unlimited voice and data offerings

Figure 23: Utilisation of 3.5G Networks by Maroc Telecom (June 2007- February 2008)


Jun 2007: Launch of '3G+ Mobile Internet'

for postpaid subscribers

Jan 2008: Full launch of 3.5G voice/data services (with more than 400 base stations) for prepaid and postpaid subscribers under '3G+' brand

Feb 2008: Launch of two high speed, unlimited access mobile Internet

packages

Pushing voice & data services



Safaricom Kenya

Market Environment – Kenya:

• Growing competition from Celtel and Orange Kenya • High percentage of population is rural • Predominantly prepaid market • Requirement of high CAPEX (capital expenditure) for expanding coverage

The figure below shows the subscriber base of the major MNOs in Kenya.

Figure 24: MNOs’ Subscriber Base – Kenya (In Million, End-2008)


Safaricom’s Strategies Safaricom is Kenya’s biggest wireless operator with over 80 percent market share (at end-2008). The operator has developed its product portfolio to suit the market conditions and requirements. Furthermore, it has flooded the wireless market with advanced and innovative services and has been able to generate higher demand for data services among its subscribers. It is also the only Kenyan operator with 3G networks. Although the majority of Kenya’s subscribers belong to low income groups, Safaricom has succeeded in popularising its services and generating fairly high ARPU, with the help of strategies mentioned in the figure below.

3.1

12.8

0

2

4

6

8

10

12

14

Celtel Safaricom

Sub

scrib

er B

ase

(In M

illio

n)

Operator

Ownership: Kenyan Government (35 percent) and Vodafone Kenya (40 percent)

Launched: 1996





Kenya Mobile Penetration: 40.9 percent (31st December 2008)




Targeted Marketing Safaricom has very cleverly positioned its services in the Kenyan market with clear target segments for each service. The three major aspects of this strategy are:

• High value services • Variable tariffs • Low income group focus

The figure below briefly explains this strategy.

Figure 26: Safaricom’s Targeted Marketing Strategy


Figure 25: Safaricom’s Strategies


Targeted Marketing

High Value Services

• Services for enterprise segment such as Bulk SMS

• Services for high value subscribers such as those available on Safaricom Live and premium rate services

Variable Tariffs

• Various tariff plans launched to suit users with varied usage needs

• Jimbabie offers call rates from USD 0.06 to USD 0.1

• Super Taifa Tariff offers flat rates

Low Income Focus

• Bamba 20, lowest denominated top up card introduced

• Call pulse changed to per second billing

• Simu Ya Jamii –a community service– for users who cannot afford handsets

Safaricom’s Strategies

Targeted Marketing

Innovative Services

Aggressive Data

Promotion

Ample Recharging

Channels



Innovative Services Safaricom is reknowned for the innovative services it has launched in the Kenyan market. Some of these services are highlighted below:

• M-PESA: This is an award winning mobile banking service and Kenyans were the first to avail this service. As of 30th September 2008, there were 4.1 million users of this service, registering a 550 percent year-on-year growth.12

• SMS2Email: This allows a user to send an SMS from a mobile handset to a PC.

• tXt: A mobile chat service that enables a subscriber to send an SMS simultaneously to multiple users.

• Get it 411: This allows users to get information, such as news, sports, traffic, horoscope etc., through SMS.

• Flashback 130: This is a service which users avail to be called back, by sending a message.

Aggressive Data Promotion Safaricom has recently begun aggressively promoting data services, and the deployment and expansion of its 3G network is playing its part in boosting the service experience for these services. The data services offered by the MNO include BlackBerry solutions, mobile TV, and Safaricom E-mail. Safaricom is the largest mobile data and Internet services provider in the country and is witnessing a steady growth of its 3G users. Ample Recharging Channels The operator has created adequate channels for its prepaid users to recharge their accounts anywhere and at anytime, thus providing them with unrestricted opportunities to use its services. The various prepaid recharge options are:

• Bamba20 • Scratch Cards/Vouchers • Virtual Airtime • ATM Top-Up • Ongea 24/7 • Sambaza • Paymate 150 • Indirect Top Up Method

The table below highlights the factors and their importance, responsible for high ARPU generation by the operator.

Factors Identified Safaricom Kenya

Targeted marketing

Innovative services

Aggressive data promotion

Ample recharging channels

12 Source: Company Reports

As of 30th September 2008, there were 4.1 million users of M-PESA, registering a 550 percent year-on-year growth.



Chapter 4 Performance Measurement 3 – Revenue Growth of the MNO



Performance Measurement 3 – Revenue Growth of the MNO Revenue growth is an important performance measurement to assess the efforts of an MNO in improving its performance. With falling prices – owing to competition and focus on subscriber acquisition – in many of the markets, MNOs face the challenge of increasing revenues through subscriber addition and by creating more revenue generating streams. Limitation When we calculate the revenue growth of an operator for a year, there is a distinct bias in the favour of MNOs which are operating in emerging markets with high subscriber growth, or who are in their first few years of operation. Revenue growth can also be boosted by the GDP growth of a market – high GDP growth increases the living standard of people and creates more avenues for operators to push their services. Therefore, in order to normalise the measurement of revenue growth, we have to take into account the GDP growth and mobile penetration of the country. Formula and Rationale

The formula used for the calculation of this performance measurement index is given below: The formula is intended to measure revenue growth against GDP growth to reward the players who are performing despite GDP growth showing a downtrend or stagnation. Mobile penetration has been used as a multiplying factor to give more weight to the matured markets, as low penetration markets have a natural tendency to show high revenue growth through high subscriber additions. A look at the top 10 highest revenue generating MNOs and their revenue growth during 2008 helps put into perspective the performance of MNOs. The figure below depicts the total revenue and revenue growth of the top 10 MNOs worldwide.

Value = (Revenue Growth of MNO - GDP Growth of Country)*Mobile Penetration of the Country



MNOs generating the highest mobile revenues during 2008 are primarily from the developed markets such as the US, Japan and Western European geography, with the notable exception of China. However, these MNOs have not figured very high in the ranking table using this performance measurement, mainly because of the following reasons:

• Some of the emerging markets have very high subscriber growth while holding off the decline in ARPU through the introduction of value added products and services.

• MNOs in developed markets have felt the pinch of economic slowdown in pushing their services.

Figure 27: Top 10 MNOs Worldwide – Total Revenue & Revenue Growth (2008)


57.549.3 49.3

43.9

30.4 27.222.0

15.8 15.2

22.3

15.612.4

6.0

-12.3

14.1 14.015.1

9.8

-15

-10

-5

0

5

10

15

20

25

0

10

20

30

40

50

60

70

China Mobile

AT&T The US

Verizon The US

NTT DoCoMo

Japan

Sprint The US

KDDI Japan

T-Mobile The US

Orange France

SoftBank Japan

Rev

enue

Gro

wth

(In

Per

cent

)

Rev

enue

(In

US

D B

illio

n)

Operator

Revenue Revenue Growth



Rankings

The figure below shows the Top 20 MNOs based on this performance measurement.

Figure 28: Top 20 MNOs Worldwide – Revenue Growth of the MNO (2008)13



Table 12: MNOs Worldwide Ranked 1 to 20 – Revenue Growth of the MNO (2008)

Rank

MNO

Score

Rank

MNO

Score

1 life:) Ukraine 10.00 11 mt:s Serbia 7.81

2 Tele2 Croatia 9.99 12 Vodafone Czech Republic 7.61

3 BITE Lithuania 9.31 13 MTS Russia 7.59 4 Zain Iraq 9.27 14 Asiacell Iraq 7.57 5 T-Mobile The Netherlands 8.64 15 Meteor Ireland 7.46 6 Oi Brazil 8.29 16 Orange Poland 7.43 7 Digitel Venezuela 8.13 17 Cosmote Greece 7.29 8 Tele2 Lithuania 8.02 18 SingTel Singapore 7.25 9 Maxis Malaysia 7.91 19 Vodafone Ireland 7.25

10 FeT Taiwan 7.89 20 DNA Finland 7.24 13 Please note: The scores were calculated to four decimal places with each MNO securing a distinct value. Due to rounding off to one decimal place, a few MNOs appear to secure the same score. For a full and detailed explanation of our calculations in this report please see the Methodology section.

life:)

Ukra

ine, 1

0.0

Tele2

Cro

atia,

10.0

BITE

Lithu

ania,

9.3

Zain

Iraq,

9.3

T-Mo

bile T

he N

ether

lands

, 8.6

Oi B

razil

, 8.3

Digit

el Ve

nezu

ela, 8

.1

Tele2

Lithu

ania,

8.0

Maxis

Mala

ysia,

7.9

FeT

Taiw

an, 7

.9

mt:s

Serb

ia, 7.

8

Voda

fone C

zech

Rep

ublic

, 7.6

MTS

Russ

ia, 7.

6

Asiac

ell Ir

aq, 7

.6

Meteo

r Ire

land,

7.5

Oran

ge P

oland

, 7.4

Cosm

ote G

reec

e, 7.3

Sing

Tel S

ingap

ore,

7.2

Voda

fone I

relan

d, 7.2

DNA

Finlan

d, 7.2

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10




Rank

MNO

Score

Rank

MNO

Score

21 Vivo Brazil 7.23 36 Globul Bulgaria 6.99 22 T-Mobile Czech Republic 7.23 37 Pelephone Israel 6.98 23 Tunisiana Tunisia 7.22 38 PCCW Mobile Hong Kong 6.98 24 MegaFon Russia 7.21 39 Excelcomindo Indonesia 6.96 25 Cell C South Africa 7.21 40 Tigo DR Congo 6.96 26 Nedjma Algeria 7.20 41 Orange Slovakia 6.95 27 Vodafone India 7.18 42 Etisalat The UAE 6.93 28 Wind Italy 7.17 43 Optimus Portugal 6.91 29 Cellcom Israel 7.17 44 Polkomtel Poland 6.90 30 VimpelCom Russia 7.13 45 Movistar Chile 6.89 31 Avea Turkey 7.10 46 Vodafone The Netherlands 6.89 32 PTC Poland 7.06 47 Vodafone Portugal 6.88 33 Movistar Argentina 7.03 48 TMN Portugal 6.86 34 E-Plus Germany 7.00 49 Claro Argentina 6.83 35 Telia Denmark 7.00 50 Kyivstar Ukraine 6.82




Rank

MNO

Rank

MNO

Rank

MNO

51 T-Mobile Croatia 91 Movistar Venezuela 131 Vodafone Egypt 52 Movistar Mexico 92 MTN Iran 132 Swisscom Switzerland 53 Vodafone Italy 93 MTN Afghanistan 133 MTN Nigeria 54 Omnitel Lithuania 94 du The UAE 134 China Mobile 55 Claro Brazil 95 Etisalat Misr Egypt 135 Telus Mobility Canada 56 Mobily Saudi Arabia 96 VIP Serbia 136 Brasil Telecom 57 T-Mobile Slovakia 97 Tigo Colombia 137 Idea Cellular India 58 Base Belgium 98 3 Sweden 138 NTT DOCOMO Japan 59 Taiwan Mobile 99 Tele2 Russia 139 Vodafone Spain 60 Telenor Serbia 100 Beeline Ukraine 140 KPN The Netherlands 61 Sonofon Denmark 101 Nextel Peru 141 Bell Mobility Canada

62 Telecom Personal Argentina 102 Sibir Telecom Russia 142 Proximus Belgium

63 Telia Sonera Sweden 103 Nextel Argentina 143 TIM Brasil

64 Bouygues France 104 Hutch Thailand 144 Reliance Communication India

65 Orange Spain 105 Nextel Brazil 145 Vodafone Romania

66 Partner Communications Israel 106 Verizon The US 146 Telenor Sweden

67 TCI Iran 107 Safaricom Kenya 147 MTN Syria 68 AT&T The US 108 Bharti Airtel India 148 Vodafone Germany 69 Orange France 109 Tunicell Tunisia 149 T-Mobile Germany 70 Starhub Singapore 110 VIPnet Croatia 150 Sunrise Switzerland 71 KDDI Japan 111 Telenor Pakistan 151 Entel PCS Chile 72 T-Mobile Montenegro 112 Vodafone Australia 152 DTAC Thailand 73 Tele2 Sweden 113 SoftBank Japan 153 Orange The UK 74 Banglalink Bangladesh 114 Movilnet Venezuela 154 Meditel Morocco 75 Globacom Nigeria 115 Celcom Malaysia 155 Telcel Mexico 76 Optus Australia 116 Mobiltel Bulgaria 156 Vodafone Turkey 77 Zain Nigeria 117 O2 Ireland 157 Chunghwa Taiwan 78 Vivatel Bulgaria 118 Comcel Colombia 158 Celtel DR Congo 79 T-Mobile The US 119 Mobilkom Austria 159 Vodafone Hungary 80 Claro Peru 120 Telia Sonera Finland 160 TDC Denmark 81 Djezzy Algeria 121 T-Mobile Hungary 161 O2 The UK 82 SFR France 122 Movistar Spain 162 Velcom Belarus 83 O2 Czech Republic 123 Pannon Hungary 163 3 Austria 84 Rogers Canada 124 Turkcell Turkey 164 Sun The Philippines 85 Orange Switzerland 125 Smart The Philippines 165 Orange Austria 86 DiGi Malaysia 126 MTS Ukraine 166 Telenor Norway 87 O2 Germany 127 Telecom Italia 167 Wind Hellas Greece

88 Telstra Australia 128 M1 Singapore 168 GrameenPhone Bangladesh

89 MobiNil Egypt 129 Netcom Norway 169 Vodacom DR Congo 90 Telefonica Peru 130 Mobistar Belgium 170 AIS Thailand




Rank

MNO

Rank

MNO

Rank

MNO

171 Promonte Montenegro 183 Vodafone New Zealand 195 Vodafone Greece 172 Zain Sudan 184 MTN South Africa 196 Zain Kenya 173 MTS Belarus 185 HTIL Hong Kong 197 True Move Thailand 174 Elisa Finland 186 Telefonica Slovakia 198 Globe The Philippines 175 Claro Chile 187 MTN Sudan 199 Sprint The US 176 Vodacom South Africa 188 KTF South Korea 200 China Unicom

177 Telecom Mobile New Zealand 189 T-Mobile Austria 201 LG Telecom South Korea

178 3 Italia 190 Mobilink Pakistan 202 T-Mobile The UK 179 Maroc Telecom Morocco 191 Telkomsel Indonesia 203 SK Telecom South Korea

180 Iusacell Mexico 192 SmarTone Hong Kong 204 CSL New World Mobility Hong Kong

181 Movistar Colombia 193 Vodafone The UK 182 Zain Jordan 194 3 The UK


Figure 29: Top 3 MNOs Worldwide – Revenue Growth of the MNO (2008)


Tele2 Croatia

life:) Ukraine

BITE Lithuania

1

2 3



MNO Strategies

life:) Ukraine

Ownership: Turkcell (54.2 percent) and Ukrainian SCM Holdings (45.8 percent)

Launched: 1998


Total Revenue Growth: 27.3 percent (2007 to 2008)

GDP Growth: 2.1 percent (2007 to 2008)

Ukraine Mobile Penetration: 120.5 percent (31st December 2008)

Technology: GSM and EDGE

Market Environment – Ukraine:

• The nominal penetration of Ukraine’s mobile market is more than 100 percent; however, the actual figure hovers around the 60-70 percent mark as this market is host to multiple SIM-cards, which account for an additional 30 percent.14

• NGN (Next Generation Network) technologies are being deployed with the aim of modernizing fixed-line networks and offering convergence services

• MNOs are increasingly focusing on network expansion and enhancing broadband services.

• Fiercely competitive market with three leading players – Kyivstar, MTS, and life:) fighting for market share.

• Broadband witnessing sluggish growth due to the country’s underdeveloped Internet sector.

The figure below shows the developments in the market share of Ukrainian MNOs during 2006-2008.

The figure below shows the total revenues generated by Ukrainian MNOs during 2006-2008.

14 Source: http://www.life.com.ua/getfile.php?lng=en&id=256&name=en_28092007.pdf 15 Please note: Figures may not add up to 100 percent because of rounding off errors.

Figure 30: MNOs’ Market Share – Ukraine (In Percent, 2006-2008)15


43.9 43.4 42.5

40.8 36.8 32.7

11.4 16.2 20.2

3.8 3.6 4.6

0

20

40

60

80

100

120

2006 2007 2008

Mar

ket S

hare

(In

Per

cent

)

Year

Beeline life:) MTS Kyivstar

http://www.life.com.ua/getfile.php?lng=en&id=256&name=en_28092007.pdf�



life:)’s Strategies

Initially, starting as the fifth operator in the wireless market of Ukraine, life:) became the third largest GSM operator within a year of launch. It is also the leading MNO in terms of new subscriber acquisitions and covered almost 93.7 percent of the country’s population by end- September 2008.16

• Brand Perception – life:) has implemented certain specific branding changes in order to develop better connections with its subscribers. The logo has been transformed to “everything is possible” from the earlier motto of “life is getting interested”. The MNO believes that the new style and happy smiley will infuse subscribers with optimism and help them in believe in the future.

life:) has been able to accomplish various milestones in terms of network roll-out, growth in revenue and subscriber base, and expansion of its sales network, as a result of the following strategies incorporated by the operator:

• Network Coverage Enhancement – Despite the economic turmoil, the investment plans of the operator have not been dampened. In 2008, it focussed on strengthening its network, and it intends to enhance the quality and coverage of its

16 Source: http://www.life.com.ua/getfile.php?lng=en&id=379&name=en_23122008.pdf

Figure 31: MNOs’ Total Revenue – Ukraine (In USD Million, 2006-2008)


Figure 32: life:)’s Success Strategies


1,701.7

2,138.0

2,466.2

1,490.01,608.0

1,740.0

88.0 260.0 440.0

44.3 111.6 200.4

0

500

1000

1500

2000

2500

3000

2006 2007 2008

Tota

l Rev

enue

(In

US

DM

illio

n)

Year

Kyivstar MTS life:) Beeline

life:)’s Success Strategies

Brand Perception

Subscriber Centricity

Range of Services

EDGE Technology

Innovative Products

Network Coverage




network in 2009. life:) increased its coverage by 8.6 percent last year.17

• Partnership with Huawei: life:)’s agreement with Huawei is seen as an integral step in its continuing commitment to network enhancement. 3,000 3G compatible base stations will be installed by Huawei, with the initial phase starting in the Western Ukraine and Crimea region. The partnership is expected to assist the operator for future 3G operations. The operator plans to invest nearly USD 200 million in 2009 to increase its network capacity.

Some of the operator’s implemented and planned steps include the following:

18

• EDGE technology was pioneered by life:) in the Ukraine market. The operator has been able to offer extensive EDGE coverage, with 66.1 percent of the sites supporting it. It plans to expand its coverage to an additional 20 cities, adding to the 119 cities it already serves. This would definitely aid the operator in offering innovative communication services.

• Innovative Products – life:) entered the Ukrainian market in 2005 with Kyivstar and MTS already having a strong foothold. In order to mark its presence, the operator pioneered a range of innovative products/services. life:) has been able to offer more than 150 value added services within three and a half years of its entrance into the Ukraine market. Some of these include:

• Advanced Video MMS – Sending video MMS to non video phones • life:) SIM menu – Advanced applications such as myInfo, easy refill, etc. • USSD End of Event notification – SMS/MMS notification about balance

status • SuperPassword – Access to all life:) services • Missed Call Notification Service • Balance Transfer Service • MeloRing, Voice SMS, Push-to-Talk, Mobile TV, etc. • Free life:) – Package with no charge for communication within the network

17 Source: http://www.life.com.ua/getfile.php?lng=en&id=394&name=en_31032009(2).pdf 18 Source: http://www.life.com.ua/getfile.php?lng=en&id=393&name=en_31032009.pdf

life:) plans to invest nearly USD 200 million in 2009 to increase its network capacity.

Figure 33: life:)’s Innovative Products


life:) Innovative Product Portfolio

Advanced Video MMS

Free life:)

Mobile TV

MeloRing

Missed Call

Notification Service

Balance Transfer

Push-To-Talk

USSD End of Event

Notification

life:) SIM Menu

http://www.life.com.ua/getfile.php?lng=en&id=394&name=en_31032009(2).pdf�




• Range of Services – One of the main reasons for life:)’s success in the Ukraine market can be attributed to various package solutions, promotional offers and attractive prices. Some of the most interesting packages include the following:

• Whirlwind of Opportunities – Laptop and Mobile Internet • Promotional Offer ‘Two Zeros’ – Free calls within the life:) network as well

as to other networks • ‘Roaming life:)’ – Roaming calls to any number at just USD 0.4/min (UAH

2/min) • life:) bonus – Loyalty programme giving subscribers a lot of advantages • ‘life:) Thousand’ – For a monthly fee of just USD 1.9 (UAH 10), subscribers

can send 1,000 SMS every 30 days. • ‘life:) Territory’ – Online portal for sharing, communicating and storing

content • ‘Easy Change’: Subscribers who switched from other operators can avail

this service and keep themselves informed about the calls made on the old number through an SMS.

Figure 34: life:)’s Range of Services


• Subscriber Centric – The operator focused on providing its users with high quality

services and keeping them updated about their latest offering. Some of the measures taken in this direction include:

• 458 exclusive life:) shops and customer service centres have been opened in 178 cities

• Subscribers have the option of ordering life:) services via 34,600 non-exclusive shops

• Two call centres are available 24/7, providing services in three languages (Ukrainian, Russian and English).

The following table lists the key factors that have led to the proliferation of the operator:

life:) Range of Services

Two Zeros

Easy Change

life:) Bonus

life:) Territory life:)

Thousand

Roaming life:)



Factors Identified life:) Ukraine

Brand Perception

Network Coverage

Innovative Products

Range of Service

Subscriber Centricity



BITE Lithuania

Ownership: Mid Europa Capital Partners

Launched: 1995




Lithuania Mobile Penetration: 142.5 percent (31st December 2008)

Technology: GSM and WCDMA (HSDPA)

Market Environment – Lithuania:

• Small but highly competitive market with the presence of three established players (Omnitel, Tele2, and BITE)

• Leader in terms of mobile penetration among the Baltic States, resulting from the extremely high SIM card penetration

• Mobile broadband is making rapid strides, with operators taking full advantage of the investments in 3G and HSDPA networks

• Internet market pretty well developed with broadband accounting for 90 percent of connections

The figure below shows the total revenues generated by Lithuanian MNOs during 2007-2008.

19 Please note: Figures may not add up to 100 percent because of rounding off errors.

Figure 35: MNOs’ Total Revenues – Lithuania (In USD Billion, 2007-2008)19


0.190.25

0.370.42

0.02

0.03

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2007 2008

Tota

l Rev

enue

(In U

SD

Bill

ion)

Year

BITE Omnitel Tele 2



BITE’s Strategies

BITE Lithuania is the third largest MNO operating in the country. It has witnessed a positive growth in both its subscriber base and revenues over the years. The operator has focussed on the following strategies in order to maintain positive revenue growth:

• Product Service Innovation: One of the primary reasons for the success of the operator has been its focus on the development of products and services.

• In 2006, the Lithuanian market witnessed a rapid proliferation of mobile Internet (highest speed in the European region), which provided the operator with the required impetus to offer this to its subscribers. BITE’s subscribers were the first to use HSDPA communication at speeds almost ten times higher than 3G communication. The service, which initially began with five cities in June 2006, expanded to 16 towns by January 2007, and had almost covered 50 percent of inhabitants in 19 towns by August 2007.20

• One of the most interesting innovations in the Baltic countries’ wireless market was the BITE HotSpot service. The device enabled users to enjoy wireless Internet services, be it at home or at work.

Subscribers had the added benefit of using this service abroad with Vodafone Mobile Connect, introduced by BITE and Vodafone.

• The operator also introduced a broad portfolio of mobile Internet services on the 3G portal. The most notable were broadcasts of 20 TV channels, 300,000 original sound call melodies, and daily news and youth magazines.21

20 Source: http://www.bite.lt/en/about/media/pr/archive/2007/show/3061 21 Source: http://images.bite.lt/bite/files/new/pub/bitegroup_net/en/pdf/BITE.annual.report.2006.pdf

Figure 36: BITE’s Success Strategies


BITE Lithuania Success Strategy

Attractive Options

Product Service

Innovation

User-centric

Approach

http://www.bite.lt/en/about/media/pr/archive/2007/show/3061�

http://images.bite.lt/bite/files/new/pub/bitegroup_net/en/pdf/BITE.annual.report.2006.pdf�



• User-centric Approach: BITE has always tried to provide the best services to its subscribers, and this has led the company to invest extensively in service innovations. Some of these include:

• The operator has renovated its 34 existing outlets and also opened up nine new outlets in 20 cities and towns. A major advancement has been the addition of special consultants to assist subscribers with the use of modern equipment.

• In order to provide the best service, BITE also launched Internet self-care tools and a help centre on its website. This enables users to find the right information more efficiently.

• BITE invited its ‘golden customers’ to the BITEland festival in Juodkrantė for the fourth consecutive time in 2006. The entire event had nearly 10,000 guests who were reportedly treated in a very elegant and stylish manner. ‘Silver customers’ had the privilege of attending music works as well as a colourful Broomstick show featuring dancers and musicians playing with brooms, sticks, etc.

• BITE was the first Lithuanian operator to reduce international call rates (as a part of European Union roaming regulations). Outgoing and incoming calls were reduced by nearly 46 and 39 percent respectively in all 27 EU member states, except for Latvia where call charges were further reduced owing to the operations of the MNO in that particular country. The operator was the first to introduce the option of creating and sending MMS from “MMS studio” to its subscribers.

Figure 37: BITE’s Key Milestones (2003-2008)


2003•BITE Plus portal – mobile Internet on the phone launched

2004•BITE Online introduced•Reached 500,000 subscribers

2005

•BITE users able to view TV and read newspaper on mobile – first time in Lithuania

2006•Fastest 3G mobile Internet implemented

2007•Mobile Internet reaches speed up to 7.2 Mbps

2008•New brand identity launched



The following table lists the key factors that led to the success of the operator:

Factors Identified BITE Lithuania

Product Service Innovation

User-centric Approach

Attractive Options



Oi Brazil

Ownership: BNDESPar (31.4 percent), Fiago (25 percent), AG Telecom (19.3 percent), L. F. Tel (19.3 percent) and Fund. Atlântico (5 percent)

Launched: 2002




Brazil Mobile Penetration: 76.7 percent (31st December 2008)


Market Environment – Brazil: • The largest mobile market in terms of subscriber numbers in Latin America • Dominated by the big four – Vivo, Claro, TIM and Oi • Predominantly a prepaid market with nearly 81.4 percent of total mobile subscribers

being prepaid by end-2008 • 3.5G has been launched in the market • Mobile number portability implemented in the country

The figure below shows the subscriber base of the major MNOs in Brazil.

Figure 38: MNOs’ Subscriber Base – Brazil (In Million, End-2008)


The figure below shows the total revenues generated by the four largest Brazilian MNOs according to their total revenues during 2006-2008.

45.0

38.7 36.4

24.4

5.61.8

05

101520253035404550

Vivo Claro TIM Oi Brasil Telecom NextelSub

scrib

er B

ase

(In M

illio

n)

Operator



Oi’s Strategies Oi is the fastest growing mobile network operator in Brazil, witnessing over 50 percent annual growth in its subscriber base between 2007 and 2008. Recently it completed the acquisition of Brasil Telecom, which has further strengthened its position in the Brazilian wireless market. Oi is the fastest growing Brazilian MNO, not only in subscriber-terms but also revenue. The figure below compares the revenue growth of operators between 2007 and 2008.

Figure 40: MNOs’ Revenue Growth – Brazil (In Percent, 2007-2008)


The following figure highlights how Oi has attained such a high revenue growth rate.

22 Pleas note: Figures may not add up to 100 percent because of rounding off errors.

12.0 13.1

24.1

36.7

53.356.5

0

10

20

30

40

50

60

TIM Brasil Telecom Claro Vivo Nextel Oi

Rev

enue

Gro

wth

(In

Per

cent

)

Operator

Figure 39: Key MNOs’s Total Revenues –Brazil (In USD Billion, 2006-2008)22

5.06.5 8.8

5.06.8

7.73.7

5.2

6.4

1.6

2.2

3.6

0

5

10

15

20

25

30

2006 2007 2008

Tota

l Rev

enue

(In

US

D B

illio

n)

Year

Oi Claro TIM Brasil Vivo



Figure 41: Oi’s Revenue Growth Strategies


Focus on Subscriber Acquisition With nearly 77 percent mobile penetration, Brazil is still a growing wireless market and operators are leaving no stone unturned in order to attract more subscribers and improve their market share. Oi’s subscriber acquisition strategy is targeted at the same goal. To increase its wireless revenue, the operator has realized the need to strengthen its subscriber base and to achieve this it has come up with various strategies. These are outlined below.

Figure 42: Oi’s Subscriber Acquisition Strategies


Oi’s Revenue

Growth Strategies

Focus on

Subscriber Acquisition

Convergence of Services

Attractive Services

Subscriber Acquisition Strategies

Acquisitions

In 2008, Oi acquired Amazonia Celular and Brasil Telecom

New

Operations

In Q4 2008, Oi started its operations in Sao Paulo, a high growth region



Convergence of Services The operator has made committed efforts to converge its various services such as fixed, mobile and Internet, in order to make them more convenient and innovative for its users. Such moves have encouraged the uptake of all services including mobile, and developments such as rising fixed to mobile interconnect tariffs have helped the MNO to increase its operational revenues. Attractive Services To increase subscribers’ loyalty and popularize its services for higher use, Oi has launched various interesting services which have further enabled it to amass higher revenues from its users. Some of these services are discussed in the figure below.

Figure 43: Oi’s Services


The table below highlights the importance of factors which have led to the rise in Oi’s wireless revenue.

Factors Identified Oi Brazil

Focus on subscriber acquisition

Attractive services

Convergence of services

Oi Conta Total

• A bundled product offering • Primary reason behind the

growing postpaid subscriber base of the operator

Oi Ligadorse • Service with benefits such as

virtual and low recharge • Prepaid cards can be used with

fixed and public phones as well

Data and VAS • A rise in the number of 3G

subscribers and increasing SMS volumes have increased Oi’s wireless revenues substantially



Chapter 5 Performance Measurement 4 – MNO Profitability



Performance Measurement 4 – MNO Profitability EBITDA Margin

The profitability of an MNO is a primary point of interest for the stakeholders to measure the success of an MNO. The performance of an operator on this front can be assessed by observing their EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margin. This is dependent on a number of factors including an operator’s strategy on competitive pricing and the provision of subsidies, government regulations, and cost of subscriber acquisition. It has been observed that owing to the presence of simpler business models, and a focus on partnering and the application of best practices for network evolution, emerging markets display better profitability than developed markets. EBITDA margins for developed markets generally fall in the 30-35 percent range, whereas emerging markets typically place above 40 percent. The main factors affecting the EBITDA margins are mentioned in the figure given below.

The presence of strong competition forces operators to adopt aggressive pricing strategies and increases the cost of subscriber acquisition; these factors result in lower EBITDA margin. These issues are relevant in both emerging markets – with a large number of players or new entrants – and developed markets – especially those with Mobile Number Portability (MNP). The figure below shows a set of ten MNOs covering a wide range of EBITDA margins with their market share.

Figure 44: Factors Affecting EBITDA Margin


Factors affecting

EBITDA margin

Low tariffs due to high competition

High churn

rate

High subscriber acquisition

cost

High handset

subsidies



The statistics in the figure above show that high market share is generally associated with high EBITDA margin. High market share results in higher interconnection revenue generated by more incoming calls to the network. The scale of operations and large turnover also make the pro-active network upgrade and launch of new services financially viable. The number of years of operations also plays a role in the EBITDA margin. For example, Serbian MNO VIP Mobile experienced a negative EBITDA margin of around 63.1 percent. This was because the player – with the launch of its mobile network operations in Q3 2007 – is new in the Serbian market and is following an aggressive pricing strategy to win subscribers. Operators are looking to strike a balance in making their offerings attractive and keeping their EBITDA margins up. They are looking to improve their EBITDA margins through pro-active network roll-outs to stay ahead of the competition, switching-off legacy infrastructure, and migrating to IP-based infrastructure to provide a better quality of service. Rankings The figure below shows the Top 20 MNOs based on EBITDA margin.

Figure 45: MNOs’ EBITDA Margin and Market Share (In Percent, 2008)


65.4 62.0 61.8 60.0 57.5

3.2 -3.5 -4.2

-42.3-63.1

52.0 51.5 49.842.5 47.7

19.04.6

22.512.0 9.1

0

20

40

60

80

100

-80-60-40-20

020406080

Sm

art T

he P

hilip

pine

s

Dje

zzy

(Ora

scom

) Alg

eria

KP

N T

he N

ethe

rland

s

Kyi

vsta

r Ukr

aine

Ora

nge

Fran

ce

Cla

ro C

hile

Bee

line

Ukr

aine

Ban

glal

ink

Ban

glad

esh

Tele

2 C

roat

ia

VIP

Mob

ile S

erbi

a

Mar

ket S

hare

(In

Per

cent

)

EB

ITD

A M

argi

n (In

Per

cent

)

Operator

EBITDA Margin Market Share



Figure 46: Top 20 MNOs Worldwide – MNO Profitability (2008)23


The rankings of MNOs based on EBITDA margin are given below.

Table 16: MNOs Worldwide Ranked 1 to 20 – MNO Profitability (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Etisalat The UAE 10.00 11 Mobiltel Bulgaria 9.08

2 Smart The Philippines 9.42 12 Tunicell Tunisia 9.02 3 Telkomsel Indonesia 9.40 13 Tunisiana Tunisia 8.99 4 Globe The Philippines 9.40 14 China Mobile 8.99 5 Maroc Telecom Morocco 9.38 15 Telcel Mexico 8.97 6 Djezzy Algeria 9.30 16 Maxis Malaysia 8.96 7 KPN The Netherlands 9.29 17 Vodafone Egypt 8.92 8 Kyivstar Ukraine 9.23 18 MTS Russia 8.91 9 MTN Nigeria 9.18 19 mt:s Serbia 8.91

10 Orange France 9.15 20 MTS Belarus 8.91


Etisa

lat T

he U

AE, 1

0.0

Smar

t The

Phil

ippine

s, 9.4

Telko

msel

Indon

esia,

9.4

Glob

e The

Phil

ippine

s, 9.4

Maro

c Tele

com

Moro

cco,

9.4

Djez

zy A

lgeria

, 9.3

KPN

The N

ether

lands

, 9.3

Kyivs

tar U

kraine

, 9.2

MTN

Nige

ria, 9

.2

Oran

ge F

ranc

e, 9.1

Mobil

tel B

ulgar

ia, 9.

1

Tunic

ell T

unisi

a, 9.0

Tunis

iana T

unisi

a, 9.0

China

Mob

ile, 9

.0

Telce

l Mex

ico, 9

.0

Maxis

Mala

ysia,

9.0

Voda

fone E

gypt,

8.9

MTS

Russ

ia, 8.

9

mt:s

Serb

ia, 8.

9

MTS

Belar

us, 8

.9

8.2

8.4

8.6

8.8

9.0

9.2

9.4

9.6

9.8

10.0

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10




Rank

MNO

Score

Rank

MNO

Score

21 Asiacell Iraq 8.86 36 Rogers Canada 8.76 22 Velcom Belarus 8.86 37 Vodafone Romania 8.75 23 MegaFon Russia 8.85 38 VimpelCom Russia 8.75 24 Etisalat Misr Egypt 8.85 39 Globacom Nigeria 8.73 25 Vivatel Bulgaria 8.85 40 AIS Thailand 8.72 26 Comcel Colombia 8.85 41 Celcom Malaysia 8.72 27 Movistar Venezuela 8.82 42 Wind Italy 8.72 28 T-Mobile Czech Republic 8.81 43 DiGi Malaysia 8.72 29 O2 Czech Republic 8.81 44 Telecom Italia 8.72

30 Vodafone Czech Republic 8.81 45 3 Italia 8.72

31 MTS Ukraine 8.79 46 Sibir Telecom Russia 8.72 32 MobiNil Egypt 8.78 47 Vodafone Italy 8.71 33 Zain Jordan 8.77 48 Taiwan Mobile 8.70 34 Telenor Serbia 8.77 49 Zain Sudan 8.70

35 GrameenPhone Bangladesh 8.77 50 T-Mobile Croatia 8.68




Rank

MNO

Rank

MNO

Rank

MNO

51 Movistar Spain 91 Movistar Chile 131 Nextel Peru 52 China Unicom 92 Cellcom Israel 132 Bharti Airtel India 53 Safaricom Kenya 93 Tigo Colombia 133 Orange Switzerland 54 Telstra Australia 94 Telia Sonera Sweden 134 O2 Ireland 55 Proximus Belgium 95 Base Belgium 135 3 Sweden 56 Meditel Morocco 96 Turkcell Turkey 136 Orange Austria 57 T-Mobile Hungary 97 Telenor Norway 137 3 Austria 58 Chunghwa Taiwan 98 Nedjma Algeria 138 Telia Sonera Finland 59 Orange The UK 99 Starhub Singapore 139 BITE Lithuania 60 Telus Mobility Canada 100 Polkomtel Poland 140 T-Mobile Montenegro 61 TMN Portugal 101 HTIL Hong Kong 141 Nextel Argentina 62 M1 Singapore 102 Digitel Venezuela 142 Vivo Brazil

63 Cosmote Greece 103 Mobilkom Austria 143 Vodafone The Netherlands

64 Vodafone Hungary 104 NTT DOCOMO Japan 144 Tele2 Lithuania 65 Pannon Hungary 105 AT&T The US 145 Claro Peru

66 Globul Bulgaria 106 Partner Communications Israel 146 TCI Iran

67 Excelcomindo Indonesia 107 Netcom Norway 147 MTN Iran 68 Entel PCS Chile 108 Orange Spain 148 MTN Afghanistan 69 Promonte Montenegro 109 PTC Poland 149 PCCW Mobile Hong Kong 70 FeT Taiwan 110 Omnitel Lithuania 150 Elisa Finland 71 Zain Iraq 111 Vodafone Spain 151 3 The UK 72 Vodafone New Zealand 112 Tele2 Russia 152 Vodafone India 73 Mobistar Belgium 113 Telefonica Peru 153 T-Mobile The US 74 Mobilink Pakistan 114 SK Telecom South Korea 154 Nextel Brazil 75 Orange Slovakia 115 Vodacom South Africa 155 Vodafone Ireland 76 T-Mobile Slovakia 116 Tele2 Sweden 156 MTN Sudan 77 Telefonica Slovakia 117 Claro Argentina 157 KDDI Japan 78 SFR France 118 Idea Cellular India 158 SoftBank Japan 79 SingTel Singapore 119 Vodafone Greece 159 T-Mobile Austria

80 Reliance Communication India 120 Telecom Personal

Argentina 160 KTF South Korea

81 Vodafone Germany 121 Cell C South Africa 161 O2 The UK

82 Bell Mobility Canada 122 Bouygues France 162 CSL New World Mobility Hong Kong

83 Wind Hellas Greece 123 DTAC Thailand 163 Movistar Mexico 84 Verizon The US 124 Mobily Saudi Arabia 164 SmarTone Hong Kong

85 Telecom Mobile New Zealand 125 Pelephone Israel 165 Movistar Colombia

86 T-Mobile Germany 126 Zain Nigeria 166 Optus Australia 87 Swisscom Switzerland 127 Movistar Argentina 167 Movilnet Venezuela 88 E-Plus Germany 128 Oi Brazil 168 Vodacom DR Congo 89 Vodafone Portugal 129 MTN Syria 169 Sunrise Switzerland 90 VIPnet Croatia 130 MTN South Africa 170 True Move Thailand




Rank

MNO

Rank

MNO

Rank

MNO

171 Meteor Ireland 183 O2 Germany 195 Brasil Telecom 172 Sprint The US 184 Avea Turkey 196 du The UAE 173 Tigo DR Congo 185 Telia Denmark 197 life:) Ukraine 174 Claro Brazil 186 DNA Finland 198 Hutch Thailand 175 Vodafone The UK 187 Vodafone Australia 199 Claro Chile 176 Telenor Sweden 188 Vodafone Turkey 200 Beeline Ukraine 177 Sonofon Denmark 189 T-Mobile The Netherlands 201 Banglalink Bangladesh 178 LG Telecom South Korea 190 Telenor Pakistan 202 Zain Kenya 179 Optimus Portugal 191 Sun The Philippines 203 Tele2 Croatia 180 Celtel DR Congo 192 Iusacell Mexico 204 VIP Serbia 181 T-Mobile The UK 193 Orange Poland 182 TDC Denmark 194 TIM Brasil

The figure below shows the Top 3 MNOs judged on EBITDA margin.

Figure 47: Top 3 MNOs Worldwide – MNO Profitability (2008)


Smart The Philippines

Etisalat The

UAE

Telkomsel Indonesia

1

2 3



MNO Strategies

Globe Telecom The Philippines

Ownership: Singapore Telecommunications (45 percent), Ayala Corporation (34 percent), and Public Stocks (21 percent)

Launched: 1994


Y-o-Y Subscriber Growth Rate: 21.6 percent (2007 to 2008)

The Philippines Mobile Penetration: 71.2 percent (31st December 2008)



Market Environment – The Philippines:

• Country has significant mobile penetration of 71 percent despite the region’s low income levels

• Competition exists among the two leading players – Smart and Globe – which together constitute nearly 60 percent of The Philippines market

• The overall telecom market is gaining momentum, characterized by increased competition, evolving business models, technology enhancement, etc.

• The Philippines accounts for one of the highest SMS volumes worldwide • Uptake of 3G has been quite slow as a result of various factors, including expensive

3G handsets, and high tariffs for non-SMS data traffic • The Philippines VAS (value added services) market is witnessing strong growth as

most companies are developing of wireless applications providing content services.

EBITDA Margin and Revenues – Globe Telecom: The figure below shows the EBITDA margins and revenues for Globe Telecom during 2006-2008.

Figure 48: EBITDA Margin and Total Revenue – Globe Telecom (2006-2008)


1.21.5

1.3

57.0

68.065.0

30

40

50

60

70

0

0.5

1

1.5

2

2006 2007 2008

EB

ITD

A M

argi

n (In

Per

cent

)

Tota

l Rev

enue

(In

US

D B

illio

n)

Year

Total Revenue EBITDA Margin



Globe Telecom’s Strategies

Globe Telecom is the second largest mobile network operator in The Philippines. Globe is quite well-known in the mobile segment due to the innovative services provided by the operator in The Philippines market. Besides innovative services, the MNO has also practised the following strategies in order to corner a staggering 65 percent EBITDA margin in the wireless segment.

• Re-branding: As a step to effectively align its products and services for all subscribers (including business), Globe came up with a new branding strategy. This new strategy meant that all the products and services in the mobile and broadband category would have ‘Globe’ as a common brand. Besides helping the operator in aligning its services and innovation under an umbrella brand, the re-branding also helped the company in streamlining its service and support.

• WiMAX Service: Globe has been the first operator in The Philippines to launch WiMAX services. The MNO’s network is one of the biggest broadband networks in the South East Asian region. The package will allow users to enjoy Internet access at speeds of 512 Kbps for a minimum package of USD 16.47 per month (PHP 795 per month).24

• Enhancing Usability: The MNO has partnered with Nokia Siemens Networks in order to upgrade its prepaid charging system. The enhancement helped the operator in enriching the experience of its subscribers and also improving its operational efficiency. As a result of the upgrade of its prepaid system, Globe Telecom has been effectively able to decrease its charging platforms considerably, thereby reducing hardware footprints and power consumption.

• Service Innovations: Globe has gained prominence in The Philippines wireless market for devising an innovative service and product portfolio. Some of the major service innovations include:

24 Source: http://www.philstar.com/Article.aspx?articleId=451934&publicationSubCategoryId=66

Figure 49: Globe Telecom’s Success Strategies


Upgrade of prepaid charging system has helped Globe Telecom in enriching the experience of its subscribers and also improving its operational efficiency.

Globe Telecom Success Strategy

Rebranding

Service

Innovations

Enhancing Usability

http://www.philstar.com/Article.aspx?articleId=451934&publicationSubCategoryId=66�



Duo – Mobile and Landline in One: The operator launched a total convergent solution ‘Duo – Mobile and Landline in One’ in partnership with Acision (a leading messaging company) which would work on both fixed and mobile networks for postpaid subscribers. This subscription-based service intends to improve network traffic, primarily voice, by offering free calls within a city zone. The service provides unlimited calls from mobile to landline and vice-versa to the Duo subscribers.

Share-A-Load: This innovative service allows postpaid, prepaid and TM subscribers to transfer prepaid call and text credits to other Globe and Touch Mobile Prepaid subscribers via SMS. The loading service allows the transfer of amounts ranging from nearly USD 0.02 to USD 3.18 (PHP 1 to PHP 150), and can also be used internationally in countries including Hong Kong and Japan.25

Globe GCASH: This is another ground-breaking service from Globe Telecom, wherein subscribers’ phones are converted into mobile wallets. It offers a range of services such as buying goods, transfering money person-to-person, receiving domestic funds and international remittances. It is the only telecom company in The Philippines to introduce such a platform. This service was awarded “Best Mobile Messaging Service” in the GSM Association Awards 2005.

Plan Duo Subscription: This service allows Globe subscribers to carry two numbers (one mobile and one landline) in a single SIM card. Subscription to this service comes at a price of USD 8.32 per month (PHP 399 per month).26

The following table lists the key factors central to the operator’s success:

Factors Identified Globe Telecom The Philippines

Re-branding

Enhancing usability

Service innovations

25 Source: http://www.freephilippinesimcard.com/globe_share_a_load_philippines.php 26 Source: http://www.yugatech.com/blog/telecoms/globe-offers-plan-duo-service/

Figure 50: Globe Telecom’s Service Innovations


Globe GCASH is a popular service from Globe Telecom, wherein subscribers’ phones are converted into mobile wallets.

Globe Telecom’s Service Innovations

Duo – Mobile and Landline in One

Share-A-Load

Credit Transfer

Globe GCASH

Plan Duo

Subscription

http://www.freephilippinesimcard.com/globe_share_a_load_philippines.php�

http://www.yugatech.com/blog/telecoms/globe-offers-plan-duo-service/�



Djezzy Algeria

Ownership: Orascom Telecom Holding SAE (49.6 percent), Oratel International Ltd. (31.1 percent), Moga Holding Ltd. (8.2 percent), AIG African Infrastructure Fund IIC (7.9 percent) and Cevital s.p.a. (3.2 percent)

Launched: 2002




Algeria Mobile Penetration: 82.9 percent (31st December 2008)

Technology: GSM

Market Environment – Algeria:

• Dominated by the big two – Djezzy and Nedjma • One of the fastest growing wireless markets in the Middle East and Africa • Operators have launched different brands to target different segments

The figure below shows the subscriber base of the major MNOs in Algeria.

Figure 51: MNOs’ Subscriber Base – Algeria (In Million, End-2008)


EBITDA Margin and Revenues – Djezzy Algeria: The figure below shows the EBITDA margins and revenues for Djezzy Algeria during 2006-2008.

5.1

14.1

0

2

4

6

8

10

12

14

16

Nedjma Djezzy

Sub

scrib

er B

ase

(In M

illio

n)

Operator



Djezzy’s Strategies Djezzy is Algeria’s biggest mobile network operator with more than fifty percent of the country’s subscribers. The operator offers both voice and data services to its corporate and retail subscribers. The MNO also generates the highest ARPU and EBITDA margins in the country. This achievement could be attributed to the following:

• Commitment to maintain leadership in the market • Focus on high ARPU generation • Launching innovative services and products to improve revenue and EBITDA

margin

Commitment to maintain leadership in the market While the operator launched its wireless operations in the country three years after Algerian Mobile Network, Djezzy soon became market leader owing to its expertise in network deployment, sales and marketing. Today its networks cover nearly 95 percent of the country’s population, and it has revealed plans to further invest in the expansion of the network and improve the quality of its services. This investment is aimed at better serving subscribers and gaining their loyalty. Nedjma, the second largest player, challenged its dominance by launching aggressive pricing plans for new services. This resulted in the adoption of a new branding strategy by Djezzy, which led to the emergence of its new brand named Allo. This brand was targeted at budget users with low prices. The Allo brand became highly popular among the masses and enabled the operator to capture a larger subscriber base and in turn maintain its leadership crown in the Algerian market. In November 2008, the operator chose Nokia Siemens Networks, to build a single subscriber database. This database was intended to gather valuable insights on subscribers’ usage habits and to improve its product portfolio accordingly. Focus on high ARPU generation The operator generates the highest ARPU in the country. Although over the years operators in the country have witnessed a decline in their ARPU, Djezzy still holds the upper hand in terms of revenue generated by its subscribers. The figure below compares ARPU of the major players in Algeria.

Figure 52: EBITDA Margin and Total Revenue – Djezzy Algeria (2006-2008)


Djezzy generates the highest ARPU in Algeria.

1.51.8

2.0

64.763.1 62.0

30

40

50

60

70

0

0.5

1

1.5

2

2006 2007 2008

EB

ITD

A M

argi

n (In

Per

cent

)

Tota

l Rev

enue

(In

US

D B

illio

n)

Year




Figure 53: MNOs’ Monthly ARPU – Algeria (In USD, 2008)


There are several reasons behind high ARPU generation by the operator. One of them is its strategy to target different subscriber segments with different brands. It operates through separate brands to serve high value subscribers such as those from the enterprise sector, and other users which avail its services only for basic purposes and are more price sensitive. Another factor which has aided its cause of high ARPU is its growing interest in the postpaid segment. The operator launched ‘Millenium’, a product which proved to be highly successful in attracting more postpaid subscribers – in fact doubling their number between 2007 and 2008; this opened further channels of recurrent revenue generation. The figure below compares the contribution of postpaid subscribers to the total subscriber base of the two leading Algerian MNOs.

7.8

12.1

0

2

4

6

8

10

12

14

Nedjma Djezzy

Mon

thly

AR

PU

(In

US

D)

Operator

Figure 54: MNOs’ Postpaid Subscribers as a Percentage of Total Subscriber Base of the MNO – Algeria (In Percent, 2007 & 2008)


2.7

1.2

2.6

4.4

01122334455

2007 2008

Pos

tpai

d S

ubsc

riber

s as

a

Per

cent

age

of T

otal

S

ubsc

riber

Bas

e (In

Per

cent

)

Year

Nedjma Dejzzy



The figure above clearly shows the growing percentage of postpaid subscribers for Djezzy, whereas in Nedjma’s case there has been a decline from 2007 to 2008. This increasing percentage has enabled the operator to sustain high ARPU generation, which in turn has resulted in higher revenues and EBITDA margin. Launching innovative services and products to improve revenue and EBITDA margin To retain the title of market leader in the wireless market, an operator has to be dynamic with its product portfolio and come up with innovative services to reduce churn and keep its subscriber base intact. On this front, Djezzy has done a commendable job by updating its portfolio and keeping its users interested. Furthermore, the operator offers attractive postpaid and prepaid tariff plans to the users which strengthen its hold over the Algerian market. The operator introduced a loyalty program called Imtiyaz. This program accumulated points for the subscribers based on their mobile phone use, which could later be redeemed for benefits such as free airtime, handsets or other gifts. Some other initiatives taken by the operator are discussed below:

• Recently, Djezzy announced its plan to launch a WAP download portal named “Yalla”. The portal will offer innovative services for the download of music, video and games onto mobile handsets.

• In October 2008, Djezzy teamed with Western Union to offer mobile remittance services in selected markets, including Algeria.

The table below highlights the importance of factors which resulted in high profitability for the operator.

Factors Identified Djezzy Algeria Focus on high ARPU

Leader in the market

Innovative services and products



KPN The Netherlands

Ownership: KPN Telecom

Launched: 1994



Netherlands Mobile Penetration: 117.9 percent (31st December 2008)


Technology: GSM and WCDMA (HSPA)

Market Environment – The Netherlands: • The country hosts one of Europe’s most sophisticated and advanced fibre

infrastructures • The acquisition of Orange by T-Mobile has led to the emergence of three MNOs in

The Netherlands wireless market – KPN, T-Mobile, and Vodafone • 3G is acting as the driving force behind the increase in subscriber numbers;

however, the market for high-end data services is still in its nascent stage as a result of low consumer enthusiasm

• All three operators are providers of wholesale services to MVNOs (Mobile Virtual Network Operators) and resellers and have been able to cover almost 90 percent of the population via their 3G networks27

• Owing to extensive government investment, the country has one of the highest levels of broadband penetration worldwide

EBITDA Margin and Revenues – KPN: The figure below shows the EBITDA margins and revenues for KPN during 2006-2008.

27 Source: http://www.budde.com.au/Research/Netherlands-Mobile-Market-Overview-Statistics-Forecasts.html

Figure 55: EBITDA Margin and Total Revenue – KPN The Netherlands (2006-2008)


3.84.3 4.6

36.639.5

61.8

0

10

20

30

40

50

60

70

0

1

2

3

4

5

2006 2007 2008

EB

ITD

A M

argi

n (In

Per

cent

)

Tota

l Rev

enue

(In

US

D B

illio

n)

Year


http://www.budde.com.au/Research/Netherlands-Mobile-Market-Overview-Statistics-Forecasts.html�



KPN’s Strategies

KPN is the biggest operator in The Netherlands having captured almost half of the market. The operator targets both consumer and business segments with its wireless and wireline services. KPN has been able to revamp the declining trend of negative EBITDA in The Netherlands by registering an EBITDA margin of approximately 61.8 percent for 2008. This has largely been possible owing to the following strategies.

Portfolio Reduction and Simplification: The operator decided to reduce and simplify its product and services portfolio both at the front-end (retail segment) and at back-end (network operations). These cost reductions benefitted KPN in two ways–first and foremost the amount saved was used for re-investment in revenue growth and secondly, the reduction helped in improving margins. The consumer and business segments were targeted with the following strategies: • Consumer Segment: The primary focus of the operator was to achieve growth but

reduce costs. The MNO had various brands, namely KPN, Hi, Het Net, XS4ALL and Telfort, all targeted at different consumer segments; therefore, it decided to reduce and simplify the entire portfolio. One of the key initiatives in this direction was:

Planet brand moving to the KPN brand in June 2008 KPN was able to achieve the following milestones:

Figure 56: KPN’s Success Strategies


Figure 57: Market Share of MNOs – The Netherlands (2008)


49.8%

27.1%

23.1%

KPN T-Mobile Vodafone

KPN Success Strategy

Portfolio Reduction

and Simplification

Technology Upgrades



Voice: Noteworthy decrease in net line loss was achieved as a result of a focus on user retention in PSTN lines

Mobile: Focus on postpaid and data products led to a better portfolio Video Services: Digitenne (DVB-T)’s success helped the operator in increasing

its subscriber base by 56 percent in 2008 compared to 2007

• Business Segment: In order to maintain its EBITDA growth the MNO has implemented the following steps:

Mobile Business market development: Having a sophisticated and better-equipped 3G network than other operators, the MNO decided to develop the mobile business market by targeting data services such as laptop data cards, BlackBerry, PDA and Machine-to-Machine

KPN intends to enhance its online application portfolio, housing/hosting initiatives in order to capture the emerging ICT areas.

In order to nurture subscriber loyalty, KPN has implemented the NetPromotor Score (NPS), wherein the user’s feedback is assessed for improvements.

• Technology Upgrades: The mobile data services market in The Netherlands is

witnessing steady growth, which provided KPN with the impetus to upgrade its entire network.

In 2008, the operator switched to an advanced HSDPA (High-Speed Downlink Packet Access) network from the entire UMTS (Universal Mobile Telecommunications System) network, which helped it to offer the best speed to its subscribers in The Netherlands

KPN intends to connect the UMTS sites through fibre optics and also introduce LTE (Long Term Evolution) in the coming years

The operator’s mobile GSM and UMTS core networks are expected to be replaced by integrated GSM-UMTS IP-based core networks in 2008-2009 in order to gain further cost benefits

The mobile data services market in The Netherlands is witnessing a steady growth, which provided KPN with the impetus to upgrade its entire network.

Figure 58: KPN’s Segment Strategies


Consumer Segment

• Simplified Multi-brand portfolio • Stop Line Loss • Subscriber and ARPU growth

Business Market • Moving up the value chain into managed ICT services • Migration to IP services • Simplified portfolio • Legacy services phase out

Wholesale and Operations

• Proactive network roll-out • Switching off legacy infrastructure



The following table lists the key factors central to the operator’s success:

Factors Identified KPN The Netherlands

Product reduction and simplification

Technology deployment



Additional Reference Material

Average Profit Per User (APPU) An alternative way of judging an operator’s profitability is APPU per month. This is an indicator of how well an operator has balanced its aggressive pricing and subsidies to attract more subscribers while keeping an eye over profits. Formula and Rationale The formula used for the calculation of APPU is given below: The APPU calculated using this formula has been used to rank the operators worldwide. The figure below shows the top 10 MNOs according to this performance measurement.

Figure 59: Top 10 MNOs Worldwide – Monthly APPU and Monthly ARPU (In USD, 2008)


For all the MNOs mentioned in the figure above, their APPU is over 20 percent of their respective ARPU. APPU can be a measure of profitability of an MNO. However, there are some challenges in using this as a fair judge of an MNO’s efforts for increasing profitability. Some of the challenges are mentioned below:

• It is difficult to rank MNOs operating in different countries using an APPU performance measurement index because during the calculation of profits, tax is levied by the local government and may vary broadly across different countries. Therefore, using APPU can put some operators in an advantageous/disadvantageous position despite their performance.

• MNOs in different stages of their establishment with respect to network launch and operations might be incurring varying capital expenditure owing to network

28.922.5 19.3

13.7 12.4 12.3 12.3 11.6 11.0 10.7

60.555.6 57.2

47.541.0

58.050.6

31.436.9

52.8

0

10

20

30

40

50

60

70

Rog

ers

Can

ada

Pro

xim

us (B

elga

com

)

Tele

nor N

orw

ay

Vod

afon

e S

pain

Nex

tel A

rgen

tina

Nex

tel B

razi

l

AT&

T Th

e U

S

Vod

afon

e Ita

ly

Cos

mot

e G

reec

e

Vod

afon

e Th

e N

ethe

rland

sMon

thly

AP

PU

and

Mon

thly

AR

PU

(In

US

D)

Operator

Monthly APPU Monthly ARPU

Net Profits of MNO (In USD) Average Subscriber Base of MNO (2008)*12

Value =



expansion requirements. Therefore, judging a relatively new operator with negative profits (net loss) due to high capital expenditure might not provide a complete picture of its performance.

• Data for net profits are not released by a number of MNOs for their country level operations. Hence, it is difficult to use this performance measurement to rank a large number of players.

EBITDA Margin vs. APPU When we compare the APPU performance measurement index with an EBITDA margin performance measurement index (as a less biased measure for profitability), the EBITDA margin performance measurement index fares better than the APPU performance measurement index. This argument is based on the aforementioned points and furthermore, EBITDA margin is less affected by varying regulations, development stage of an MNO in a market, and has better data availability. EBITDA margin is more dependent on factors such as existing competition and market share and these factors are more admissible rather than the above mentioned factors.



Chapter 6 Performance Measurement 5 – MNO Growth vs. Market Growth



Performance Measurement 5 – MNO Growth vs. Market Growth

The subscriber growth of an MNO is an indicator of the appeal of its pricing plans and quality of its service. However, an MNO’s subscriber growth cannot be compared in absolute terms with that of another MNO operating in another market because of various factors. For example, the operators might be operating in markets at different levels of penetration. Or they might be at different stages of their service launch, which might enable them to achieve higher year-on-year subscriber growth owing to a low previous year subscriber base. The emerging markets have experienced tremendous growth during 2008. The Top 10 markets which witnessed the highest 2008 subscriber growth are shown in the figure below:

Nearly all the countries shown above have sub 100 percent penetration and mobile services that are getting popular among the rural population. It is easier for an MNO in these markets to increase its subscriber base compared to MNOs operational in saturated markets. Therefore, to evaluate the success of an operator’s strategy in increasing its subscriber base, subscriber growth has to be seen with respect to the subscriber base growth in a country. The study may also be useful in evaluating an operator’s performance in saturated markets especially those with MNP (Mobile Number Portability) regulation, where MNOs look to attract competitor’s subscribers to increase their market share. Formula and Rationale

The formula used for the calculation of this performance measurement index is given below.

Figure 60: Top 10 Countries Worldwide – Y-o-Y Subscriber Growth (2007 to 2008) and Penetration (End-2008)


62.0

47.1 46.5 45.0 43.0 41.3 41.0 38.4 37.434.5

67.7

29.9

57.5

21.3

37.4

54.6

32.2

139.6

40.9

12.5

0

20

40

60

80

100

120

140

160

0

10

20

30

40

50

60

70

Iran

Indi

a

Indo

nesi

a

Afg

hani

stan

Nig

eria

Egy

pt

Ban

glad

esh

Sau

di A

rabi

a

Ken

ya

DR

Con

go

Pen

etra

tion

(In P

erce

nt)

Sub

scrib

er g

row

th (I

n P

erce

nt)

Country

Subscriber growth Penetration



The objective of using this performance measurement is to evaluate the aggressiveness of an MNO compared to its peers. Furthermore, the comparison has been normalised by using the market share of the MNO in the numerator to input a weight for the scale of its operations, so as to blunt the effect of extraordinary y-o-y growth shown by an operator in the first few years of operations. Rankings

The figure below shows the Top 20 MNOs based on this performance measurement.

Figure 61: Top 20 MNOs Worldwide – MNO Growth vs. Market Growth (2008)28


The rankings of MNOs based on this performance measurement are given below.


Wind

Italy,

10.0

life:)

Ukra

ine, 9

.1

TDC

Denm

ark,

8.7

3Itali

a, 8.6

Sono

fon D

enma

rk, 8.

5

Voda

fone I

relan

d, 8.4

Voda

fone I

taly,

8.4

Telef

onica

Slov

akia,

8.4

China

Mob

ile, 8

.3

Telen

or N

orwa

y, 8.2

Sing

Tel S

ingap

ore,

8.2

mt:s

Serb

ia, 8.

2

Safar

icom

Keny

a, 8.2

Pol k

omtel

Pola

nd, 8

.2

Chun

ghwa

Taiw

an, 8

.2

MTN

Iran,

8.1

Voda

fone N

ew Z

ealan

d, 8.1

Asiac

ell Ir

aq, 8

.1

Beeli

ne U

kraine

, 8.1

Zain

Iraq,

8.1

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Subscriber Base Growth of MNO * Market Share of MNO Subscriber Base Growth of the Country

Value =

Rank 11 to 20

Rank 1 to 10



Table 20: MNOs Worldwide Ranked 1 to 20 – MNO Growth vs. Market Growth (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Wind Italy 10.00 11 SingTel Singapore 8.23 2 life:) Ukraine 9.06 12 mt:s Serbia 8.19 3 TDC Denmark 8.66 13 Safaricom Kenya 8.19 4 3 Italia 8.59 14 Polkomtel Poland 8.18 5 Sonofon Denmark 8.53 15 Chunghwa Taiwan 8.16 6 Vodafone Ireland 8.42 16 MTN Iran 8.15 7 Vodafone Italy 8.37 17 Vodafone New Zealand 8.15 8 Telefonica Slovakia 8.37 18 Asiacell Iraq 8.15 9 China Mobile 8.27 19 Beeline Ukraine 8.13

10 Telenor Norway 8.24 20 Zain Iraq 8.13


Rank

MNO

Score

Rank

MNO

Score

21 Mobilkom Austria 8.12 36 VIP Serbia 8.05 22 Comcel Colombia 8.12 37 Swisscom Switzerland 8.04 23 Cosmote Greece 8.10 38 MTN Syria 8.04 24 du The UAE 8.09 39 Pelephone Israel 8.03 25 T-Mobile Montenegro 8.08 40 Base Belgium 8.03 26 Telcel Mexico 8.08 41 Meditel Morocco 8.03 27 Movilnet Venezuela 8.07 42 Telia Denmark 8.03

28 Tunisiana Tunisia 8.07 43 Partner Communications Israel 8.03

29 Tele2 Lithuania 8.07 44 TMN Portugal 8.02 30 T-Mobile Hungary 8.06 45 SK Telecom South Korea 8.02 31 Cellcom Israel 8.06 46 Zain Jordan 8.02 32 SoftBank Japan 8.06 47 Celtel DR Congo 8.02 33 Avea Turkey 8.06 48 Zain Sudan 8.02 34 Telefonica Peru 8.05 49 Velcom Belarus 8.02 35 Telia Sonera Sweden 8.05 50 HTIL Hong Kong 8.02




Rank

MNO

Rank

MNO

Rank

MNO

51 Movistar Chile 91 O2 Ireland 131 T-Mobile The US 52 Maroc Telecom Morocco 92 Telkomsel Indonesia 132 Telstra Australia 53 Maxis Malaysia 93 VIPnet Croatia 133 Wind Hellas Greece 54 O2 The UK 94 Tele2 Croatia 134 Vivo Brazil

55 DNA Finland 95 T-Mobile Croatia 135 Telecom Mobile New Zealand

56 Etisalat The UAE 96 Turkcell Turkey 136 Vodafone Australia 57 Movistar Spain 97 Vodafone Portugal 137 Proximus Belgium 58 Vodafone Czech Republic 98 Vodacom DR Congo 138 Entel PCS Chile 59 3 The UK 99 Oi Brazil 139 KDDI Japan 60 Orange France 100 T-Mobile Czech Republic 140 NTT DOCOMO Japan 61 Mobiltel Bulgaria 101 Tigo DR Congo 141 PTC Poland 62 Sunrise Switzerland 102 Globul Bulgaria 142 Vivatel Bulgaria 63 MegaFon Russia 103 T-Mobile The Netherlands 143 Movistar Argentina 64 Optus Australia 104 Telenor Pakistan 144 Movistar Venezuela 65 MTN South Africa 105 E-Plus Germany 145 Globacom Nigeria 66 MTS Belarus 106 Globe The Philippines 146 Movistar Colombia 67 Vodafone Spain 107 DTAC Thailand 147 Vodafone Germany 68 Mobily Saudi Arabia 108 Banglalink Bangladesh 148 Vodafone India 69 AT&T The US 109 Vodafone The UK 149 Digitel Venezuela 70 BITE Lithuania 110 Meteor Ireland 150 VimpelCom Russia 71 Etisalat Misr Egypt 111 KTF South Korea 151 LG Telecom South Korea

72 Pannon Hungary 112 T-Mobile Germany 152 Reliance Communication India

73 TCI Iran 113 Vodafone Egypt 153 Cell C South Africa

74 Vodafone The Netherlands 114 Movistar Mexico 154 O2 Germany

75 Tunicell Tunisia 115 True Move Thailand 155 Bell Mobility Canada 76 PCCW Mobile Hong Kong 116 MTS Russia 156 Bouygues France 77 MTN Afghanistan 117 Bharti Airtel India 157 Djezzy Algeria 78 Vodacom South Africa 118 O2 Czech Republic 158 T-Mobile Austria 79 Smart The Philippines 119 Telia Sonera Finland 159 Optimus Portugal 80 Rogers Canada 120 Claro Chile 160 TIM Brasil 81 Claro Peru 121 Zain Nigeria 161 Vodafone Romania 82 Verizon The US 122 T-Mobile Slovakia 162 DiGi Malaysia 83 Claro Argentina 123 Claro Brazil 163 3 Sweden 84 Celcom Malaysia 124 KPN The Netherlands 164 China Unicom

85 Sun The Philippines 125 GrameenPhone Bangladesh 165 Zain Kenya

86 AIS Thailand 126 Excelcomindo Indonesia 166 3 Austria 87 SFR France 127 Tele2 Sweden 167 Idea Cellular India 88 Telus Mobility Canada 128 Elisa Finland 168 Vodafone Turkey

89 Telecom Personal Argentina 129 Mobistar Belgium 169 M1 Singapore

90 MobiNil Egypt 130 MTN Nigeria 170 Vodafone Greece




Rank

MNO

Rank

MNO

Rank

MNO

171 MTN Sudan 183 Brasil Telecom 195 Omnitel Lithuania 172 Orange Spain 184 Nextel Peru 196 Orange Austria 173 FeT Taiwan 185 Telenor Sweden 197 Kyivstar Ukraine 174 Taiwan Mobile 186 Orange Switzerland 198 Orange Poland 175 Tele2 Russia 187 Nextel Argentina 199 Mobilink Pakistan

176 CSL New World Mobility Hong Kong 188 Sibir Telecom Russia 200 T-Mobile The UK

177 Orange The UK 189 Netcom Norway 201 Sprint The US 178 Telenor Serbia 190 Nextel Brazil 202 Orange Slovakia 179 Tigo Colombia 191 Starhub Singapore 203 MTS Ukraine 180 Nedjma Algeria 192 Hutch Thailand 204 Telecom Italia 181 SmarTone Hong Kong 193 Iusacell Mexico 182 Promonte Montenegro 194 Vodafone Hungary


Figure 62: Top 3 MNOs Worldwide – MNO Growth vs. Market Growth (2008)


life:) Ukraine

Wind Italy

TDC Denmark

1

2 3



MNO Strategies

Wind Italy Market Environment – Italy:

• Italians are very receptive to data services; the market’s affinity for data services including GPRS, MMS, and other multimedia services based on 3G/3.5G networks is creating opportunities for operators to increase revenues.

• The entrance of virtual mobile network operators has intensified the already existing competition among four major operators. The figure below shows the market share of Italian MNOs during 2006-2008.

Figure 63: MNOs’ Market Share – Italy (In Percent, December 2006-December 2008)


• Prepaid subscribers formed over 80 percent of the Italian mobile subscriber base by

end-2008; considering the high percentage of prepaid subscribers, the market has high data usage – which is generally not associated with prepaid markets

• The market has pioneered evolving technologies innovative offerings (triple play; quadruple play, fixed-mobile convergence); and is among the leading markets in mobile television

43.6% 43.9%41.8%

19.8% 18.8% 20.3%

9.5% 9.8% 10.2%

27.1% 27.5% 27.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Dec-06 Dec-07 Dec-08

Mar

ket S

hare

(In

Per

cent

)

MonthTelecom Italia Wind 3 Italia Vodafone

Ownership: Wholly owned subsidiary of Weather Investments

Launched: 1999



Italy Mobile Penetration: 142.8 percent (31st December 2008)





Wind’s Strategies The commencement of operations by 3 Italia intensified the competition in the Italian market. Furthermore, the presence of MNP has aggravated the challenge of winning subscribers in a market where penetration has already crossed 140 percent. Wind is focusing on holding on to market share through attractive pricing and innovative services. Some of the strategies are mentioned below:

• Targeting community calling needs: Wind Italy offers attractive plans such as ‘Noi

2 Big’ consisting of a bundle of 1,000 minutes per month for calling chosen numbers at a monthly fee of USD 5 (EUR 4), and ‘Wind Night’ for unlimited calls from 11 pm to 7 am at USD 2.5 (EUR 2.0) per month.

• Targeting youth segment: The operator targets university students through ‘Wind Campus’ plan – launched in November 2008 – which offers 1,000 minutes and 1,000 SMSs to the campus community at USD 6.3 (EUR 5.0) per month. The plan also enables free of charge web-browsing and provides a blend of voice, SMS, and Internet options especially designed for the youth segment.

• Rewarding high use: Wind Italy offers ‘Promo Card’ at USD 6.3 (EUR 5.0) per month which enables subscribers to earn a bonus of USD 1.3 (EUR 1.0) for each minute of outgoing calls to be accumulated over a month.

• Targeting ethnic groups: The ‘Call your country’ option provided by the operator is aimed at increasing the appeal of international calling plans for ethnic groups. The offer was enhanced through the ‘Promo Card’ plan in November 2008.

• Rewarding subscribers switching to Wind Italy: Under the ‘Passa a Wind’ offer, Wind Italy doubles up the recharge value of a voucher (during the first six months), up to USD 62.5 (EUR 50.0) per month, for consumers switching to Wind Italy via MNP.29

29 Source:

http://www.windgroup.it/download/investitori/bilanci_eng/Eng_WIND_Group_Consol_31_12_08.pdf

Figure 64: Wind’s Strategies


Wind Italy launched ‘Wind Campus’ plan in November 2008 to target university students.

Targeting user segments

• Youth segment: ‘Noi 2 Big’ and ‘Wind Campus’ plans to satisfy high community calling needs

• Ethnic groups: ‘Call your country’ plan and ‘Promo Card’ • Competitors’ subscriber base: ‘Passa a Wind’ • Business segment: Attracting low-use business subscribers

Encouraging data use

• ‘SuperInternet SIM’ cards to cater to data-only needs • BlackBerry Internet Service for the consumer segment • Discount of up to 100 percent on HSPDA devices when opting

for flat or semi flat offers

Pricing and packaging

• Change from data traffic based traffic model to event based pricing model for i-mode mobile e-mail and MMS

• Extension of products from consumer segment to business segment

• Provision for bundled offers customised according to target groups

Strategy Products

http://www.windgroup.it/download/investitori/bilanci_eng/Eng_WIND_Group_Consol_31_12_08.pdf�



• Differentiated data offerings: ‘SuperInternet SIM’ cards to cater to data-only needs: Wind Italy offers a

SIM enabled on packet switching traffic only to provide a ‘SuperInternet SIM’ intended for Internet, SMS, MMS, and WAP service consumption.

BlackBerry Internet service for the consumer segment: Through the launch of this service during 2008, the operator tested high-end mobile service offerings on the consumer segment. The operator has increased the appeal of the service by providing easy installation through SMS.

Factors Identified Wind Italy

Identification of potential target groups

Differentiated offerings

Pricing and packaging

Rewarding loyalty and high use



TDC Denmark

Ownership: TDC Group

Launched: 1992



Denmark Mobile Penetration: 120.6 percent (31st December 2008)



Market Environment – Denmark:

• In spite of high penetration levels, the market is growing steadily. • Demand for data services is providing the impetus for growth among the main

operators – TDC, Telia Denmark, and Sonofon • 3G services have a widespread presence across the country, with all the major

MNOs planning to roll out HSDPA upgrades • Among the European countries, Denmark has displayed impressive uptake of

broadband and digital media services, with the analogue switch-off expected by end-2009.

TDC’s Strategies

TDC leads the Danish mobile market accounting for nearly 48 percent of the subscriber base in 2008. The revenues for the Group are primarily constituted by five business segments namely Business Nordic, Fixnet Nordic, Mobile Nordic, YouSee, and Sunrise.

Figure 65: TDC’s Success Strategies


TDC Success Strategy

Customised Product

Offerings

Innovative Services

Targeting Business

Segment



Figure 66: Revenue by Business Segment – TDC (2008)


In a market having more than 100 percent penetration, the operator has been successful in increasing its subscriber base owing to the following strategies:

• Targeting Business Segment: Business Nordic group has catered to the requirements of the business segment effectively by launching various products exclusively for this segment. This includes Turbo 3G services based on HSDPA technology to cater to the demand for mobile e-mail. Business Nordic has also introduced bundled services wherein mobile broadband access (TDC Flex Data) has been bundled with TDC wireless hotspots in airports, trains, hotels, conference centres, cafés, etc. across Denmark.

• Customized Product Offerings: Fixnet Nordic introduced various products/offerings targeting the needs of different groups:

Only company in Denmark to introduce unlimited music downloads of more than two million tracks for its broadband and mobile subscribers at no extra charge, via its ‘PLAY’ service in 2008

Owing to the decrease in subscriber base of traditional landline telephony and also to counter migration between mobile and VoIP, Fixnet came up with various flat-rate products. TDC Telefoni (a PSTN subscription) was launched wherein the users enjoyed the choice of call-forwarding and free subscription.

Convergence Product: Fixnet Nordic launched a convergence product ‘Duét’ which bundled landline and a mobile subscription. It also includes an advanced forwarding function between subscribers’ landline and mobiles. The subscriber base for this service reached 371,000 subscribers in 2008.

• Innovative Services: Mobile Nordic has continually improved the user experience by introducing new, innovative services for its users. The company launched a new service where the users can view the caller’s name and address even if the contact is not pre-stored in the subscriber’s mobile handset. It also launched a service where the user can see the sender’s name and context of the SMS without opening the inbox.

The following table lists the key factors that led to the growth of the operator:

31.0%

21.7%13.7%

8.3%

22.4%

2.9%

Business Nordic Fixnet Nordic Mobile Nordic YouSee Sunrise Other activities

TDC Denmark launched a service where the user can see the sender’s name and context of the SMS without opening the inbox.



Factors Identified TDC Denmark

Targeting business segment

Customized product offerings

Innovative services



Vodafone Ireland

Ownership: Vodafone Group

Launched: 1993



Ireland Mobile Penetration: 128.0 percent (31st December 2008)



Market Environment – Ireland:

• The market is dominated primarily by three players namely Vodafone, O2, and Meteor.

• The Mobile market is witnessing fierce competition owing to the entry of MVNOs. This has caused changes to the wireless landscape, including the failure of Smart Telecom (fourth 3G operator) and the consolidation of Meteor as a mobile arm of Eircom

• Mobile broadband is growing fast as a result of flat-rate data plans • The broadband market is quite under-developed compared to other European

countries; however, Government efforts to enhance the local loop unbundling is helping the market to register growth, albeit slow

Vodafone Ireland’s Strategies

Figure 67: Vodafone Ireland’s Success Strategies


Vodafone Ireland’s Success

Strategies

Attractive

Tariff Plans

First Time Services

Bundled Offerings



Vodafone Ireland is the biggest MNO in Ireland with a market share of 44 percent and a subscriber base of 2.6 million at end-2008. Vodafone Ireland has been able to sustain its market position as a result of the following strategies:

Figure 68: MNOs’ Market Share - Ireland (2007 & 2008)


44.5%

32.3%

18.9%

4.3%

2007

44.0%

31.8%

18.6%

5.6%

2008

Vodafone O2 Meteor 3



• Attractive Tariff Plans: Vodafone Ireland has launched exciting tariff/price plans for its subscribers:

New Perfect Fit 400 and 600 postpaid plans have been launched, wherein the users enjoy the flexibility of calling other Vodafone users free of charge. This plan has lifetime validity and is available to new as well as existing subscribers. Vodafone subscribers can also enjoy the additional benefit of free voicemail.

The company introduced the Prepay tariff - which has no signing or connection fee - for the Polish community. Looking at the vast Polish community in Ireland, Vodafone targeted this group with special tariff plans as Poles considered mobile as their primary means of communication. The subscribers pay USD 0.1 (9 cents) per minute to Polish landline numbers and USD 0.3 (25 cents) per minute to Polish mobile numbers.

• First Time Services: The operator has pioneered various new services in Ireland’s wireless market. These include:

Vodafone Mobile Internet: Vodafone Ireland has integrated the Internet and mobile through Vodafone Mobile Internet by partnering with popular websites such as eBay, Google, MySpace, etc., in order to deliver a rich user experience. This service does not require a handset upgrade and a subscriber with a 2.5G/3G handset can use this service for USD 13.8 per month (EUR 9.99 per month).30

3G services: Vodafone was the first Irish operator to launch 3G data services and 3G broadband

Vodafone Unlimited Data: The operator launched a flat-rate 3G mobile Internet service. This service is available at USD 77.3 (EUR 49) per month and allows unlimited e-mail and Internet access anytime.

The package also allows subscribers to enjoy Vodafone’s 3G broadband network using HSDPA technology. This service comes at a cost of approximately USD 77.3 (EUR 49) per month offering a speed of 1.2 Mbps.31

Sky Mobile TV: The MNO has been the pioneer in launching Mobile TV in this country. The host of services include 24-hour news channels, sports,and entertainment.

The operator also introduced Windows Mobile, which provides remote access to Microsoft Outlook, Word, Excel, PowerPoint, etc. A number of handheld devices support this service.

• Bundled Offerings: In order to increase its business subscriber base, Vodafone Ireland has come up with the ‘Vodafone Office’ plan, which is a broadband and phone bundle package. It offers free local and national calls from Vodafone landlines along with the choice of 3 MB or 7.6 MB Vodafone broadband.

The following table lists the key factors that have led to the operator’s success:

Factors Identified Vodafone Ireland

Attractive tariff plans

First time services

Bundled offerings

30 Source: http://www.vodafone.ie/aboutus/media/press/show/BAU003151.shtml?date=August+26%2c+2007 31 Source: http://www.vodafone.ie/aboutus/media/press/show/BAU004000.shtml;jsessionid=5DB41A2F1149F816076462D95756ECC7?date=Tue+May+27+14%3A32%3A00+IST+2008

Vodafone Ireland has integrated the Internet and mobile through ‘Vodafone Mobile Internet’ by partnering with popular websites.It has also come up with the ‘Vodafone Office’ plan, which is a broadband and phone bundle package.

http://www.vodafone.ie/aboutus/media/press/show/BAU003151.shtml?date=August+26%2c+2007�

http://www.vodafone.ie/aboutus/media/press/show/BAU004000.shtml;jsessionid=5DB41A2F1149F816076462D95756ECC7?date=Tue+May+27+14%3A32%3A00+IST+2008�

http://www.vodafone.ie/aboutus/media/press/show/BAU004000.shtml;jsessionid=5DB41A2F1149F816076462D95756ECC7?date=Tue+May+27+14%3A32%3A00+IST+2008�



Chapter 7 Performance Measurement 6 – Significance of the MNO



Performance Measurement 6 – Significance of the MNO Significance of an MNO has been included as a measure of an MNO’s penetration in its market of operation. The factor can be used to evaluate the contribution of an operator to the mobile penetration in a market. However, when using an operator’s market penetration32

The top 3 players in terms of market share mentoned in the figure above are Safaricom Kenya, Etisalat the UAE and China Mobile. Number of years for their operation on 2G (and above) networks are 13 years, 15 years and 12 years respectively.

as a measure of its significance we face two problems. First, using this significance performance measurement index may make the evaluation biased in favor of MNOs operating in a market for a longer time. Second, the absence of a normalising factor accounting for the addressable population in the country of operation may not present the full picture, as an operator may have lower market penetration owing to population demographics. The figure below shows the Top 10 MNOs Worldwide based on subscriber market share.

Formula and Rationale


32 Please note: An operator’s market penetration refers to its contribution to the mobile penetration in the country. If there are ‘n’ operators in a country, the sum of their market penetrations will add up to mobile penetration in the country.

Figure 69: Top 10 MNOs Worldwide – Market Share (In Percent, End-2008)


82.674.7 71.9 71.7

67.4 66.8 65.6 65.0 62.5 61.7

0

10

20

30

40

50

60

70

80

90

Saf

aric

om K

enya

Etis

alat

The

UA

E

Chi

na M

obile

Telc

el M

exic

o

Com

cel C

olom

bia

TCI I

ran

Tele

nor N

orw

ay

Mar

oc T

elec

om

mt:s

Ser

bia

Sw

issc

om

Mar

ket S

hare

(In

Per

cent

)

Operator

Subscriber Base of the MNO Population of the Country (10-74 Years) * No of Years of Network Operation of MNO (2G & Above)

Value =



The formula is intended to normalise MNO scores by taking into account the two aforementioned factors – country demographics and number of years of 2G (and above) operation of an MNO. Also, the ratio of subscriber base of an MNO to the population in 10-74 years for the country of operation can be considered as the effective mobile penetration of an operator. This replaces the conventional mobile penetration of an MNO and aims to provide a level playing field for MNOs operating in different markets. Rankings


Figure 70: Top 20 MNOs Worldwide – Significance of the MNO (2008)33




du T

he U

AE, 1

0.0

Mobil

y Sau

di Ar

abia,

7.9

Movis

tar V

enez

uela,

7.7

Telef

onica

Per

u, 7.4

Movil

net V

enez

uela,

7.4

Comc

el Co

lombia

, 7.0

Etisa

lat T

he U

AE, 7

.0

T-Mo

bile M

onten

egro

, 6.6

mt:s

Serb

ia, 6.

4

MTN

Iran,

6.4

Glob

ul Bu

lgaria

, 6.3

Cosm

ote G

reec

e, 6.3

Clar

o Per

u, 6.2

MTS

Belar

us, 6

.2

Djez

zy A

lgeria

, 6.2

VIP

Ser

bia, 6

.2

Tunis

iana T

unisi

a, 6.1

Movis

tar C

olomb

ia, 6.

1

VIPn

et Cr

oatia

, 6.0

Mobil

tel B

ulgar

ia, 6.

0

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10



Table 24: MNOs Worldwide Ranked 1 to 20 – Significance of the MNO (2008)

Rank

MNO

Score

Rank

MNO

Score

1 du The UAE 10.00 11 Globul Bulgaria 6.32 2 Mobily Saudi Arabia 7.86 12 Cosmote Greece 6.28 3 Movistar Venezuela 7.70 13 Claro Peru 6.21 4 Telefonica Peru 7.41 14 MTS Belarus 6.20 5 Movilnet Venezuela 7.35 15 Djezzy Algeria 6.20 6 Comcel Colombia 7.02 16 VIP Serbia 6.15 7 Etisalat The UAE 6.97 17 Tunisiana Tunisia 6.12 8 T-Mobile Montenegro 6.57 18 Movistar Colombia 6.09 9 mt:s Serbia 6.44 19 VIPnet Croatia 6.04

10 MTN Iran 6.39 20 Mobiltel Bulgaria 5.99


Rank

MNO

Score

Rank

MNO

Score

21 Tele2 Lithuania 5.99 36 Movistar Spain 5.80 22 Asiacell Iraq 5.92 37 Telenor Norway 5.78 23 Promonte Montenegro 5.92 38 Pelephone Israel 5.78 24 Digitel Venezuela 5.88 39 Kyivstar Ukraine 5.77 25 Telstra Australia 5.88 40 Smart The Philippines 5.77 26 Zain Iraq 5.87 41 Telefonica Slovakia 5.77 27 Claro Argentina 5.84 42 Cellcom Israel 5.76 28 Vivatel Bulgaria 5.84 43 Starhub Singapore 5.76 29 Swisscom Switzerland 5.83 44 T-Mobile Czech Republic 5.75

30 Partner Communications Israel 5.83 45 Vodafone New Zealand 5.74

31 MobiNil Egypt 5.82 46 Omnitel Lithuania 5.74 32 Etisalat Misr Egypt 5.82 47 KPN The Netherlands 5.74 33 Orange Slovakia 5.82 48 Vodafone Ireland 5.74 34 Telecom Italia 5.81 49 Tunicell Tunisia 5.73 35 T-Mobile Croatia 5.80 50 TMN Portugal 5.73




Rank

MNO

Rank

MNO

Rank

MNO

51 Tele2 Croatia 91 Vodafone Spain 131 Sunrise Switzerland 52 O2 Czech Republic 92 Wind Italy 132 MegaFon Russia 53 Movistar Chile 93 Telenor Serbia 133 3 The UK 54 Vodafone Egypt 94 MTS Russia 134 Vivo Brazil 55 SingTel Singapore 95 Zain Jordan 135 O2 The UK 56 DNA Finland 96 Mobistar Belgium 136 life:) Ukraine 57 Vodacom South Africa 97 Vodafone Italy 137 DiGi Malaysia 58 Velcom Belarus 98 Polkomtel Poland 138 TIM Brasil

59 Telecom Personal Argentina 99 Orange Spain 139 Globacom Nigeria

60 Vodafone Romania 100 M1 Singapore 140 VimpelCom Russia 61 T-Mobile Hungary 101 China Mobile 141 Avea Turkey 62 O2 Ireland 102 T-Mobile Germany 142 Orange Switzerland 63 Telia Sonera Sweden 103 AIS Thailand 143 Verizon The US 64 SK Telecom South Korea 104 Elisa Finland 144 AT&T The US 65 T-Mobile Slovakia 105 Telcel Mexico 145 Sonofon Denmark 66 Maxis Malaysia 106 Optimus Portugal 146 SFR France

67 Mobilkom Austria 107 NTT DOCOMO Japan 147 Vodafone The Netherlands

68 Vodafone Greece 108 Chunghwa Taiwan 148 Globe The Philippines

69 Telecom Mobile New Zealand 109 Meditel Morocco 149 Telkomsel Indonesia

70 Turkcell Turkey 110 Celcom Malaysia 150 DTAC Thailand 71 Entel PCS Chile 111 HTIL Hong Kong 151 Claro Brazil 72 TDC Denmark 112 PTC Poland 152 Oi Brazil 73 Orange Poland 113 Vodafone Germany 153 Zain Nigeria 74 Proximus Belgium 114 Orange France 154 Vodafone The UK 75 T-Mobile The Netherlands 115 MTN Syria 155 Orange The UK 76 T-Mobile Austria 116 Telia Denmark 156 T-Mobile The UK 77 MTS Ukraine 117 MTN South Africa 157 Claro Chile 78 True Move Thailand 118 3 Italia 158 Movistar Mexico 79 Meteor Ireland 119 Pannon Hungary 159 Bell Mobility Canada 80 Telenor Pakistan 120 FeT Taiwan 160 KDDI Japan 81 Safaricom Kenya 121 KTF South Korea 161 Cell C South Africa 82 Vodafone Portugal 122 MTN Nigeria 162 O2 Germany 83 Base Belgium 123 BITE Lithuania 163 Sun The Philippines 84 Nedjma Algeria 124 Optus Australia 164 Vodafone Turkey 85 Wind Hellas Greece 125 Vodafone Hungary 165 MTN Afghanistan 86 Vodafone Czech Republic 126 Tele2 Sweden 166 PCCW Mobile Hong Kong 87 Telia Sonera Finland 127 Orange Austria 167 E-Plus Germany 88 Movistar Argentina 128 Taiwan Mobile 168 Rogers Canada

89 TCI Iran 129 CSL New World Mobility Hong Kong 169 LG Telecom South Korea

90 Maroc Telecom Morocco 130 Netcom Norway 170 3 Sweden




Rank

MNO

Rank

MNO

Rank

MNO

171 Tigo Colombia 183 SmarTone Hong Kong 195 Reliance Communication India

172 Sprint The US 184 Zain Kenya 196 Vodafone India 173 Telenor Sweden 185 Tele2 Russia 197 Iusacell Mexico

174 GrameenPhone Bangladesh 186 Excelcomindo Indonesia 198 Sibir Telecom Russia

175 Mobilink Pakistan 187 T-Mobile The US 199 Hutch Thailand 176 3 Austria 188 Vodacom DR Congo 200 Idea Cellular India 177 Telus Mobility Canada 189 China Unicom 201 Nextel Peru 178 Bouygues France 190 Banglalink Bangladesh 202 Nextel Argentina 179 Vodafone Australia 191 Brasil Telecom 203 Tigo DR Congo 180 Zain Sudan 192 Bharti Airtel India 204 Nextel Brazil 181 MTN Sudan 193 Celtel DR Congo 182 SoftBank Japan 194 Beeline Ukraine


Figure 71: Top 3 MNOs Worldwide – Significance of the MNO (2008)


Mobily Saudi

Arabia

du The UAE

Movistar

Venezuela

1

2 3



MNO Strategies

du The UAE

Ownership: UAE Federal Government (40 percent), Mubadala Development Company (20 percent), TECOM Investments (20 percent) and public shareholders (20 percent)

Launched: 2006




UAE Mobile Penetration: 214.2 percent (31st December 2008)


Market Environment – The UAE: • Population – 4.6 million; population in 10-74 year age-group – 3.9 million (31st

Decmber 2008) • Mobile market comprises of two operators – Etisalat and du • Wireless market with highest penetration worldwide • Etisalat’s monopoly broken by du

Astronomical Mobile Penetration This astronomical mobile penetration figure (214.2 percent) could possibly be skewed by a massive and fluctuating level of migrant workers who enter the UAE and – while recorded in prepaid penetration figures (when they purchase a SIM) – are not necessarily included in the population statistics. Data retrieval from the UAE is one of the markets that prove notoriously difficult and, in the absence of knowing how long a SIM card is considered to be active for; we have used official population and subscriber figures at face value to arrive at our conclusions. Please be aware of these factors when studying this report. du’s Strategies du is one of two leading telecom players in the UAE. The brand ‘du’ was unveiled by Emirates Integrated Telecommunications Company (ETIC), the UAE’s second largest telecom provider, in February 2006. The company launched wireless services across the UAE at the start of February 2007, and ever since has witnessed a rapid surge in its subscriber numbers – surpassing almost 1.5 million users by end-2007 (after just ten months of operations). The launch of the brand has been aided by the UAE’s favourable demographic factors which comprise a large chunk of the target population. Also, the market is a huge attraction for immigrants. It is estimated that The UAE population will reach 5.7 million by 2015.34

34 Source:

The following figure shows the demographic break-out of The UAE market.

http://www.census.gov/ipc/www/idb/country/aeportal.html#DI

du has witnessed a rapid surge in its subscriber numbers adding nearly a million subscribers in 2008.

http://www.census.gov/ipc/www/idb/country/aeportal.html#DI�



The figure below highlights the factors behind du’s success.

Figure 73: du’s Key Success Factors Summarized Worldwide


Strategic Launch Time When the du brand was launched by ETIC in the beginning of 2006, the national economy was witnessing a boom. The UAE market was also in the process of establishing itself as an international hub for commerce, tourism, services, etc. Furthermore, consumer demands

Figure 72: Demographic Break-out – The UAE Worldwide (End-2008)

Source: CIA – The World Factbook

14.9%

84.9%

0.2%

0-9 years 10-74 years 75 and over

du’s Success Strategy

Strategic Launch Time

Range of Services Offered

Accessibility and

Usability

Pricing Strategic

Marketing

First Mover Advantage



and ambitions were rising owing to the growth of the young population in this market. All these factors helped to create a favourable environment for the uptake of du’s services. First Mover Advantage du has been the pioneer in introducing various services in to the UAE’s wireless market. Such regional firsts include Pay by the Second, International Video Calling, Mobile TV, Mobile Payments, and Mobile portal – ‘MyWorld’. It was also first to launch the Number Booking service, which facilitated the entire process of getting a preferred number without going through the hassle of queuing up in the shops.

Figure 74: du’s First-time Products in The UAE Market


Accessibility and Usability du’s self-care service includes useful features that enhance the usability for its customers. Through this service, users have the choice of selecting the products and services as it suits, and have control over their monthly and Pay as You Go plans. Besides helping subscribers keep track of their monthly plan bills and total recharge per month, the self-care service also allows them to register for mobile payments, activate as well as set their Me&Mine numbers, and buy SMS and data bundles, etc. The operator has also ventured into partnerships with big retailers in the UAE to increase its distribution network and enhance the overall accessibility for the subscribers. du has been extensively working with various Government departments to increase the coverage area, as a measure to address the concern of network coverage faced by all players in The UAE. Strategic Marketing du’s marketing strategy focussed on a lot of initiatives in order to gain a strong foothold in a saturated market where playing only on price differentiation would be ineffective. The operator took the following initiatives in this direction: • Number Booking campaign: Before the launch of its wireless services, du’s promotional

strategy included the launch of its Number Booking campaign in November 2006. This campaign focused on the importance of mobile numbers for users. It gave subscribers the choice of switching to a new operator without changing their existing number. During

du has ventured into partnerships with big retailers in the UAE to increase its distribution network.

du’s First Time

Products

Pay by the Second

International Video Calling

Mobile Portal – My World

Mobile Payments

Mobile TV



this campaign, users received a passcode for mobile handsets and du line (with the existing number) from any du authorized dealer. The cost of retaining the same number with prefix-055 was nearly USD 27 (AED 100).35

• As a part of its promotional strategy, du came up with exciting introductory offers. The operator provided a SIM for USD 15 (AED 55) loaded with USD 14.7 (AED 54) worth of talk time – which meant that it effectively cost only a nominal USD 0.3 (AED 1) to the subscriber.

36

• Me & Mine product: To target specific market segments, du came up with the Me & Mine product. Keeping in mind that the UAE is host to a large immigrant population, this offer allowed subscribers a 10 percent discount on two selected international numbers, without any annual fee.

• Free incoming calls during Haj: With the Haj pilgrimage being one of the most important and special moments in the life of Muslims, du provided the facility of free unlimited incoming calls to all its subscribers (postpaid and prepaid) roaming in Saudi Arabia between 27 November – 20 December 2008. This free facility required no additional registration or subscription charge.

• Other promotional campaigns: This included a joint promotion with Barclaycard wherein the operator offers a free SIM card and a fixed credit to a new credit card applicant.

Figure 75: du’s Strategic Marketing Initiatives


35 Source: http://www.du.ae/en/about/press-releases/du-launches-retain-your-numbere2809d-campaign.html 36 Source: http://www.almalcapital.com/files/news_pdf/Initial%20Telecoms%20Sector.pdf

du’s Marketing

Strategy

Joint Promotions

(e.g. Barclays)

Number Booking

Campaign

Me & Mine

Product

Free Incoming

Calls during Haj

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Pricing du has never focused on price differentiation as it could be easily replicated by the incumbent player (Etisalat) and would eventually lead to margin losses for both. However, the tactic to introduce “Thank You” among pre-registrants seems to have paid off for the operator. The highly lucrative subscriber offer, designed to compel them to switch operators, includes the following: • The postpaid monthly subscription charges are waived for three years and it does not

include any service bundle • The prepaid subscribers need not pay any yearly subscription for two years • Subscribers are imparted with free credit equivalent to their connection fee Range of Services Offered Owing to the technological advancements worldwide and the uptake of these technologies by various age groups, du has also initiated the following services for the UAE market: • du partnered with Nokia Intellisync to provide a wireless e-mail platform, which is

compatible with various devices and offers advanced functionality. Also, it will help in providing solutions to a range of sectors from consumer to SME to large corporations.

• Owing to the proliferation and rapid uptake of its video conferencing over IP service (Telepresence), du is also planning to launch the next-generation video conferencing facilities for its business users. The operator plans to run this service in partnership with application provider MASERGY and Interoute (a European telecom carrier). This service will enable business users to have virtual meetings and overcome the cost of travel.

The following table lists the key factors that have led to the operator’s success:

Factors Identified du The UAE

Strategic launch time

First mover advantage

Accessibility

Strategic marketing

Pricing

Range of services

du partnered with Nokia Intellisync to provide a wireless e-mail product and solutions to enterprise segment.



Movistar Venezuela

Ownership: Owned by Telefónica Móviles

Launched: 1991



Venezuela Mobile Penetration: 108.7 percent (31st December 2008)


Technology: CDMA2000 1x, EV-DO, GSM and WCDMA (HSDPA)

Market Environment – Venezuela:

• Population – 26.4 million; population in 10-74 year age-group – 20.5 million (31st Decmber 2008)

• Boasts one of the highest mobile penetrations in Latin America. Country’s ratio of mobile handsets to fixed line is nearly 4.5:1 (September 2008).37

• Strong growth in subscriber numbers despite the country’s penetration surpassing the 100 percent mark.

• CDMA remains the leading technology, though MNOs are turning to GSM • Initial dominance of prepaid service in the country; however, focus is gradually

shifting towards postpaid.

37 Source: http://www.budde.com.au/Research/Venezuela-Telecoms-Mobile-Broadband-and-Forecasts.html

Figure 76: MNOs’ Subscriber Base – Venezuela (In Million, End-2008)


4.7

10.611.9

0

2

4

6

8

10

12

14

Digitel Movistar Movilnet

Sub

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er B

ase

(In M

illio

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Movistar Venezuela’s Strategies

Movistar, formerly Telcel Bellsouth, is the second largest mobile operator in Venezuela after Movilnet. Both Movistar and Movilnet have strong subscriber bases (in excess of 10 million); however, owing to the entry of Digitel, the market has been subject to further competition, and the market share of the new player has reached a substantial twenty percent within two years of its launch. The market share of the mobile operators in Venezuela during 2007-2008 is depicted in the figure below:

Figure 77: Movistar’s Success Strategies


Movistar Success Strategies

Technology First Mover

Promotional Offers

Focus on Network Coverage



Figure 78: MNOs’ Market Share – Venezuela (2007 & 2008)38


With the entry of Digitel, the competition has intensified and this has led to a reduction in Movistar’s market share, it has been able to increase its subscriber base by nearly 12 percent in the year 2008 over the corresponding 2007 figure owing to the following strategies.

• Technology First Mover: Movistar offered better technology to overcome the rising challenge faced by the new entrant as well as to sustain the competition provided by leading player, Movilnet. The steps taken by the operator to tap the high-end of the market include:

• Switch to GSM: Venezuela is one of the few countries in the Latin American region with CDMA as the leading technology. However, operators are now switching to GSM, with Movistar being the first. The operator deployed its GSM network in December 2006 in some specific areas; however, the widespread commercial coverage eventually took place at the beginning of 2007. The leading operator Movilnet launched its GSM network in May 2008. This helped the MNO to increase its subscriber base during the interim.

• 3G/3.5G/HSDPA Uptake: The first 3G UMTS mobile service in the country was launched by Movistar in December 2008, giving it first mover

38 Please note: Figures may not add to 100 percent because of rounding-off errors.

39.6%

39.9%

20.4%

2007

36.9%

42.8%

20.3%

2008

Movistar Movilnet Digitel



advantage. The operator commenced services in the Greater Caracas, region offering speeds up to 1Mbps over a 3.5G network, and then gradually expanded services to the central and western regions.

• Focus on Network Coverage: Movistar is making huge network investments in order to expand its capacity and enhance its overall coverage.

• The MNO made an investment worth USD 10 million in the initial three months of 2008, in order to deploy 40 GSM radio base stations in Venezuela, mainly to boost remote coverage. 39

• Movistar Venezuela also extended its fibre-optic network, with an additional 365 km of cable linking various cities, to provide better mobile and fixed line services. Another 1,000 UMTS base stations are expected to be deployed in the country.

Further, the operator deployed 11 GSM cells in west Venezuela and installed an additional 45 to enhance coverage.

In the first phase of 3.5G deployment, the operator made an investment worth USD 25.6 million (VEF 55). An additional amount worth approximately USD 105 million (VEF 225 million) is expected to be spent in order to have nationwide coverage.40

• Promotional Offers: The operator is trying to win subscribers through its promotional offers/differentiated offerings.

• Advantage for Prepay Telpago subscribers: The MNO has introduced a promotional offer wherein the subscribers can avail a bonus worth 300, 650 or 1,000 free seconds on recharge of USD 9.3, 18.6, and 27.9 (VEF 20, VEF 40, and VEF 60) respectively. In the case of online recharging, the user bonus doubles.41

• Anniversary month offer: In order to celebrate the Movistar brand, the operator came up with a lucrative offer wherein subscribers on purchasing specific handsets enjoyed the benefit of 500 SMS, 2,000 seconds (voice call), 7 MB Internet traffic, etc. The promotional offer was available during March-April 2009.

42

• With the launch of 3.5G services, the operator intends to expand its portfolio of value added services.

The following table lists the key factors that led to the proliferation of the operator:

Factors Identified Movistar Venezuela

Technology first mover

Focus on network coverage

Promotional offers

39 Source: http://marketmettle.com/knowtelefonica/31-telefonicawatch-issue-200803 40 Source: http://www.telegeography.com/cu/article.php?article_id=26491 41 Source: http://wirelessfederation.com/news/14944-movistar-launches-promotional-offer-for-telpago-subscribers-venezuela/ 42 Source: http://wirelessfederation.com/news/14880-movistar-celebrates-anniversary-month-launches-promotion-venezuela/

The first 3G UMTS mobile service in the country was launched by Movistar in December 2008, giving it first mover advantage.

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Ownership: Public Investors (40 percent), Institutional Investors (33 percent) and Etisalat (27 percent)

Launched: 2005



Saudi Arabia Mobile Penetration: 139.6 percent


Technology/coverage: GSM and WCDMA (HSPA)

Mobily Saudi Arabia

Market Environment – Saudi Arabia:

• Population – 28.1 million; population in 10-74 year age-group – 20.3 million (31st Decmber 2008)

• Strong growth in subscriber numbers • 3.5G networks operational in the country • Third national GSM player joined STC and Mobily in August 2008

Mobily’s Strategies Mobily, the trading name of Etihad Etisalat Company, is the second largest operator in Saudi Arabia and started operations in May 2005. Services offered by Mobily fall under two headings, namely Personal and Business. The Personal division caters to the needs of subscribers by offering prepaid and postpaid plans, 3.5G solutions, messaging, and data solutions, to name a few. While the Business division targets corporate clients with its BlackBerry, bulk SMS and Mobily connect business services. Mobily broke Saudi Telecom’s wireless monopoly by winning the Kingdom’s second GSM license. The operator has been able to secure a market share of 41 percent (by end 2008) within four years of launch.



Figure 79: MNOs’ Market Share – Saudi Arabia (2007 & 2008)


40.0%

60.0%

2007

41.2%

52.8%

6.0%

2008

Mobily STC Zain



The figure below shows the key success factors for Mobily Saudi Arabia.

Figure 80: Mobily’s Success Factors


First Mover Mobily has been the pioneer in many new services in Saudi Arabia, including: • Value added services: Value added services offered by the company include MMS,

location based services (LBS), and international roaming for prepaid SIM cards along with GPRS and GPRS EDGE roaming. It also introduced a ‘call me’ service, which allows disconnected connections to send free SMS.

• Mobily Business and BlackBerry Service: A business brand concept was first introduced by Mobily in the Saudi market. The operator came up with ‘Mobily Business’, which is targeted at the corporate sector, and is completely different from the MNO’s consumer offering. This also led to the introduction of BlackBerry services for the first time in Saudi Arabia – offered by Mobily in partnership with Research in Motion (RIM) and Emitac Mobile Solutions (EMS). The operator also introduced attractive price plans targeted at corporate clientele, which helped it to add big names such as Saudi Arabian Agricultural Bank (SABB), Samba Financial Group, and Saudi Pepsi Cola to its client list.

• High End Services: With the introduction of its 3.5G network in June 2006, the operator enjoyed the first mover advantage of offering 3G services. As a result, the Saudi market was host to services such as video calling, multiplayer gaming, mobile TV, etc. By end- 2007, Mobily had a 3G subscriber base of 3 million which increased to 4.5 million by end-2008. Recently, it has upgraded its network to 3.75G status.

Mobily Saudi Arabia came up with ‘Mobily Business’ targeting the corporate sector.

Mobily’s Success Factors

First Mover

Key Partnership

Pricing



Figure 81: Mobily’s First Time Services


Key Partnership Etisalat has strategically used the direct and indirect sales channels to establish its brand (Mobily) in the Saudi market. This also aided Mobily to achieve its sales and revenue targets in 2006. Currently, Mobily’s revenues are primarily generated from voice. However, with the subscriber focus increasing towards data services, the company is trying to capitalise on this segment. For instance, Mobily ventured into a partnership with Bayanat Al-Oula – a leading Data service provider in Saudi Arabia – for approximately USD 400 million in September 2007. This collaboration helped Mobily increase its subscriber numbers via high quality data communication services. Bayanat Al-Oula became a subsidiary of Mobily Saudi Arabia following an acquisition in March 2008.43

Figure 82: Subscriber Base – Mobily (In Million, 2006-2008)


43 Source: https://www.zawya.com/story.cfm/sidZAWYA20080318075716/SAR%201.5b%20Mobily%20acquisition%20of%20Bayanat%20approved

6.0

11.0

14.8

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2

4

6

8

10

12

14

16

2006 2007 2008

Sub

scrib

er B

ase

(In M

illio

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Year

Mobily’s First Time Services

Value Added

Services

Mobily Business and

BlackBerry Service

3.5G Network

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Pricing Mobily has tried to play on the pricing aspect in order to create a strong foothold in the market and gain a substantial market share. As a measure to diminish the effect of churn and also to ramp up its market share against the entry of Zain, the operator introduced lucrative offers including free WiMAX installation and modems, cheap call rates, and also established a roaming alliance with Etisalat in the UAE and Egypt. Also mindful of the importance that the Haj pilgrimage holds in the life of Muslims, Mobily offered a special range of initiatives including: • The Rihal prepaid package introduced by the operator during the Haj period, came at an

attractive price of USD 13.3 (SAR 50), providing credit worth USD 13.3 (SAR 50). Also, subscribers were afforded the flexibility of calling a particular country at reduced prices, just by sending the country’s dialling code to 1100 via an SMS.44

• Free high speed Internet connectivity through Wi-Fi was offered to Haj pilgrims.

• National and International call rates were heavily subsided for one month, with call provision for as low as USD 0.03 to desired numbers.

• Prepaid subscribers were entitled to up to 70 percent free credit on top-ups of amounts greater than USD 16 (SAR 60) for two weeks.45

In order to make a mark in the Mobile TV segment, Mobily came up with an ‘unlimited’ package for mobile television. This initiative came after the success of its flat rate unlimited mobile Internet package. The following table summarizes the key factors attributable to the success of the operator:

Factors Identified Mobily Saudi Arabia

First mover Key partnership

Pricing

44 Source: http://www.mobily.com.sa/portalu/wps/wcm/connect/EE/home/About+EE/Company+news/en/News071 45 Source: http://comm.ae/2009/01/11/price-wars-in-the-kingdom/

Mobily came up with an ‘unlimited’ package for mobile television to push mobile video services.

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Chapter 8 Performance Measurement 7 – Successful Growth of Revenue from Data Services



Performance Measurement 7 – Successful Growth of Revenue from Data Services Telecom markets worldwide are experiencing a decline in ARPU. The decline can be attributed to a number of factors. In emerging markets, this is primarily owing to a large portion of subscriber additions coming from low-income groups; low consumer awareness about value added services and low affordability of service-capable handsets. In developed markets, there has been a decline in service pricing due to increasing competition and voice services have a reached a point of saturation in terms of revenue generation. This has resulted in reduction in contribution of voice revenue to the total revenue. The decline in voice revenue as a percentage of service revenue worldwide is depicted in the figure below.

With increasing pressure on voice services, operators are looking for ways to increase non-voice ARPU. Efforts have been made by operators in developed as well as emerging markets to find products and services which can enable them to stem the decline in ARPU. The operators in developed markets have leveraged high-speed networks to provide multimedia services; whereas in low-ARPU markets – understanding the constraints of the availability of high-end handsets – MNOs have focused on innovating with service offerings and are providing text-based data services and ring-back tones. The importance of data services in increasing ARPU makes it imperative to track the popularity of data services among the subscriber base of an MNO and to study key success strategies. Formula and Rationale


Figure 83: Voice Revenue as a Percentage of Service Revenue – Worldwide (In Percent, 2004-2013F)


F – Forecasted

87.2 85.683.9

81.178.8

76.474.0

71.769.5

67.3

40

60

80

100

2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F 2013F

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Data Revenue as a Percentage of Total Revenue * Market Share Mobile Penetration of the Country

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The success of MNOs in implementing data services may be evident by observing the share of data revenues in total revenues. However, the selection of data revenue as a percentage of total revenues will not fairly reward the vision and innovation shown by an MNO in implementing data services successfully in markets where overall penetration is low. The penetration factor is relevant because it is easy for MNOs to popularise data services in markets with high mobile penetration. This enables these services to reach a critical mass of subscribers necessary to build a profitable business model. The advantage can be due to a combination of factors, such as the availability of data service capable handsets with the subscribers and an increase in consumer demand for data services with maturing of markets. However, for operators to launch in markets with low mobile penetration they have to be more innovative with the data services, as high-end data services generally do not gain much traction in these markets. Therefore, most successful data services employed by MNOs in markets with low penetration have been customised according to market needs – be it SMS-based mobile banking and remittance transfer services in The Philippines and Kenya, location-based services in South Africa, or ring-back tones in many African markets. Rankings


Figure 84: Top 20 MNOs Worldwide – Data Revenue Measure (2008)46




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obile

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6

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8

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Successful data services employed by MNOs in markets with low penetration have been customised according to market needs.

Rank 11 to 20

Rank 1 to 10



Table 28: MNOs Worldwide Ranked 1 to 20 – Data Revenue Measure (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Smart The Philippines 10.00 11 GrameenPhone Bangladesh 7.01

2 Telkomsel Indonesia 8.60 12 SK Telecom South Korea 6.91 3 NTT DOCOMO Japan 8.46 13 KDDI Japan 6.80

4 Globe The Philippines 8.23 14 Telecom Mobile New Zealand 6.65

5 China Mobile 8.16 15 Vodafone New Zealand 6.61 6 Safaricom Kenya 7.99 16 Orange France 6.54 7 MTN Syria 7.34 17 Claro Peru 6.53 8 Telefonica Peru 7.21 18 Swisscom Switzerland 6.51 9 Telenor Norway 7.09 19 Vodafone Ireland 6.49

10 Telcel Mexico 7.07 20 SingTel Singapore 6.48


Rank

MNO

Score

Rank

MNO

Score

21 Mobilkom Austria 6.45 36 MobiNil Egypt 6.19 22 Telstra Australia 6.44 37 Excelcomindo Indonesia 6.17 23 Proximus Belgium 6.43 38 Movistar Venezuela 6.16 24 Zain Iraq 6.42 39 Rogers Canada 6.11 25 Vodafone Egypt 6.38 40 Netcom Norway 6.10 26 Maroc Telecom Morocco 6.37 41 Optus Australia 6.09 27 KPN The Netherlands 6.36 42 mt:s Serbia 6.08 28 TCI Iran 6.35 43 Orange Slovakia 6.06 29 Movilnet Venezuela 6.35 44 T-Mobile Croatia 6.05 30 MTS Belarus 6.32 45 Banglalink Bangladesh 6.04 31 Turkcell Turkey 6.30 46 AT&T The US 5.99 32 SoftBank Japan 6.28 47 Telia Sonera Sweden 5.97 33 Comcel Colombia 6.22 48 Velcom Belarus 5.97 34 TDC Denmark 6.22 49 T-Mobile Slovakia 5.96 35 Maxis Malaysia 6.21 50 KTF South Korea 5.95




Rank

MNO

Rank

MNO

Rank

MNO

51 Etisalat The UAE 91 MTN Iran 131 Orange The UK 52 T-Mobile Hungary 92 Omnitel Lithuania 132 FeT Taiwan 53 Verizon The US 93 Digitel Venezuela 133 Telenor Serbia 54 Asiacell Iraq 94 Vodafone Portugal 134 M1 Singapore

55 Telecom Italia 95 Vodafone The Netherlands 135 DNA Finland

56 T-Mobile Czech Republic 96 Zain Sudan 136 Entel PCS Chile 57 SFR France 97 Celtel DR Congo 137 Vodafone Turkey 58 O2 Czech Republic 98 Vodacom DR Congo 138 T-Mobile The UK 59 Telus Mobility Canada 99 MTN Afghanistan 139 Zain Kenya 60 Vodafone Germany 100 Bharti Airtel India 140 Pelephone Israel 61 Vodacom South Africa 101 MTN Sudan 141 Vivo Brazil 62 O2 The UK 102 Vodafone India 142 Mobilink Pakistan 63 O2 Ireland 103 Telia Denmark 143 Etisalat Misr Egypt 64 China Unicom 104 AIS Thailand 144 MTS Ukraine 65 Orange Poland 105 DiGi Malaysia 145 T-Mobile Montenegro 66 Movistar Spain 106 Vodafone Italy 146 Movistar Colombia

67 Telia Sonera Finland 107 CSL New World Mobility Hong Kong 147 Meditel Morocco

68 Djezzy Algeria 108 Tele2 Lithuania 148 Meteor Ireland

69 Tunicell Tunisia 109 Telecom Personal Argentina 149 DTAC Thailand

70 Tunisiana Tunisia 110 Tigo DR Congo 150 Taiwan Mobile

71 VIPnet Croatia 111 Reliance Communication India 151 Vodafone Romania

72 Elisa Finland 112 Tele2 Sweden 152 E-Plus Germany 73 Polkomtel Poland 113 MTN South Africa 153 Orange Switzerland 74 T-Mobile Austria 114 Chunghwa Taiwan 154 Vodafone Czech Republic 75 Bell Mobility Canada 115 Kyivstar Ukraine 155 Telenor Sweden 76 Mobiltel Bulgaria 116 Globul Bulgaria 156 O2 Germany 77 T-Mobile Germany 117 Movistar Mexico 157 Promonte Montenegro 78 Pannon Hungary 118 Movistar Chile 158 Optimus Portugal 79 Mobistar Belgium 119 Vodafone Spain 159 Vodafone Hungary 80 TMN Portugal 120 Cellcom Israel 160 BITE Lithuania 81 Zain Jordan 121 Mobily Saudi Arabia 161 MTN Nigeria 82 Celcom Malaysia 122 Starhub Singapore 162 Claro Brazil 83 Claro Argentina 123 Sprint The US 163 Avea Turkey 84 Orange Austria 124 MTS Russia 164 T-Mobile The US 85 PTC Poland 125 Base Belgium 165 Telenor Pakistan 86 Movistar Argentina 126 HTIL Hong Kong 166 Bouygues France 87 T-Mobile The Netherlands 127 Sunrise Switzerland 167 VimpelCom Russia 88 Vodafone The UK 128 Vodafone Australia 168 Orange Spain 89 Sonofon Denmark 129 Idea Cellular India 169 TIM Brasil

90 Sun The Philippines 130 Partner Communications Israel 170 MegaFon Russia




Rank

MNO

Rank

MNO

Rank

MNO

171 Cosmote Greece 183 Tele2 Croatia 195 VIP Serbia 172 Wind Italy 184 LG Telecom South Korea 196 3 Sweden 173 True Move Thailand 185 Cell C South Africa 197 Nextel Peru 174 3 Italia 186 3 Austria 198 Tele2 Russia 175 Zain Nigeria 187 Vodafone Greece 199 Beeline Ukraine 176 SmarTone Hong Kong 188 Vivatel Bulgaria 200 Brasil Telecom 177 life:) Ukraine 189 Wind Hellas Greece 201 Nextel Argentina 178 PCCW Mobile Hong Kong 190 Telefonica Slovakia 202 Sibir Telecom Russia 179 Globacom Nigeria 191 du The UAE 203 Hutch Thailand 180 Claro Chile 192 Iusacell Mexico 204 Nextel Brazil 181 Oi Brazil 193 Tigo Colombia 182 3 The UK 194 Nedjma Algeria


Figure 85: Top 3 MNOs Worldwide – Data Revenue Measure (2008)


Telkomsel Indonesia


NTT DOCOMO

Japan

1

2 3



MNO Strategies

Smart Communications The Philippines

Ownership: Philippine Long Distance Company (PLDT)

Launched: 1999




The Philippines Mobile Penetration: 71.2 percent (31st December 2008)


Market Environment – The Philippines:

• Dominated by the big two – Smart Communications and Globe Telecom • Known as the ‘SMS Capital of the World’ • Nearly 1 billion SMSs are exchanged daily in the country47

• SMS prices are extremely low, Sun Cellular offers free SMS

The figure below shows the subscriber base of the major MNOs in The Philippines.

Figure 86: MNOs’ Subscriber Base – The Philippines (In Million, End-2008)


Data revenue measure – Smart Communications: The figure below shows total revenues and the contribution of data services to the total revenues for Smart Communications during 2006-2008.

47 Source: http://www.zdnetasia.com/news/communications/0,39044192,62042583,00.htm

8.1

24.7

35.2

0

5

10

15

20

25

30

35

40

Sun Cellular Globe Telecom Smart Communications

Sub

scrib

er B

ase

(In M

illio

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Smart Communications’ Strategies Smart Communications is The Philippines’ largest mobile network operator with nearly 35.2 million subscribers by end-2008. The operator offers innovative services such as Smart Money, Smart Load and Smart Padala. Its GSM network covers more than 99 percent of the country’s population.48

• Launched in 1994 as a free service and remained free till the year 2000

The percentage contribution of data services to the total revenues for Smart Communications is one of the highest for MNOs worldwide. In 2008, revenue from data services formed approximately 55 percent of the total service revenue. This high percentage of data revenue is primarily because of the extraordinarily high use of text messaging in the country.

History of SMS in The Philippines

• The six year span of free service made subscribers SMS addicts • In 2001, PLDT and Globe introduced landline texting, extending the reach of the

service • The launch of innovative services such as Smart Cinema Club, which allowed

subscribers to get information about the latest movies, download logos and movie ringtones, further popularised the service among the masses

• The advent of text games in 2001 took the use of SMS to new heights; the country’s first text game “Text to Millions” was launched by Smart

• Corporate SMS was launched in 2003 • SMS has become a communication channel between the country’s citizens and

Government • SMS is used by all sections of the society from doctors to farmers

48 Source: http://smart.com.ph/corporate/about/company/AboutUs.htm

Figure 87: Data Revenue Measure – Smart Communications (2006-2008)


In 2008, Smart Communications’ revenue from data services formed approximately 55 percent of the total service revenue.

1.61.9

2.2

47.649.8 49.6

0

10

20

30

40

50

0

0.5

1

1.5

2

2006 2007 2008

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(In

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Astronomical amount of SMS generated The subscribers in the Philippines are simply crazy for text messaging services. In 2008, Smart subscribers alone sent approximately 250 billion SMS, a figure higher than the whole Latin American region.

Figure 88: SMS Volume – Smart Communications (In Billion, 2006-2008)


The operator has introduced various services and plans to further capitalize on the popularity of SMS. With such efforts in place, it managed to generate revenue of USD 1 billion from SMS services alone. The figure below compares the SMS revenue of the operator for the period 2006-2008.

Figure 89: SMS Revenue – Smart Communications (In USD Billion, 2006-2008)


The figure below depicts the contribution of SMS to the total data revenue generated by the MNO during the period 2006-2008.

238.4 227.0249.7

0

50

100

150

200

250

2006 2007 2008

SM

S V

olum

e (In

Bill

ion)

Year

0.7

0.91.0

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2006 2007 2008

SM

S R

even

ue

(In U

SD

Bill

ion)

Year



Figure 90: SMS Revenue as a Percentage of Data Revenue – Smart Communications (In Percent, 2006-2008)


Encouraging price plans for SMS SMS became popular in the country right from the outset. Initially the service was free which helped it to gain momentum in the local market. The popularity of the service grew to the extent that operators were forced to keep SMS prices well below the average price of voice calls. The figure below compares the voice to SMS price ratio for four different Asian operators. It could be easily deduced from the figure that due to high voice to SMS price ratio in The Philippines, SMS has become the preferred mode of communication over voice.

Figure 91: Voice Tariff-per-Minute to per-message SMS Cost Ratio of Asian MNOs (April 2009)


The table below highlights the importance of factors that have resulted in the MNO’s high level of data revenue generation.

Factors Identified Smart Communications The Philippines Excessive use of SMS

Encouraging SMS use

89.7 93.6 94.6

0

20

40

60

80

100

2006 2007 2008

SM

S R

even

ue a

s a

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cent

age

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ata

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enue

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)

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1.0 1.2

3.5

6.4

0

1

2

3

4

5

6

7

Bharti Airtel China Mobile DiGi Malaysia Smart Communications

Voi

ce to

SM

S R

atio

Operator



Telkomsel Indonesia

Ownership: Telkom Indonesia (65 percent) and SingTel (35 percent)

Launched: 1994




Indonesia Mobile Penetration: 57.5 percent (31st December 2008)


Market Environment – Indonesia:

• Dominated by the big three – Telkomsel, PT Satelindo and Excelcomindo • Competition has intensified in recent years leading to considerable reductions in the

price of services • Big SMS market in the region • 3.5G networks deployed in the country • Operators aggressively promoting their content services

The figure below shows the subscriber base of the major MNOs in Indonesia.

Figure 92: MNOs’ Subscriber Base – Indonesia (In Million, End-2008)


Data revenue measure – Telkomsel Indonesia: The figure below shows total revenues and the contribution of data services to the total revenues for Telkomsel Indonesia during 2006-2008.

4.5

26.0

36.5

65.3

0

10

20

30

40

50

60

70

HTIL Excelcomindo PT Satelindo Telkomsel

Sub

scrib

er B

ase

(In M

illio

n)

Operator



Telkomsel’s Strategies Telkomsel is Indonesia’s largest mobile network operator with approximately 65 million subscribers by end-2008. It offers its services worldwide with the help of 323 roaming partners across 170 countries.49

• High use of SMS services

It became the first operator in the country to offer 3G services in September 2006, and was also the first operator to launch rechargeable GSM prepaid services in Asia. The MNO offers a variety of data services and generates substantial annual data revenue. The high ratio of data revenue generated by its subscribers could be attributed to the following:

• Constant innovation and better services • Variety of services for the corporate sector

High use of SMS services In most of the major Asian mobile markets, SMS enjoys widespread popularity and Indonesia is no exception. In 2008, Telkomsel’s subscribers exchanged 78 billion SMS, up 58 percent on the corresponding 2007 figure. However, the gain in SMS volume was negated by a 39 percent decline in price per SMS in 2008 as compared to 2007. The operator managed to yield revenue of USD 0.9 billion for the year 2008.

49 Source: http://www.telkomsel.com/web/company_profile

Figure 93: Data Revenue Measure – Telkomsel Indonesia (2006-2008)


Telkomsel became the first operator in Indonesia to offer 3G services in September 2006, and was also the first operator to launch rechargeable GSM prepaid services in Asia.

3.24.0 4.0

27.4

31.3 31.7

0

20

40

0

1

2

3

4

5

2006 2007 2008

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(In

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cent

)

Tota

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enue

(In

US

D B

illion

)

Year


http://www.telkomsel.com/web/company_profile�



Figure 94: SMS Revenue – Telkomsel (In USD Billion, 2007 & 2008)


The figure below depicts SMS’ contribution to the operator’s data revenue.

Figure 95: SMS Revenue as a Percentage of Data Revenue – Telkomsel (In Percent, 2007 & 2008)


The operator offers various interesting packages and services which have further assisted in increasing the uptake of SMS in the country.

• In January 2009, Telkomsel launched “Free 300 SMS” for ‘Kartu As’ users. The subscribers, through a daily registering fee of USD 0.2 (IDR 2,000), could send 300 SMS to all Telkomsel numbers during 00.00-19.00 hours.

• In July 2008, it introduced the SMS Asik & Nelpon Sip promotion for Kartu As users, which offered an SMS package of USD 0.1 for 50 SMS per day.50

• In September 2007, it introduced video SMS services which enabled subscribers to send recorded video messages to other users.

For National Customer Day and the Moslem fasting month it offered free SMS for the period 5-26 September 2008 between midnight and six A.M. within its network.

• It introduced a service called SMS Me in September 2007, which enabled prepaid users with insufficient credit to send SMS to a recipient who was instead charged for the SMS.


1.00.9

0.6

0.8

1.0

2007 2008

SM

S R

even

ue

(In U

SD

Bill

ion)

Year

85.0 85.0

0

20

40

60

80

100

2007 2008

SM

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s a

Per

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age

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Rev

enue

(In

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)

Year



• In June 2007, the MNO launched a 100 free SMS promotion for Kartu As subscribers, which credited an account with 100 SMS credit if a user sent at least 100 SMS in a month.

• In May 2007, it launched the simPATI Pake Banyak Gratis Pake Banyak program which offered free bonuses for every six SMS sent by a subscriber during peak time.

Constant innovation and better services Apart from SMS, other content services especially ringback tones have kept Telkomsel among the front runners in the wireless data arena. The figure below highlights some of the outstanding services launched by the operator.

Figure 96: Telkomsel’s Initiatives in Mobile Content Market


Variety of services for the corporate sector The operator has targeted the enterprise segment with the following services:

• HALOhybrid: This service empowered organisations to regulate the mobile communication cost of their employees.

• Mobile Virtual Private Network: With the help of this service, enterprises were able to form a closed user network among its employees enabling them to communicate among themselves using short codes.

Other Services: Other services offered by the operator to the enterprise segment included push e-mail, sales force automation, corporate mobile messenger, Web2 SMS etc. The table below highlights the importance of factors that have led to the MNO’s high level of data revenue generation.

• The operator launched a platform which encouraged subscribers to create their own ringback tones.

• It enhanced this initiative and allowed other subscribers to download these ringback tones.

Ringback

Tones

Mobile

Payments

• In March 2009, Telkomsel and Citibank launched a new mobile banking service named Citi Mobile-Thin Client.

• In November 2007, it launched country’s first mobile wallet service named T-Cash.

Mobile Video

• In August 2008, it launched a 3G Traffic Monitoring service which allowed users to check traffic through 3G video call.

• In September 2007, it introduced Video Blogging services which enabled subscribers to record and share their videos.

Mobile E-mail

• In October 2008, it introduced BlackBerry Bold and the Sunset Red BlackBerry Curve 8320.

• In June 2007, the operator extended its push e-mail solutions to the non-enterprise segment with the launch of You’ve Got Mail service.

Other

Innovations

• In August 2007, the operator unveiled its mobile comic service called m-Komik.

• In March 2007, HALOhybrid postpaid cards were launched which possessed the capabilities of both postpaid as well as prepaid cards.



Factors Identified Telkomsel Indonesia High use of SMS

Focus on corporate sector

Innovative services



NTT DOCOMO Japan

Ownership: NTT Mobile Communications Network, Inc. and Public Investors

Launched: 1993




Japan Mobile Penetration: 82.3 percent (31st December 2008)

Technology: PDC and WCDMA (HSPA)

Market Environment – Japan:

• Dominated by the big three – NTT DOCOMO, KDDI and SoftBank • The most advanced wireless market worldwide • Largest 3G subscriber base worldwide • Mobile subscribers are well educated and aware about the technical know-how of

wireless services • Sole market where mobile e-mail has surpassed SMS • 4G networks in testing phase • Mobile number portability has been introduced

The figure below shows the subscriber base of the MNOs.

Figure 97: MNOs’ Subscriber Base – Japan (In Million, End-2008)


Data revenue measure – NTT DOCOMO Japan: The figure below shows total revenues and the contribution of data services to the total revenues for NTT DOCOMO during 2006-2008.

20.0

30.6

54.2

0

10

20

30

40

50

60

SoftBank KDDI NTT DOCOMO

Sub

scrib

er B

ase

(In M

illio

n)

Operator



NTT DOCOMO’s Strategies NTT DOCOMO is Japan’s largest MNO with nearly half of the country’s subscriber base using its network. The operator is known to set benchmarks with its innovations in the wireless arena. For DOCOMO, data ARPU forms a substantial constituent of mobile ARPU, and this could be attributed to the following reasons:

• Early start in advanced technologies and platforms • Development of services to meet diversifying subscriber needs • More focus on existing subscriber base utilisation than expansion • Efforts to make services more user friendly

Early start in advanced technologies and platforms NTT DOCOMO has always led worldwide operators in terms of technology innovations. In 1999, the operator launched the most popular mobile Internet platform, i-mode, and two years later introduced FOMA, the world’s first 3G commercial mobile service based on WCDMA. After seven years of 3G operations, the MNO has been able to develop the world’s largest 3G subscriber base. This helped the MNO to stabilise the use of mobile data services in the country and to generate higher data ARPU. The operator has already performed a test for the deployment of 4G networks in the near future.

Figure 98: Data Revenue Measure – NTT DOCOMO Japan (2006-2008)


41.0 41.4 43.9

29.233.2

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2006 2007 2008

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Figure 99: FOMA and i-mode Subscribers – NTT DOCOMO (In Million, End-2008)


Development of services to meet diversifying subscriber needs Mobile e-mail has always enjoyed a greater status in the Japanese market, however, of late several other mobile data services, such as video and music downloads, and mobile payments have achieved higher levels of subscriber interest. NTT has been well aware of these transitions and has come up with suitable services at appropriate times. Osaifu-Keitai, iD and DCMX services were launched by the operator to target the market of small cash payments in the country. By end-2008, it had over eight million DCMX members and more than ten million iD subscriptions.51


It also took steps to enhance the use of mobile music and mobile video services in the country. For instance, in May 2007, it introduced the Uta-hodai service which offered music downloads for a flat rate. Some of the other innovative services launched by the operator include the imadoco kantan search service which enables subscribers to search for contacts using GPS, and the Area Mail Disaster Information service which provides emergency warnings and disaster information issued by the Japan Meteorological Agency. More focus on existing subscriber base utilisation than expansion The operator primarily focused on subscriber base utilisation rather than expansion to bolster its position in the market. To open up more revenue avenues for its existing subscribers, it came up with new strategies and business models shown in the figure below.

47.5 48.2

0

10

20

30

40

50

FOMA i-mode

FOM

A a

nd i-

mod

e S

ubsc

riber

s (In

Mill

ion)

Platform

NTT DOCOMO focused on subscriber base utilisation rather than expansion to bolster its position in the market.



Figure 100: NTT DOCOMO’s Strategies


Efforts to make services more user-friendly The operator made constant efforts to bring its services closer to subscribers and easier to use. As of end-2008, it had installed approximately 400,000 iD payment terminals.52


In the year 2008, it added more variety in the Smartphone series to target the subscribers who prefer specific services over others. The figure below highlights the four new series and their target segments.

New Business

Model

• New discount services launched in August 2007 • Introduced to build long term relationships with

subscribers • By end-2008 over 30 million users availing services

• New handset sales model introduced in November 2007

• Allowed subscribers to pay handset cost in 12 or 24 installments

New Fields of Businesses

• Flat-rate subscription business allows users to avail data services for flat rates, eliminating pricing apprehensions

• 15.8 million users availed this plan by end-2008

• Life assistant business to churn revenue out of non-traffic fields such as credit business

• International business to target international travelers, enterprises and overseas business deployment



Figure 101: NTT DOCOMO’s Handset Series Launched in 2008


The table below highlights the importance of factors that have led to the MNO’s high level of data revenue generation.

Factors Identified NTT DOCOMO Japan Early start in advanced technologies

Variety of services offered

User friendly services

Subscriber base utilisation

docomo PRIME series for users who love multimedia services such as video, games etc.

docomo PRO series for subscribers who seek advanced digital tools

docomo SMART series for users who want to keep a balance between their personal and professional lives

docomo STYLE series for users who want to make a style statement with the latest looks and accessories



Chapter 9 Performance Measurement 8 – Measuring Subscriber Loyalty



Performance Measurement 8 – Measuring Subscriber Loyalty Churn is a measure of the number of subscribers who leave an operator or move to another operator’s network. In the face of intensifying competition and aggressive pricing strategies, MNOs face the threat of decreasing subscriber loyalty. Furthermore, with the introduction of Mobile Number Portability (MNP), the inhibiting factor of changing a mobile number – which deters subscribers from switching subscriptions – has been minimised. High churn rates are mostly prevalent in the prepaid segment, and operators are adopting various strategies to increase the loyalty of their prepaid subscriber base and are promoting postpaid plans to stem the churn rate. The adverse effects of a high churn rate for an MNO can be shrinking profit margins and an increase in the effective cost of subscriber acquisition. Therefore, the significance of churn rate for increasing the profitability of an MNO can not be overlooked. The figure below shows the top ten operators worldwide with the lowest churn rates, along with their EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margins during 2008. The EBITDA margins for seven out of ten of these operators are above 35 percent.


The formula used for the calculation of this performance measurement index is given below:

Figure 102: Top 10 MNOs Worldwide – Monthly Churn Rate and EBITDA Margin (In Percent, 2008)


0.7 0.8 0.8 0.9 1.0 1.0 1.0 1.1 1.2 1.2

36.0

27.4

39.843.1

36.739.0

26.429.0

39.837.1

05101520253035404550

0.0

0.4

0.8

1.2

1.6

2.0

NTT

DO

CO

MO

Jap

an

KD

DI J

apan

Sin

gTel

Sin

gapo

re

Chu

nghw

a Ta

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Sta

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re

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obile

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man

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k Ja

pan

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d

Rel

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e C

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atio

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dia

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Son

era

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A M

argi

n (In

Per

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)

Mon

thly

Chu

rn R

ate

(In P

erce

nt)

Operator

Monthly Churn EBITDA

Value = Churn + Net Additions in Target Segment of the Country (10-74 Years)



There are several countries which are experiencing a decline in the addressable population – taken as the 10-74 age-group population in this study. Therefore, the operators in these markets will be at an disadvantage if we use churn alone as a performance measurement. We have tried to counter this factor by adding net additions in the target segment of the market. This is intended to provide a level playing field to the MNOs operating in various markets by toning down the churn rate in the countries where addressable population is declining, and scale up the churn for operators operating in countries with positive growth in the target segment. Rankings


Figure 103: Top 20 MNOs Worldwide – Measuring Subscriber Loyalty (2008)53



53Please note: The scores were calculated to four decimal places with each MNO securing a distinct value. Due to rounding off to one decimal place, a few MNOs appear to secure the same score. For a full and detailed explanation of our calculations in this report please see the Methodology section.

NTT

DOCO

MO Ja

pan,

10.0

KDDI

Japa

n, 9.9

Chun

ghwa

Taiw

an, 9

.8

Sing

Tel S

ingap

ore,

9.8

SoftB

ank J

apan

, 9.8

T-Mo

bile G

erma

ny, 9

.8

Star

hub S

ingap

ore,

9.7

Elisa

Finl

and,

9.7

Telia

Son

era S

wede

n, 9.7

Tele2

Swe

den,

9.7

3Swe

den,

9.7

Telen

or S

wede

n, 9.7

Mobil

kom

Austr

ia, 9.

7

T-Mo

bile H

unga

ry, 9.

6

Voda

fone H

unga

ry, 9.

6

Pann

on H

unga

ry, 9.

6

Relia

nce I

ndia,

9.6

China

Mob

ile, 9

.6

Veriz

on T

he U

S, 9.

6

Base

Belg

ium, 9

.6

9.3

9.4

9.5

9.6

9.7

9.8

9.9

10.0

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10



Table 32: MNOs Worldwide Ranked 1 to 20 – Measuring Subscriber Loyalty (2008)

Rank

MNO

Score

Rank

MNO

Score

1 NTT DOCOMO Japan 10.00 11 3 Sweden 9.69 2 KDDI Japan 9.93 12 Telenor Sweden 9.69 3 Chunghwa Taiwan 9.85 13 Mobilkom Austria 9.68 4 SingTel Singapore 9.85 14 T-Mobile Hungary 9.64 5 SoftBank Japan 9.81 15 Vodafone Hungary 9.64 6 T-Mobile Germany 9.79 16 Pannon Hungary 9.64

7 Starhub Singapore 9.73 17 Reliance Communication India 9.61

8 Elisa Finland 9.73 18 China Mobile 9.61 9 Telia Sonera Sweden 9.69 19 Verizon The US 9.60

10 Tele2 Sweden 9.69 20 Base Belgium 9.60


Rank

MNO

Score

Rank

MNO

Score

21 O2 Czech Republic 9.57 36 Rogers Canada 9.53 22 T-Mobile Czech Republic 9.57 37 Orange Austria 9.52

23 Vodafone Czech Republic 9.57 38 T-Mobile Montenegro 9.51

24 China Unicom 9.57 39 T-Mobile Croatia 9.47 25 3 Austria 9.55 40 VIPnet Croatia 9.47 26 Globul Bulgaria 9.55 41 Tele2 Croatia 9.47

27 Mobiltel Bulgaria 9.55 42 Partner Communications Israel 9.45

28 Vivatel Bulgaria 9.55 43 Telus Mobility Canada 9.43 29 Nextel Brazil 9.55 44 Pelephone Israel 9.41 30 Telia Sonera Finland 9.55 45 Bell Mobility Canada 9.41 31 Swisscom Switzerland 9.54 46 SFR France 9.40 32 Sunrise Switzerland 9.54 47 Bouygues France 9.40

33 Orange Switzerland 9.54 48 Telecom Mobile New Zealand 9.40

34 Sonofon Denmark 9.54 49 Vodafone New Zealand 9.40 35 Proximus Belgium 9.54 50 MTS Belarus 9.39




Rank

MNO

Rank

MNO

Rank

MNO

51 Velcom Belarus 91 Orange The UK 131 Tunisiana Tunisia 52 M1 Singapore 92 Vodafone Australia 132 Tunicell Tunisia 53 Orange France 93 MTN Afghanistan 133 3 The UK 54 Cellcom Israel 94 Claro Argentina 134 Iusacell Mexico 55 AT&T The US 95 Polkomtel Poland 135 MTN Syria 56 Mobistar Belgium 96 Orange Poland 136 T-Mobile The US 57 Movistar Argentina 97 MegaFon Russia 137 3 Italia 58 Nextel Argentina 98 Tele2 Russia 138 Vodafone Romania 59 Orange Slovakia 99 Sibir Telecom Russia 139 Globacom Nigeria 60 T-Mobile Slovakia 100 Cosmote Greece 140 Promonte Montenegro 61 Telefonica Slovakia 101 Movistar Mexico 141 Meditel Morocco 62 T-Mobile Austria 102 Zain Nigeria 142 Maroc Telecom Morocco 63 Telstra Australia 103 KPN The Netherlands 143 PTC Poland 64 Taiwan Mobile 104 T-Mobile The Netherlands 144 Meteor Ireland

65 TMN Portugal 105 Vodafone The Netherlands 145 TIM Brasil

66 Optimus Portugal 106 MTS Ukraine 146 TCI Iran 67 Vodafone Portugal 107 Telenor Norway 147 Telenor Serbia 68 Movistar Spain 108 Netcom Norway 148 mt:s Serbia 69 Movistar Chile 109 Comcel Colombia 149 VIP Serbia 70 Entel PCS Chile 110 Movistar Colombia 150 Vodafone The UK 71 Vodafone Germany 111 Tigo Colombia 151 Telefonica Peru 72 E-Plus Germany 112 Telecom Italia 152 KTF South Korea 73 Nextel Peru 113 Wind Italy 153 du The UAE 74 O2 Germany 114 Wind Hellas Greece 154 Etisalat The UAE 75 Vodafone Spain 115 Oi Brazil 155 Vodafone Ireland 76 DNA Finland 116 O2 The UK 156 Etisalat Misr Egypt 77 MTN Sudan 117 Vivo Brazil 157 Vodafone Egypt 78 Avea Turkey 118 SK Telecom South Korea 158 MobiNil Egypt 79 Turkcell Turkey 119 VimpelCom Russia 159 Claro Peru 80 Vodafone Turkey 120 Sprint The US 160 Telcel Mexico

81 Telecom Personal Argentina 121 Claro Brazil 161 Djezzy Algeria

82 Optus Australia 122 Mobilink Pakistan 162 Nedjma Algeria 83 Banglalink Bangladesh 123 Telenor Pakistan 163 T-Mobile The UK

84 GrameenPhone Bangladesh 124 Mobily Saudi Arabia 164 Zain Jordan

85 MTS Russia 125 Movistar Venezuela 165 Asiacell Iraq 86 FeT Taiwan 126 Movilnet Venezuela 166 Zain Sudan 87 MTN Iran 127 Digitel Venezuela 167 Zain Iraq 88 Vodafone Italy 128 Omnitel Lithuania 168 Bharti Airtel India 89 Vodafone Greece 129 Tele2 Lithuania 169 Vodafone India 90 Orange Spain 130 O2 Ireland 170 LG Telecom South Korea




Rank

MNO

Rank

MNO

Rank

MNO

171 Telkomsel Indonesia 183 Idea Cellular India 195 DTAC Thailand 172 Excelcomindo Indonesia 184 Safaricom Kenya 196 True Move Thailand 173 Claro Chile 185 Zain Kenya 197 Hutch Thailand 174 MTN Nigeria 186 AIS Thailand 198 Globe The Philippines 175 BITE Lithuania 187 Smart The Philippines 199 Vodacom South Africa 176 HTIL Hong Kong 188 TDC Denmark 200 MTN South Africa

177 CSL New World Mobility Hong Kong 189 Telia Denmark 201 Cell C South Africa

178 PCCW Mobile Hong Kong 190 Maxis Malaysia 202 Vodacom DR Congo 179 SmarTone Hong Kong 191 Celcom Malaysia 203 Tigo DR Congo 180 life:) Ukraine 192 DiGi Malaysia 204 Celtel DR Congo 181 Kyivstar Ukraine 193 Sun The Philippines 182 Brasil Telecom 194 Beeline Ukraine


Figure 104: Top 3 MNOs Worldwide – Measuring Subscriber Loyalty (2008)


KDDI Japan

NTT DOCOMO

Japan

Chunghwa

Taiwan

1

2 3



MNO Strategies

KDDI Japan

Ownership: KDDI Corporation

Launched: 1994


Y-o-Y Subscriber Growth Rate for KDDI: 3.4 percent (2007 to 2008)

Y-o-Y Population Growth in 10-74 year age-group: (-)ve 0.4 percent (2007 to 2008)54

Market Environment – Japan:


Japan Mobile Penetration: 82.3 percent (31st December 2008)

Technology: CDMA and CDMA2000

• Dominated by the big three – NTT DOCOMO, KDDI and SoftBank • The most advanced wireless market worldwide • Highest 3G subscribers worldwide • Predominantly postpaid market • High level of subscriber loyalty high with low churn • Higher switching cost – another reason for low churn • Mobile number portability introduced in October 2006

The figure below shows the subscriber base of the major MNOs in Japan.

Figure 105: MNOs’ Subscriber Base – Japan (In Million, End-2008)


KDDI’s Strategies KDDI is Japan’s second largest mobile network operator after NTT DOCOMO, and operates over CDMA networks. The MNO is rated very high on the subscriber satisfaction front and this has helped it to lower its churn rate. Other reasons responsible for low churn are:

• High percentage of postpaid subscribers • Total Customer Satisfaction policy • Discount plans and other retention measures

54 Please note: There is a negative growth.

20.0

30.6

54.2

0

10

20

30

40

50

60

SoftBank KDDI NTT DOCOMO

Sub

scrib

er B

ase

(In M

illio

n)

Operator



High percentage of postpaid subscribers Japan is predominantly a postpaid market which has kept the churn rates of the MNOs comparatively lower than other Asian markets. KDDI has increased its postpaid subscriber base over the years in order to further reduce its churn and improve ARPU. The figure below compares the churn and postpaid subscribers percentage of three Japanese operators.

Figure 106: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base – Japan (In Percent, 2008)


The figure above shows the relation between churn and penetration of postpaid subscribers. The same relation has been observed between KDDI’s postpaid subscriber base and its churn. This is highlighted in the figure below.

Figure 107: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base – KDDI (In Percent, Q1 2008 – Q4 2008)


As a result of the increase in percentage of postpaid subscribers, KDDI has been able to achieve reduced churn rates which is clearly evident from the above figure.

0.7 0.81.0

99.9 98.592.0

0

25

50

75

100

0

0.2

0.4

0.6

0.8

1

1.2

NTT DOCOMO KDDI SoftBank

Pos

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e (In

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Operator

Monthly Churn Postpaid Percentage

0.90 0.870.75 0.65

97.9 98.3 98.4 98.5

0

25

50

75

100

00.10.20.30.40.50.60.70.80.9

1

Q1 2008 Q2 2008 Q3 2008 Q4 2008

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rn(In

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Quarter




Subscriber Satisfaction policy KDDI introduced this policy in March 2003 to perform better on the subscriber satisfaction front. The operator assesses its subscribers’ feedback and requests gathered through its service centres, support centres and surveys to improve quality of service and develop new products to suit subscribers’ needs. The figure below describes this policy.

Figure 108: KDDI’s Total Customer Satisfaction Policy


Discount plans and other retention measures Mobile number portability (MNP) was introduced in October 2006 in Japan which made MNOs apprehensive about losing market share to competitors. This forced them to come up with interesting services and retention plans to keep their customer base intact. The figure below briefly outlines some of KDDI’s retention strategies.

Total Customer Satisfaction Policy

Working with users to create better services

KDDI seeks subscribers’ help to develop better services and operations

Realisation of satisfaction

KDDI takes all feedback and opinions of subscribers seriously in order to realize a level of satisfaction for the subscribers

Subscriber orientated thinking and action

KDDI tries to assess things from the subscribers’ perspective to offer better quality of service

Subscriber evaluation

KDDI takes users’ criticism positively and considers it an opportunity to improve their experience

Subscriber

trust

KDDI believes in developing an honest relationship with its subscribers

Building and repaying subscriber satisfaction

KDDI believes in increasing its profits by building subscriber satisfaction and reward them with more benefits

Recognition of excellence

KDDI wants its employees to help subscribers in their decisions and actions



Figure 109: KDDI’s Retention Measures


The table below highlights the importance of factors which have resulted in low churn for the operator.

Factors Identified KDDI Japan

High percentage of postpaid subscribers

Discount plans and retention measures

Total Customer Satisfaction policy

Discount Plans

• Launched plans such as Everybody discount and Family discount

• Introduced flat rate plans for data usage

New Services and Handsets

• Improved its music, mobile TV and other entertainment services e.g. LISMO Audio Device Link service

• Handsets launched to suit the lifestyles of subscribers



SingTel Singapore

Ownership: Singapore Telecom

Launched: 1993


Y-o-Y Subscriber Growth Rate for SingTel: 26.4 percent (2007 to 2008)

Y-o-Y Population Growth in 10-74 year age-group: 1.3 percent (2007 to 2008)


Singapore Mobile Penetration: 136.7 percent (31st December 2008)


Market Environment – Singapore:

• Wireless market comprises three MNOs – SingTel, Starhub and M1 • Low churn market • Full mobile number portability implemented in 2008 • All MNOs offer 3G services • Highly competitive market with very little to choose between the three MNOs

The figure below shows the subscriber base of major MNOs in Singapore.

Figure 110: MNOs’ Subscriber Base – Singapore (In Million, End-2008)


Churn Scenario – Singapore: The figure below shows the monthly churn of the MNOs operating in Singapore during 2008 and also depicts the percentage of their subscriber base under the postpaid segment.

1.61.8

2.9

0

1

1

2

2

3

3

4

M1 Starhub SingTel

Sub

scrib

er B

ase

(In M

illio

n)

Operator



Figure 111: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base – Singapore (In Percent, 2008)


The figure shows that over half of the subscriber bases of the MNOs mentioned above are postpaid. SingTel’s Strategies SingTel has the highest number of mobile subscribers with over 46 percent market share in Singapore. The operator has led the local market with its innovative wireless services and added more subscribers than its competitors in 2008, enabling it to considerably lower churn. Various strategies adopted by the operator to increase subscribers’ loyalty and satisfaction are highlighted in the figure below.

1.6

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M1 Starhub SingTel

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Operator




Attractive price plans The Singaporean wireless market is highly competitive and to survive in such conditions operators have to lure their subscribers with attractive service offerings. Following this logic, SingTel came up with pricing plans which provided it with the competitive edge in the market. These plans served the needs of all categories of subscribers. The figure below shows some of the operator’s postpaid plans and the free services offered with these plans.

Figure 113: SingTel’s Postpaid Plans


Figure 112: SingTel’s Subscriber Satisfaction and Retention Strategies


Retention Strategies

Attractive

Price Plans

Proactive Approach

Customised

Services

First to Launch Services

iOne Plus

• 100 minutes • 500 local SMS • VoiceMail • SMS Plus

iThree Plus

• 2,000 minutes • 2,000 local SMS • VoiceMail • SMS Plus

3G Flexi

• 500 minutes • 500 local SMS • AutoRoam • SMS Plus

Classic

• 150 minutes • 360 local SMS • Voice Mail • SMS Plus



For prepaid subscribers, it introduced the USD 1.5 EASY Top Up service on payphones – the smallest top up denomination available in the country. The operator also introduced price plans specifically for iPhone 3G users.55

• PlayNow plus service in collaboration with Sony Ericsson

First to launch services The operator has an impressive record of introducing innovative services in the Singaporean mobile market before anybody else. Such efforts capture new users for the operator and also increase the loyalty of existing subscribers. Below is a list of some recent services introduced by SingTel in Singapore.

• Nokia Messaging for Nokia E63 with special data plans • Location tracker service • Bloomberg mobile service • iPhone • MobileM@il (a free push e-mail service for postpaid subscribers)

Customised services The operator realised that different subscribers have different needs and if they are not given appropriate services to satisfy those needs they tend to turn to other operators for the same services. In order to avoid such instances, SingTel offered services which took care of users with diverse interests ranging from sports to finance news. The figure below highlights some of the targeted services offered by the operator.

Figure 114: SingTel’s Customised Services


Proactive approach The operator believes in a proactive approach for anticipating subscribers’ needs and responding with appropriate services for them. Efforts made by the operator include:

• It launched mio TV service on mobile for the growing demand for video services. • It introduced iPhone 3G to offer better services over next generation networks. • It rolled out a service which enabled users to get real time bus arrival information on

their mobile handsets. 55 Source: Company Reports

SingTel offered personalized services which took care of users with diverse interests ranging from sports to finance news.

Customised Services

Sports • EPL • Champions

League • Spanish Primera

Liga • SMS Score

Alerts

Finance • Bloomberg

Mobile • Dow Jones

Financial News • Asian Wall Street

Journal

Entertainment • mio TV • Korean Dramas • WOW TV

Entertainment • Mobile Cartoons

Adult Services • Supermodels • Victoria's Secret

Special • TOTO Results • 4D & TOTO

Lucky Pick • 4D Results




Factors Identified SingTel Singapore

Attractive price plans

First to launch services

Customised services

Proactive approach



Chunghwa Telecom Taiwan

Ownership: State-run Company with Government’s share approximately 35 percent

Launched: 1995


Y-o-Y Subscriber Growth Rate for Chunghwa Telecom: 2.6 percent (2007 to 2008)

Y-o-Y Population Growth in 10-74 year age-group: 0.6 percent (2007 to 2008)


Taiwan Mobile Penetration: 105.2 percent (31st December 2008)


Market Environment – Taiwan:

• Dominated by three operators – Chunghwa Telecom, FeT and Taiwan Mobile • Among the most advanced wireless markets in Asia • All major operators have launched 3.5G networks • WiMAX roll out expected in 2009 • Operators are cutting voice prices and pushing data services • MVNOs are operational in the country

The figure below shows the subscriber base of the major MNOs in Taiwan.

Figure 115: MNOs’ Subscriber Base – Taiwan (In Million, End-2008)


Chunghwa Telecom’s Strategies Chunghwa Telecom is Taiwan’s biggest mobile network operator with nearly 37 percent market share. The operator is known for its advanced wireless networks and innovative services. By end-2008, it had the highest number of 3G subscribers in the country. With the lowest churn in 2008, Chunghwa’s subscribers turned out to be the most loyal. This high level of satisfaction among subscribers has been achieved through certain strategies which are highlighted in the figure below.

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6

8

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FeT Taiwan Mobile Chunghwa Telecom

Sub

scrib

er B

ase

(In M

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Operator



Figure 116: Chunghwa Telecom’s Subscriber Satisfaction Strategies


Focus on postpaid segment The operator has shifted its focus on to high valued postpaid subscribers and is committed to gain more postpaid subscribers in its total subscriber base. Currently, it has the highest percentage of postpaid subscribers among the three major MNOs. The tendency of switching operators is generally higher in the prepaid segment, rather than the postpaid. Having a higher percentage of postpaid subscribers has helped Chunghwa to keep its churn rate considerably lower than the other MNOs. This is depicted in the figure below.

Figure 117: Monthly Churn and Postpaid Subscribers as a Percentage of Total Subscriber Base – Taiwan (In Percent, 2008)


The above figure clearly shows that the operator with the highest percentage of postpaid subscribers has the lowest churn rate and vice-versa. The operator added nearly 0.2 million

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Chunghwa Telecom Taiwan Mobile FeT

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S

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Bas

e (In

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cent

)

Mon

thly

Chu

rn(In

Per

cent

)

Operator


Subscriber Satisfaction Strategies

Focus on postpaid segment

Emphasis

on quality of service

Better service

offerings



postpaid subscribers in 2008, whereas, Taiwan Mobile suffered a decline in its postpaid subscriber base. Emphasis on quality of service In order to retain subscribers, excellent quality of service is absolutely imperative. Chunghwa Telecom seeks to achieve the highest level of quality for its services and for that it took the following steps:

• Quality assurance function of its operating units • Dedicated task forces to monitor network performance • Quality evaluation criteria set by the senior management and timely reviews of

performance by them

Better service offerings To gain the loyalty of its subscribers, an operator needs to offer its best services. Working on the same principle, Chunghwa took various initiatives including the migration of its 2G subscribers to 3G, in order to give its users an opportunity to avail its next generation networks for a richer experience. Other efforts made by the operator are mentioned in the figure below.

Figure 118: Chunghwa Telecom’s Initiatives



Chunghwa took initiatives for migration of its 2G subscribers to 3G, in order to give its users an opportunity to avail its next generation networks for a richer experience.

Chunghwa Telecom’s Initiatives

New

Handsets

75 percent of iPhone contracts were renewals and 25 percent were new subscriptions

Expansion of

3G

Chunghwa had 3.6 million 3G subscribers by end-2008; most of them were migrated from its 2G services

Discount packages

Discount packages were introduced for mPro and mCool

Strategic

Partnerships

Collaborated with handset manufacturers and content providers to offer interesting services

Exclusive content

It offered exclusive content such as Beijing Olympic Games in 2008 and many more



Factors Identified Chunghwa Telecom Taiwan

High percentage of postpaid subscribers

Quality of service

Better service offerings



Chapter 10 Performance Measurement 9 – Postpaid Penetration Measure



Performance Measurement 9 – Postpaid Penetration Measure Postpaid subscribers are viewed as a source of continuous revenue inflow for an operator. They are also associated with low churn and high ARPU. Therefore, operators having greater postpaid subscriber percentages are considered more potent in terms of revenue generation. The characteristics associated with prepaid and postpaid subscribers, and the benefits for the operators in pushing subscribers to adopt postpaid subscribers are mentioned in the figure below:

The benefits mentioned in the diagram above put operators with a higher percentage of its subscriber base as postpaid subscribers at an advantage over competitors. It has been observed that as the markets mature, the percentage of subscriber base with postpaid subscriptions shows an upward trend. The top 10 mobile markets worldwide with the highest postpaid subscriber percentage are mentioned in the figure below.

Figure 119: Benefits of Postpaid Subscriptions for MNOs


Factors Prepaid Service

Transition Strategy

Postpaid Service

Benefits

Service Features

Pricing and Packaging

Distribution Channels

Higher service use, easy to

push new services

Higher ARPU

Low cost, easy

distribution

Basic Voice services, long distance, roaming, VAS packages

VAS (prepaid), selected data services Usage -based fee

Full set of VAS, data services such as mobile E-mail

Limited minutes, payment prior to use

Flexible pricing plans, bundling with reward for high use

Monthly payment, lower charge rate for bundled service promoting high use

Top-ups through prepaid cards, use above voucher limit not allowed

Increased flexibility, Internet refills using credit cards/ATMs allowed

Unlimited usage (use based credit limit), Internet payment




The selection of postpaid percentages may not be an effective way of evaluating the efforts of an operator in transforming its prepaid subscribers to postpaid, because in addition to operators’ efforts postpaid percentage is also dependent on market characteristics; and some markets tend to have higher postpaid percentages. Also, the more years of operations of an MNO, the more chance there is for an operator to increase its postpaid subscriber base. Therefore, inclusion of number of years of operation as a normalising factor can make the comparison less biased and also more likely to capture new above-par performers. The formula used for the calculation of this performance measurement is given below.

Rankings


Figure 120: Top 10 Mobile Markets Worldwide – Postpaid Subscribers and Mobile Penetration (In Percent, 2008)


99.5 98.090.8 87.2

78.4 77.872.9 72.7 70.3 69.0

94.382.3

129.4

93.6

66.8

87.4 86.699.1

86.5

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0

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Finl

and

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an

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ada

Bel

arus

The

US

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way

Fran

ce

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(In P

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Country

Postpaid Subscribers in Country Penetration

Postpaid Subscribers of MNO as a Percentage of Total Postpaid Subscribers in the Country Number of Years of Operation of MNO (2G & Above) Value =



Figure 121: Top 20 MNOs Worldwide – Postpaid Penetration Measure (2008)56




Telef

onica

Per

u, 10

.0

du T

he U

AE, 8

.5

Movil

net V

enez

uela,

8.3

Etisa

lat M

isr E

gypt,

7.9

Movis

tar V

enez

uela,

7.9

Clar

o Per

u, 7.9

Mobil

y Sau

di Ar

abia,

7.8

Comc

el Co

lombia

, 7.5

Asiac

ell Ir

aq, 7

.1

MTS

Belar

us, 7

.0

Voda

fone E

gypt,

7.0

Djez

zy A

lgeria

, 7.0

Zain

Iraq,

7.0

MTN

Nige

ria, 6

.9

MobiN

il Egy

pt, 6

.8

MTN

Syria

, 6.8

Tunis

iana T

unisi

a, 6.8

Movis

tar C

olomb

ia, 6.

7

MTN

Iran,

6.6

MTN

Afgh

anist

an, 6

.5

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10



Table 36: MNOs Worldwide Ranked 1 to 20 – Postpaid Penetration Measure (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Telefonica Peru 10.00 11 Vodafone Egypt 7.02 2 du The UAE 8.47 12 Djezzy Algeria 7.01 3 Movilnet Venezuela 8.31 13 Zain Iraq 6.97 4 Etisalat Misr Egypt 7.89 14 MTN Nigeria 6.88 5 Movistar Venezuela 7.88 15 MobiNil Egypt 6.83 6 Claro Peru 7.87 16 MTN Syria 6.79 7 Mobily Saudi Arabia 7.82 17 Tunisiana Tunisia 6.77 8 Comcel Colombia 7.52 18 Movistar Colombia 6.68 9 Asiacell Iraq 7.08 19 MTN Iran 6.59

10 MTS Belarus 7.03 20 MTN Afghanistan 6.53


Rank

MNO

Score

Rank

MNO

Score

21 TCI Iran 6.50 36 Telecom Personal Argentina 6.12

22 Zain Sudan 6.48 37 Telenor Norway 6.11 23 Telstra Australia 6.44 38 T-Mobile Montenegro 6.10 24 Safaricom Kenya 6.44 39 Maroc Telecom Morocco 6.09 25 mt:s Serbia 6.37 40 Telkomsel Indonesia 6.08 26 Etisalat The UAE 6.35 41 Entel PCS Chile 6.07 27 Tunicell Tunisia 6.34 42 Swisscom Switzerland 6.07 28 Globul Bulgaria 6.24 43 Cosmote Greece 6.07 29 VIP Serbia 6.23 44 Globe The Philippines 6.05 30 Velcom Belarus 6.18 45 SK Telecom South Korea 6.05 31 Meditel Morocco 6.18 46 MTS Ukraine 6.03 32 Movistar Chile 6.16 47 China Mobile 6.03 33 Orange Slovakia 6.15 48 T-Mobile Slovakia 6.03 34 Vodafone Romania 6.13 49 Avea Turkey 6.02 35 Globacom Nigeria 6.13 50 T-Mobile Croatia 6.00




Rank

MNO

Rank

MNO

Rank

MNO

51 Turkcell Turkey 91 TDC Denmark 131 BITE Lithuania 52 Mobiltel Bulgaria 92 TMN Portugal 132 Optimus Portugal 53 VIPnet Croatia 93 MTS Russia 133 Vodafone Greece 54 O2 Ireland 94 3 Italia 134 Orange Spain 55 Kyivstar Ukraine 95 Orange France 135 Wind Italy 56 Zain Jordan 96 Vodafone New Zealand 136 HTIL Hong Kong

57 Partner Communications Israel 97 Polkomtel Poland 137 Vodafone Germany

58 Movistar Argentina 98 Tele2 Lithuania 138 Sun The Philippines

59 Telecom Mobile New Zealand 99 Telenor Serbia 139 GrameenPhone

Bangladesh 60 Zain Kenya 100 Orange Poland 140 KDDI Japan

61 Promonte Montenegro 101 Mobilkom Austria 141 Vodafone The Netherlands

62 Banglalink Bangladesh 102 AIS Thailand 142 Oi Brazil 63 Movistar Spain 103 Vivo Brazil 143 Telus Mobility Canada 64 KPN The Netherlands 104 KTF South Korea 144 Sunrise Switzerland 65 NTT DOCOMO Japan 105 DTAC Thailand 145 life:) Ukraine 66 Proximus Belgium 106 Vodafone Czech Republic 146 Sprint The US 67 Mobistar Belgium 107 Taiwan Mobile 147 Optus Australia 68 Vodacom South Africa 108 Celcom Malaysia 148 Digitel Venezuela 69 Chunghwa Taiwan 109 MTN South Africa 149 Orange Switzerland 70 Telecom Italia 110 PTC Poland 150 O2 The UK 71 Maxis Malaysia 111 Claro Brazil 151 Tele2 Sweden 72 Omnitel Lithuania 112 T-Mobile Austria 152 Vodafone Portugal

73 3 The UK 113 AT&T The US 153 CSL New World Mobility Hong Kong

74 China Unicom 114 Telia Denmark 154 Orange Austria 75 Starhub Singapore 115 Telia Sonera Sweden 155 Telefonica Slovakia 76 Vivatel Bulgaria 116 FeT Taiwan 156 Claro Argentina 77 Verizon The US 117 T-Mobile The Netherlands 157 VimpelCom Russia 78 Tele2 Croatia 118 Telia Sonera Finland 158 Telenor Pakistan 79 Vodafone Ireland 119 Vodafone Spain 159 DiGi Malaysia 80 O2 Czech Republic 120 Bell Mobility Canada 160 Sonofon Denmark 81 TIM Brasil 121 M1 Singapore 161 Vodafone The UK 82 Smart The Philippines 122 Vodafone Hungary 162 LG Telecom South Korea 83 Pelephone Israel 123 Pannon Hungary 163 3 Sweden 84 T-Mobile Hungary 124 Telcel Mexico 164 Bharti Airtel India 85 T-Mobile Czech Republic 125 Rogers Canada 165 Wind Hellas Greece 86 Cell C South Africa 126 True Move Thailand 166 Bouygues France 87 Mobilink Pakistan 127 T-Mobile Germany 167 Orange The UK 88 Cellcom Israel 128 SFR France 168 Vodacom DR Congo 89 DNA Finland 129 Netcom Norway 169 Vodafone Italy 90 SingTel Singapore 130 Elisa Finland 170 O2 Germany




Rank

MNO

Rank

MNO

Rank

MNO

171 Tigo Colombia 183 Movistar Mexico 195 Brasil Telecom 172 Zain Nigeria 184 MegaFon Russia 196 Vodafone Australia

173 Reliance Communication India 185 3 Austria 197 Tigo DR Congo

174 MTN Sudan 186 Base Belgium 198 Idea Cellular India 175 Iusacell Mexico 187 E-Plus Germany 199 Celtel DR Congo 176 Vodafone India 188 Vodafone Turkey 200 Beeline Ukraine 177 Telenor Sweden 189 Excelcomindo Indonesia 201 Nextel Peru 178 SoftBank Japan 190 T-Mobile The UK 202 Sibir Telecom Russia 179 Meteor Ireland 191 SmarTone Hong Kong 203 Nextel Argentina 180 T-Mobile The US 192 Claro Chile 204 Nextel Brazil 181 PCCW Mobile Hong Kong 193 Nedjma Algeria 182 Hutch Thailand 194 Tele2 Russia

The figure below shows the top three MNOs judged on this performance measurement.

Figure 122: Top 3 MNOs Worldwide – Postpaid Penetration Measure (2008)


du The UAE

Telefonica

Peru

Movilnet

Venezuela

1

2 3



MNO Strategies

Telefonica Moviles Peru

Ownership: Telefonica Group

Launched: 1992


Postpaid Subscribers: 9.8 percent (31st December 2008)



Peru Mobile Penetration: 63.4 percent (31st December 2008)

Technology: GSM, WCDMA, CDMA and CDMA2000

Market Environment – Peru: • Dominated by two MNOs – Telefonica and Claro • One of the high growth markets in Latin America • Network distribution is highly uneven because of varying topographies • Primarily a Prepaid market • Growth of prepaid subscribers outpacing growth of postpaid subscribers • 3G networks operational in the country

The figure below shows the subscriber base of the major MNOs in Peru.

Figure 123: MNOs’ Subscriber Base – Peru (In Million, End-2008)


Telefonica Moviles’ Strategies Telefonica Moviles Peru is the largest mobile network operator in Peru with over 57 percent market share, and the only Peruvian operator to offer both GSM and CDMA services. Its GSM subscribers have outnumbered their CDMA counterparts and the MNO is gradually shifting to GSM networks. The operator has the highest number of postpaid subscribers in Peru. This feat can be explained through strategies mentioned in the figure below.

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8

10

12

Claro Telefonica

Sub

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er B

ase

(In M

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n)

Operator



Postpaid leader Nearly all wireless markets in Latin American region are prepaid dominated and Peru is no exception. The mobile market of Peru is led by Telefonica Moviles and the operator possesses both the highest number of prepaid and postpaid subscribers. The figure below compares the postpaid subscribers of Peru’s two leading MNOs.

Figure 125: Postpaid Subscriber Base – Peru (In Million, End-2008)


0.8

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Claro Telefonica

Pos

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Figure 124: Telefonica’s Strategies


Telefonica’s Strategies

Postpaid

leader

Initial focus on postpaid segment

Encouraging the uptake of

postpaid services



Initial focus on postpaid segment Postpaid subscribers as a percentage of total subscriber base have declined for the Peruvian operators over the years, and Telefonica too has witnessed this trend. However, the MNO was able to minimize the loss of postpaid subscribers initially and fared better than its competitors. For instance, during the period 2004-2005, the postpaid percentage in the total subscriber base for Telefonica fell by just 0.6 percent from 17.7 to 17.1 percent, whereas, Claro’s corresponding figure reduced by over 3 percent,from 15.3 percent to 12.2 percent. Encouraging the uptake of postpaid plans The majority of the Latin American region, including Peru, is experiencing a downward trend in the number of postpaid subscribers. To counter this decline in postpaid subscribers, Telefonica Moviles has come up with region-wide strategies to encourage the uptake of postpaid plans by subscribers. These strategies include attractive postpaid plans bundled with popular handsets and other lucrative offers – such as accumulating travel points ‘LAN PASS’ by using mobile services – for the postpaid subscribers. The table below highlights the factors which enabled the operator to lead in the postpaid segment and their respective importance.

Factors Identified Telefonica Moviles Peru

Postpaid leader

Initial focus

Encouraging uptake of services

To counter the decline in postpaid subscribers, Telefonica Moviles has come up with strategies to encourage the uptake of postpaid plans by subscribers.



Comcel Colombia

Ownership: America Movil Group

Launched: 1994





Colombia Mobile Penetration: 90.4 percent (31st December 2008)


Market Environment – Colombia:

• Comcel is the clear market leader • Prepaid subscribers dominate market • Growth of prepaid subscribers outperforming growth of postpaid subscribers • Operators focus more on prepaid segment for higher growth • 3G networks are operational in the country

The figure below shows the subscriber base of the major MNOs in Colombia.

Figure 126: MNOs’ Subscriber Base – Colombia (In Million, End-2008)


Comcel’s Strategies Comcel is the largest mobile network operator in Colombia with over 67 percent market share. The operator witnessed the highest subscriber growth among all Colombian MNOs in the 2008. In 2008, it became the first operator to launch 3G services in the country. In the postpaid segment, the MNO has performed exceedingly well with nearly half of the country’s postpaid base using its networks. The figure below highlights the factors responsible for this achievement.

10.0

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15

20

25

30

Movistar Comcel

Sub

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er B

ase

(In M

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n)

Operator



Growth of postpaid subscribers Like other Latin American markets, Colombia is also dominated by the prepaid segment. The country’s operators have typically kept their focus on prepaid subscribers to achieve higher growth rates and increase their market share, which has led to a decline in the growth of postpaid users. However, amid such conditions, Comcel managed to achieve positive growth for its postpaid subscriber base and was the only Colombian operator in 2008 which could claim this. The figure below compares the trend in postpaid subscriber growth for Colombia’s two leading MNOs.

Figure 128: Postpaid Subscriber Base – Colombia (In Million, 2006-2008)


Variety of postpaid plans To promote its postpaid services, Comcel has come up with tariff plans which are targeted at different sets of users. These users fall into two categories:

• High and moderate usage subscribers: Such users are willing to pay higher for more minutes of use and other value added services

• Low usage subscribers: To satisfy the needs of these users, the operator offers low priced plans with a few included minutes as well

The latest “Endless plan” series launched by Comcel is another initiative taken to popularize postpaid services among its subscribers. Subscribers availing these plans can make calls to numbers of their own choice without being charged for the first five minutes. Apart from voice minutes, each plan holder gets a fixed amount of text messages free of cost. The table

2.93.2

3.7

1.8 1.8 1.6

0

1

2

3

4

2006 2007 2008

Pos

tpai

d S

ubsc

riber

s (In

M

illio

n)

Year

Comcel Movistar

Figure 127: Comcel’s Strategies


Comcel’s Strategies

Variety of

postpaid plans

Growth of postpaid

subscribers



below highlights the factors which enabled the operator to lead in the postpaid segment and their relative importance.

Factors Identified Comcel Colombia

Growth of postpaid subscribers

Variety of postpaid plans



Vodafone Egypt

Ownership: Vodafone Group (55 percent) and Telecom Egypt (45 percent)

Launched: 1998




Egypt Mobile Penetration: 54.6 percent (31st December 2008)



Market Environment – Egypt:

• Penetration is quite moderate (around 54 percent) despite significant growth in mobile users – reflecting a huge untapped market for MNOs

• Market primarily dominated by prepaid subscribers • Nearly half of the Egyptian population resides in rural areas, which is driving MNOs

to invest heavily in infrastructure in order to target the low-income rural areas. • Competition in the Egyptian market has been intensified by the entry of the third

player, Etisalat, as a result of the innovative services and low prices it is offering • Internet market proliferation in the country, owing to the launch of broadband Internet

connectivity in 2004 and subscriber-friendly broadband packages Vodafone’s Strategies Vodafone Egypt is the second largest operator in Egypt accounting for a market share of 39.5 percent in 2008. The Egyptian MNO is part of the UK’s Vodafone Group and was formerly known as Click GSM, before being re-branded to Vodafone Egypt. The operator was able to gain a foothold in this market by introducing the concept of prepaid mobile phone offerings. However, the operator is currently the market leader in the postpaid segment. The strategies which led to this success are depicted in the figure below:



Figure 129: Vodafone Egypt’s Success Strategies


Postpaid Dominance in a Prepaid Market Prepaid subscribers account for the majority of the overall wireless market. MobiNil leads the market in terms of market share (45.1 percent) as well as overall subscribers (20.1 million). However, Vodafone Egypt has a strong foothold on the postpaid segment, with the highest number of postpaid subscribers in 2008. This is depicted in the figure below. The operator also recorded a higher year-on-year postpaid subscriber growth (17.3 percent).

Focus on Postpaid Segment Taking into consideration that the ARPU for postpaid subscribers is greater than the prepaid segment, the former is an extremely lucrative segment for the MNOs. In order to tap this

Figure 130: Postpaid Subscriber Base – Egypt (In Million, End-2008)


0.64

0.70

0.5

0.6

0.7

0.8

MobiNil Vodfaone Egypt

Pos

tpai

d S

ubsc

riber

s (In

M

illio

n)

Operator

Vodafone Egypt’s Success

Strategies

Product Portfolio

Enhancement

Focus on Postpaid Segment

Postpaid

Dominance in Prepaid Market



segment effectively, Vodafone has taken the following measures in order to enhance its product portfolio and match the expectations of postpaid users:

• In order to increase its revenue per user, the MNO has refined its mobile tariff structure, thereby increasing the price per minute for postpaid subscribers while lowering down the postpaid monthly connection fees.

• Vodafone is targeting the business segment and promoting postpaid subscriber use through a wide range of value-added services.

• Vodafone also decided to acquire a 3G license. Primarily for the following two reasons:

First and foremost, the operator wanted to counter the competition provided by Etisalat Misr through the launch of 3G services.

Secondly, postpaid subscribers are likely to be heavier users compared to prepaid and more likely to use 3G services such as Internet browsing, etc.

Vodafone promoted its 3G services for its postpaid subscribers by following an aggressive pricing strategy:

Video Telephony – Approximately USD 0.1 (EGP 0.75) per minute57

Mobile TV- Approximately USD 0.1 (EGP 0.50) per minute

Internet Surfing – Nearly USD 0.2 (EGP 1) per day (up to max of 5 MB) and an additional USD 0.8 (EGP 5) for each extra MB

Track download – Nearly USD 0.9 (EGP 4.5) per song58

Besides this pricing strategy, the operator also offered 20 minutes of free video calling per month in the initial two months following the video calling service launch.

Product Portfolio Enhancement Vodafone Egypt came up with the following attractive products and services for its subscribers:

57 Source: http://www.thedailynewsegypt.com/article.aspx?ArticleID=7170 58 Source: http://www.thedailynewsegypt.com/article.aspx?ArticleID=7170

Vodafone is targeting the business segment and promoting postpaid subscriber use through a wide range of value-added services.

Figure 131: Vodafone Egypt’s Product Portfolio


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• TV Phone: Via ‘Vodafone Live!’, Vodafone Egypt subscribers were able to enjoy Video and Radio streaming for the first time in this country.

• Ring Back Tones: This service was pioneered by Vodafone in the Egyptian mobile market wherein a subscriber can select from different songs and set it as their ringtone

• Balance Transfer for Vodafone El Kart and El Khat: Vodafone was the first company that gave subscribers the option of transferring small balances from their phones to their peer group, relatives, etc. through this service.

• Vodafone World: While roaming, subscribers were able to call and send SMS at flat prices.

The following table lists the key factors that have led to the success of the operator:

Factors Identified Vodafone Egypt

Postpaid dominance in prepaid market

Focus on postpaid segment

Product portfolio enhancement



Chapter 11 Performance Measurement 10 – Technology Measure



Performance Measurement 10 – Technology Measure MNOs have been upgrading their networks with evolving network technologies to ensure high quality of service and for expanding the range of services. The network is also useful in reducing the cost of deployment and to provide services in a cost-effective manner. Therefore, evolution of a network is as beneficial for reducing operational costs as it is for generating new revenue streams. The figure below depicts the benefits of deployment of evolved technologies such as 3G and 3.5G.

Figure 132: Advantages of Technology Evolution



The formula used for the calculation of this performance measurement index is given below: The figure given below contains a chart depicting the ‘mobile network technology score’ for an MNO – based on technology and mobile penetration in the country of operation at year-end 2008 – used for its evaluation in this performance measurement.

Quality of Service

Staying ahead of growing capacity requirements: Use of advanced networks and Network optimisation tools to provide congestion-free services

Improved Spectral Efficiency: This helps to reduce opex and despite initial high capex is cost-effective in the long run.

New Revenue Streams

Targeting Enterprise Segment: High-speed networks are more capable of providing feature-rich Internet services and corporate applications

Multimedia Services: Advanced networks enable data-centric multimedia services useful in providing a range of content and data services

Mobile Network Technology Score of MNO Mobile Penetration of the Country * Number of Years of Network Operation (2G & Above) Value =



The objective of using this performance measurement index is to evaluate how futuristic an MNO is compared to its peers. Furthermore, the comparison has been normalised by using the number of years of 2G (and above) operation. Also, an operator using higher network technology - even with low penetration - has been considered as more futuristic. For example, Etisalat Misr launched its 3.5G network in May 2007 and became the first Egyptian MNO to launch a 3.5G network. This reflects the operator’s vision in gaining a technological edge and capturing the data-download services market. However, if an MNO is operating in a market for a long period of time, which has over 100 percent penetration, it is expected to evolve its network in order to sustain and bolster its position. Therefore, a lesser score has been assigned for the deployment of advanced networks in this instance, compared to MNOs doing the same in a market with lower penetration levels. Limitations: Some of the operators who have not deployed 3G/3.5G networks might not have done so owing to licensing issues and unavailability of spectrum. The delay in deployment due to these issues has not been taken into account. Rankings The figure below shows the Top 20 MNOs based on this performance measurement index.

Figure 133: Evaluation of an MNO based on Network Technology and Mobile Penetration


The objective of using technology performance measurement is to evaluate how futuristic an MNO is compared to its peers.

0

10

20

30

40

50

60

70

80

90

Below 30 Percent

30-50 Percent 50-70 Percent 70-90 Percent 90-110 Percent

Over 110 Percent

Sco

re

Penetration (Dec 2008)

2G 2.5G 3G 3.5G



Figure 134: Top 20 MNOs Worldwide – Technology Measure (2008)59




Etisa

lat M

isr E

gypt,

10.0

MTN

Suda

n, 8.4

Voda

com

DR C

ongo

, 8.2

MTN

Afgh

anist

an, 7

.9

Celte

l DR

Cong

o, 7.9

Tigo D

R Co

ngo,

7.8

Telef

onica

Per

u, 7.4

Glob

acom

Nige

ria, 7

.2

Clar

o Per

u, 7.1

Telef

onica

Slov

akia,

6.9

MTN

Iran,

6.7

Telen

or P

akist

an, 6

.6

MTN

Nige

ria, 6

.6

MTN

Syria

, 6.6

Movis

tar V

enez

uela,

6.5

Zain

Suda

n, 6.4

Movis

tar C

olomb

ia, 6.

4

Voda

fone E

gypt,

6.4

MobiN

il Egy

pt, 6

.4

Zain

Nige

ria, 6

.4

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10



Table 40: MNOs Worldwide Ranked 1 to 20 – Technology Measure (2008)

Rank

MNO

Score

Rank

MNO

Score

1 Etisalat Misr Egypt 10.00 11 MTN Iran 6.71 2 MTN Sudan 8.38 12 Telenor Pakistan 6.62 3 Vodacom DR Congo 8.19 13 MTN Nigeria 6.62 4 MTN Afghanistan 7.94 14 MTN Syria 6.61 5 Celtel DR Congo 7.90 15 Movistar Venezuela 6.53 6 Tigo DR Congo 7.77 16 Zain Sudan 6.38 7 Telefonica Peru 7.37 17 Movistar Colombia 6.38 8 Globacom Nigeria 7.16 18 Vodafone Egypt 6.37 9 Claro Peru 7.15 19 MobiNil Egypt 6.37

10 Telefonica Slovakia 6.86 20 Zain Nigeria 6.36


Rank

MNO

Score

Rank

MNO

Score

21 Brasil Telecom 6.34 36 Comcel Colombia 5.92 22 VIP Serbia 6.31 37 Mobily Saudi Arabia 5.91 23 Asiacell Iraq 6.24 38 Hutch Thailand 5.87 24 Movilnet Venezuela 6.14 39 MTS Belarus 5.85 25 Idea Cellular India 6.10 40 China Mobile 5.84 26 Safaricom Kenya 6.04 41 du The UAE 5.82

27 Reliance Communication India 6.02 42 Movistar Mexico 5.80

28 Zain Kenya 6.02 43 Vivatel Bulgaria 5.78 29 Sun The Philippines 5.99 44 Oi Brazil 5.78

30 GrameenPhone Bangladesh 5.97 45 Zain Iraq 5.77

31 Banglalink Bangladesh 5.97 46 True Move Thailand 5.74 32 Bharti Airtel India 5.94 47 TIM Brasil 5.74 33 Vodafone India 5.94 48 Smart The Philippines 5.72 34 3 The UK 5.93 49 Nedjma Algeria 5.72 35 Meditel Morocco 5.92 50 Excelcomindo Indonesia 5.72




Rank

MNO

Rank

MNO

Rank

MNO

51 China Unicom 91 Orange Switzerland 131 mt:s Serbia 52 Tigo Colombia 92 SK Telecom South Korea 132 Telenor Norway 53 Digitel Venezuela 93 T-Mobile The Netherlands 133 Netcom Norway 54 Bell Mobility Canada 94 T-Mobile Slovakia 134 Vodafone Romania 55 Tele2 Croatia 95 Orange Slovakia 135 Mobistar Belgium 56 Iusacell Mexico 96 NTT DOCOMO Japan 136 O2 Ireland 57 Telkomsel Indonesia 97 Globul Bulgaria 137 Cellcom Israel 58 3 Sweden 98 Orange Poland 138 Vodafone Czech Republic 59 Claro Brazil 99 Chunghwa Taiwan 139 PCCW Mobile Hong Kong 60 3 Austria 100 Starhub Singapore 140 Optimus Portugal 61 Maroc Telecom Morocco 101 Nextel Peru 141 Optus Australia 62 3 Italia 102 SFR France 142 Vodafone Australia 63 Telus Mobility Canada 103 Sunrise Switzerland 143 M1 Singapore

64 Tunisiana Tunisia 104 Telia Denmark 144 Vodafone The Netherlands

65 Djezzy Algeria 105 Orange Spain 145 T-Mobile Montenegro

66 Telecom Personal Argentina 106 Telcel Mexico 146 T-Mobile Austria

67 Claro Argentina 107 Pelephone Israel 147 Base Belgium

68 Vivo Brazil 108 Partner Communications Israel 148 O2 Czech Republic

69 Verizon The US 109 VIPnet Croatia 149 T-Mobile Hungary 70 Velcom Belarus 110 Movistar Argentina 150 Pannon Hungary 71 Globe The Philippines 111 Orange France 151 Telenor Serbia 72 FeT Taiwan 112 AIS Thailand 152 Proximus Belgium 73 Cell C South Africa 113 DTAC Thailand 153 KPN The Netherlands 74 Rogers Canada 114 Meteor Ireland 154 Vodafone Spain 75 Claro Chile 115 KDDI Japan 155 Movistar Spain 76 Entel PCS Chile 116 TCI Iran 156 T-Mobile Croatia 77 Movistar Chile 117 Tunicell Tunisia 157 Vodafone New Zealand

78 Bouygues France 118 Orange Austria 158 Telecom Mobile New Zealand

79 AT&T The US 119 Tele2 Lithuania 159 Swisscom Switzerland 80 T-Mobile The US 120 Maxis Malaysia 160 HTIL Hong Kong 81 Sprint The US 121 Celcom Malaysia 161 Orange The UK 82 Telstra Australia 122 DiGi Malaysia 162 O2 The UK 83 DNA Finland 123 O2 Germany 163 Cosmote Greece 84 Avea Turkey 124 Wind Italy 164 E-Plus Germany 85 Taiwan Mobile 125 Turkcell Turkey 165 TDC Denmark 86 KTF South Korea 126 MTN South Africa 166 Sonofon Denmark 87 LG Telecom South Korea 127 Vodacom South Africa 167 Vodafone Turkey 88 Mobilink Pakistan 128 Polkomtel Poland 168 BITE Lithuania 89 SoftBank Japan 129 PTC Poland 169 Omnitel Lithuania 90 Vodafone Hungary 130 MTS Ukraine 170 Vodafone Italy




Rank

MNO

Rank

MNO

Rank

MNO

171 Telecom Italia 183 T-Mobile Germany 195 VimpelCom Russia 172 T-Mobile The UK 184 Vodafone The UK 196 MTS Russia

173 Vodafone Ireland 185 CSL New World Mobility Hong Kong 197 Wind Hellas Greece

174 Mobilkom Austria 186 T-Mobile Czech Republic 198 Vodafone Greece 175 Mobiltel Bulgaria 187 Zain Jordan 199 life:) Ukraine 176 SmarTone Hong Kong 188 Elisa Finland 200 Beeline Ukraine 177 Tele2 Sweden 189 Promonte Montenegro 201 Etisalat The UAE 178 Telia Sonera Sweden 190 Nextel Brazil 202 Kyivstar Ukraine 179 Telenor Sweden 191 Tele2 Russia 203 Nextel Argentina 180 Telia Sonera Finland 192 TMN Portugal 204 Sibir Telecom Russia 181 SingTel Singapore 193 Vodafone Portugal 182 Vodafone Germany 194 MegaFon Russia


Figure 135: Top 3 MNOs Worldwide – Technology Measure (2008)


MTN Sudan

Etisalat Misr

Egypt

Vodacom DR

Congo

1

2 3



MNO Strategies

Vodacom DR Congo

Ownership: Vodacom International (51 percent) and Congolese Wireless Networks (49 percent)

Launched: 1999



DR Congo Mobile Penetration: 12.5 percent (31st December 2008)


Technology: GSM (EDGE)

Market Environment – Democratic Republic of Congo:

• Population - 66.5 million people (31st December 2008); high growth rate of 3.2 percent.60

• Very low mobile penetration compared to African countries

• Huge untapped market owing to high percentage of rural population

• Lack of proper infrastructure results in high capital expenditure

Vodacom’s Strategies

Figure 136: Vodacom DR Congo’s Success Strategies


• Time of Entry: Vodacom entered the DR Congo market at the time of civil war in 2001

when most of the big companies refrained from market entry. The operator firmly believed that it could use the situation to its advantage and avoid the competition which it faced in other markets. It would also help them in doing away with the quick investment that a new player would have to make in a competitive market in order to establish itself. Vodacom leveraged this market condition by investing slowly and rolling out technologies at a normal pace. The DR Congo market at that time was also subject to extremely low penetration, in both fixed as well as wireless segments.

60 Source: http://www.census.gov/ipc/www/idb/country/cgportal.html

Vodacom Success Strategy

Technology First Mover

Time of Entry

Timely

Technology Launch

Captial

Expenditure

Key

Partnership

http://www.census.gov/ipc/www/idb/country/cgportal.html�



Vodacom is presently operating as the number one player in the DR Congo market. The market share of MNOs operating in DR Congo is given in the figure below:

Figure 137: MNOs’ Market Share – DR Congo (End-2008)


• Key Partnership: Vodacom devised an easier way of entering into the DR Congo

market. It took over the operations of Congolese Wireless Network, although the deal was registered as a joint venture. The MNO was responsible for providing just the capital, whereas Congolese Wireless offered its 20-year license, subscriber base equivalent to 12,000 subscribers and additional fixed assets - which primarily helped Vodacom in establishing itself quite cheaply in this market.

• Capital Expenditure: Despite the civil war, Vodacom spent heavily on network infrastructure, to the tune of almost USD 94 million in DR Congo61

. It specifically invested in rural areas, primarily mining cites, border cities and cities housing UN bases as a step to extensively increase its coverage.

Figure 138: Capital Expenditure – Vodacom (In USD Million, 2003-2008)

Source: Penn State

• Timely Launch of technologies: Vodacom DR Congo has been aggressive in

developing and implementing network within the country. In 2002, Vodacom DR Congo

61 Source: http://news.bbc.co.uk/1/hi/business/2010584.stm

48.2%

39.2%

12.6%

Vodacom Celtel (Zain) Tigo

474

339272

206 206 193

0

100

200

300

400

500

2003 2004 2005 2006 2007 2008

CA

PE

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US

D M

illio

n)

Year

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expanded its GSM network by building an 88-base station GSM network connecting cities more than 1,600 kilometres apart within three months.62

Figure 139: Vodacom’s Network Expansion in DR Congo

Source: Penn State

During the civil war, DR Congo had non-existent infrastructure/roads. The operator made extensive use of air transport for the transfer of equipment, towers, fuel, steel, cement, etc. They also deployed public payphones in rural areas.

• Technology First Mover: In DR Congo, Vodacom has been the pioneer in offering

GPRS and EDGE for Internet access. The operator is also making headways with regard to the implementation of a 3G network in the country.

The following table summarises the key success factors for the operator.

Factors Identified Vodacom DR Congo

Time of launch

Key partnership

Capital expenditure

Timeliness of launch

Technology first mover

62 Source: http://www.africanwireless.com/new_page_8.htm

12/2001: Joint

Venture

5/2002: Launch in 3 cities

12/2002: 15 cities covered

12/2003: 58 cities covered

12/2004: 120 cities

covered

12/2005: 183 cities

covered

12/2006: 200 cities

covered

http://www.africanwireless.com/new_page_8.htm�



MTN Sudan

Ownership: MTN Group

Launched: 2005



Sudan Mobile Penetration: 27.5 percent (31st December 2008)

Market Share: 25 percent (31st December 2008)


Market Environment – Sudan

• Population – 40.2 million people (31st December 2008)

• New opportunities for MNOs and investors after foreign investment was allowed in 2007

• Low mobile penetration (27.5 percent) – which means a huge untapped market

• Two main players – Zain (market leader) and MTN

• Mostly prepaid subscribers with postpaid subscribers accounting for only 1.5 percent of total subscribers in 2008

• Really low broadband penetration, and Internet service uptake also slow; implying an enormous potential demand for future Internet services

MTN Sudan’s Strategies

Figure 140: MTN Sudan’s Success Strategies


• Focus on strong network deployment: The Sudanese market is host to intense

competition with three operators (two GSM and one CDMA) in a market with a mobile

MTN’s

Success Strategies

Focus on Strong

Network Deployment

Attractive Pricing Options

Distribution

Network



penetration of only 25 percent. In 2007, owing to the low tariff and rebranding of other operators, market conditions were quite challenging for the MNO. However, MTN was able to substantially grow its subscriber base to 2.6 million in 2008 (from 2.1 million in 2007) on the back of its technically-sound network. It also offered its subscribers value-added services such as 3G and international roaming.

Figure 141: Subscriber Base – MTN Sudan (In Million, 2006-2008)


In 2007, Sudanese MNOs primarily focused on the deployment of strong

networks. As many as 575 base transceiver sites were rolled out in Sudan. MTN Sudan was comfortably able to roll out over 40 sites in Darfur, despite the ongoing conflicts during that time. Further, the MNO was successfully able to cover approximately 42.8 percent of the population by end-2007; the population coverage increased to 45.3 percent by end-2008.63

MTN also rolled out 1,200 km of fibre cabling from Khartoum to Port Sudan in order to enhance its infrastructural backbone.

Figure 142: Capital Expenditure – MTN Sudan (In USD Million, 2006-2008)64


63 Source: http://www.mtn.com/AboutMTNGroup/GroupFootprint/MiddleEastAndNorth/MiddleEastAndNorth_Sudan.aspx 64 Please note: The 2008 figure is as estimation.

1.1

2.1

2.6

0

1

1

2

2

3

3

2006 2007 2008

Sub

scrib

er B

ase

(In M

illio

n)

Year

90

140150

0

20

40

60

80

100

120

140

160

2006 2007 2008

CA

PE

X (In

US

D M

illio

n)

Year

http://www.mtn.com/AboutMTNGroup/GroupFootprint/MiddleEastAndNorth/MiddleEastAndNorth_Sudan.aspx�



• Expansion of distribution network: MTN has ventured into a partnership with sixteen main distributors. The primary focus of the operator is to extend its network to all rural areas and main cities and be able to support all distribution channels.

MTN is focusing on developing its network in Southern Sudan. The MNO has recently launched a new mobile switching centre (MSC) in Juba as a step to providing consumers in Southern Sudan with affordable access to mobile services.

• Attractive Options for Subscribers: The operator has been able to cope with the competition in Sudan by launching a host of value added and innovative services, such as Caller Tunez, Voice SMS, prepaid multi-profiles, bulk SMS, 3G connect card, IVR content services, and super clip. It was also the first Sudanese operator to provide per-second billing. It also introduced the Mazazik service which allowed users to replace caller tune with their personalized song.

In 2007, the operator also made major modifications to its Pay as you talk prepaid offer, in order to make it more appealing for its existing and new subscribers. It has also included an additional option of free night calls between 12:30 A.M. and 5:30 A.M. on B-Rahtak and Kalam price plans.

Figure 143: MTN Sudan Pay as You Talk – Option Plans


As a result of the decrease in ARPU from USD 16 in 2006 to USD 12 in 2007 -

owing to the existence of dual SIM cards - the MNO also came up with segmented pricing to target different user segments depending on their calling and messaging needs. This helped MTN in increasing use among subscribers.

The following table summarises the key success factors for the operator.

Factors Identified MTN Sudan

Focus on strong network deployment

Attractive pricing options

Distribution network

MTN Sudan has ventured into a partnership with sixteen main distributors to extend its network to all rural areas and main cities.

Pay as You Talk

Plan

El Asli

• Standard prepaid plan • Mainly for short calls

B-Rahtak

• Lower call tariffs with monthly fee

• Mainly for those who talk a lot

Kalam

• Charge per minute • Mainly for those who make

long calls



Ownership: Etisalat (66 percent), Egypt Post (20 percent), National Bank of Egypt (10 percent) and Commercial International Bank (4 percent)

Launched: 2007




Egypt Mobile Penetration: 54.6 percent (31st December 2008)


Etisalat Misr Egypt Market Environment – Egypt:

• Population – 81.7 million people (31st December 2008)

• Mobile market has witnessed significant growth during the past two years

• Mobile subscribers in the country increased at a CAGR of more than 57 percent during the period 2006-2008

The figure below shows the subscriber base of Egypt’s MNOs at end-2008.

Figure 144: MNOs’ Subscriber Base – Egypt (In Million, End-2008)


The entrance of Etisalat Misr in to the Egyptian mobile market not only brought an end to the duopolistic structure but also resulted in the deployment of advanced mobile networks. Etisalat Misr was the first to offer 3G based services in the country.65

65 Source:

The figure below shows the timelines of the deployment of 3G and above network by the various players.

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20.117.6

6.7

0

10

20

30

MobiNil Vodafone Egypt Etisalat Misr

Sub

scrib

er B

ase

(In M

illio

n)

Operator

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Figure 145: Network Deployment – Egypt


Etisalat’s Strategies

• Advanced 3G based Services: Etisalat Misr was able to grow its subscriber base by nearly 1 million in a short span of seven weeks after its launch in May 2007.66 This can be attributed to the fact that Etisalat Misr was the first company to launch 3G based mobile services in the country. The wide array of services that the company offered to its subscribers – including mobile video and TV services, and mobile Internet – helped it to displace the incumbent operators, MobiNil and Vodafone Egypt.67

The figure below shows the market share of the three operators from December 2006 to December 2008.

Figure 146: Market Share – Egypt (In Percent, December 2006 - December 2008)68


• Attractive Options: Etisalat Misr primarily focused on the quality of service rather

than just slashing prices to stimulate demand for its services. However, the company launched a new scheme to penetrate the prepaid consumer segment. The company offered its subscribers ‘Life Time Free Minutes’ under which subscribers

66 Source: http://www.arabianbusiness.com/500043-world-view?ln=en 67Source:http://www.etisalat.ae/index.jsp?lang=en&type=content&currentid=10c8e15c0b56a010VgnVCM1000000a0a0a0a____&contentid=2e0ae65d78562110VgnVCM1000000c24a8c0RCRD&parentid=fa58800d1f52a010VgnVCM1000000a0a0a0a____ 68 Please note: The figures may not add up to 100 percent because of rounding off errors.

0.0% 0.0%4.2%

7.2%9.8% 11.7% 13.0% 14.1% 15.1%

51.5% 52.5%49.8% 49.2% 47.9% 47.2% 46.6% 46.0% 45.3%

48.5% 47.5% 46.0% 43.7% 42.3% 41.1% 40.4% 39.9% 39.6%

0%

10%

20%

30%

40%

50%

60%

Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08

Mar

ket S

hare

(In

Per

cent

)

MonthEtisalat Misr MobiNil Vodafone Egypt

2G MobiNil – 1996 Vodafone – 1998 Etisalat Misr – 2007

2.5G MobiNil – 2003 Vodafone – 2003 Etisalat Misr – 2007

3G MobiNil – 2008 Vodafone – 2007 Etisalat Misr – 2007

3.5G Etisalat Misr – 2007

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were offered five minutes free every month. The main objective of this scheme was to outbid its peers who started offering a lifetime prepaid service and per second billing to subscribers.

• Content, Marketing and Distribution Channel: With the launch of an advanced

3G network, Etisalat Misr tried to penetrate the market by offering exclusive content to its subscribers. For instance, Etisalat went into partnership with football team FC Barcelona, which gave it rights to co-brand merchandise and use content to broadcast it on its mobile networks in its operational regions. In addition, the company also introduced some pre-launch schemes that helped it to bolster its position in the market. One such offer allowed a subscriber to book a number that was similar to his current number (of MobiNil or Vodafone Egypt). In order to penetrate the market, the company also signed distribution agreements with companies such as I2, Modern Distribution Co. and Sky Distribution Company. The MNO’s primary objective was to open sale points in strategic locations in Egypt including popular malls and prominent neighborhoods.

Figure 147: Etisalat’s Strategies


• Positioning: Etisalat Misr positioned itself as the operator that offered better

services at lower costs than its peers. A late-2007 survey found that nearly 40 percent of subscribers would switch to the Etisalat network if given the option to keep the same number. The corresponding figures for Vodafone Egypt and MobiNil stood at 13 percent and 8 percent respectively. This is shown in the figure below.

Etisalat’s Strategies

Exclusive Content

Marketing

Distribution



With the launch of the Mobile Number Portability Scheme in April 2008, leading Egyptian operator MobiNil witnessed an increase in subscriber churn, as the earlier survey had predicted. This is shown in the figure below.

Figure 149: Monthly Churn – MobiNil (In Percent, Q1 2007 – Q4 2008)


0%

2%

4%

6%

8%

10%

12%

Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008

Mon

thly

Chu

rn

(In P

erce

nt)

Quarter

Figure 148: MNO Choice – Egypt (December 2007)*

Source: Makoob Research

*If the subscriber was allowed to use the same number and move to a different MNO

40.0%

13.0%8.0%

24.0%

15.0%

Etisalat Misr Vodafone Egypt MobiNil Satisfied with Current MNO Can't Say

MNP Introduced

http://www.cellular-news.com/story/28802.php�



The following table summarises the key success factors for the operator:

Factors Identified Etisalat Misr Egypt Advanced 3G based services

Attractive options

Content, marketing and distribution channel

Positioning



Chapter 12 Other Leading MNOs’ Strategies



Other Leading MNOs’ Strategies China Mobile

Ownership: State-owned enterprise of People’s Republic of China Government

Launched: 1997



China’s Mobile Penetration: 47.8 percent (31st December 2008)


Technology: GSM and TD-SCDMA

Market Environment – China:

• Largest mobile market worldwide • Dominated by the big two – China Mobile and China Unicom • Mobile penetration still below 50 percent • Biggest operator China Mobile launched 3G in 2008 • Huge number of potential subscribers in rural areas

China Mobile’s Strategies China Mobile Communications Corporation, better known as China Mobile, is the biggest MNO operating in the Chinese telecommunication market, accounting for nearly 72 percent of the market share at end-2008. It is also the world’s number one operator in terms of subscriber base, registering 457.2 million subscribers by end-2008. The figure below displays the subscriber base of the top five MNOs worldwide:

Besides its dominance in the Chinese market, the operator also has a presence in Hong Kong and Pakistan (ZONG brand). The MNO has been able to maintain the largest subscriber base as a result of the following strategies depicted in the figure below:

Figure 150: Top 5 MNOs Worldwide – Subscriber Base (In Million, End-2008)


457.2

133.485.7 77.0 72.1

0.0

100.0

200.0

300.0

400.0

500.0

China Mobile China Unicom Bharti Airtel India AT&T The US Verizon The US

Sub

scrib

er B

ase

(In M

illio

n)

Operator



Targeting the Rural Market Considering the fact that China is home to the largest population globally and the mobile penetration currently standing at just 47.8 percent (December 2008), there is a huge untapped market for the MNOs. The rural market contributed nearly 50 percent of the total subscriber growth for China Mobile in 2008. This market is providing the right stimulus for the operator’s growth, which has forced the MNO to implement the following strategies to increase its subscriber base:

• ‘Lower ARPU, lower Minutes of Usage (MoU), lower cost’: In order to drive rural market development, China Mobile has been aggressively following this strategy. Through better resource utilization and efficiency, it reduced its subscriber acquisition and service costs on a per subscriber basis

• Economies of scale achieved through the ‘Lower ARPU, lower MoU, lower cost’ strategy was leveraged in its sales and marketing activities. It used mass broadcasting and economical advertising channels specifically catering to the rural market to boost its growth.

• Low-cost distribution channels were also launched in rural areas. • Small denomination recharge and over-the-air-recharging was also promoted among

the rural subscribers. Focus on the Business Segment China Mobile is making rapid growth in its corporate clientele with the total corporate subscriber base reaching 2.33 million accounts. The MNO has implemented the following strategies for its business segment:

• The operator introduced a wide range of applications focussing on urban and rural development, education and environmental protection, etc.

• China Mobile also enhanced the service provisions to multi-national corporate users and trans-provincial users

• Machine-to-machine business application was also introduced in various areas in the corporate arena.

• In order to cater to the demand for mobile office, production monitoring and service management, China Mobile promoted industry-specific applications based on mobile-terminals. The figure below displays the key industry-specific applications introduced by the MNO in the Chinese market:

Figure 151: China Mobile’s Success Strategies


The rural market contributed nearly 50 percent of the total subscriber growth for China Mobile in 2008. This market is providing the right stimulus for the operator’s growth.

China Mobile Success Strategy

Focus on Business Segment

Targeting

Rural Market

Capital

Expenditure

3G

Development



Capital Expenditure In order to meet the demands of escalating subscriber numbers, voice usage volume, value-added business and also to the needs of reconstruction after unforeseen circumstances, such as snowstorms and earthquakes, the MNO’s capital expenditure volume reached nearly USD 19.6 billion (RMB 136.3 billion) in 2008. The operator intends to achieve the following with the planned CAPEX budget for 2009, 2010, and 2011:

• Cater to increasing market demand • Further aid in the development of value-added business • Integrate the 2G/3G network • Sustain the leading position in the Chinese market • Reconstruction after natural disasters

Figure 152: China Mobile’s Industry-specific Applications




Figure 153: Capital Expenditure – China Mobile (In USD Billion, 2008-2011F)

Source: Company Annual Report

F – Forecasted

In 2009, the operator plans to spend 76 percent of the budget on the integration of 2G/3G and the rest for 2G wireless networks, out of which 70 percent will be used for network construction in rural areas. 3G Development The operator is making rapid strides in the development of 3G technology in the Chinese wireless market. China Mobile is leveraging the existing 2G core network and launching innovative 3G services for its subscribers. The MNO has introduced 3G dual mode handsets, which have inter-operability with 2G. It is also sharing the 2G core network, supporting systems and business platforms. On the marketing front, China Mobile has launched the unique 3G logo, while keeping the brand structure unchanged. The following table lists down the key factors that have driven the success of the operator:

Factors Identified China Mobile

Target Rural Market

Focus on Business Segment

Capital Expenditure

3G Development

19.6 19.3 18.915.9

0.000

5.000

10.000

15.000

20.000

25.000

2008 2009F 2010F 2011F

CAP

EX

(In U

SD B

illion

)

Year



AT&T The US

Ownership: AT&T Group

Launched: 1996



US Mobile Penetration: 86.6 percent (31st December 2008)


Technology: GSM and WCDMA (HSUPA)

Market Environment – The US:

• Largest North American mobile market • Dominated by the big four – AT&T, Verizon, T-Mobile and Sprint • Among the most advanced mobile markets worldwide • Strong presence of enterprise segment in the mobile industry • Market experiences high ARPU generation • Subscribers have both high awareness and technical know-how of data services

AT&T’s Strategies The US is a highly competitive market with key MNOs AT&T, Verizon, Sprint and T-Mobile striving hard for greater market share. Currently, AT&T is the leading wireless operator in the US accounting for 29 percent of the market in 2008. The MNO registered the largest subscriber base (77 million) in 2008 for the US wireless market and ranks fourth in the world in terms of wireless subscribers at end-2008.

Figure 154: Top 10 MNOs Worldwide – Monthly Average Profit Per User (In USD, 2008)


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In Fortune magazine’s 2009 list of Most Admired companies, AT&T ranked number one in the telecommunication industry. The MNO has practised the following success strategies:

• Content Delivery on Portals: The operator has started offering unique contents on

portals such as AT&T blue room and AT&T Smart Limits. Blue room provides features such as exclusive sports, music, gaming, live

performances, original sports contents and video, wide range of commentary on different topics, to name a few.

AT&T Smart Limit collates the wireline, wireless, Internet and video information into one online destination via this portal.

Additionally, AT&T has also ventured into partnership with content providers such as TotalVid, Akimbo, Vongo and MobiTV. This has been done to enhance the broadband experience through differentiated entertainment-related services.

• Wireless Service Offering Portfolio: AT&T has introduced a host of attractive and exciting service offerings in the wireless space. Some of the most innovative services include the following:

MobiTV: This service allows users to view news, sports, entertainment, etc., from more than 30 channels (MSNBC, CNBC, FOX Sports, Discovery Channel, to name a few) on their mobile phones.

Home Monitoring Service: AT&T has launched one of the most revolutionary services which integrates wireless and Internet services and this service is available nationwide. Home Monitoring equips the users with the flexibility of accessing streaming digital video and real-time data virtually anytime and from any place through personal computers as well as AT&T wireless devices.

AT&T Unity: This service offers subscribers free domestic calling to and from AT&T wireless and wireline phones. Through the AT&T Unity plan, the operator has brought together home, business and wireless calling.

The following table lists the key factors that have led to the success of the operator.

Figure 155: AT&T’s Success Strategies


AT&T has partnered with content providers such as TotalVid, Akimbo, Vongo and MobiTV to provide differentiated entertainment-related services.



Factors Identified AT&T The US

Mobile TV and Video Experience

Content Delivery on Portals

Wireless Service Offering Portfolio



Chapter 13 Summary and Conclusions



Summary and Conclusions Traditionally, corporate performance in the mobile industry is measured in a number of ways: Handset vendors are generally measured based on the number of units shipped and on market share, globally and regionally. Equipment vendors are measured on revenues and profits and market share, and content/application companies tend to be measured on numbers of downloads/users/players and on revenues and profits. Performance at mobile network operators tends to be measured by the number of subscribers, gross revenues, ARPU, churn, data as a percentage of service revenues and profits, as well as market share, but that is generally a sub-set of subscriber numbers within each national market, so not useful as a measure internationally. These measures are fine, but they all suffer from certain shortcomings. Subscriber numbers: As a measure, subscriber numbers shows the size an MNO has achieved, and hence this demonstrates market share within any given market. However, there are limitations to using this metric as a measure of the ‘best’ networks in the world. The data is obviously dependant on the population of each country and the number of competitors working in each market, and it does not fully take into account churn, customer service, market saturation, profitability and so on. China Mobile is the biggest single network in the world as measured by subscriber numbers, and this is down to a number of factors: China is one of the largest countries in the world, China has the largest population in the world and China Mobile faces very few competitors in its huge domestic market. Of course, the management running China Mobile deserves a lot of credit for the sheer size and scale of the operation they run. Managing that many customers on a single network is an immense task, but it is a task which would surely be even harder if they faced another five or six competitors. Revenues: Again, as a measure of the world’s ‘best’ networks, measuring gross revenues is another flawed measure, as there are clearly vast differences in wealth, prosperity and consumer spending power in different parts of the world. Measuring the performance of an MNO by looking at gross revenues in dollar values is not a fair measure of MNO performance when comparing the USA to India, or the UK to Bangladesh, or Germany to Algeria, etc. ARPU has long been used as one of the most popular performance measurement indicators of the mobile industry. However, again this favors the wealthy nations of North America, Western Europe and certain parts of Eastern Asia, so while ARPU makes an excellent yardstick for comparing corporate performance within one national market, or for comparing the performance of one MNO over a period of time, it is not a great way to find the ‘best’ MNOs in the world, or even in each region. ARPU figures achieved by operators in countries in the emerging markets cannot be compared fairly with the high ARPU we see in wealthy markets in the most developed parts of the world. In this report, we have attempted to take all these well known performance measurements and modify them in order to study hundreds of MNOs around the world using a fair set of criteria. We have developed several new performance measurements and we have modified these more traditional measurements, and then we have blended them all together to try to truly identify the ‘best’ MNOs in each major geographical region. The mobile and wireless industry is one of the most aggressive growth sectors in the world today. Even the current economic slowdown has not stopped its growth in many markets around the globe. Worldwide, 2007 to 2011 is a period of particular strategic importance to the mobile industry, with worldwide mobile penetration climbing from 50 percent in 2007 to a forecast 75 percent by the end of 2011. As the more advanced markets have become saturated, the focus of the industry has now split, with the more advanced markets focused on data services while the developing markets continue to pursue growth and market share.



The mobile industry was still a very voice-centric business in 2007, but after 2011 many markets worldwide will be far more concentrated on non-voice mobile services. Mobile phones are changing from primarily being voice communication devices to become pocket computers, personal organizers, mobile entertainment and lifestyle devices and anytime-anywhere Internet access portals. MNOs in the most developed markets are now focused on growing non-voice mobile services, reducing churn and increasing ARPU. Markets are fiercely competitive and voice margins are under intense pressure, and MNOs have been working very hard in recent years developing mobile data services, to increase the share of service revenues coming from non-voice services. The tough economic climate in 2008 and 2009 has added pressure to the whole industry, and with voice prices being pushed harder than ever, MNOs have been relying heavily on advanced handsets, advanced mobile data services and mobile broadband service offerings to achieve differentiation and hold on to valuable customers. At the same time, MNOs in developing markets continue to focus on organic growth, network roll-out and winning market share in fast growing markets. These operators face many challenges of their own, including developing networks in extremely low-ARPU rural markets, delivering advanced 3G services to key cities and maintaining Quality of Service (QoS). Churn and customer retention is another battleground altogether in developing markets, where the subscriber base tends to be predominantly prepaid. In low ARPU markets many subscribers tend to use only very basic voice and SMS services, and differentiation is tough to achieve, adding crushing pressure to service margins. This study has used a variety of new performance measurement indices to look at MNOs across all regions and understand how they are performing in relation to one another. The research we conducted has looked at many MNOs using both the traditional measurements and our range of new measurements. This study identified some of the leading players in the industry and their successful strategies to win, and keep, their subscribers. In this summary, we start with the more traditional KPIs (key performance indicators), then we summarize our new performance measurements, and then we blend the old with the new to identify leading players in each major geographical region.



Traditional KPIs

The three following tables highlight the top 10 players in each region for the three traditional KPIs – Total Subscribers, Total Revenues and ARPU.

Table 44: Top 10 Operators by Subscribers – Regional (End-2008)

Rank Region

Asia Pacific Europe North America Latin America Middle East and Africa

1 China Mobile MTS Russia AT&T The US Telcel Mexico TCI Iran

2 China Unicom VimpelCom Russia Verizon The US Vivo Brazil Vodacom South Africa

3 Bharti Airtel India MegaFon Russia Sprint The US Claro Brazil MTN Nigeria

4 Telkomsel Indonesia T-Mobile Germany T-Mobile The US TIM Brasil MobiNil Egypt

5 Reliance

Communication India

Turkcell Turkey Rogers Canada Comcel Colombia Vodafone Egypt

6 Vodafone India Vodafone Germany Bell Mobility Canada Oi Brazil Zain Nigeria

7 NTT DOCOMO Japan Telecom Italia Telus Mobility

Canada Movistar Mexico MTN South Africa

8 Smart The Philippines Orange France Claro Argentina Globacom Nigeria

9 Idea Cellular India Movistar Spain Movistar Argentina Djezzy (Orascom) Algeria

10 KDDI Japan Kyivstar Ukraine Telecom Personal Argentina

Mobily Saudi Arabia

Rather obviously, the subscriber base of many leading MNOs is a simple product of the size of the market that each MNO operates within. The top 10 for the Asia Pacific region is largely dominated by China and India; Europe is dominated by Russia, Germany and Turkey; North America sees the USA dominate Canada and the top ten for Latin America is dominated by Brazil, Mexico and Argentina. Only the least developed region in the world, Africa and the Middle East shows some less-predictable variety, though of course it’s no real surprise to see MNOs operating in Nigeria, Egypt and South Africa high on the list.



Table 45: Top 10 Operators by Total Revenues – Regional (2008)

Rank Region


1 China Mobile Orange France AT&T The US Telcel Mexico Vodacom South Africa

2 NTT DOCOMO Japan Movistar Spain Verizon The US Vivo Brazil MTN South Africa

3 KDDI Japan Telecom Italia Sprint The US TIM Brasil Etisalat The UAE

4 SoftBank Japan SFR France T-Mobile The US Claro Brazil MTN Nigeria

5 SK Telecom South Korea T-Mobile Germany Rogers Canada Movistar Venezuela TCI Iran

6 China Unicom Vodafone Germany Telus Mobility Canada Oi Brazil Maroc Telecom

Morocco

7 KTF South Korea O2 The UK Bell Mobility Canada Comcel Colombia Vodafone Egypt

8 Bharti Airtel India Vodafone Spain Movistar Mexico Djezzy (Orascom) Algeria

9 Telstra Australia Vodafone The UK Movistar Argentina MobiNil Egypt

10 LG Telecom South Korea Vodafone Italy Movilnet Venezuela

Partner Communications

Israel As with the previous table, these results are again quite predictable. The top ten MNOs in the Asia Pacific region are dominated by China, Japan and South Korea – China through the sheer size of the market and Japan and South Korea being widely acknowledged as two of the most advanced mobile markets in the world. The top ten for Europe is clearly made up entirely from MNOs in the “Big 5” wealthy Western European nations. In North America the USA dominates Canada again and in Latin America again we see the largest markets – Mexico and Brazil – taking most of the top ten. The Africa and Middle East region shows some changes, the list topped unsurprisingly by the leading MNOs in South Africa, a country always at the very forefront of regional development.



Table 46: Top 10 Operators by Monthly ARPU – Regional (2008)

Rank Region


1 KDDI Japan 3 The UK Rogers Canada Nextel Brazil Etisalat The UAE

2 NTT DOCOMO Japan Bouygues France Telus Mobility

Canada Nextel Argentina Partner

Communications Israel

3 Vodafone Australia Vodafone Ireland Sprint The US Nextel Peru Cellcom Israel

4 Telstra Australia O2 Ireland Verizon The US Movistar Venezuela Pelephone Israel

5 SoftBank Japan Orange Switzerland Bell Mobility Canada Digitel Venezuela du The UAE

6 SK Telecom South Korea Orange Austria AT&T The US Entel PCS Chile Mobily Saudi

Arabia

7 Optus Australia Netcom Norway T-Mobile The US TIM Brasil MTN Syria

8 Vodafone New Zealand 3 Austria Movilnet Venezuela Zain Jordan

9 SingTel Singapore Meteor Ireland Movistar Chile MTN South Africa

10 Starhub Singapore Telenor Norway Iusacell Mexico Cell C South Africa

Of the three most popular traditional KPIs, ARPU is certainly the one that offers the best way to compare corporate performance between MNOs, but obviously the metric shows wide variance between rich and poor economies. In this ARPU table we see the Asia Pacific region top ten dominated by the wealthier Asian markets, particularly noting the Australian MNOs; the European top ten is made up entirely from countries from Western and Northern Europe, particularly noting MNOs in Ireland; in North America the Canadian MNOs get some revenge over their large neighbour to the South; Latin America shows a more mixed spread, with MNOs in Venezuela and Chile placing higher in the table (both markets are quite strong SMS markets), and in Africa and the Middle East we see South African MNOs pushed down the table by players from countries in the Middle East. So it is clear that the traditional KPIs are very useful for comparing MNOs within a country, and they are useful for comparing MNOs within markets of comparable population and economic wealth, but beyond this the limitations start to weaken any further comparisons. In the following table we offer a table showing the top 20 MNOs worldwide as measured by these traditional KPIs we have already discussed, plus Churn and Data as a Percentage of Total Revenue.



Table 47: Top 20 Operators by different KPIs - Worldwide (2008)

Rank

KPI

Subscribers Total Revenues Monthly ARPU Monthly Churn Data as a

Percentage of Total Revenues

1 China Mobile China Mobile 3 The UK NTT DOCOMO Japan


2 China Unicom AT&T The US Bouygues France KDDI Japan Globe The Philippines

3 Bharti Airtel India Verizon The US Vodafone Ireland SingTel Singapore SoftBank Japan

4 AT&T The US NTT DOCOMO Japan O2 Ireland Chunghwa Taiwan NTT DOCOMO

Japan

5 Verizon The US Sprint The US Orange Switzerland T-Mobile Germany KDDI Japan

6 Telkomsel Indonesia KDDI Japan Rogers Canada Starhub Singapore Orange Austria

7 MTS Russia T-Mobile The US Orange Austria SoftBank Japan Mobilkom Austria

8 Reliance

Communication India

Orange France Netcom Norway Elisa Finland SingTel Singapore

9 Vodafone India SoftBank Japan Telus Mobility Canada

Reliance Communication

India

Telkomsel Indonesia

10 Telcel Mexico Movistar Spain 3 Austria Telenor Sweden O2 The UK

11 NTT DOCOMO Japan Telecom Italia Meteor Ireland 3 Sweden Sun The

Philippines

12 Sprint The US SFR France Nextel Brazil Telia Sonera Sweden Proximus Belgium

13 VimpelCom Russia Telcel Mexico KDDI Japan Tele2 Sweden 3 Austria

14 Vivo Brazil T-Mobile Germany Telenor Norway Mobilkom Austria Telecom Mobile New Zealand

15 MegaFon Russia Vodafone Germany NTT DOCOMO Japan Verizon The US 3 The UK

16 T-Mobile Germany SK Telecom South Korea

Sunrise Switzerland China Mobile Vodafone Ireland

17 Claro Brazil O2 The UK Proximus Belgium Pannon Hungary 3 Italia

18 Turkcell Turkey Vodafone Spain SFR France T-Mobile Hungary O2 Germany

19 TIM Brasil Vodafone The UK Etisalat The UAE Vodafone Hungary Telstra Australia

20 Vodafone Germany China Unicom Sprint The US Nextel Brazil Optus Australia



The next step in our evaluation involved blending together a whole range of performance measurements in order to understand not just which MNO has the most subscribers or makes the most money, but how various MNOs perform across a broader set of criteria. In order to compute such a ranking exercise we have followed three different approaches which are discussed in the sections below.

Ranking 1: Traditional Approach

This approach uses a quite traditional set of industry standards to compare various MNOs. These standards are listed below.

• MNO’s Penetration in the Market – a measure of comparative market share • Subscriber Growth – not total subscribers • Technology Deployed • ARPU • Revenue Growth – not gross revenues • Data Revenue’s Contribution to Total Revenue • Postpaid Subscriber Share • Churn

This list of performance measurements are the yardsticks normally used to evaluate the performance of an MNO, or close variations on those yardsticks, and here we blend them together to look at the combined result. As discussed, when applied to MNOs operating in different market conditions, these standards are subject to some basic limitations which are explained below again for clarity. Limitation The standards used in this blended traditional ranking are naturally inclined to favour MNOs in the more developed markets and give those markets a higher score than MNOs in developing markets. Rather obviously, the technology deployed by an operator is bound to be more advanced in developed countries compared to emerging markets. Likewise, ARPU, revenue and data revenue are highly dependent upon the financial conditions (affordability) of local users, where again developed markets score over the developing ones. In a nutshell, when MNO performance is evaluated using these traditional performance measurement indicators, operators in the developed countries will always score higher than operators in developing markets, predominantly because of the disparity in economic conditions. This is evidenced by the fact that the top fifty in our ranking is completely dominated by MNOs in wealthy, highly developed markets. Indeed, the top hundred only features one MNO from Africa and one from Latin America, and a handful of MNOs from Eastern Europe. The section below illustrates the full rankings of worldwide MNOs using this blended traditional approach.



Figure 156: Top 20 MNOs Worldwide – Overall Ranking Using Traditional Approach (2008)69


Table 48: MNOs Worldwide Ranked 1 to 20 – Overall Ranking Using Traditional Approach (2008)

Rank

MNO

Score

Rank

MNO

Score

1 NTT DOCOMO Japan 10.00 11 3 Austria 8.95 2 KDDI Japan 9.54 12 SK Telecom South Korea 8.91 3 SoftBank Japan 9.43 13 Proximus Belgium 8.89 4 Verizon The US 9.16 14 Elisa Finland 8.88 5 Orange Austria 9.10 15 Telus Mobility Canada 8.87 6 Mobilkom Austria 9.08 16 AT&T The US 8.86 7 Telenor Norway 9.02 17 Telia Sonera Finland 8.84 8 SingTel Singapore 9.00 18 Swisscom Switzerland 8.84 9 Rogers Canada 8.97 19 Etisalat The UAE 8.79 10 3 The UK 8.95 20 Orange France 8.78


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7

8

9

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re

Operator

Rank 11 to 20

Rank 1 to 10




Rank

MNO

Score

Rank

MNO

Score

21 Netcom Norway 8.77 36 Movistar Spain 8.43 22 Telstra Australia 8.76 37 Mobistar Belgium 8.41 23 DNA Finland 8.70 38 Sonofon Denmark 8.41 24 Bouygues France 8.66 39 O2 Ireland 8.40 25 SFR France 8.65 40 T-Mobile Austria 8.40 26 Sunrise Switzerland 8.62 41 Cellcom Israel 8.38 27 Vodafone Ireland 8.59 42 KTF South Korea 8.38 28 3 Sweden 8.55 43 KPN The Netherlands 8.34 29 Telenor Sweden 8.54 44 Telia Sonera Sweden 8.31

30 Partner Communications Israel 8.53 45 Optus Australia 8.30

31 Orange Switzerland 8.52 46 VIP Serbia 8.28 32 Sprint The US 8.52 47 Chunghwa Taiwan 8.27 33 Bell Mobility Canada 8.51 48 Vodafone Spain 8.26 34 T-Mobile The US 8.51 49 Telia Denmark 8.24

35 Vodafone The Netherlands 8.47 50 Pelephone Israel 8.23




Rank

MNO

Rank

MNO

Rank

MNO

51 TDC Denmark 91 Orange Poland 131 Telenor Serbia

52 O2 The UK 92 CSL New World Mobility Hong Kong 132 Claro Peru

53 O2 Czech Republic 93 Vodafone Hungary 133 Digitel Venezuela 54 Vodafone New Zealand 94 PCCW Mobile Hong Kong 134 Turkcell Turkey 55 Orange Slovakia 95 T-Mobile Montenegro 135 Claro Argentina 56 Starhub Singapore 96 Optimus Portugal 136 MTN Syria 57 MTS Belarus 97 mt:s Serbia 137 Telcel Mexico 58 Tele2 Sweden 98 Telecom Italia 138 Globe The Philippines 59 T-Mobile Slovakia 99 HTIL Hong Kong 139 Telefonica Peru 60 Taiwan Mobile 100 Movilnet Venezuela 140 Claro Brazil 61 T-Mobile The Netherlands 101 PTC Poland 141 Oi Brazil

62 Telecom Mobile New Zealand 102 Movistar Argentina 142 Celcom Malaysia

63 Vodafone Australia 103 Smart The Philippines 143 Iusacell Mexico 64 T-Mobile Croatia 104 Movistar Venezuela 144 Movistar Mexico 65 M1 Singapore 105 Meteor Ireland 145 TIM Brasil 66 Etisalat Misr Egypt 106 Vivatel Bulgaria 146 Telefonica Slovakia 67 FeT Taiwan 107 Vodafone Italy 147 Movistar Colombia

68 Mobiltel Bulgaria 108 Telecom Personal Argentina 148 Vivo Brazil

69 Vodafone Germany 109 du The UAE 149 Sun The Philippines 70 O2 Germany 110 Vodafone Greece 150 Nextel Peru 71 T-Mobile Germany 111 MTN Iran 151 Avea Turkey 72 Orange The UK 112 Omnitel Lithuania 152 Maroc Telecom Morocco 73 T-Mobile Czech Republic 113 Mobily Saudi Arabia 153 DiGi Malaysia 74 T-Mobile Hungary 114 Movistar Chile 154 Globacom Nigeria 75 Cosmote Greece 115 China Mobile 155 Safaricom Kenya 76 Vodafone The UK 116 Tele2 Lithuania 156 MTS Russia 77 Pannon Hungary 117 T-Mobile The UK 157 TCI Iran 78 Velcom Belarus 118 Promonte Montenegro 158 Vodafone Egypt 79 LG Telecom South Korea 119 BITE Lithuania 159 Nextel Argentina 80 TMN Portugal 120 China Unicom 160 Zain Iraq

81 Vodafone Czech Republic 121 Maxis Malaysia 161 Reliance Communication India

82 Orange Spain 122 Excelcomindo Indonesia 162 Zain Nigeria 83 SmarTone Hong Kong 123 Wind Hellas Greece 163 MTN Nigeria 84 E-Plus Germany 124 Telkomsel Indonesia 164 Banglalink Bangladesh 85 Vodafone Portugal 125 Entel PCS Chile 165 Brasil Telecom 86 Globul Bulgaria 126 Nextel Brazil 166 Bharti Airtel India 87 3 Italia 127 Base Belgium 167 Vodafone India 88 Tele2 Croatia 128 Comcel Colombia 168 MegaFon Russia 89 Polkomtel Poland 129 Wind Italy 169 MobiNil Egypt 90 VIPnet Croatia 130 Vodafone Romania 170 MTS Ukraine




Rank

MNO

Rank

MNO

Rank

MNO

171 Meditel Morocco 183 Idea Cellular India 195 life:) Ukraine 172 VimpelCom Russia 184 Zain Sudan 196 Tigo DR Congo 173 Hutch Thailand 185 MTN Sudan 197 Kyivstar Ukraine 174 Zain Jordan 186 Tunicell Tunisia 198 Nedjma Algeria

175 Tigo Colombia 187 GrameenPhone Bangladesh 199 Zain Kenya

176 Asiacell Iraq 188 Vodafone Turkey 200 Mobilink Pakistan 177 MTN Afghanistan 189 Cell C South Africa 201 Beeline Ukraine 178 AIS Thailand 190 DTAC Thailand 202 Sibir Telecom Russia 179 Claro Chile 191 Djezzy Algeria 203 Celtel DR Congo 180 Vodacom South Africa 192 Tele2 Russia 204 Vodacom DR Congo 181 MTN South Africa 193 Telenor Pakistan 182 Tunisiana Tunisia 194 True Move Thailand



Ranking 2: Normalised Approach

We have established that the traditional measures do not offer a fair way to compare MNOs across different regions and economic conditions, and the rankings from our blended traditional approach favour MNOs in developed markets. In order to address this imbalance, in this study we have developed a range of ten new performance measurements, by normalising the traditional standards. Obviously you have read our detailed results from running each of these ten new performance measurements over the body of this report. Now we have blended those ten new measurements together to create a new overall ranking based ONLY on the ten new normalised metrics, and again we have cast this across many MNOs from around the world. These ten new performance measurements are listed below.

• MNO ARPU PPP • ARPU as a percentage of disposable income • Revenue growth of the MNO • MNO Profitability • MNO growth vs. market growth • Significance of the MNO • Successful growth of revenues from data services • Measuring subscriber loyalty • Postpaid penetration measure • Technology measure

As you will see from the new ranking, this normalisation has helped many MNOs from developing nations to compare more favorably with their counterparts in highly developed markets, now metrics are being compared across a more level playing field. However, this approach also has flaws, which are explained below. Limitations The normalised approach adopted here slightly turns the tables in the favour of operators in developing nations. For instance, when we normalise ARPU in a country with the disposable income of its citizens, it gives developing markets an edge over developed ones as the disposable income in developing markets tends to be much lower than in developed nations. When measuring ARPU as a percentage of disposable income, this twists the data in favour of MNOs in the developing markets. Another reason why subscribers in developing markets spend a higher proportion of their disposable income on their mobile phones is because they often do not have access to fixed wireline telecoms services. In countries where wireline penetration is low, such as in many African nations, mobile penetration has quickly exceeded wireline penetration. For many people in these countries, a mobile phone is proving to be their first ever experience of telecoms services, and this drives ARPU as a percentage of [low] disposable income much higher, when compared (normalised using PPP) to mobile phone users in developed markets who also have access to a fixed line phone and a separate broadband connection. Furthermore, in many countries, particularly in Asia, mobile phones are providing people with their first ever connection to the Internet, and this again is effectively driving up ARPU when compared to the developed nations where fixed line broadband is already so prevalent. Another of our ten new performance measurements looks at the speed of growth an MNO has achieved. Here again MNOs in the developing markets gain some advantage. MNOs operating in the more developed nations have built economies of scale into the costs of network infrastructure, which have helped bring down the price of GSM (and other standards of) equipment. This helps MNOs in developing nations to roll out network growth faster and cheaper than their counterparts in the developed world were doing ten years earlier. MNOs in developing nations also receive investment from overseas which further speeds the process of network roll out.



Similar factors are at play when looking at our tenth new performance measurement index, the Technology Measure. Again, we see technology moving forward much faster in some developing nations, where we see the ‘leap frog’ effect as MNOs quickly build out 3G and 3.5G networks only a few years after establishing their first 2G operations. In many of the developed nations, 3G was a hyped-up dream for years before the equipment, standards, handsets, content, software and marketing was all in place to make it a reality. Now these issues have all been resolved, MNOs in developing markets can ‘leap frog’ over interim 2.5G and 3G technologies and move straight to fast 3G and 3.5G networks. All of these factors must be considered, and you will see from the new rankings listed over the next few pages that these new performance measurements do seem to favour the MNOs in the developing markets over those in the developed markets. The top 20 is completely dominated by players from developing nations. The section below shows the ranks of worldwide MNOs using the normalised approach.

Figure 157: Top 20 MNOs Worldwide – Overall Ranking Using Normalised Approach (2008)70



Telef

onica

Per

u, 10

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du T

he U

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tar V

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9.0

Etisa

lat M

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gypt,

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Movil

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abia,

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Zain

Iraq,

8.3

Safar

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Keny

a, 8.3

Clar

o Per

u, 8.2

Etisa

lat T

he U

AE, 8

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MTN

Syria

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Asiac

ell Ir

aq, 8

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China

Mob

ile, 8

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Voda

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gypt,

8.1

Smar

t The

Phil

ippine

s, 8.0

Zain

Suda

n, 7.9

NTT

DOCO

MO Ja

pan,

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Tunis

iana T

unisi

a, 7.9

0

1

2

3

4

5

6

7

8

9

10

Sco

re

Operator

Rank 11 to 20

Rank 1 to 10




Rank

MNO

Score

Rank

MNO

Score

1 Telefonica Peru 10.00 11 Claro Peru 8.20 2 du The UAE 9.07 12 Etisalat The UAE 8.16 3 Movistar Venezuela 9.03 13 MTN Syria 8.12 4 Etisalat Misr Egypt 8.84 14 Asiacell Iraq 8.11 5 Movilnet Venezuela 8.75 15 China Mobile 8.08 6 Mobily Saudi Arabia 8.53 16 Vodafone Egypt 8.07 7 MTN Nigeria 8.48 17 Smart The Philippines 7.97 8 Comcel Colombia 8.34 18 Zain Sudan 7.93 9 Zain Iraq 8.30 19 NTT DOCOMO Japan 7.89 10 Safaricom Kenya 8.30 20 Tunisiana Tunisia 7.89


Rank

MNO

Score

Rank

MNO

Score

21 MTS Belarus 7.88 36 Mobiltel Bulgaria 7.32 22 Globacom Nigeria 7.87 37 Globul Bulgaria 7.31 23 MobiNil Egypt 7.77 38 T-Mobile Croatia 7.30 24 mt:s Serbia 7.75 39 Orange France 7.29 25 Djezzy Algeria 7.65 40 Swisscom Switzerland 7.28 26 Telkomsel Indonesia 7.61 41 SK Telecom South Korea 7.26 27 MTN Iran 7.56 42 Vodafone Czech Republic 7.25 28 Telstra Australia 7.54 43 Proximus Belgium 7.24 29 SingTel Singapore 7.54 44 T-Mobile Slovakia 7.23 30 Maroc Telecom Morocco 7.53 45 O2 Czech Republic 7.23 31 Orange Slovakia 7.43 46 Cosmote Greece 7.20 32 MTN Afghanistan 7.42 47 KPN The Netherlands 7.20

33 Tunicell Tunisia 7.39 48 Partner Communications Israel 7.18

34 Telenor Norway 7.34 49 T-Mobile Montenegro 7.17 35 T-Mobile Czech Republic 7.32 50 Velcom Belarus 7.16




Rank

MNO

Rank

MNO

Rank

MNO

51 GrameenPhone Bangladesh 91 SFR France 131 Vodafone Italy

52 TCI Iran 92 Bell Mobility Canada 132 Elisa Finland 53 Movistar Colombia 93 MTS Russia 133 3 Italia

54 Rogers Canada 94 Pannon Hungary 134 Reliance Communication India

55 Movistar Spain 95 Telia Sonera Sweden 135 Orange Switzerland 56 Cellcom Israel 96 Nextel Argentina 136 Orange Spain 57 VIPnet Croatia 97 T-Mobile The Netherlands 137 T-Mobile Austria 58 KDDI Japan 98 Wind Italy 138 KTF South Korea 59 Vodafone Ireland 99 Promonte Montenegro 139 Sonofon Denmark 60 Starhub Singapore 100 Taiwan Mobile 140 Vodafone Germany 61 Mobilkom Austria 101 Tele2 Croatia 141 Sunrise Switzerland 62 T-Mobile Hungary 102 Polkomtel Poland 142 MegaFon Russia 63 Movistar Chile 103 M1 Singapore 143 Banglalink Bangladesh 64 Vodafone New Zealand 104 Vodafone Romania 144 VimpelCom Russia 65 Verizon The US 105 Kyivstar Ukraine 145 Base Belgium 66 Maxis Malaysia 106 Vodafone Spain 146 Tele2 Sweden 67 Zain Jordan 107 Orange Poland 147 Celcom Malaysia 68 Digitel Venezuela 108 Vodafone Hungary 148 Meteor Ireland 69 Globe The Philippines 109 Orange Austria 149 3 Austria 70 Telefonica Slovakia 110 Telenor Serbia 150 Optimus Portugal 71 Nextel Brazil 111 DNA Finland 151 Telecom Italia 72 Vivatel Bulgaria 112 Vodafone Portugal 152 Orange The UK 73 Turkcell Turkey 113 Telia Sonera Finland 153 TDC Denmark

74 Telecom Personal Argentina 114 Netcom Norway 154 Telenor Pakistan

75 Pelephone Israel 115 Claro Argentina 155 Vodafone India 76 Zain Nigeria 116 SoftBank Japan 156 Claro Brazil 77 Chunghwa Taiwan 117 3 The UK 157 O2 The UK 78 MTN Sudan 118 Nextel Peru 158 Bharti Airtel India

79 Telecom Mobile New Zealand 119 Omnitel Lithuania 159 life:) Ukraine

80 Movistar Argentina 120 Vivo Brazil 160 TIM Brasil 81 AT&T The US 121 China Unicom 161 3 Sweden 82 Telcel Mexico 122 PTC Poland 162 AIS Thailand 83 Telus Mobility Canada 123 MTS Ukraine 163 Mobilink Pakistan 84 FeT Taiwan 124 T-Mobile Germany 164 Excelcomindo Indonesia 85 Entel PCS Chile 125 Bouygues France 165 Vodafone Greece

86 Mobistar Belgium 126 Vodafone The Netherlands 166 DiGi Malaysia

87 TMN Portugal 127 BITE Lithuania 167 E-Plus Germany 88 Meditel Morocco 128 Avea Turkey 168 Telenor Sweden 89 Tele2 Lithuania 129 Oi Brazil 169 T-Mobile The US 90 O2 Ireland 130 Optus Australia 170 Movistar Mexico




Rank

MNO

Rank

MNO

Rank

MNO

171 Wind Hellas Greece 183 Cell C South Africa 195 T-Mobile The UK 172 Telia Denmark 184 Idea Cellular India 196 Brasil Telecom 173 Sprint The US 185 PCCW Mobile Hong Kong 197 Hutch Thailand 174 Tigo Colombia 186 MTN South Africa 198 SmarTone Hong Kong 175 Vodacom South Africa 187 LG Telecom South Korea 199 Vodacom DR Congo 176 VIP Serbia 188 Vodafone Turkey 200 True Move Thailand 177 Zain Kenya 189 Sibir Telecom Russia 201 Claro Chile 178 Nedjma Algeria 190 DTAC Thailand 202 Tigo DR Congo 179 Vodafone Australia 191 Tele2 Russia 203 Celtel DR Congo 180 O2 Germany 192 Sun The Philippines 204 Beeline Ukraine 181 HTIL Hong Kong 193 Iusacell Mexico

182 Vodafone The UK 194 CSL New World Mobility Hong Kong



The table below further details the top three players ranked for each of the ten new performance measurements discussed in the main body of this report. This data again highlights the ranking bias towards MNOs operating in developing nations.

Table 56: Top 3 Operators Worldwide for Performance Measurements – Normalised Approach (2008)

Performance Measurement MNO Rank

MNO Monthly ARPU PPP

Nextel Brazil 1

Nextel Argentina 2

Nextel Peru 3

ARPU as a Percentage of Disposable Income

MTN Nigeria 1

Zain Sudan 2

Globacom Nigeria 3


life:) Ukraine 1

Tele2 Croatia 2

BITE Lithuania 3

MNO Profitability

Etisalat The UAE 1

Smart The Philippines 2

Telkomsel Indonesia 3


Wind Italy 1

life:) Ukraine 2

TDC Denmark 3


du The UAE 1

Mobily Saudi Arabia 2

Movistar Venezuela 3


Smart The Philippines 1

Telkomsel Indonesia 2

NTT DOCOMO Japan 3


NTT DOCOMO Japan 1

KDDI Japan 2

Chunghwa Taiwan 3


Telefonica Peru 1

du The UAE 2

Movilnet Venezuela 3

Technology Measure

Etisalat Misr Egypt 1

MTN Sudan 2

Vodacom DR Congo 3 As we have discussed, there are a number of factors which seem to bias the results of these performance measurements in favour of the developing markets. However, this bias in the results does not entirely favour MNOs in developing markets without some merit. Many of the MNOs working in these markets have worked very hard to achieve rapid growth, maximum ARPU and minimum churn. Throughout the body of this report you have read many case studies detailing the successful strategies of these network operators.



The table below offers a brief summary of the key strategies adopted by MNOs which have featured high on this ranking list based on the ten new normalised performance measurements.

Table 57: Key Strategies Identified for Performance Measurements – Normalised Approach

Performance Measurement Key Strategies Identified

MNO Monthly ARPU PPP

High ratio of postpaid subscribers


Innovative approach for non-voice services

ARPU as a Percentage of Disposable Income

Target different segments with different services

Make services more attractive and affordable

Complement voice services with data services


Aggressive approach towards subscriber acquisition

Services innovation

Promotion of data services

MNO Profitability

Increase network utilisation

Focus on high ARPU generation

Innovative and attractive services


Identify potential subscribers

Customise product offerings

Pioneer with attractive services


Focus on network coverage

Pioneer with attractive services

Understand price sensitivity of the market


Aggressive promotion of SMS

Make data services more user friendly



High ratio of postpaid subscribers


Focus on quality of service


Initial focus on postpaid segment

Encourage the uptake of postpaid plans


Technology Measure

Early start in advanced technologies

Focus on network expansion and utilisation

Launch services to match the technology

SUMMARY

High ratio of postpaid subscribers Innovation in services Promotion of data services Focus on enterprise segment



Key strategies identified Driving growth: - Target services to key customer groups. Research we have conducted for this report

and for other reports we have written in recent years, has repeatedly shown that services must be designed, tailored, packaged and marketed to suit the needs of specific segments of the market – teens, enterprise users, baby boomers, prosumers, etc. One size does NOT fit all.

- Focus on basics. Ensure good network coverage, attractive (and clear, simple) price plans, keep prices competitive on basic services such as voice and SMS, make prices accessible on more advanced services to entice users to use more.

- Innovate. Pioneer new services to key segments, such as the teens and young adults, innovate in marketing.

- Keep an eye on quality. Ensure quality content partnerships and quality services. Partner with well recognized quality brands. Ensure network quality and quality of customer service, these will dramatically help churn reduction.

Driving ARPU: - Focus on the postpaid segment. It is widely accepted that postpaid subscribers are

higher value customers than prepaid subscribers. For MNOs, keeping a focus on the postpaid segment of the market helps to keep the customer base in the higher-value end of the market, and helps to combat churn. Enterprise customers obviously form an important sub-set within the postpaid market.

- Customize. As noted above, our research has repeatedly shown the value of tailored content, services and tariffs to suit the needs of key segments of the market.

- Package voice and data services together. Encourage postpaid subscribers to use more non-voice services by tempting them with attractive bundle deals. Package lots of data services into well priced tariffs, bundling lots of voice minutes, SMS, MMS and other data services in attractively priced deals.

- Target the enterprise segment. - Fixed-mobile substitution. Our research shows many African MNOs taking a much

greater share of subscribers’ disposable income than their counterparts in wealthier markets. Price voice tariffs to steal voice traffic from fixed networks.

Combating churn: - Focus on postpaid. Again, try hard to drive prepaid customers onto postpaid deals. - Quality of service. As previously noted, focus on quality of network coverage, quality of

service, innovative services and innovative marketing. - Competitive pricing. Keep tariffs competitive and focus on pricing that makes non-voice

services affordable and accessible to customers. Growing data services: - Learn to love SMS. SMS continues to be the often un-loved hero of non-voice services

revenues worldwide. Drop prices, push volumes, SMS accounts for over 65 percent of all non-voice service revenues worldwide, and will continue this lead for many years.

- Ensure services are accessible. Data services must be easy to use, focus on simplicity, ease of service discovery and clear simple pricing.

- Target markets. Yet again, ensure services are tailored and marketed to specific sub-segments of the market, such as teens, enterprise segment, etc.

Summary: - Focus on quality - Focus on innovation - Push postpaid tariffs - Segment your market - Clear pricing - Push data services - Love SMS



As one final measure to help us understand the limitations of using our ten new performance measurements it is useful to understand how the results are affected by regional market variations. The table below shows the regional mix of the top 20 operators for each performance measurement index.

Table 58: Regional Mix of MNOs in Top 20 List for Each Performance Measurement – Normalised Approach (2008)

Performance Measurement

Region Total

Asia Pacific Europe North America

Latin America

Middle East and Africa

MNO Monthly ARPU PPP 3 7 5 3 2 20

ARPU as a Percentage of

Disposable Income 2 0 0 3 15 20

Revenue Growth of the MNO 3 13 0 2 2 20

MNO Profitability 5 7 0 1 7 20

MNO Growth vs. Market Growth 4 12 0 0 4 20

Significance of the MNO 0 8 0 6 6 20

Data Revenue Measure 11 4 0 3 2 20

Measuring Subscriber Loyalty 8 11 1 0 0 20

Postpaid Penetration Measure 1 1 0 6 12 20

Technology Measure 2 1 0 4 13 20

TOTAL 39 64 6 28 63 200

This table clearly shows regional variation for several of the specific performance measurements. Normalised ARPU has balanced out quite well, with European and North American operators leading the way, as we might expect to see, these being the most advanced markets with the highest use of data services. By contrast, ARPU as a percentage of disposable income shows no entries at all for the European and North American regions, and the table is dominated by MNOs from Africa and The Middle East. As discussed previously, lower levels of disposable income slightly distort this figure, but more significantly, much lower penetration of wireline telecoms services boost the use of mobile phones in this region. In many parts of Africa and Asia, mobile phones are not only the first telecoms services many people have ever had access to, but they also offer many people a first chance to access the Internet and also a first chance to use banking services. As we have discussed in several reports we have previously published, traditional banking services are not available to large segments of the population in many developing countries. In such places, basic mobile payment services offer people a first chance to use banking services. Our best selling report ‘Strategies for Creating End-User Demand for Mobile Data Services’ profiled the GCASH service from Globe Telecom in The Philippines. Further, our market study ‘Strategies for Driving Data ARPU’ looked at the M-PESA mobile banking service from Safaricom in Kenya.

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Such case studies in countries like Kenya and the Philippines and also in Bangladesh show us that banking services are often not available to great segments of the population, and as mobile phone penetration grows, so simple banking services are being made available to people who previously did not have access to any banking services at all. Our study of M-PESA (Safaricom, Kenya, see more on page 45 of this report) shows that poor banking infrastructure in Kenya meant that 80 percent of the population of almost 32 million people did not have access to banking services. Mobile penetration in Kenya is over 40 percent now, so in such conditions the mobile platform can extend basic banking services to a far larger segment of the population than existing banking infrastructure. Numerous research studies have also shown that bringing mobile telecoms to developing nations in Africa and Asia is also helping slightly to alleviate poverty. Extending telecoms services to small business owners in parts of Africa, to farmers in China and to entrepreneurs from Latin America to Asia, has been shown to boost business productivity and assist small businesses to grow. It is hardly surprising to see greater ‘ARPU as a percentage of disposable income’ in such countries, where previously large segments of the population have had no access at all to telephony and banking services. These issues help to show the enormous growth potential that still lies ahead for the mobile industry worldwide. At the present time, (time of writing: late May 2009), world population stands at approximately 6.8 billion, and total mobile subscriptions worldwide stands at approximately 4.5 billion, so worldwide mobile penetration is approximately 66 percent. Enormous potential for growth still exists around the world. Equipment vendors continue to build newer and more efficient equipment that will enable mobile networks to cover sparsely populated rural regions at cost-effective build-out prices. Research, such as this study, continues to show that mobile telecoms services are just as popular – or maybe even more popular – in low-ARPU developing markets as they are in the highly developed markets. At present, subscribers in these countries mostly lack the disposable income for such frivolous entertainment activities as mobile music, games, videos, etc. Once these services become affordable and viable in these markets, the opportunity to grow ARPU will grow rapidly. Massive opportunities still exist across Asia, Africa and the Middle East and Latin America, where the growth of mobile services is helping businesses and individuals, and in some ways aiding the global effort to relieve poverty and suffering. We see strong performances from a number of European operators when looking at MNO growth against the rest of the market, growth in profitability, and churn management. Operators in the Asia Pacific region seem to dominate in terms of generating revenues from data services, clearly that strength coming from Japan and South Korea in particular. Again we see operators in Africa and the Middle East leading the way in rapid technology development (the leap frog effect) and in the growth of the postpaid subscriber base too. Both the AME region and Latin America made positive entries here, but it must be remembered that these are typically the world’s lowest postpaid penetration markets, so these gains must be viewed from a very low starting point. Notable by their absence, few of these rankings feature MNOs from North America. Of course, this is another anomaly of the regional markets, as there are far fewer MNOs in North America being tracked in this study than in other regions. Also, with these new performance measures biased slightly in favour of the developing markets, North America is naturally left behind, as one of the wealthiest and most developed regions in the world.



Ranking 3: Blended Approach

As we have discussed, there are strengths and weaknesses to measuring MNO performance using both the traditional KPIs and our ten new indices which level the economic playing field much more fairly. It remains that both approaches have their own limitations which inhibit the emergence of a complete and true picture of MNOs performance worldwide. The first approach favors developed markets, and the second one backs the developing nations. Hence, to nullify their biased nature, we have come up with a ranking which takes into account both the approaches and creates a much more balanced view for studying the performance of all mobile operators worldwide. The section below illustrates the ranks of worldwide MNOs using this new fully blended approach.

Figure 158: Top 20 MNOs Worldwide – Overall Ranking Using Blended Approach (2008)71



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Table 59: MNOs Worldwide Ranked 1 to 20 – Overall Ranking Using Blended Approach (2008)

Rank

MNO

Score

Rank

MNO

Score

1 NTT DOCOMO Japan 10.00 11 Movistar Venezuela 8.85 2 Etisalat The UAE 9.29 12 SK Telecom South Korea 8.84 3 KDDI Japan 9.20 13 du The UAE 8.83 4 Etisalat Misr Egypt 9.11 14 SoftBank Japan 8.83 5 Telefonica Peru 9.08 15 Proximus Belgium 8.81 6 SingTel Singapore 9.07 16 Swisscom Switzerland 8.80 7 Telenor Norway 8.97 17 Rogers Canada 8.80 8 Telstra Australia 8.90 18 Orange France 8.77 9 Verizon The US 8.89 19 Movilnet Venezuela 8.72 10 Mobilkom Austria 8.86 20 MTS Belarus 8.65


Rank

MNO

Score

Rank

MNO

Score

21 Orange Austria 8.62 36 3 Austria 8.35 22 Telus Mobility Canada 8.60 37 DNA Finland 8.33 23 AT&T The US 8.59 38 Bell Mobility Canada 8.29

24 Partner Communications Israel 8.52 39 O2 Czech Republic 8.28

25 Vodafone Ireland 8.51 40 Mobistar Belgium 8.26 26 3 The UK 8.49 41 Bouygues France 8.25 27 Mobily Saudi Arabia 8.45 42 Smart The Philippines 8.24 28 Telia Sonera Finland 8.43 43 O2 Ireland 8.24 29 Movistar Spain 8.40 44 T-Mobile Slovakia 8.22 30 SFR France 8.40 45 Comcel Colombia 8.22 31 KPN The Netherlands 8.39 46 T-Mobile Croatia 8.21 32 Elisa Finland 8.39 47 Mobiltel Bulgaria 8.19 33 Orange Slovakia 8.39 48 Chunghwa Taiwan 8.18 34 Netcom Norway 8.37 49 Starhub Singapore 8.18 35 Cellcom Israel 8.37 50 Vodafone New Zealand 8.18




Rank

MNO

Rank

MNO

Rank

MNO

51 Pelephone Israel 91 O2 The UK 131 Globe The Philippines 52 China Mobile 92 T-Mobile Germany 132 Meteor Ireland 53 mt:s Serbia 93 VIP Serbia 133 Wind Italy 54 Sunrise Switzerland 94 Telia Denmark 134 Telcel Mexico 55 T-Mobile Czech Republic 95 Vodafone Egypt 135 Movistar Colombia 56 Telia Sonera Sweden 96 Vodafone Germany 136 LG Telecom South Korea 57 Orange Switzerland 97 Globacom Nigeria 137 China Unicom

58 Vodafone The Netherlands 98 Tele2 Croatia 138 Vodafone Romania

59 Claro Peru 99 Vivatel Bulgaria 139 BITE Lithuania 60 Cosmote Greece 100 Movistar Argentina 140 TCI Iran 61 Vodafone Czech Republic 101 Vodafone Portugal 141 Telenor Serbia 62 Vodafone Spain 102 Polkomtel Poland 142 MTN Afghanistan 63 Velcom Belarus 103 Orange The UK 143 Telefonica Slovakia

64 T-Mobile Austria 104 Telecom Personal Argentina 144 Vodafone Greece

65 Sonofon Denmark 105 Asiacell Iraq 145 Djezzy Algeria

66 Telecom Mobile New Zealand 106 Orange Spain 146 Claro Argentina

67 MTN Syria 107 Orange Poland 147 HTIL Hong Kong 68 KTF South Korea 108 Movistar Chile 148 Base Belgium 69 3 Sweden 109 Vodafone Hungary 149 PCCW Mobile Hong Kong 70 T-Mobile Hungary 110 3 Italia 150 Excelcomindo Indonesia 71 Globul Bulgaria 111 Vodafone Australia 151 SmarTone Hong Kong 72 Optus Australia 112 Maxis Malaysia 152 Tunicell Tunisia 73 T-Mobile The Netherlands 113 Maroc Telecom Morocco 153 MTS Russia 74 Telenor Sweden 114 MobiNil Egypt 154 Zain Nigeria

75 Taiwan Mobile 115 Nextel Brazil 155 CSL New World Mobility Hong Kong

76 FeT Taiwan 116 Tele2 Lithuania 156 Oi Brazil 77 MTN Iran 117 PTC Poland 157 Wind Hellas Greece 78 MTN Nigeria 118 O2 Germany 158 Zain Jordan 79 Sprint The US 119 Tunisiana Tunisia 159 Nextel Argentina 80 T-Mobile The US 120 Entel PCS Chile 160 Nextel Peru 81 Safaricom Kenya 121 Zain Sudan 161 Vivo Brazil 82 M1 Singapore 122 Promonte Montenegro 162 Celcom Malaysia 83 TMN Portugal 123 Vodafone Italy 163 Claro Brazil

84 Zain Iraq 124 Digitel Venezuela 164 GrameenPhone Bangladesh

85 Telkomsel Indonesia 125 Optimus Portugal 165 Avea Turkey 86 T-Mobile Montenegro 126 E-Plus Germany 166 Meditel Morocco 87 VIPnet Croatia 127 Omnitel Lithuania 167 TIM Brasil

88 Pannon Hungary 128 Turkcell Turkey 168 Reliance Communication India

89 TDC Denmark 129 Vodafone The UK 169 MTN Sudan 90 Tele2 Sweden 130 Telecom Italia 170 Movistar Mexico




Rank

MNO

Rank

MNO

Rank

MNO

171 T-Mobile The UK 183 Vodacom South Africa 195 Tele2 Russia 172 MTS Ukraine 184 Kyivstar Ukraine 196 Mobilink Pakistan 173 Banglalink Bangladesh 185 MTN South Africa 197 Zain Kenya 174 DiGi Malaysia 186 Idea Cellular India 198 Nedjma Algeria 175 MegaFon Russia 187 Brasil Telecom 199 True Move Thailand 176 VimpelCom Russia 188 Telenor Pakistan 200 Tigo DR Congo 177 Bharti Airtel India 189 Cell C South Africa 201 Sibir Telecom Russia 178 Vodafone India 190 Hutch Thailand 202 Beeline Ukraine 179 Iusacell Mexico 191 Vodafone Turkey 203 Celtel DR Congo 180 AIS Thailand 192 DTAC Thailand 204 Vodacom DR Congo 181 Sun The Philippines 193 life:) Ukraine 182 Tigo Colombia 194 Claro Chile

As you can see from the data tables, this method of ranking MNO performance creates a far more balanced view and we believe this to be as close and accurate a picture as is possible. MNOs in Japan appear to crowd the top of the list, but this is hardly surprising, as Japan is widely acknowledged as the world’s leading mobile market - an almost entirely postpaid market; high mobile data usage; innovative and always at the forefront of new technology; saturated; high ARPU and all in one of the world’s wealthiest economies. Beyond this dominance of Japanese MNOs, the rest of the rankings seem well balanced, with only the Africa and Middle East region slipping lower down the table, no doubt a result of the economic climate in this region and the lower penetration of mobile services in many African nations. The figure below provides the number of MNOs from different regions securing a place in the top 10 for each of the three approaches we have shown.

Figure 159: Regional Count of Top 10 Operators for Different Approaches


You can clearly see that using the traditional approach, Asia Pacific, Europe and North America lead the way owing to the nature of these more developed markets. On the other hand, for the normalised approach all top 10 operators are from the developing markets of Latin America and the Middle East and Africa regions. The blended approach fairly

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successfully minimises the bias in both these other two approaches by taking a mix of traditional and normalised KPIs and producing a more balanced ranking as a result. Notes covering a few anomalies, outliers and interesting observations

Throughout the report we noticed several possible anomalies worthy of brief discussion. The notes below try to explain some of the extraordinary findings of the study and these notes should also be studied carefully to aid a full understanding of all the research results. Performance Measurement 1 Query: Nextel in Latin America dominates the top 3 rankings Explanation: Nextel has successfully secured a niche market in Latin America, which sees the company taking the top three places in our MNO ARPU (PPP) ranking. Nextel has focussed on attracting postpaid customers, which helps reduce churn and generally means for higher spending, in a region which is predominantly prepaid. Most Latin American countries are 80 percent or more prepaid, and Nextel has focused on winning business from the minority of postpaid customers. This strategy has seen them focus on the enterprise sector; winning high-value subscribers and securing loyalty by offering advanced services (BlackBerry, push-to-talk, etc) at premium prices to the top-end of the market. Performance Measurement 6 Query: Extraordinarily high penetration level in the UAE Explanation: The mobile penetration of the UAE was 214 percent at end-2008. This astronomically high penetration can be partially attributed to the presence of a large group of migrant workers in the Emirates. Abu Dhabi and Dubai both attract vast communities of migrant workers, both labourers working on the endless construction projects and white collar workers to fill the offices and homes that result from all this building. The mobile subscriptions for this segment are included in the subscriber base of the country, reported by network operators, whereas the migrant working population is not fully accounted for in the official national population data. Therefore, the actual penetration level may be considerably lower than the reported value. Performance Measurement 6 Query: You may have observed that Safaricom in Kenya has 82.6% market share after 13 years of operation, yet it secured a lower postion in the ‘Significance of the MNO’ ranking than Etisalat (UAE) which has achieved 74.7% market share (lower) after 15 years in business (longer). Explanation: These markets have contrasting mobile penetration. By year end-2008, Kenya had approximately 41 percent mobile penetration where as the UAE has around 214 percent mobile penetration (see above). Therefore, despite both the players having a large market share the penetration of mobile services in the target population differ significantly, causing this seeming anomaly. Performance Measurement 6 Query: Achieving a high result as a second entrant into a monopoly market Explanation: In the Significance Measure index, two of the top three – du in the UAE and Mobily in Saudi Arabia – were second entrants into monopoly markets. The excellent and rapid subscriber growth these MNOs enjoyed can partly be attributed to the unique market characteristics of such a scenario. Competition is healthy and welcomed in almost any consumer market. Rapid growth can be expected from the new entrant as subscribers welcome the fresh choice, and naturally competition into a former monopoly usually also puts prices under pressure. A similar picture was seen in the Indian mobile market, when the BSNL monopoly was broken. Interestingly, when du launched in The UAE it avoided a direct price war with Etisalat, competing instead on products and services, differentiating its service offering through innovation and new non-voice services. Performance Measurement 7 Query: The dominance of Asian MNOs in our data revenue measure Explanation: You may have noticed that the results for PM7, our measure of the success of developing revenues from data services, show 11 of the top 20 MNOs to be in the Asia Pacific region. There are several explanations for this, and these points are well worth



understanding. Obviously, the use of non-voice services is very high in both Japan and South Korea, two markets widely acknowledged as world leading markets in the adoption not only of advanced mobile services, but also ‘all-things hi-tech’. Markets such as Japan and South Korea see very high use of mobile e-mail and MMS, but we have also observed that even in low ARPU markets, such as the Philippines and Bangladesh, the use of non-voice mobile services is much higher than in many more developed, wealthier markets in other regions of the world. The use of advanced data services in Japan and South Korea is supported by the evolution of world-leading data services and the availability of a wide choice of high-end handsets; whereas in the emerging markets such as the Philippines, subscribers use SMS in vast quantities, and as a preference to comparatively expensive voice. Performance Measurement 8 Query: Low churn rates in Japan Explanation: Our results show that network operators in Japan enjoy world-leading, enviably low churn rates. All three Japanese MNOs benefit from monthly churn rates of just one percent or lower. These low churn rates in Japan are worth understanding, as many MNOs around the world would benefit greatly from reducing churn rates to such low figures. Where SMS is the most popular mobile messaging format in almost every country in the world, mobile e-mail is also very popular in Japan. In Japan, where postpaid penetration is in the order of 98 percent, mobile e-mail is even more popular than SMS as a messaging format. While MNP (mobile number portability), which was introduced to the Japanese market in October 2006, allows subscribers to keep their phone number when they change network, they cannot keep their e-mail address. This factor makes an outstanding contribution to keeping churn so low, as subscribers clearly do not want to keep changing their e-mail address, forming great loyalty to their chosen MNO. Additionally, another factor aiding the low churn rate is the difference in network technology between the Japanese MNOs. The difference makes the transition of subscribers from one operator to another costlier, as they often need to purchase a new handset and there is often a fee attached to switching. This again helps reduce churn. To further reward subscriber loyalty, Japanese MNOs practice constant innovation, frequently introducing new handsets and all the latest service offerings. Performance Measurement 10 Query: The success of Hutchison’s “3” brand Explanation:

It’s impossible not to notice that in PM10, our ranking for how fast an MNO has managed to penetrate advanced network services into any given market, the top 50 rankings are completely dominated by network operators in developing markets. Clearly, it is natural that the ‘mass market’ catches up with the ‘early adopters’ at a faster pace, to paint a somewhat simplified picture of complex global markets. What is worthy of note, is the MNOs appearing on this list from the developed markets. 3 UK appears at number 34 on the list, the first entry from a fully matured, fully saturated market. Further entries from equally mature markets come in as follows: 3 UK – 34 Bell Canada – 54 3 Sweden – 58 3 Austria – 60 3 Italy – 62 Telus Canada – 63

Full credit must be given to Hutchison, and to the Canadian mobile industry. Hutchison have managed to establish an internationally recognised brand in tough, highly competitive markets, which also enjoys excellent high ARPU in several of those markets, notably in Europe. The results from this performance measurement clearly show how difficult it is to establish and grow an all-new brand in highly competitive, saturated, price sensitive



markets. These results should be carefully considerd by any player looking for growth opportunities, or any investors looking at establishing new operations. Whilst organic growth can still easily be found in the developing markets, setting up a new presence in fully matured markets is a long and expensive and difficult process.



Overall Ranking: Objective Analysis of Regional Performance in Three Core Areas of Success

Throughout the body of this report we have studied a number of mobile network operators based on a new set of performance measurement criteria. In this summary section we have looked at how those MNO performances can be studied and measured when using more traditional KPIs, our new measurements, and a blended set of both metrics. Throughout this entire study we have shown you many individual and collective ways of looking at MNO performance, including size, growth, ability to extract revenues from subscribers, advances made in non-voice mobile services, advancement of network technology, customer retention and so on. Individually and collectively, these results are very interesting, and the entire study has helped us to identify many of the success factors employed by selected MNOs to help win competitive advantage in these many areas of operation. While informative and interesting, these areas form a basket of diverse performance measurement indices which do not necessarily give an objective indication of the performance of the operators in any one specific focus area. For example, an operator in a highly developed market is unlikely to be looking to achieve rapid growth in subscriber numbers or gross revenues, since the market is likely saturated and highly competitive. In such a scenario, the primary focus of that MNO may instead be on customer retention, ARPU growth and increasing the percentage of revenues from data services. By contrast, an MNO in a developing market may be focussed on growing its subscriber base, winning market share in net subscriber additions, expanding its network to cover more territory and pushing SMS as the main revenue generating non-voice service. Therefore, it might be acceptable for the operators in emerging markets to initially grab a major chunk of the subscriber market share even while operating at low ARPU; and then to focus on pushing value added services to lift data ARPU as time goes by. Based on these differing needs, we have segmented our results into three broad areas of focus which most network operators have some interest in. These are:

• Best MNOs for size and growth • Best MNOs for extracting revenues from customers • Best MNOs for advancing non-voice mobile services

By using our blended approach (the third, most balanced approach, as identified in the previous pages), and then segmenting the various KPIs and performance measurements to single out factors effecting these three specific areas of focus, we have produced three further Overall Rankings. These new rankings provide a much more specific view of network operator performance based on more ‘real-world’ examples of most MNOs’ typical core areas of focus. We have further presented these results regionally, to normalise any lasting regional economic differences that may still be weighting the results one way or the other. The following figure illustrates the three new overall rankings, and then each ranking, and how it is calculated, is discussed in the text over the following pages.



Figure 160: Focus Areas of the Three Overall Rankings


Overall Rankings

Overall Ranking 2 Overall Ranking 3 Overall Ranking 1

Covers size and growth of MNOs

Covers the revenues generated by MNOs

Covers MNOs’ initiatives at pushing their data services



Overall Ranking 1 – Best MNOs by region for size and growth This overall ranking for size and growth considers the MNO’s performance in its ability to attract and retain subscribers and revenue generation. The MNOs have been ranked using the blended approach, considering the following performance measurement indices:

• MNO growth vs. market growth • Revenue growth of MNO • Significance of the MNO • Effective churn measure • Actual subscriber numbers • Actual market share

The regional top 10 list for MNOs’ performance in Overall Ranking 1 is given in the table below. This table shows the best MNOs in each region based on size and growth performance.

Table 63: Top 10 Regional Operators by Overall Ranking 1 (OR1)

Rank Region


1 China Mobile mt:s Serbia AT&T The US Comcel Colombia Zain Iraq

2 SingTel Singapore Tele2 Croatia Verizon The US Telefonica Peru Etisalat The UAE

3 NTT DOCOMO Japan life:) Ukraine Rogers Canada Movilnet Venezuela du The UAE

4 Vodafone New Zealand

Swisscom Switzerland

Bell Mobility Canada Movistar Venezuela Mobily Saudi

Arabia

5 Telstra Australia T-Mobile Montenegro

Telus Mobility Canada Telcel Mexico Safaricom Kenya

6 Chunghwa Taiwan Cosmote Greece T-Mobile The US Movistar Chile TCI Iran

7 FeT Taiwan Globul Bulgaria Sprint The US Movistar Argentina Tunisiana Tunisia

8 KDDI Japan Mobiltel Bulgaria Digitel Venezuela Cellcom Israel

9 Telecom Mobile New Zealand Tele2 Lithuania Claro Argentina Asiacell Iraq

10 Starhub Singapore Telenor Norway Claro Peru Djezzy Algeria



Overall Ranking 2 – Best MNOs by region for extracting revenues from subscribers As markets mature, so ARPU gains in importance. In developed markets ALL operators are looking to generate maximum revenues from each subscriber, as market competition squeezes margins ever tighter. Locking customers into postpaid contracts, which help to combat churn, encouraging fixed-to-mobile substitution and then keeping ARPU from eroding, are core strategic objectives for many MNOs. In the developing markets too, operators cannot afford to ignore ARPU. MNOs in developing markets are growing networks into rural areas where ARPU can be incredibly low, and extracting every last cent of additional revenue from customers can make the difference between profit and loss. This overall ranking for MNOs, based on their success in extracting revenues from subscribers, is calculated again using the blended approach, and utilising the following performance measurement indices:

• MNO ARPU PPP • ARPU as a Percentage of disposable income • Revenue growth of MNO • MNO Profitability • Postpaid penetration measure • Postpaid subscribers as a percentage of subscriber base • Total revenues • Actual ARPU

The regional top 10 list for MNOs’ performance in Overall Ranking 2 is given in the table below. This table shows the best MNOs in each region based on their ability to extract maximum revenues from their subscribers.


Rank Region


1 NTT DOCOMO Japan Orange France Verizon The US Nextel Brazil


Israel

2 KDDI Japan Bouygues France AT&T The US Nextel Argentina Etisalat The UAE

3 SK Telecom South Korea 3 The UK Sprint The US Movistar Venezuela MTN Nigeria

4 Telstra Australia SFR France Rogers Canada Telefonica Peru Cellcom Israel

5 China Mobile Movistar Spain Telus Mobility Canada Nextel Peru Pelephone Israel

6 FeT Taiwan Telenor Norway T-Mobile The US Movilnet Venezuela Zain Iraq

7 SoftBank Japan Vodafone Czech Republic

Bell Mobility Canada Movistar Chile Zain Sudan

8 Taiwan Mobile Orange Austria Digitel Venezuela MTN Syria

9 SingTel Singapore Netcom Norway Movistar Argentina Globacom Nigeria

10 KTF South Korea Proximus Belgium Telecom Personal Argentina

Mobily Saudi Arabia



Overall Ranking 3 – Best MNOs by region for advancing non-voice mobile services As discussed over the previous pages, almost all network operators in almost all markets work hard to maintain ARPU as high as possible. In many developed markets, and in some developing markets, voice prices have been squeezed through competitive pressure and for many MNOs, voice now offers very little margin. Voice also offers very little opportunity to differentiate service offerings between competitors. As a result, many MNOs have spent the last few years pushing data services hard, as these services offer better margins and ways to differentiate service offerings from competitors. In developing markets, SMS forms the vast majority of non-voice revenues, and indeed SMS is still the number 1 non-voice revenue generating service in all regions worldwide. However, in many developed markets other services are now gaining in popularity. Operators need to grow data services aggressively, and this requires fast, modern networks which can handle the capacity and complexity of advanced non-voice services. We have tried to rate the success of operators in advancing non-voice mobile services through the following performance measurement indices, again using our blended approach:

• MNO ARPU PPP • Data revenue measure • Technology measure • Actual ARPU

The regional top 10 list for MNOs’ performance in Overall Ranking 3 is given in the table below. This table shows the best MNOs in each region based on their success in driving forward non-voice mobile services.


Rank Region


1 NTT DOCOMO Japan 3 The UK Rogers Canada Nextel Brazil MTN Syria

2 KDDI Japan Vodafone Ireland Telus Mobility Canada Nextel Argentina Etisalat Misr Egypt

3 SK Telecom South Korea Telenor Norway Verizon The US Etisalat The UAE


Israel

4 SingTel Singapore O2 Ireland Bell Mobility Canada

Vodafone Czech Republic

Sunrise Switzerland

5 Telstra Australia Orange Austria AT&T The US Starhub Singapore Vodafone Australia

6 Movistar Venezuela Proximus Belgium Sprint The US 3 Italia China Mobile

7 TDC Denmark Bouygues France Telefonica Slovakia Tele2 Croatia Orange The UK

8 SoftBank Japan Netcom Norway DNA Finland T-Mobile Czech Republic

9 Telefonica Peru Orange France Pannon Hungary Safaricom Kenya

10 Nextel Peru 3 Austria TIM Brasil Pelephone Israel



The table below highlights the top 20 players worldwide for each overall ranking category as discussed over the previous five pages.

Table 66: Top 20 Worldwide Operators by Different Overall Rankings

Rank Overall Ranking

OR1 – Size and Growth OR2 – Making Money OR3 – Data Services

1 China Mobile Verizon The US NTT DOCOMO Japan

2 Zain Iraq NTT DOCOMO Japan Nextel Brazil

3 Etisalat The UAE AT&T The US 3 The UK

4 mt:s Serbia KDDI Japan Rogers Canada

5 Comcel Colombia Sprint The US Vodafone Ireland

6 du The UAE Rogers Canada KDDI Japan

7 Telefonica Peru Orange France Telus Mobility Canada

8 Mobily Saudi Arabia Bouygues France Telenor Norway

9 SingTel Singapore Telus Mobility Canada SK Telecom South Korea

10 Tele2 Croatia 3 The UK O2 Ireland

11 life:) Ukraine Nextel Brazil Orange Austria

12 Swisscom Switzerland SK Telecom South Korea Proximus Belgium

13 NTT DOCOMO Japan T-Mobile The US Bouygues France

14 Movilnet Venezuela SFR France MTN Syria

15 Safaricom Kenya Partner Communications Israel Etisalat Misr Egypt

16 T-Mobile Montenegro Etisalat The UAE Nextel Argentina

17 Cosmote Greece MTN Nigeria Netcom Norway

18 Movistar Venezuela Movistar Spain Verizon The US

19 Telcel Mexico Bell Mobility Canada Orange France

20 TCI Iran Telenor Norway Bell Mobility Canada



Global overall rankings - key observations Overall Ranking 1:

• Top 3 operators: China Mobile, Zain Iraq, and Etisalat in the UAE. Even with our rankings normalised China Mobile still takes the top spot, primarily because of its huge subscriber base and dominant market share, which is comfortably supported by a reassuringly low churn rate. Zain Iraq has fared well in the revenue growth and market share indices; whereas Etisalat in the UAE secures a high rank owing to its high market share and strong subscriber growth.

• Trends: The top 20 ranking is dominated by MNOs operating in the developing markets of the Asia Pacific, Middle East and Latin American regions where the opportunity for growth in absolute subscriber numbers is higher. However, our blended performance measurement recognises more than just the size of an MNO’s subscriber base. These MNOs have scored highly thanks to a combination of factors, including recording growth faster than the other players in their markets; winning subscribers, market share and revenues; and keeping churn under control.

Overall Ranking 2:

• Top 3 operators: Verizon and AT&T in the US, and NTT DOCOMO in Japan. It comes as no surprise that these players topping the table are based in the two richest economies in the world. These players achieved high scores not just based on gross revenues, but also on high ARPU, high profitability and high penetration of postpaid services, a sign of good churn management and good prospects for ARPU growth.

• Trends: The top 20 ranking is dominated by MNOs operating in the developed markets such as The US, Japan, Canada, The UK and France. While a number of the big players in North America, Japan, South Korea and Western Europe were to be expected on this list, it is significant to see that MNOs such as 3 UK and Bouygues Telecom in France also sit very high on the list. Also significant is the high placing of MNOs in Israel, Nigeria, Brazil and the UAE. High positions in this ranking have been helped by strong profitability and high ARPU as a percentage of disposable income, as well as solid revenue performance, solid revenue growth and reliable ARPU figures.

Overall Ranking 3:

• Top 3 operators: NTT DOCOMO in Japan, Nextel Brazil and 3 in the UK. This overall ranking awards high marks to MNOs who are doing the best job of advancing non-voice mobile services and boosting ARPU as a result. Again the leading Japanese operator makes the top 3, and rightly so, as its iMode service has been a world-leading wireless Internet service for many years. NTT DOCOMO and 3 UK have both performed well under our data revenue measure, and both deliver world class ARPU results. Nextel Brazil has earned its place in the top 3 by delivering the world’s highest ARPU (PPP), among other factors.

• Trends: The top 20 ranking is dominated by MNOs operating in North America, Western and Northern Europe, and the developed markets of the Asia Pacific region such as Japan and South Korea. This is only to be expected, even with the ranking weighted by our normalised performance measurements, as these regions are clearly leading the world in terms of 3G penetration and the growth of data services.



Chapter 14 Methodology



Methodology MNOs covered in the study: We have covered 204 MNOs worldwide in this study. The inclusion of MNOs has been subject to the data availability of an MNO’s Key Performance Indicators (KPIs). Selection of Performance Measurement Indices: These have been selected on their ability to capture an MNO’s performance based on Key Performance Indicators such as subscribers, ARPU, churn, data revenue, EBITDA, market share, etc. These KPIs have been used along with normalising factors, such as number of years of 2G operation (and above), and mobile penetration in the market, to provide an even playing field. Calculation of Scores: After the selection of indices, formulae were devised to compute the scores of MNOs. The formulae and the rationales behind them have been discussed in the sections focusing on the ten selected performance measurement indices. Then, within a performance measurement index, the values obtained for all 204 MNOs were normalised (as mentioned in the figure below) in such a way that their sum equals unity. Thereafter, these values were proportionately given scores in the range of 5-10, with 10 being the top-ranked and 5 being at the ‘bottom’ of the ranking. The methodology used to rank MNOs is represented pictorially in the figure given below. The apparent existence of duplicate ranking scores: In each of the ten performance measurement indices we provide a score (outlined above) for MNOs placing in the top fifty, and there are instances where MNOs rank differently but appear to have the same score. In actuality, these scores were first calculated to four decimal places with each MNO securing a distinct and unique value, before being rounded off to one decimal place for succinct presentation purposes. Please note: From an initial assessment of 700-plus MNOs, this complex report has involved extensive data collection for 204 mobile network operators worldwide. Obtaining data for over 200 operators is an understandably lengthy process, and during our collection window in Q1 2009 the latest complete set of available data was for full year end-2008. For this reason, MNOs in this report are ranked on their full year 2008 performance, not 2009.



While selecting the three MNOs to be profiled under each performance measurement index, we have tried to avoid the following cases:

• Creating multiple case studies of the same player under different performance measurement indices

• Creating multiple case studies covering the same country under a performance measurement index

Therefore, there might be cases where an MNO has secured a top-3 place but has not been profiled. This approach has been followed to cover as many MNOs and markets as possible. The aim is to capture different strategies adopted by MNOs in markets worldwide, thereby, delivering the best value to our readers. After obtaining MNO scores for 10 selected performance measurement indices, the combined score for each of the MNOs was calculated. These scores were then used to assign weight to each of the performance measurement indices. Thereafter these weights were used to calculate the normalised scores. The scores obtained for MNOs were used to assign overall ranks to the operators. The overall ranking methodology has been explained in the figure given below.

Figure 161: Methodology for Calculating MNO Score for a Performance Measurement Index


Devising formula for selected Performance Measurement Index (PM-X) to provide a level playing field for MNOs worldwide

Calculation of MNO Score (MSPM-X) for selected Performance Measurement Index using the devised formula

Ranking of MNOs for selected Performance Measurement Index

Calculation of Final MNO Score (FMSPM-X) for selected index:

5 * (NMSPM-X – Lowest NMSPM-X) (Highest NMSPM-X – Lowest NMSPM-X) FMSPM-X = 5 +

Calculation of Normalised MNO Score (NMSPM-X) for selected PM-X:

MSPM-X Sum of all MSPM-X within Performance Measurement X

NMSPM-X =



The figure below shows the weights assigned to each of the performance measurement indices used in the overall ranking of MNOs.

Figure 162: Methodology for Calculating Normalised Overall MNO Score


Calculation of Final MNO Scores (FMSPM-X) for Performance Measurement Indices

(X = 1 to 10)

Calculation of Combined Score for an MNO:

Combined Score for an MNO = Sum of FMSPM-X (X = 1 to 10)

Overall Ranking of MNOs based on Normalised Combined Score

Assignment of weights to 10 Performance Measurement Indices based on the correlation of their scores with the combined score

Calculation of Normalised Combined Score (NCSMNO) for an MNO using assigned weights:

NCSMNO = Sum of products of weight assigned to Performance

Measurement Indices and respective MNO Score



We have also tried to analyse the performance of MNOs based on the following performance indicators:

• MNO Penetration in the market • Subscriber Growth • Technology Score • ARPU • Revenue Growth • Data Revenue as a Percentage of Total Revenue • Postpaid MNO Subscriber Ratio • Churn Rate

The methodology followed to rank MNOs based on these KPIs is shown in the figure below:

72 Please note: The figures may not add up to 100 percent because of rounding-off errors.

Figure 163: Assignment of weights to different Performance Measurement Indices72


6.5%9.9%

6.5%

10.7%

5.3%

13.8%11.4%

9.3%

18.7%

8.0%

MNO ARPU PPP ARPU as a Percentage of Disposable Income

Revenue Growth of the MNO MNO Profitability

MNO Growth vs. Market Growth Significance of the MNO

Successful Growth of Revenue from Data Services Measuring Subscriber Loyalty

Postpaid Penetration Measure Technology Measure



The results from the two methods of ranking mentioned above show that normalised ranking is biased towards players from emerging markets, whereas traditional ranking is biased towards MNOs operational in developed markets. Therefore, we have ranked the players based on their performance in both the ranking methods under a blended ranking method. The method uses the sum of scores of an MNO in normalised and traditional ranking approaches and has been explained in the figure below.

The overall ranking scores have also been calculated for three focus areas given below:

• Size and growth • Extracting revenues from subscribers • Advancing non-voice mobile services

The figure below shows performance measurement indices pertaining to a focus area:

Figure 164: Methodology for Calculating Traditional Overall MNO Score


Figure 165: Methodology for Calculating Blended Overall MNO Score


Calculation of Final MNO Scores (FMSPM-X) for Performance Measurement Indices (X = 1 to 8)


Combined Score for an MNO (TCSMNO) = Sum of FMSPM-X (X = 1 to 8)

Overall Ranking of MNOs based on Traditional Combined Score

Normalised Ranking Score of an MNO (NCSMNO)

Blended Ranking Score of an MNO = NCSMNO + TCSMNO

Overall Ranking of MNOs based on Blended Score

Traditional Ranking Score of an MNO (TCSMNO)



Figure 166: Focus Areas of the Overall Rankings and Constituting Performance Measurement Indices


The method of overall ranking on the above mentioned focus areas has been explained in the figure given below.

Descriptions of some of the terms/factors used in the study are provided below:

Figure 167: Methodology for Calculating Overall MNO Rankings – 1, 2 & 3


Calculation of Final MNO Scores (FMSPM-X) for selected Performance Measurement Indices


Combined Score for an MNO = Sum of FMSPM-X under a focus area

Overall Ranking of MNOs based on Combined Score under a focus area

Overall Ranking 2

Overall Ranking 3

Overall Ranking 1

Size and growth • MNO Growth vs. Market Growth • Revenue Growth of the MNO • Significance of the MNO • Measuring Subscriber Loyalty • Subscriber Numbers • Market Share

Extracting revenues from subscribers • MNO ARPU PPP • ARPU as a Percentage of

Disposable Income • Revenue Growth of the MNO • MNO Profitability • Postpaid Penetration Measure • Postpaid Subscribers as a

Percentage of Subscriber Base • Total Revenues • ARPU

Advancing non-voice mobile services • MNO ARPU PPP • Data Revenue Measure • Technology Measure • ARPU



1. Purchasing Power Parity (PPP): Purchasing Power Parity is the amount of adjustment required on the exchange rate between two countries to take into account each currency's purchasing power for identical goods in those countries. For example, USD 1 may be equivalent to ‘x local currency’ of a country according to the exchange rate. However, the cost of goods and commodities in the US available at USD 1 might not be available at ‘x local currency’. If goods are cheaper in that country than in the US, the real measures (such as GDP or ARPU) converted to USD based on exchange rate will have to be scaled up to express them in PPP terms. Therefore, PPP has been used in this study to account for the purchasing power of the population in a country.

2. Disposable income: Disposable income is gross income minus income tax applicable on that income, and hence the amount of income left to an individual after taxes have been paid that is available for spending and saving.

3. EBITDA margin: EBITDA margin is the ratio in percentage of EBITDA to the total revenue earned by an MNO. EBITDA is the earnings of an MNO before accounting for Interest, Taxes, Depreciation and Amortization.

4. Mobile penetration: It is the mobile subscriber base in a country expressed as a percentage of its total population.

5. MNO market penetration: It is the mobile subscriber base of an MNO expressed as a percentage of total population of the country of operation.

For your reference, a full Glossary of terms is also provided within this report.



Chapter 15 Appendices



Appendices

This market study has been written in a way that avoids excessive use of market acronyms (except where appropriate) and industry technical talk, as we have tried to keep the text open to all readers, not just those with in-depth knowledge of the world’s mobile markets. Because this study covers all geographical regions and many emerging markets, a great deal of the data contained within this study will potentially be of interest to investors, financial analysts, consultants, venture capitalists and others all around the world who do not work within the mobile industry itself every day of their lives. To many of these people, some of the industry technical talk and acronyms may be confusing, so we have attempted to write this study in a self explanatory way that assumes little prior knowledge, but in doing this, some of the speech chosen may seem somewhat "obvious" to our more knowledgeable readers. We hope this offers the best possible solution to everyone, and we hope this does not cause any confusion or inconvenience. Where we have used technical terms or acronyms, we offer an explanation of those expressions below.



Glossary

1G or First Generation Packet Data Networks Packet data networks include Cellular Digital Packet Data (CDPD), Advanced Radio Data Information Service (ARDIS) and Mobitex are regional as opposed to national networks.

2G or Second Generation Packet Data Networks The second-generation packet networks recently introduced consist of combined voice and packet data networks based on global standards.

2.5G 2.5G describes the state of wireless technology and capability usually associated with General Packet Radio Services (GPRS) - that is, between the second and third generations of wireless technology. The second generation or 2G-level of wireless is usually identified as Global System for Mobile (GSM) service and the third generation or 3G-level is usually identified as Universal Mobile Telecommunication Service (UMTS). Each generation provides a higher data rate and additional capabilities. There is also a fourth generation (4G) of technology in the planning and research stages. 2.5G protocols extend 2G systems to provide additional features such as packet-switched connection (GPRS) and enhanced data rates (HSCSD, EDGE).

3G or third generation 3G is an International Telecommunication Union (ITU) specification for the third generation (analog cellular was the first generation and digital PCS73

Third generation Wireless Wide Area Networks (WWAN) communication systems are characterised by high-speed data rates (144 Kbps

was the second generation) of mobile communication technology.

74 to 2+ Mbps75) suitable for multimedia content. 3G technologies typically are packet-switched and use Code Division Multiple Access (CDMA) technology to communicate. Examples of 3G include EDGE76, 1xRTT, HDR and W-CDMA77

4G or fourth generation

. 3G protocols in mobile telephony support higher data transmission rates, measured in Mbps, intended for applications other than voice. 3G support broadband and bandwidth applications, such as full-motion video, video conferencing and Internet access.

4G or fourth generation WWAN communication systems are characterised by high-speed data rates at 20+ Mbps, suitable for high-resolution movies and television. The initial deployment of 4G communication systems is expected in 2006-2010. The proposed features of these systems include 100 Mbps speed, location sensing and self-tailoring to user needs.

AAC Advance Audio Coding: It is an advanced audio compression algorithm used for downloading music files, streaming video, audio and satellite-radio applications.

AMR Adaptive Multi-Rate: It is a data compression tool used for coding audio forms, such as speech. It makes use of different modes of encoding, such as ACELP, DTX, VAD and CNG, to tackle unlikely network conditions

73 Personal Communications Service (PCS) 74 Kilobits per second (Kbps) 75 Megabits per second (Mbps) 76 Enhanced Data for Global Evolution (EDGE) 77 Wideband Code Division Multiple Access (W-CDMA)



AMPS Advanced Mobile Phone System: A 1G standard, which operates in the 800-900MHz-frequency band. It is still widely used in the United States.

Average Profit per User (APPU) Measures the average monthly profit generated for each customer unit, such as a handset or pager that an operator has in operation.

Average Revenue per User (ARPU) Measures the average monthly revenue generated for each customer unit, such as a handset or pager that an operator has in operation.

Backhaul It refers to the process of transmitting voice and data traffic from a remote site to a central site.

BMP BMP is an extension for files containing graphics. It is used as a graphics file format on the Microsoft Windows platform. It stores image formats of different bit sizes. It regenerates the image in its own form and does not have any compressing capabilities. However, it can adapt itself to other image software’s running on other operating systems. This graphic format also comes with .DIB (device-independent bitmap), .XBM, .XPM and .TGA extensions. BMP files can support lossless data compression algorithms because of their spare capacities.

BoP Bottom of Pyramid: It refers to poorest socio economic groups.

BREW Binary Runtime Environment for Wireless: It is an application development platform developed by Qualcomm. It enables wireless users to download and run applications, such as enhanced e-mail, location positioning, games, etc., to BREW-enabled handset. BREW was first introduced and developed for CDMA handsets, but it now supports GSM/GPRS and UMTS handsets as well.

Broadcast Technologies for Mobile TV Some of the broadcast technologies for mobile TV worldwide are: DVB-H78

78 Source:

(Digital Video Broadcast – Handheld): DVB-H technology allows simultaneous broadcast of television, video and radio channels on mobile, and helps operators to preserve network bandwidth for other data and voice services. It has been accepted as the standard by the European Telecommunications Standards Institute (ETSI). ISDB-T (Integrated Services Digital Broadcast – Terrestrial): It is the transmission standard that has been developed in Japan to help the radio and television stations support digital content. DMB (Digital Media Broadcast): It is a transmission standard, which transmits video feed via satellite (S-DMB) or terrestrial (T-DMB) mode. The standard is currently deployed in Korea and is being increasingly used in other parts of Asia as well as Europe. MBMS (Multimedia Broadcast/Multicast Service): This standard allows the transmission of multimedia content over the UMTS and GSM network.

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BTS Base Transceiver Station: It is the equipment that facilitates the wireless communication between user equipments such as mobile handsets, computers etc., and the mobile network.

BWA Broadband Wireless Access: It is a form of fixed wireless access system.

CAPEX Capital Expenditure: It refers to the cost of developing a product or system.

CDMA Code Division Multiple Access: In a CDMA system, each voice circuit is labelled with a unique code and transmitted on a single channel simultaneously along with many other coded voice circuits. The receiver uses the same code to recover the signal from the noise.

CDMA2000 1x CDMA2000 1x: This is regarded as the first phase of CDMA2000 technology used for providing voice and data services over mobile networks. Data speeds of 307kbps are using a single channel while with two channels speeds of 614kbps are possible.

Churn Rate It is the rate at which the subscribers cancel their subscription with the existing operator and sign up with another operator.

Concatenate It refers to the operation of joining of two character strings end to end Disposable income Disposable income is gross income minus income tax applicable on that income, and hence the amount of income left to an individual after taxes have been paid that is available for spending and saving.

DoJa It is a JAVA-based technology/application developed for DOCOMO's i-mode mobile handset. It allows users to access more interactive applications or content than the conventional HTML-based i-mode content.

DRM Digital Rights Management: It refers to a set of technologies used for the administration of digital content. It authorises the nature and restricts the frequency of the usage based on the administrative policy settings. It sustains the revenue of the mobile network operator by regulating the usage of content at end user.

DSL Digital Subscriber Loop: It is a technology that provides digital data transmission over the copper lines of a PSTN network.

DVB-H Digital Video Broadcasting-Handheld is a mobile TV format. Broadcast services can be brought to mobile handsets using this technical specification.

EBITDA margin EBITDA margin is the ratio in percentage of EBITDA to the total revenue earned by an MNO. EBITDA is the earnings of an MNO before accounting for Interest, Taxes, Depreciation and Amortization.



EDGE Enhanced Data rates for Global Evolution: An enhanced modulation technique designed to increase network capacity and data rates in GSM networks. EDGE should provide data rates up to 384 Kbps. EDGE will let operators without a 3G license compete with 3G networks offering similar data services.

Emoticon Emoticons are symbols or combination of symbols used to convey emotional content in messages.

EV-DO Evolution Data Only, Evolution Data Optimised: It is a wireless radio broadband data protocol being adopted by many CDMA operators. It is being used as a part of CDMA2000 networks in Japan, Korea, the United States and Canada. It provides better data speeds in comparison to GSM technologies such as GPRS and EDGE.

ExEn Execution Environment: It is an application developed by Infusio for developing games for higher-end mobile devices.

GIF Graphics Interchange Format: It is a file extension to a different kind of bitmap image. This format of file is capable of compressing the size of the file, unlike a normal BMP format file. The compression process does not result in loss of data. This feature ensures the quality of image by simultaneously reducing the downloading times by a considerable amount. This format is only suitable for images of 256 and less colours. It causes limitation in formatting picture files.

GPRS General Packet Radio Service (GPRS) is a packet-based standard for mobile communication, which runs at speeds up to 115 kilobits per second, compared with GSM systems' 9.6 kilobits per second. GPRS supports a wide range of bandwidths and makes efficient use of limited bandwidth. It is particularly suited for sending and receiving small bursts of data, such as e-mail and web browsing, as well as large volumes of data. Applications for GPRS may include any of the following: chat, text and visual information, still images, moving images, web browsing, document sharing/collaborative working, audio, job dispatch, corporate e-mail, Internet e-mail, vehicle positioning, remote Local Area Network (LAN) access, file transfer or home automation.

GSM Global System for Mobile communications, the most widely used digital mobile phone system and the mobile telephone standard in Europe. It was originally defined as a pan-European open standard for a digital cellular telephone network to support voice, data, text messaging and cross-border roaming. GSM is now one of the world's main 2G digital wireless standards. GSM is present in more than 160 countries and according to the GSM Association, accounts for approximately 70 percent of the total digital cellular wireless market. GSM is a time division multiplex (TDM) system. Implemented on 800, 900, 1800 and 1900 MHz frequency bands.

GUI Graphical User Interface (GUI) is the front-end interface and navigation design of an application. This includes standard formats for representing text and graphics. GUIs have become the standard ways for interaction between users and digital devices.



HTML Hyper Text Mark-up Language: It is a syntax based language used for designing web pages. The content of HTML, written in standard syntax, when opened in a web browser takes the form of Web page. The nascent version of HTML was used with easy syntax rules in comparison to existing HTML and MHTML versions of it. In recent times, the official standards of World Wide Web recommend Web developers to use XHTML 1.1, XHTML 1.0 and HTML 4.01 versions.

IC An Integrated Circuit which is also known as a chip is a small electronic circuit made out of semiconductor material. IC is used in almost all electronic equipment in use today.

iMelody It is a standard format through which music tones can be transferred between devices. The format has volume modifiers to vary the volume throughout the tone duration, codes for flashing phone’s backlight and other features. iMelody was developed by the irDa association (infrared communications).

Instant Messaging Instant Messaging is an Internet-based service that alerts users when their friends or colleagues are online and allows them to communicate with each other in real-time through private online chat areas. With instant messaging, users create a list of other users with whom they want to communicate. When a user from their list is online, the service alerts them and enables an immediate contact with the other user. While instant messaging has primarily been a proprietary service offered by Internet service providers such as AOL and MSN, businesses are starting to employ instant messaging to increase employee efficiency and make expertise more readily available to employees.

Intranet The intranet is a private network inside a company or an organisation, and uses software similar to that used on the Internet. Companies use intranets to manage projects, provide employee information, distribute data and information, etc.

i-mode i-mode is a proprietary packet-based information service for mobile handsets. It delivers information (such as mobile banking, and train timetable) to handsets and enables exchange of e-mail from mobile handsets on the PDC-P network. Launched in 1999 by NTT DOCOMO, i-mode is very popular in Japan (especially for e-mail and transfer of icons).

IMPS IMPS (Instant Messaging and Presence Service) is an instant messaging system designed for mobile environments. Presence refers to the availability of a user for communication.

IMS IMS IP Multimedia Subsystem is an extension of the GSM / 3GPP GPRS core Network. It uses SIP (Session Initiation Protocol) to set up, maintain and terminate packet-switched voice and multimedia sessions.

Interoperability This is defined as the ability of a network to operate with other networks, such as two systems based on different protocols or technologies.

J2ME Java2, Micro edition: The Micro Edition of the Java 2 Platform provides an application environment that specifically addresses the needs of commodities in the vast and rapidly growing consumer and embedded space, including mobile handsets, pagers, personal digital assistants, set-top boxes, and vehicle telematics systems.



Java A simple platform-independent object-oriented programming language used for writing applets that are downloaded from the World Wide Web by a client and run on the client's machine.

JPEG Joint Photographic Experts Group: This is the most commonly used format for storage and transmission of images on the Internet. The format uses lossy compression techniques wherein the compressed data is very close to the original form. An advanced form of the JPEG standard known as JPEG File Interchange Format (JFIF) is capable of formatting the size of graphics according the storage capacity of computer and transmission medium.

LTE Long-Term Evolution (LTE) is the standard being developed by 3GPP to achieve download rates of 100Mbps, and upload rates of 50Mbps for every 20MHz of spectrum and is termed as a 4G standard. LTE will have support for bandwidths ranging from 1.25MHz to 20MHz. The LTE group is expected to come up with concrete recommendations by September 2007.

MIDI Musical Instrument Digital Interface: It is a protocol which acts as an interface between musical notes of an electronic instrument and computer. The orchestral performance and notes are defined (formatted) into a form, which can be understood and played by computers, i.e., MIDI is capable of playing the actual piece of orchestra unlike a recorded version.

MNO market penetration It is the mobile subscriber base of an MNO expressed as a percentage of total population of the country of operation.

Mobile Number Portability (MNP) MNP is a facility which allows mobile subscribers to retain their mobile number when moving between mobile networks.

Mobile penetration It is the mobile subscriber base in a country expressed as a percentage of its total population.

MP3 It is an expert compressing tool, which has been widely used in musical content rendering. It is capable of compressing audio files up to 10 percent of its original size. MPEG layer-3 (MP3) format can retain the full quality of an actual song by unperceivable deviations.

MVNO Mobile Virtual Network Operator: Term used for a mobile operator who does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNOs have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers.

Node - B It is a term used in Universal Mobile Telecommunications System (UMTS) to refer to the Base Transceiver Station (BTS).

Nokia Binary It is an audio format developed by Nokia, which allows mobile users to send ringtones to some Nokia handsets and other brands. It is also known as SCKL, since all the messages begin by //SCKL.



OPEX Operating Expenditure: It refers to the ongoing costs for running or operating a product or system.

Packet Data Packet data is a method of transmitting information in small packets each containing a certain amount of the information. Packet data networks allow transmission of high-speed data to and from devices connected to the network. Packet Data is similar to dial-up Internet access available in homes or in businesses with cable modems, ADSL79

PCO

lines, etc.

Public Call Office: It refers to the telephone facility located in a public place.

PCS networks Personal Communications Service Networks: In the U.S., the 1.9 GHz band has been allocated for PCS systems; the allocated spectrum is 120 MHz wide and is licensed as two 30 MHz segments for the 51 major trading areas, and three 10 MHz segments for the 493 basic trading areas.

PDA Personal Digital Assistant: A portable computing device capable of transmitting data. This device makes possible services such as paging, data messaging, electronic mail, computing, facsimile, date book and other information handling capabilities.

PDC This stands for Personal Digital Cellular, a Japanese cellular standard.

PHS system This stands for Personal Handy phone system, a Japanese cordless standard.

PIM Personal Information Manager: Also known as a "contact manager," is a form of software that logs personal and business information, such as contacts, appointments, lists, notes, occasions, etc.

PNG Portable Network Graphics: This tool replicates the GIF format in it’s functioning with compression as an added feature. This format similar to GIF is capable of working on different platforms, backed by library functions. It is a non-lossy compression tool.

Purchasing Power Parity (PPP) Purchasing Power Parity is the amount of adjustment required on the exchange rate between two countries to take into account each currency's purchasing power for identical goods in those countries.

PTT Push to Talk is a two way communication system which allows only one user to talk at any given time. This system, comparable to walky-talky is unlike mobile handsets which allow multiple users to speak at the same time.

QCP QCP is a format used for ringtones. The format was developed by Qualcomm PureVoice.

79 Asymmetric Digital Subscriber Line (ADSL)



RAN Radio Access Network: It is a component that exists between the mobile handset and the core network. It performs the radio functionality of the network and provides connection to the core network.

SIM card It is a smart card that gives GSM handset its user identity. The card is inserted into a GSM/TDMA or GSM-only mobile handset containing subscriber-related data. The card contains 18 digits code for GSM markets and 20 digits code for TDMA markets.

SIM Toolkit Subscriber Identity Module Application Toolkit: It is used by network operators to provide a user friendly interface on a subscribers’ handset to access value-added services provided by them. These applications also provide a mechanism for storing and using any service specific parameters. These applications are built within a SIM card by mobile network operators.

SIMPLE SIMPLE (Session Initiation Protocol for Instant Messaging and Presence Leveraging Extensions) is an open standard instant messaging (IM) protocol.

SIP Session Initiation Protocol or SIP is a standard multimedia and telephony protocol for initiating an interactive user session over mobile networks. The services under SIP may include call forwarding, number delivery, authentication and other telecoms applications.

Smartphone Smartphone is a phone with a microprocessor, memory, screen and built-in modem. The Smartphone combines some of the capabilities of a PC in a phone device. Most of the current models also include a Web browser.

SMS TV This is defined as the use of SMS for variety of applications, such as voting, teletext chat for TV programmes.

SMSC Short Message Service Centre (SMSC) provides the routing of all SMS or text messages in any mobile network. Similar to e-mail server, the SMSC handles large volumes of messages sent between two mobile handsets or a mobile handset and a software application.

SoC System on Chip: It refers to the process of integrating all the components of an electronic system into a single integrated circuit or chip.

SS7 SS7 is a global standard for telecommunications defined by ITU Telecommunication Standardisation Sector (ITU-T). The standard defines the procedures and protocol by which network elements in the public switched telephone network (PSTN) exchange information over a digital signalling network to effect mobile (cellular) and wire-line call setup, routing and control. Thin Client Thin Client refers to a client computer or client software in client-server architecture networks. The primary purpose of Thin Client is to convey input and output between the user and the remote server.



TIFF Tagged Image File Format: It is a platform free image format, which enables reproduction of an image created on a platform, such as Macintosh, on other platform such as an ordinary PC. It is an advanced tool for storing bit map or graphic image on different platforms. TIFF format supports scanned image, fax and other applications involving editing of image.

TDD Time Division Multiplex: This is a scheme for allowing simultaneous transmission and receiving of data at the same frequency, but with the different time slots allocated to them.

TDMA Time Division Multiple Access: A TDMA channel is a single FDMA channel divided up in time into multiple time slots. TDMA system is able to transmit multiple voice circuits per channel. Three users can take it in turn to share one radio channel. The channels can vary in bandwidth and depending on the type of system, the time slots can transmit all or part of a voice circuit. Each user's speech is stored, compressed and transmitted as a quick packet, using controlled time slots to distinguish them-hence the phrase 'time division'. It uses 30 KHz channels and a vocoder rate of 8 Kbits/sec. At the receiver, the packet is de-compressed.

UMTS Universal Mobile Telecommunications System: This is the future transmission network for third generation mobile telephones, as defined by the International Telecommunications Union (ITU). In time, UMTS could reach transmission capacities of 2 Mbits/sec. (compared to 9.6 Kbits/sec. for GSM). Initially UMTS will offer rates of 144 to 384 Kbits/sec. This standard will make the development of new multimedia services having very wide bands and new uses, notably in the transmission of video, images and sound possible.

UMTS TDD Universal Mobile Telecommunication System (UMTS) Time-Division-Depleting (TDD): UMTS TDD Mobile Broadband technology is a packet data implementation of the international 3GPP UMTS standard and is designed to work in a single unpaired frequency band. It is designed to generate typical data transfer rates of up to 2 Mbps.

UMTS FDD Universal Mobile Telecommunication System (UMTS) Frequency Division Duplex (FDD): It is designed to generate typical data transfer rates of up to 384 Kbps and is suitable for wide area coverage due to potentially high reach.

VAS Mobile operators offer various services which are not part of the basic voice offer. These services are availed off separately by the mobile subscribers. It includes services such as SMS, MMS, mobile e-mail, mobile games, mobile music etc. These also include services such as WAP, voicemail, call diversion, etc.

vCalender It is a standard format used to exchange information about schedules and activities electronically via an e-mail attachment. vCalender requires a personal information manager (PIM) type of application program. The format was developed by a consortium founded by Apple, AT&T, IBM and Siemens.

vCard vCard is an electronic business card used for exchanging personal information digitally. It contains name, address information, company logos, URLs, photographs and sound clips. It was developed by a consortium founded by Apple, AT&T, IBM and Siemens.



WAP Wireless Advance Protocol: WAP is a specification for a set of communication protocols to standardise the way mobile devices, such as handsets and radio transceivers, can be used for Internet access. The WAP standard is based on Internet standards (HTML, XML and TCP/IP). It consists of a Wireless Markup Language (WML) specification, a WMLScript specification, and a Wireless Telephony Application Interface (WTAI) specification. The WAP protocol is the leading standard for information services on wireless terminals such as digital handsets. Some examples of WAP for accessing information include the following: checking train timings, purchasing tickets, flight check-in, viewing traffic information, checking weather conditions, looking up stock values, looking up phone numbers, looking up addresses or looking up sport results, and there are countless more.

WAV It is a widely used audio format for wireless devices which is limited to files less than 2 GB in size.

WBMP It is a graphic file format used for sending Web content to wireless devices. The format is designed to support multiple image types for WAP-enabled wireless phones.

WiBro Wireless Broadband: The technology was formulated by South Korean telecom industry as an equivalent to mobile WiMAX international standard.

Wi-Fi Wireless Fidelity: It is used to provide wireless local area network through enhanced interoperability of the network. Services such as Internet, VoIP phone access, and gaming, etc., can be provided using Wi-Fi.

WiMAX Worldwide Interoperability for Microwave Access: It is a telecommunication technology used for wireless data transfer over long distances through point-to-point links as well as mobile cellular type access. It is based on standards that are useful in wireless broadband access.

Wireless MAN Wireless Metropolitan Area Network: The technology is used to provide wireless network over a larger area as compared to local area network.

WLL Wireless Local Loop: It refers to the wireless devices that are situated in fixed locations. The signal transmissions occur through the air and it provides connectivity to the users in remote and isolated areas without the need for laying new cables.

WMA Windows Media Audio: It is a compression format with Digital Rights Management features incorporated in it. It compresses the content to half of what an MP3 can do with the same content. This feature makes it more adaptable to lower memory devices such as handsets.

WML Wireless Mark-up Language is an XML and a HTML-based language used for creating content, which can be delivered to wireless hand-held devices. This language supports WAP (Wireless Application Protocol) standards just as HTML supports World Wide Web (http) standards. WML is useful in accessing text on web pages over hand-held devices.



W-CDMA Wideband Code Division Multiple Access: The third generation standard offered to the International Telecommunication Union by GSM proponents. This is a 3G technology that increases data transmission rates in GSM systems by using CDMA instead of TDMA. W-CDMA has become the Direct Sequence mode in the ITU's 3G specification, which includes the 1x Multi-Carrier mode (1x MC) and 3x Multi-Carrier mode (3x MC). 1x MC (formerly known as cdma2000) and 3x MC comprise the 3G upgrade paths for operators already using CDMA.



Portio Research Classifications

Geographical Regions: There is sometimes a difference in the way research firms classify the major geographical territories. At Portio Research, we follow 'obvious' geographical lines, but for the record, here are the regional definitions we follow, unless otherwise stated in the report: Western Europe: Standard classification includes Iceland and various islands Central and Eastern Europe: Includes standard list of Central and Eastern European countries, and the Baltic states, Balkans, Russia, Greece and Turkey Asia Pacific: Includes Australasia, the Indian Sub-Continent, Pakistan, Afghanistan, Sri Lanka, Maldives and the Former Soviet Union Central Asian republics North America: Standard classification, including Hawaii and islands to the North Latin America: Includes all South and Central American countries including Mexico, The Caribbean and The West Indies Middle East: Includes Israel and all Middle Eastern countries East of Egypt, South of Turkey and West of Afghanistan Africa: Standard classification includes territories in Western Indian Ocean

Mobile Subscribers Generally, we count active SIMs, and we consider active as being used within 3 months, but, of course there is some room for variance, depending on what figures operators themselves publish or report to us when we interview them. When running spot-checks on operator numbers, we are governed by the figures they give us, and as we are all aware, many individuals and companies around the world count their subscribers/subscriptions by a number of different criteria. We refer to "total subscribers" for a network/country or globally, as a count of the total number of active subscriptions those networks have, and as such this can cause a slight distortion of any country-penetration rate.

Currency and Monetary Values All monetary values quoted in this report are in US Dollars as the most widely recognised benchmark internationally. The currency conversion has been done on the year average basis. Whilst researching global mobile markets, we use http://www.oanda.com/ for all currency conversion calculations.

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Companies Mentioned in this Report 3 Austria http://www.drei.at/portal/de/privat/Privat_Home_1.html 3 Italia http://www.tre.it/public/home.php 3 The UK http://www.three.co.uk/Home AIS Thailand http://www.ais.co.th/en/index.html Asiacell Iraq http://www.asiacell.com/ AT&T The US http://www.att.com/ Avea Turkey http://www.avea.com.tr/ Banglalink Bangladesh http://www.banglalinkgsm.com/ Base (KPN) Belgium http://www.base.be/ Beeline Ukraine http://www.beeline.ua/ Bell Mobility Canada http://www.bell.ca/home/ Bharti Airtel India http://www.airtel.in/ BITE Lithuania http://www.bite.lt/ Bouygues France http://www.bouyguestelecom.fr/ Brasil Telecom http://www.oi.com.br/index.html Celcom Malaysia http://www.celcom.com.my/cep/ Cell C South Africa http://www.cellc.co.za/ Cellcom Israel http://www.cellcom.co.il/ Celtel (Zain) DR Congo http://www.cd.zain.com/fr/ China Mobile http://www.chinamobileltd.com/ China Unicom http://www.chinaunicom.com.cn/ Chunghwa Taiwan http://www.cht.com.tw/CHTFinalE/Web/ Claro Argentina http://www.claro.com.ar/ Claro Brazil http://www.claro.com.br/portal/ Claro Chile http://www.clarochile.cl/ Claro Peru http://www.claro.com.pe/ Comcel Colombia http://www.comcel.com.co/ Cosmote Greece http://www.cosmote.gr/ CSL New World Mobility Hong Kong http://www.hkcsl.com/ DiGi Malaysia http://www.digi.com.my/ Digitel Venezuela http://www.digitel.com.ve/ Djezzy (Orascom) Algeria http://www.djezzygsm.com/ DNA Finland http://www.dna.fi/ DTAC Thailand http://www.dtac.co.th/english/ du The UAE http://www.du.ae/ Elisa Finland http://www.elisa.fi/ Entel PCS Chile http://www.entelpcs.cl/ E-Plus Germany http://www.eplus.de/ Etisalat Misr Egypt http://www.etisalat.com.eg/ Etisalat The UAE http://www.etisalat.ae/ Excelcomindo Indonesia http://www.xl.co.id/ FeT Taiwan http://www.fetnet.net/ Globacom Nigeria http://www.gloworld.com/ Globe The Philippines http://www.globe.com.ph/ Globul Bulgaria http://www.globul.bg/eng/ GrameenPhone Bangladesh http://www.grameenphone.com/



HTIL Hong Kong http://www.three.com.hk/ Hutch Sweden http://www.tre.se/ Hutch Thailand http://www.hutch.co.th/ Idea Cellular India http://www.ideacellular.com/ Iusacell Mexico http://www.iusacell.com.mx/ KDDI Japan http://www.kddi.com/ KPN The Netherlands http://www.kpn.com/ KTF South Korea http://www.kt.com/ Kyivstar Ukraine http://www.kyivstar.ua/en/ LG Telecom South Korea http://www.lgtelecom.com/ life:) Ukraine http://www.life.com.ua/index.php?lng=en M1 Singapore http://www.m1.com.sg/ Maroc Telecom Morocco http://www.maroctelecom.com/ Maxis Malaysia http://www.maxis.com.my/ Meditel Morocco http://www.meditel.ma/ MegaFon Russia http://eng.megafon.ru/ Meteor Ireland http://www.meteor.ie/ Mobilink Pakistan http://www.mobilinkgsm.com/ Mobilkom Austria http://www.mobilkom.at/ Mobiltel Bulgaria http://www.mtel.bg/ Mobily Saudi Arabia http://www.mobily.com.sa/ MobiNil Egypt http://www.mobinil.com/ Mobistar Belgium http://www.mobistar.be/ Movilnet Venezuela http://www.movilnet.com.ve/ Movistar Argentina http://www.movistar.com.ar/ Movistar Chile http://www.movistar.cl/ Movistar Colombia http://www.movistar.com.co/ Movistar Mexico http://www.movistar.com.mx/ Movistar Spain http://www.movistar.es/ Movistar Venezuela http://www.movistar.com.ve/ mt:s Serbia http://www.telekom.yu/ MTN Afghanistan http://www.mtn.com.af/ MTN Iran http://www.irancell.ir/ MTN Nigeria http://www.mtnonline.com/ MTN South Africa http://www.mtn.co.za/ MTN Sudan http://www.mtn.sd/ MTN Syria http://www.spacetelsyria.com/ MTS Belarus http://www.mts.by/ MTS Russia http://www.mtsgsm.com/ MTS Ukraine http://www.mts.com.ua/ Nedjma Algeria http://www.nedjma.dz/ Netcom Norway http://www.netcom.no/ Nextel Argentina http://www.nextel.com.ar/ Nextel Brazil http://www.nextel.com.br/ Nextel Peru http://www.nextel.com.pe/ NTT DOCOMO Japan http://www.nttdocomo.com/ O2 Czech Republic http://www.cz.o2.com/ O2 Germany http://www.telefonica.de/



O2 Ireland http://www.o2online.ie/ O2 The UK http://www.o2.co.uk/ Oi Brazil http://www.oi.com.br/ Omnitel Lithuania http://www.omnitel.lt/ Optimus Portugal http://www.optimus.pt/ Optus Australia http://www.optus.com.au/ Orange Austria http://www.orange.at/ Orange France http://www.orange.com/ Orange Poland http://www.orange.pl/ Orange Slovakia http://www.orange.sk/ Orange Spain http://www.orange.es/ Orange Switzerland http://www.orange.ch/ Orange The UK http://www.orange.co.uk/ Pannon Hungary http://www.pannon.hu/ Partner Communications Israel http://www.orange.co.il/ PCCW Mobile Hong Kong http://www.pccwmobile.com/ Pelephone Israel http://www.pelephone.co.il/ Polkomtel Poland http://www.plusgsm.pl/ Promonte Montenegro http://www.promonte.com/ Proximus Belgium http://www.proximus.be/ PTC Poland http://www.era.pl/ Reliance Communication India http://www.rcom.co.in/ Rogers Canada http://www.rogers.com/ Safaricom Kenya http://www.safaricom.co.ke/ SFR France http://www.sfr.fr/ Sibir Telecom Russia http://www.sibirtelecom.ru/ SingTel Singapore http://home.singtel.com/ SK Telecom South Korea http://www.sktelecom.com/ Smart The Philippines http://www.smart.com.ph/ SmarTone Hong Kong http://www.smartone.com.hk/ SoftBank Japan http://mb.softbank.jp/mb/ Sonofon Denmark http://www.sonofon.dk/ Sprint The US http://www.sprint.com/ Starhub Singapore http://www.starhub.com/ Sun The Philippines http://www.suncellular.com.ph/ Sunrise Switzerland http://www.sunrise.net/ Swisscom Switzerland http://www.swisscom.com/ Taiwan Mobile http://www.taiwanmobile.com/ TCI Iran http://www.irantelecom.ir/ TDC Denmark http://www.tdc.dk/ Telcel Mexico http://www.telcel.com/ Tele2 Croatia http://www.tele2.hr/ Tele2 Lithuania http://www.tele2.lt/ Tele2 Russia http://www.tele2.ru/ Tele2 Sweden http://www.tele2.se/ Telecom Italia http://www.tim.it/ Telecom Mobile New Zealand http://www.telecom.co.nz/ Telecom Personal Argentina http://www.personal.com.ar/



Telefonica Peru http://www.movistar.com.pe/ Telefonica Slovakia http://www.sk.o2.com/ Telenor Norway http://www.telenor.com/ Telenor Pakistan http://www.telenor.com.pk/ Telenor Serbia http://www.telenor.co.yu/ Telenor Sweden http://www.telenor.se/ Telia Denmark http://www.telia.dk/ Telia Sonera Finland http://www.sonera.fi/ Telia Sonera Sweden http://www.telia.se/ Telkomsel Indonesia http://www.telkomsel.com/ Telstra Australia http://www.telstra.com.au/mobile/ Telus Mobility Canada http://www.telusmobility.com/ Tigo (MIC) DR Congo http://www.tigo.cd/ Tigo Colombia http://www.tigo.com.co/ TIM Brasil http://www.timbrasil.com.br/ TMN Portugal http://www.tmn.pt/ T-Mobile Austria http://www.t-mobile.at/ T-Mobile Croatia http://www.t-mobile.hr/ T-Mobile Czech Republic http://www.t-mobile.cz/ T-Mobile Germany http://www.t-mobile.de/ T-Mobile Hungary http://www.t-mobile.hu/ T-Mobile Montenegro http://www.t-mobile.me/ T-Mobile Slovakia http://www.t-mobile.sk/ T-Mobile The Netherlands http://www.t-mobile.nl/ T-Mobile The UK http://www.t-mobile.co.uk/ T-Mobile The US http://www.t-mobile.com/ Truemove Thailand http://www.truemove.com/ Tunicell Tunisia http://www.tunisietelecom.tn/ Tunisiana Tunisia http://www.tunisiana.com/ Turkcell Turkey http://www.turkcell.com/ Velcom Belarus http://www.velcom.by/ Verizon The US http://www.verizonwireless.com/ VimpelCom Russia http://www.vimpelcom.com/ VIP Serbia http://www.vipmobile.rs/ VIPnet Croatia http://www.vipnet.hr/ Vivatel Bulgaria http://www.vivatel.bg/ Vivo Brazil http://www.vivo.com.br/ Vodacom DR Congo http://www.vodacom.cd/ Vodacom South Africa http://www.vodacom.co.za/ Vodafone Australia http://www.vodafone.com.au/ Vodafone Czech Republic http://www.oskarmobil.cz/ Vodafone Egypt http://www.vodafone.com.eg/ Vodafone Germany http://www.vodafone.de/ Vodafone Greece http://www.vodafone.gr/ Vodafone Hungary http://www.vodafone.hu/ Vodafone India http://www.vodafone.in/ Vodafone Ireland http://www.vodafone.ie/ Vodafone Italy http://www.vodafone.it/



Vodafone New Zealand http://www.vodafone.co.nz/ Vodafone Portugal http://www.vodafone.pt/ Vodafone Romania http://www.vodafone.ro/ Vodafone Spain http://www.vodafone.es/ Vodafone The Netherlands http://www.vodafone.nl/ Vodafone The UK http://www.vodafone.co.uk/ Vodafone Turkey http://www.vodafone.com.tr/ Wind Hellas Greece http://www.wind.com.gr/ Wind Italy http://www.wind.it/ Zain Iraq http://www.iq.zain.com/ Zain Jordan http://www.jo.zain.com/ Zain Kenya http://www.ke.zain.com/ Zain Nigeria http://www.ng.zain.com/ Zain Sudan http://www.sd.zain.com/



About the Authors Areeb Khan Areeb Khan, lead author of this report, works as a Manager with Portio Research and Evalueserve, and is responsible for project planning, client interface and quality ownership of projects. He is a post graduate in Business Management from Indian Institute of Management, Calcutta. He has been working with Portio Research and Evalueserve since August, 2008. Gaurav Narula Gaurav Narula is working as a Senior Business Analyst with Portio Research and Evalueserve. He has worked on various projects related to telecom domain. He graduated from IT-BHU, Varanasi, India. He has been working with Portio Research and Evalueserve since March 2007. Vikas Kumar Vikas Kumar is working as a Business Analyst with Portio Research and Evalueserve. He has worked on various projects related to telecom domain. He graduated from IIT Delhi, India. He has been working with Portio Research and Evalueserve since July 2007. Deepak Mahajan Deepak Mahajan is working as a Business Analyst with Portio Research and Evalueserve. He graduated from Delhi College of Engineering, India. He has been working with Portio Research and Evalueserve since May 2008. John White John White has been Editor and contributing author for this report. John is Business Development Director for Portio Research and has over 18 years experience in the technical publishing industry. Working in the IT sector previously and in the telecoms industry for the last 11 years, John has extensive experience in the mobile sector.



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