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Tel.Com Conference – 23 October 2002

Dr. Georges H. Bongi Group Executive Marketing and Strategy. Tel.Com Conference – 23 October 2002. Agenda. The Realities of Today The Changes The Future. The Realities of Today The Facts. Reaching a saturation level . . . but !. Market.

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Tel.Com Conference – 23 October 2002

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  1. Dr. Georges H. Bongi Group Executive Marketing and Strategy Tel.Com Conference – 23 October 2002

  2. Agenda • The Realities of Today • The Changes • The Future

  3. The Realities of TodayThe Facts • Reaching a saturation level . . . but ! Market • As in many mobile markets, increased competition has driven Average Revenue per User down ARPU • Voice and SMS Products Distribution and Costof Sales • Essentially retail • Very high subsidisation Customer Services • Focus on services level and not on agent expertise

  4. International Market OverviewMarket Penetration and Growth Penetration and Income Levels Annual GDP/capita $10000+ $3000 - $10000 $1500 - $2999 Up to $1499 Penetration Source: Merrill Lynch estimates for EOP 1Q2002 from ‘Wireless Matrix’, June 2002 ‘All Africa’ figure from Informa (March 2002 data)

  5. South Africa Market OverviewSubscribers’ Base, Growth and Penetration Source: Pyramid Research

  6. The Realities of TodayThe Facts • Reaching a saturation level . . . but ! Market • As in many mobile markets, increased competition has driven Average Revenue per User down ARPU • Voice and SMS Products Distribution and Costof Sales • Essentially retail • Very high subsidisation Customer Services • Focus on services level and not on agent expertise

  7. Minutes of use (mins/subs/month) No data available Source: Merrill Lynch estimates for 1Q2002 from ‘Wireless Matrix’, June 2002 International Market OverviewARPU and Minutes of Use ARPU ($/month) Source: Merrill Lynch estimates for 1Q2002 from ‘Wireless Matrix’, June 2002

  8. International Market OverviewARPU Evolution Mobile Operator ARPUs US$ Regional ARPU Trends • STABILISINGin Europe and South Africa • RISINGin part of Asia • DECLININGin the Americas 1999 2000 2001 2002 Wt. Average of 45 Countries Source: Merril Lynch, Wireless Matrix, 1Q02

  9. The Realities of TodayThe Facts • Reaching a saturation level . . . but ! Market • As in many mobile markets, increased competition has driven Average Revenue per User down ARPU • Voice and SMS Products Distribution and Costof Sales • Essentially retail • Very high subsidisation Customer Services • Focus on services level and not on agent expertise

  10. The Realities of TodayThe Facts • Reaching a saturation level . . . but ! Market • As in many mobile markets, increased competition has driven Average Revenue per User down ARPU • Voice and SMS Products Distribution and Costof Sales • Essentially retail • Very high subsidisation Customer Services • Focus on services level and not on agent expertise

  11. International Market OverviewHandset Subsidies & Cost Per Gross Add US$(Approximately) No CPGA data 70 60 Note (*): M-Cell handset subsidy: Goldman Sachs report, February 2002; no data one CPGA Source: Morgan Stanley, ‘Global Telecom Outlook’, June 2002

  12. The Realities of TodayThe Facts • Reaching a saturation level . . . but ! Market • As in many mobile markets, increased competition has driven Average Revenue per User down ARPU • Voice and SMS Products Distribution and Costof Sales • Essentially retail • Very high subsidisation Customer Services • Focus on services level and not on agent expertise

  13. Agenda • The Realities of Today • The Changes • The Future

  14. The Changes Convergence of Industries Data Telecom Industry Mobile Voice Fixed Voice Internet PC-LAN Infocom Industry ComputerIndustry PC Desktop computing Main frames MediaIndustry Electronic publishing Entertainment To remain competitive as a telecom player, MTN will develop a position in the emerging convergence market Source: Ericsson

  15. The Changes Calling The Next Generation Communication is at the heart of people’s lives As a result, the mobile phone is infused with rich new meaning

  16. People to People People to Devices Devices to Devices The ChangesThe Changing Face of Communications Homes Appliances Buildings Computers People Transportation Vehicles & Systems Intelligent Subscriber Devices Vending Machines • Multiple Connections per Person • Networking Embedded in Household and Business Devices • “Always On, Always Connected”, At Home, At Work, and On the Go

  17. The Changes Data “Take-rates” Increase in services and applications Subscriberpenetration % Video MMS SMS Time from Launch Successful Data Products will require faster subscriber take-rates than their Predecessors!

  18. Optimum Return The Changes Operators’ Challenges Rate of Innovation High Loss of return Medium Loss of opportunity Low Rate of Market Acceptance High Low Medium

  19. Agenda • The Realities of Today • The Changes • The Future

  20. The Future Life Enhancement Tools: Devices

  21. The Future Mobile Services’ Evolution SUCCESS Availability of Solutions VOICE SMS MMS VIDEO Connectivity / Internet Access MUST

  22. Significant Europe: 10-15% SA: 3% The Future International Data Penetration Data as % of ARPU % Selected Countries - 3 / 2002 Source: Merril Lynch, Wireless Matrix, 1Q 2002

  23. The Future Consolidated ARPU Projection Shares of ARPU %

  24. The World of Voice & SMS The World of Applications Price Plan Content is the Differentiator The Future: Consumer Segment Beyond the Price Plan Price Plan is the Differentiator

  25. Executives GSM Handset Rovers Knowledge Workers Mobility of the Device PDA Laptop Desk- bound Desktop Wireless WAN Wired LAN Wired SYNC Wireless LAN Wired WAN Distributed nature of connections The Future: Business SegmentDefining the Products Requirement Divergent worker profiles utilise unique computing and communication technology to fulfil their function Providing distributed access improves on-the-job productivity Source: Ovum

  26. OfficeX-Change InstantOffice TelemetryApplications MessagingApplications M-CommerceApplications The Future:Business SegmentData Positioning MTN Applications MTN NetworkingSolutions Internet/ Intranet Access Integration, datacost, security MTNdataLIVE(GPRS)) Always on line MTNdataFAST(HSCSD) Speed Value Proposition MTN Data Solutions MTNdataMESSAGE(SMS) Universal Access Basic datatransfer MTNdataLINK(CSD)

  27. IS2 IS3 BS2 IS4 G1 G2 BS3 G3 G4 BS4 BS1 IS1 Generic 3 BusinessSpecific IndustrySpecific BusinessSpecific Generic 4 Generic 2 IndustrySpecific IndustrySpecific IndustrySpecific BusinessSpecific BusinessSpecific Generic The Future: Business SegmentGeneric vs Specific Applications Examples: G1 = Office Xchange G2 = Corporate Access IS1 = Fleet management IS2 = Navigation assistance BS1 = Wireless patient monitoring Solution MTNmulti-server plan DataLIVE DataFAST DataMESSAGE

  28. Network and SolutionPartners The Future: Service DeliveryMTN and Partners Ericsson Understandingthe need of thebusiness user AST Microsoft Comparex Develop and market horizontal and vertical solutions for improved productivity Third party developers Network ServiceProviders LEAF Integrate with MTN network Integrate solutionswithin corporate systems Integrated Service Delivery and Support

  29. Market Potential rebound thanks to new technology and data ARPU Data and usage stimulation Products From Voice to Video and Business Solutions Distribution and Costof Sales Evolution of channels to match technological evolution Customer Services Increase ability to support more complex products Partnership And… The key of success for content The Future Summary The MTN journey to the Future has already started !

  30. The best way to predict the Future . . . is to create it Peter Drucker

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