MAVAM Brasil 10th edition - MESSAGING

MAVAM Brazil
10th Edición

Grupo Convergencia | Convergencialatina | Convergencia Research
Avenida Belgrano 680 – Piso 9 (C1092AAT) - Buenos Aires, Argentina
T. + 54 11 4345-3036
info@convergencialatina.com | wwww.convergencialatina.com | research@convergencia.com

Editorial
As the global leader in mobile messaging with more than one one-third of the global
SMS infrastructure market (as calculated by Informa Telecoms & Media in 2011),
Acision launches the tenth edition of MAVAM Brazil with the special theme
¨Messaging”. This edition continues to demonstrate Acision’s commitment to
providing a tool that analysis the trends associated with the consumption of mobile
VAS and messaging across the Brazilian mobile market during the last quarter
messaging
and how this impacts operators.
In 2011, we witnessed the Brazilian carriers launch aggressive pricing models and
offers around SMS to encourage the uptake of this service, while also highlightin
highlighting
the advantages and potential of using it. However, while widely used in other
countries in Latin America, we still see low penetration in the Brazilian market.
Subscribers have started to respond positively to alternative and better pricing
models, and this research indicates that consumption of SMS is increasing in
this
Brazil, with some carriers experiencing a rise in traffic by up to four times,
depending on the carrier.
Oliveira Vancrei
Net sales of SMS and MMS during the third quarter of 2011 reached R$ 964
million, representing 37.1% of VAS revenues. Although SMS and messaging
representing
Acision
stands for a major proportion of mobile VAS today, we have used this MAVAM
VP regional Am´wrica Latina research to better understand the reasons that motivate or inhibit the use of text
and multimedia messaging, with the results represented in this report.
results
We also demonstrate that opportunities based on SMS go beyond the basic
service as we know it today with value added, personalised messaging providing
value-added,
an enriched user experience through services such as group messaging, auto auto-
reply / auto signature and parental control. These services have the potential to
auto-signature
increase messaging revenues by up to 15 percent and vastly improve the
messaging experience and relevance for the end
end-user.
In addition, we expect to see widespread adoption of services like Collect SMS
and Prepaid SMS Reply services in 2012, which modelled on the well known
collect call procedure enables prepaid customers to send messages even when
out of credit.
We also expect IP Messaging services to be a priority for oper
operators in 2012, as
they seek to deliver new innovative services to compete with ‘OTT’ messaging
services. IP Messaging, such as is RCS e, is key to delivering services that have
RCS-e,
the same user experience, reach and reliability that users have become
accustomed
accustomed to with SMS, while leveraging the capabilities of broadband IP
network and delivering services such as IM, group chat, file transfer and video
sharing. Operators will also begin to adopt cloud based services, which will
cloud-based
become a prominent delivery model in 2012, also means that these innovations
will be brought to market faster.
With this in mind, this edition of MAVAM has researched the potential demand for
new messaging services that enrich and expand the use of messaging, how users
use messaging services and looks at business models for paying for each service
services
and driving up operator revenue.
We hope you enjoy reading!

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Index
1. Introduction....................................................................................................................................................................................................... 4
1.1. Value Added Services worldwide ............................................................................................................................................................... 5

1.2. Value Added services in Latin America ...................................................................................................................................................... 9

1.3. Value Added Services in Brazil ................................................................................................................................................................ 12

2. MAVAM (Acision Monitor for Mobile VAS) ...................................................................................................................................................... 16

3. Messaging Services (Special Topic) ............................................................................................................................................................... 17
3.1. SMS ........................................................................................................................................................................................................ 18

3.1.1. Future importance of SMS ................................................................................................................................................................ 20

3.1.2. Barriers to SMS usage ...................................................................................................................................................................... 20
3.1.3. New SMS and MMS-based services ................................................................................................................................................. 21
3.2. MMS ........................................................................................................................................................................................................ 25

3.3. Instant messaging (IM) ............................................................................................................................................................................ 28
3.4. Advantages of SMS over instant messaging ............................................................................................................................................ 33

3.5. Advantages of instant messaging over SMS ............................................................................................................................................ 34
3.5.1. Service preference among recipients ................................................................................................................................................ 35
3.5.2. Service preference based on circumstances ..................................................................................................................................... 36
3.5.3. Service speed and reliability.............................................................................................................................................................. 37

3.6. Use of messaging during end of year festivities ....................................................................................................................................... 38
3.7. Use of advertising to reduce SMS prices ................................................................................................................................................. 39

4. MAVAM Brazil ................................................................................................................................................................................................ 40

4.1. Entertainment .......................................................................................................................................................................................... 40

4.1.1. File types (images, music, games, ringtones and videos).................................................................................................................. 40
4.1.2. Mobile TV (viewing) .......................................................................................................................................................................... 41
4.2. E-Mail ...................................................................................................................................................................................................... 41

4.3. Mobile Internet ......................................................................................................................................................................................... 43
4.4. Social Networks ....................................................................................................................................................................................... 45
4.5. Mobile Marketing ..................................................................................................................................................................................... 47
4.6. Cash and mobile banking ........................................................................................................................................................................ 49
4.7. GPS and maps ........................................................................................................................................................................................ 50

5. Conclusions .................................................................................................................................................................................................... 51

6. Glossary ......................................................................................................................................................................................................... 52

7. Technical File ................................................................................................................................................................................................. 56

8. Equipo ............................................................................................................................................................................................................ 58

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1. Introduction
During the third quarter of 2011, we saw mobile telephony connections pass the 100% milestone in Latin America,
although there are still countries like Mexico, Bolivia, Nicaragua, Cuba, Peru and others yet to hit this mark. Today,
there is more than one connection per person because of circumstances where people own more than two
telephones, have machine to machine (M2M) connections, mobile broadband USB modems and connections
which are almost redundant.

2011 also saw smartphone penetration increase and mobile broadband services evolve. Mobile broadband is also
driving a surge in post-paid clients for operators, especially in major markets, while pre-paid plans still account for
the larger share of the market. Social networks and apps are the drivers of this new phase for mobile broadband.

In 2012, the main markets in Latin America will have adopted portability and a number of mobile virtual network
operator (MVNO) businesses will be built. Today, Columbia has the biggest MVNO market which is principally
focused on broadband. New virtual mobile operators are expected to enter the markets in Brazil, Argentina, Mexico
and Chile, as well as other countries. These operators focus on niche markets and their potential market share is
estimated to be 2%. Virgin Mobile is expected to be the newest entrant, which is seeking to become the first
regional mobile virtual operator focusing on the 14-34 age range.

The arrival of mobile virtual operators brings a new outlook for spectrum in various countries, generally attracting
new players who will increase competition.

Based on these factors, 2012 should see more competition rise, especially in mobile broadband, with growing use
of social networks and application by pre-paid clients as well as new businesses.

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1.1. Value Added Services worldwide
To understand the value added services (VAS) business worldwide, we analyzed VAS evolution for the world’s
biggest mobile carriers in various regions of the world. We compared the 3Q values for 2010 and 2011, except for
China Mobile, whose data only allows us to compare changes between 1H 2010 and 1H 2011.

The companies evaluated are:

América Móvil – Latin America Verizon – United States

AT&T - United States Vodafone

China Mobile – China* Vodafone United Kingdom

Orange - France Vodafone Germany

NTT Docomo - Japan Vodafone India

Telefónica

Telefónica Spain Chart 1
Operators analyzed
Telefónica United Kingdom

Telefónica Latin America

AT& T / Verizon
America Móvil + TEF Latam
China Telecom
France Telecom
NTT Docomo
Telefónica
Vodafone

*
China Mobile 1H 2010 x 1H 2011

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Chart 2
Change in share of voice service revenue vs. value added service (VAS) revenue. Between the
second and third quarter 2011. Except China Mobile, comparing 1H 2010 with 1H 2011

20%
16%
Voice Services VAS Services
15%

10%
7%
6%
4% 5%
5% 4% 3% 3%
2% 2% 2% 3% 3%
1% 1%
0%
-1% 0% -1%-1%
-3%-3%-3%
-5% -4% -5%

-10%
America Movil Telefónica Latin America AT&T United States
France Telecom France NTT Docomo Vodafone United Kingdom
Telecom Italy Telefónica United Kingdom Verizon
Vodafone Germany Telefónica Spain Vodafone India

Source: Convergencia Research based on carriers’ published financial reports.

VAS continues to grow its share of total revenue among the carriers surveyed, independent of country. Positive
changes in voice service revenue contributions are normally explained by specific events, such as regulatory
measures (reduced interconnection fees – Se MAVAM Brazil 9th Edition), competition or seasonal effect.

In more advanced countries, the increase is mainly based on mobile Internet revenues driven by the increasing
number of smartphones. In countries where there is still room to grow the number of connections, SMS still plays a
major role in VAS growth.

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Chart 3
VAS share of total ARPU. 3Q 2011. Except China Mobile, comparing 1H 2010 with 1H 2011
100%

80%
VAS over the total %

60%

40%
54%

46%

46%

43%

40%

39%

35%
20%

32%

30%

26%

25%

25%

16%
0%

Source: Convergencia Research based on carriers’ corresponding financial reports – 3Q 2011

It is interesting to compare the operations of Vodafone UK, Germany and India.

In the UK, Vodafone’s VAS represent 46% of service sales and this share is almost identical to its main competitor,
O2 UK (Telefonica).

In the UK, which has a significant number of smartphones, Vodafone’s mobile Internet service sales have grown
around 3% quarterly/per quarter, while messaging (SMS and MMS) grow around 2%. However, in Germany
messaging revenues are also growing at 2%, while mobile Internet revenues are growing at 6%.

In contrast, India, which has mobile penetration of around 70% of the population, SMS grows at around 43% and
mobile Internet at just 2%, mainly because 3G networks were only recently launched (See previous editions of
MAVAM).

In the US, both Verizon and AT&T present similar figures to Vodafone, with VAS growth of no more than 5% per
quarter and voice revenues declining by 1 to 3%, depending on the carrier, although in this market VAS
contribution (40%) is lower that the European countries where Vodafone operates. In Japan, voice and data growth
rates for NTT Docomo are similar to the USA, but the main difference is that VAS (contributing 54% of revenues) is
NTT Docomo’s main source of income, instead of voice revenues, on which other carriers depend.

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At China Mobile, whose figures only allow for a six-monthly comparison, the number of subscribers grew 11.3%
annually between the first semester of 2010 and 2011 to 617 million lines, in a country where 75% penetration still
offers room for post-paid plan growth. As new users are usually “low usage clients” and the “one client with several
chips” is becoming more commonplace, total ARPU dropped 3% in the first half of 2011, year on year.

China Mobile has 35 million 3G subscribers (5% of its customer base). At the end of the first half of 2011, VAS
represented 32.2% of carrier revenues, up 18% year on year compared with 5% for voice services, in local
currency. Of the VAS, the contribution made by SMS has dropped almost 1 percentage point, while revenue for
voice services, mobile Internet and “other VAS” rose between 0.5 and 1 percentage point.

Chart 4
Mobile penetration vs. VAS contribution to ARPU. 3Q 2011. China Mobile 1H 2010 x 1H 2011
160%
VAS % 3Q 11
140% Penetration / 100 inhabitants
120%
100%
80%
60%
40%
20%
0%

Source: Convergencia Research based on carriers’ corresponding financial reports and penetration data from various sources.

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1.2. Value Added services in Latin America
The third quarter of 2011 ended with 607 million mobile telephone lines (including 10.5 million trunking2 lines) in
1
Latin America and the Caribbean . The number of lines brings regional penetration up to 104% -taking into account
trunking lines and 102% without them-, although some countries3 have yet to achieve this level of mobile
subscriptions. South America4 and Mexico represent 89% of these lines (540.4 million). The remainder are in
Central America5 (41.7 million) and the Caribbean6 (24.6 million).

The main regional telecom holdings are America Movil, operating in 18 countries, and Telefonica, in 14. Together,
they represent 64% of lines in Latin America and the Caribbean (37% and 27% respectively).

During the quarter through September 30, 2011, total sales for mobile operators in the countries researched were
23,397 billion dollars (without trunking services revenues), up 17% year on year. Convergencia Research
estimates that 2011 should end with sales 14% up on 2010 to 91,500 billion dollars.

89% of regional revenues are generated in South America and Mexico (17,138 million dollars and 3,753 million
dollars respectively) and the remaining 11% is split between Central America (1,446 million dollars) and the
Caribbean (1,061 million dollars).

Voice revenues were up 11% between 3Q 2010 and 3Q 2011 to 15,967 billion dollars.

Revenues from device sales rose to 2,052 billion dollars, 20% up on the 1,716 billion dollars registered last year.

Value added services (VAS) continue to show the most robust growth. During the third quarter of 2011 they
generated 5,378 billion dollars, 40% up year on year. This means that VAS now represent 25% of service revenues
(voice + VAS), compared with 21% previously.

2
Trunking or Specialized Mobile Service (SME for its initials in Portuguese) is a service of terrestrial mobile telecommunications of collective
interest that uses the radio system, mainly, to perform delivery operations or other forms of telecommunications. Sourse: Annex to resolution
No. 404 of May 5, 2005 (Anatel).
3
Bolivia, Paraguay, Perú, Venezuela, Guyana y Guyana Francesa, México, Belice, Costa Rica, Guatemala, Honduras y Nicaragua, Antillas
Francesas, Bonaire, Cuba, Curazao, Haití, Islas Turcas y Caicos, Montserrat, Puerto Rico, República Dominicana y Santa Lucía.
4
Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Guiana, French Guiana, Paraguay, Peru, Suriname, Uruguay and Venezuela.
5
Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama.
6
Anguilla, Antigua and Barbados, French Antilles, Aruba, Bahamas, Barbados, Bermuda, Bonaire, Cuba, Curacao, Dominica, Granada, Haiti,
Cayman Islands, Turks and Caicos Islands, British Virgin Islands, Jamaica, Montserrat, Porto Rico, Dominican Republic, Saint Kitts and Neves,
Saint Vicente and the Grenadines, Santa Lucia, Trinidad and Tobago.

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Chart 5
Mobile telephony revenue growth in Latin America, by service type. 3Q 2010 x 3Q 2011

USD 25,000 3Q 10 3Q 11 Variation 45%
40%
40%

USD 23,397
USD 20,000 35%
Revenues in USD Million

USD 20,006
30%
USD 15,000

USD 15,967
25%

USD 14,439
20%

USD 5,378
17% 20%
USD 10,000

USD 3,851
15%

USD 2,052
USD 1,716
11%
USD 5,000 10%

5%

USD 0 0%
Total Mobile Voice Service VAS Terminals
Phone Service
Chart 6
Mobile telephony sales by revenue source. 3Q 2010 x 3Q 2011
USD 25,000
USD 144 USD 23.397
USD 840 USD 543
USD 1.527 USD 337
USD 20,006
USD 20,000
Revenues in USD Million

USD 15,000

USD 10,000

USD 5,000

USD 0
3Q10 Voice Serv. Terminals Internet Messaging Other VAS 3Q11

Voice Serv. Terminals Internet Messaging Other VAS

Of the added value services, SMS and MMS have a 51% market share, with mobile Internet at 38% and other VAS
representing 11%. Other VAS revenue flows include, for example, mobile marketing, revenue sharing for content
and application downloads, mobile banking solutions and others.

Mobile Internet revenues have risen 69%, driven by the growth of smartphones, which now represent around 10%
of all cell phones in Latin America.

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Brazil is the biggest mobile Internet market by revenue and users, although Central America and countries with low
levels of fixed line broadband penetration also drive significant volumes.

Text and multimedia messaging services have seen sales rise by 25%, mainly because there are still countries with
very low usage levels and there are still opportunities to increase usage through devices and other commercial
tactics.

The other VAS’s have seen revenues rise by 31%, based on new mobile businesses like mobile payments, mobile
marketing and application downloads, among others.

Chart 7
VAS Revenue Shares. Through 3Q 2011.
Voice Serv. VAS SMS + MMS Internet Other VAS

USD 2,052
38%
USD 15,967 USD 5,378
75% 25%
USD 2,714
51%
USD 613
11%

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1.3. Value Added Services in Brazil
Brazil ended the third quarter of 2011 with 231 million mobile telephone connections (including 3.9 million trunking
lines from Nextel), representing 120% penetration of the local population. Annual growth is 19% between the third
quarters of 2010 and 2011. When this study was being concluded, Anatel announced that there were 242.2 million
mobile lines at the end of December 2011, which increases penetration to 124%.

Chart 8
Mobile Telephone connections by operator. Variation between 3Q 2011 and 3Q 2011
80,000 3Q10 3Q11 Variation 30%
26%
70,000
Mobile Phone Service Customers - In

25%
67,038

60,000

59,210
57,714

57,514

18% 20%
50,000
thousands

16%
48,767

46,947

15%
40,000 15%

42,871
37,387
30,000
10%

20,000

5%
10,000

0 0%
Vivo Claro TIM Oi

Vivo remains in the top spot by number of connections, with 67 million connections and year on year growth of
16%. In second spot is TIM, with 59.2 million connections and 26% annual growth. In third place is Claro, which
grew by 18% and now has 57.5 million subscribers. Oi is in fourth place with 42.8 million connections and posted
the lowest annual growth (15%).

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Chart 9
Market share by number of lines. In thousands.
Oi CTBC
TIM 42,871 633
59,210 19% 0.28%
26%

Sercomtel
76
0.03%

Vivo
Claro 67,038
57,514 30%
25%

Vivo and Oi increased ARPU, which fell slightly for Claro and TIM in these quarters.

Vivo remained leader in ARPU (25.2 BRL and $ 16). In second place is TIM with ARPU of 23.5 BRL and $12.9.

Chart 10
Total ARPU for the major operators. 3Q 2010 and 3Q 2011, in BRL and US$
USD 18 3Q10 3Q11 R$ 30 3Q10 3Q11
USD 16
USD 16.0

R$ 25
R$ 26.2
R$ 25.2

USD 14
USD 14.4

R$ 23.5

R$ 22.9
USD 13.5
USD 13.4

R$ 22.2
USD 13.1
USD 12.9

USD 12 R$ 20
ARPU - In USD

R$ 21.2
ARPU - In R$

R$ 19.0
USD 10.9

USD 10
USD 10.4

R$ 17.0

R$ 15
USD 8

USD 6 R$ 10

USD 4
R$ 5
USD 2

USD 0 R$ 0
Vivo Claro TIM Oi Vivo Claro TIM Oi

Gross mobile sales, including device sales in the third quarter of 2011 were 21,332 billion BRL, up 11% year on
year.

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Chart 11
Gross and net revenues for the mobile telephone business. 3Q 2010 and 3Q 2011, in BRL and US$
Voice Services Voice Services
USD 20,000
Terminals R$ 25,000 R$ 21,332 Terminals
USD 13,007 R$ 19,301 R$ 1,535
USD 15,000 R$ 20,000 R$ 1,347
USD 936 R$ 15,412
In Million USD

USD 11,029
USD 9,397

In Million R$
USD 770 R$ 13,130 R$ 1,182
USD 7,503 USD 721 R$ 15,000 R$ 840
USD 10,000

R$ 19,797
USD 12,071

R$ 17,955
USD 480
USD 10,260

R$ 14,231
R$ 10,000

USD 8,677

R$ 12,291
USD 7,023
USD 5,000
R$ 5,000

USD 0
R$ 0
3Q10 3Q11 3Q10 3Q11
3Q10 3Q11 3Q10 3Q11
Gross revenues in USD Net revenues in USD
Gross revenues in R$ Net revenues in R$

Mobile services represent 92.7% of all gross sales, up 10% year on year. The remaining 7.3% is revenues from
devices, which rose 14%.

Between July and September 2011, net VAS sales reached 2,601 billion BRL, up 36% year on year. VAS revenues
represent 19.83% of Brazilian mobile operators’ service sales, similar to the contribution recorded in 2Q 2011.

In the third quarter, mobile broadband generated net sales of 1,413 billion BRL, representing 54.3% of the VAS
business. Annual growth was 64%.

Instant messaging services (SMS + MMS) rose 14% to 0,964 billion BRL. SMS represents 37.10% of VAS.

Other VAS’s grew 6% generating net sales of 0,224 billion BRL. Other VAS represented 8.6% of the value added
business.

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Chart 12
Net revenue distribution by service. 3Q 2011, in millions of BRL and US$
Voice Serv. VAS SMS + MMS Internet Other VAS

USD 862
R$ 1,413
54%
USD 6,411 USD 1,586
R$ 10,514 R$ 2,601
80% 20%
USD 588
R$ 964 USD 136
37% R$ 224
9%

Vivo retains top spot in VAS as a percentage contribution to total revenues (23%). VAS represents 18% of service
sales to both TIM and Oi.

Chart 13
Net VAS sales as a percentage of service sales. Quarterly evolution 2009 – 3Q 2011.
25% 23% 23%
Vivo 23%
22% 22% 22%
TIM
20%
20% Oi
18%
17% 17%

15% 15% 18%
15% 13% 13% 14% 16%
13% 13% 15%
12% 12%
11%
12%
10% 12% 12%
11% 11%
11%
10% 10%
9% 9%

5%

0%
3Q 3Q 3Q 4Q 3Q 3Q 3Q 4Q 1Q 2Q 3Q
2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011

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2. MAVAM (Acision Monitor for Mobile VAS)
MAVAM Acision aims at analyzing the trends of value added services in Latin America. This study has been carried
out in Brazil since 2009. It started to be carried out in Mexico in 2010 and in Argentina in 2011.

This edition of MAVAM Brazil has the following methodological features:

a) It was carried out through a survey addressed to 1,493 mobile phone users across Brazil, by means of two
different surveying techniques: the Computer-assisted Web Interviewing (CAWI) technique and Computer-
assisted Telephone Interviewing (CATI) technique. The sample consists of 193 people interviewed on the phone
(CATI) from December 5th through December 15th, 2011, and of 1,300 people interviewed on the Internet
(CAWI) from December 5th through December 16th, 2011.

b) The geographic area covered by the sample comprises all of Brazil’s regions. The sample considers the number
of inhabitants, their socioeconomic status, age and gender in order to improve representativeness nationwide.

As the number of Internet users is lower than the number of mobile users, and given that the sample represents
a population which is very familiar with the use of technology, the values obtained in some cases bar projections
from applying to the entire market, and they are only reference and indicative data. These cases are explained
throughout the study.

c) The CAWI was supplemented by the CATI in order to create a group for data monitoring and comparison
purposes.

d) The services analyzed in this edition include:

Messaging Mobile Internet

• SMS • Social networks

• MMS • Payments and mobile banking

• E-mail • Mobile Marketing

• Instant messaging • Location services (GPS)

Entertainment Brazil: Geographical areas
• Music Sample Participation
North 44 2.9%
• Images
North-East 266 17.8%
• Games South-East 840 56.3%
South 256 17.1%
• Ringtones Center-West 87 5.8%
• TV

• Video

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3. Messaging Services (Special Topic)
Widespread adoption of mobile telephony is also reflected by text messaging services. It is reasonable to say that
almost 100% of telephones worldwide can be used to send and receive messages. However, as seen in previous
editions of MAVAM, frequency of SMS usage differs by country.

The increasing number of smartphones available and instant (IM) or over the top ‘OTT’ messaging solutions for
mobile phones are challenging traditional text messaging services in the field of interpersonal communications.
This is why this tenth edition of MAVAM will look at the new products and solutions that seek to enrich traditional
SMS and generate new operator revenues.

The characteristics of the messaging services examined in this section are:

1. Automatic signature: define a signature or greeting at the end of messages (E.g.: “I’m on vacation”, “I’m busy
right now / I’m out of office”).

2. Personal White List / Black List: create contact lists to define who can and cannot send messages to users.

3. Automatic forwarding: allows for automatic resending of messages received to another telephone number (e.g.
your personal or work phone).

4. Automatic email forwarding: allows messages received to be automatically forwarded to an email account for
backup or reading on a PC.

5. Distribution list: to send messages to a group of contacts whose recipients can also respond to the entire group.

6. Delivery receipt: receive a delivery confirmation for sent messages.

7. Search: ability to search saved messages

8. Reminders: Receive reminders for appointments.

9. The party called pays for sending the message: in order to be able to send a message, it is paid for by the
recipient.

10. Cloud-based archive to save all messages in a cloud storage service provided by the operator.

11. Multiple SIM cards: the ability to send messages from any other device (tablets, dongles, USB modems, etc.).

12. Alias: configure names or nicknames for a user’s number.

13. SMS Pager: receive text messages or calls without showing a number, but showing a nickname: people send
SMS messages to a service center (for example, 12345) starting with the nickname, followed by the message.

We also compare the features users find most important in an instant messaging and SMS services. Additionally,
we look at situations in which users prefer to use other forms of communication.

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Although our assessment is based on message communications between persons, we should point out that
machine to machine communications and enterprise messaging through the adoption as a new B2C (business to
consumer) communication channel (e.g. mobile couponing, promotions, SMS bank services, government
procedures, etc.) will play an important role in the future of SMS.

3.1. SMS
89% of participants said they have used some sort of text messaging (SMS) service in the last three months. These
figures have remained steady over the past four quarters with positive and negative variations not exceeding one
percentage point.

Chart 14
Use of text messaging (SMS). Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q
2011: 1,493 cases)

100%

95%
Percentage of cases

90% 90%
90% 89%
88%

85%

80%
4Q2010 1Q2011 2Q2011 4Q2011

Among SMS users, usage frequency shows a slightly upward trend. 58% of users send more than one SMS daily,
2 percentage points up on the second quarter of 2011, while at the same time the proportion of those not using the
service has fallen (21% versus 24% in the second quarter).

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Chart 15
Use of text messaging (SMS). Base: total sample (1,493 cases)

21%

5% 21%
Yes
89%
6%
58%

I have not sent any SMS over the last 3 months
I do not make use of the service
I send very f ew text messages. I hardly ever send text messages
I send one SMS per week
I send more than one SMS per week

Increased frequency can be explained as a result of the more aggressive bundles and offerings in the SMS market
during 2011. For example, when we finalized this edition, Brazilian operators were offering pre-paid SMS packages
that reduced SMS prices by between 50% (Claro) and 88% (Oi). Monthly packages of 100 SMS messages cost
around $5.

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3.1.1. Future importance of SMS

Participants were asked to compare the importance of SMS services today and in the future. 46% said that SMS
will be more important than it is now, while 18% felt it would be less important.

Chart 16
Future importance of SMS. Base: total sample (1,493 cases)
100%

80%
Percentage of cases

60%

46%
40%

18% 28% 27%
19%
20%
11%
7% 8%

0%
I don't know / It will be less It will have It will be It will be more It will be more
no answer important than small important important important than
today importance today

3.1.2. Barriers to SMS usage

It is important to ask what impedes greater SMS usage. Among SMS users (89% of the sample), the main reason
they do not use the service more is that there is no need to (16%), the service is expensive (18%) and some users
prefer voice communications (18%). Other less common responses include a lack of (pre-paid) credit and
promotional messaging packages (7%) and a lack of contacts who use the service (3%).

Among non-users (11% of participants), the main reason for lack of uptake (for 66%7) is that they prefer voice
communications. This adoption barrier has remained constant throughout MAVAM’s 2011 surveys. Other reasons
include a lack of usage – where user is not familiarized with its use (24%) or no need to use the service (21%).
Price does not seem to be a significant barrier to people who have not adopted the service.

7
Multiple response.

| 20 |

3.1.3. New SMS and MMS-based services
Preferred products and solutions

Interviewees were asked to look at a list of 13 services as add-ons and improvements to text messaging as we
know it today, and select the ones they would like to use. Each participant was allowed to select more than one
option from the list.

The most popular were: delivery receipt (86%), multiple SIM cards (85%), reminders (82%) and searching saved
messages (80%).

Chart 17
Which of these features would you like to see available for SMS (text messaging) Service.
Base: total sample (1,493 cases). Multiple responses.

Receipt notif ication 86%

Multiple SIM 85%

Reminders 82%

Search 80%

Alias 72%

Auto-signature 71%

Distribuition list 71%

Auto-send to an email account 70%

White/black lists personalization 68%

Cloud message 66%

Paid in the destination 63%

SMS Beeper 63%

Auto-send to another cell phone 60%

0% 20% 40% 60% 80% 100%
Percentage of cases

Participants were asked how difficult it was to understand each of the proposed services. Between 2% and 4% of
interviewees had difficulty understanding the value of the proposed services. The biggest percentage (4%) was
recorded for the following solutions: automatically forwarding received messages, creating discussion lists, creating
nicknames (aliases) and the SMS Pager.

| 21 |

Most important services

Interviewees were asked how likely they were to buy each of the selected solutions. In this case, participants used
a scale of importance ranging from 1 (not important) to 5 (very important).

Of the four features with the biggest potential for adoption (delivery receipt, multiple SIM cards, reminders and
searches) users said that delivery confirmation was the most important (81%).

Chart 18
How important are each of the SMS services you said you would like to have in the future?
Base: cases in which users would like certain features. Note: to make the graph easier to read, we have only included the features with the most
potential.

Receipt notif ication 7% 12% 81%

Multiple SIM 6% 17% 77%

Reminders 7% 14% 79%

Search 8% 20% 72%

0% 20% 40% 60% 80% 100%

Percentage of cases

Not important / Somewhat important Neutral Important / Very important

| 22 |

Willingness to pay for a service

The services people would be more willing to pay for include reminders (44%), automatic SMS forwarding to an
email account (43%), Multiple SIM cards (43%), cloud-based files (43%) and the SMS Pager (41%).

For these five services, the average value people would be willing to pay is between 3.4 and 3.8 BRL. The highest
and most frequently mentioned value is 5 BRL for the automatic forwarding and cloud storage service.

Willingness to pay for SMS service features. Base: 852 (Number of people who said they would like to have each of the
services). Multiple responses.

% of people that Average value
Most frequently
Feature would be willing to people would be
mentioned value
pay for the service willing to pay
Reminders 44% R$3.5 R$0.5
Auto-send to an email account 43% R$3.4 R$5.0
Multiple SIM 43% R$3.7 R$1.0
Cloud message 43% R$3.8 R$5.0
SMS Beeper 41% R$4.3 R$1.0
Auto-send to another cell phone 39% R$3.1 R$1.0
Receipt notification 39% R$3.3 R$0.5
Paid in the destination 38% R$3.2 R$0.5
Distribuition list 37% R$4.0 R$1.0
White/black lists personalization 35% R$5.1 R$5.0
Auto-signature 30% R$4.6 R$5.0
Search 29% R$3.3 R$0.5
Alias 27% R$3.7 R$1.0

| 23 |

New feature configuration

33% of users who would consider using at least one of the suggested products said that the ideal method for
configuring the service would be via an application installed on their phone. In second place, 26% of participants
said that the best option would be SMS configuration and 24% said they would prefer to configure the service via
the operator’s Internet portal.

Chart 19
What would be the best way to configure the SMS services listed. Base: People who like to have at least one
feature (1,428 cases). Multiple responses.

Through an app installed on your cell phone 33%

Sending an SMS to conf igure services 26%

Through the operator's web site 24%

Through an app installed on your computer 8%

through a complement installed in the email
4%
manager

Through a WAP portal 3%

Other 2%

0% 20% 40% 60% 80% 100%
Percentage of cases

| 24 |

3.2. MMS
MMS usage has remained stable throughout the second quarter of 2011: 12% of the sample said they sent at least
one MMS per week (active users). 77% of interviewees said that their cell phones were able to send multimedia
messages, similar to the figure in the second quarter (75%).

Chart 20
MMS (Multimedia Messaging) usage. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)
100%

2Q2011
77% of users with MMS-enabled cell phones 4Q2011
80% 75% 77%
Percentage of cases

60%

40%
10% of users who may
prospectively be turned
into active users 12% of active users

20%
12% 10%
6% 7%
5% 5%

0%
Mobile Phones enabled I send very few MMS, I I send one MMS in I send more than one
to send MMS hardly send MMS average MMS

In this edition, we surveyed the occasions and situations that users send MMS messages. Our results showed that
69% of users who sent MMS messages in the last three months said they do so on special occasions like birthdays
and other celebrations. 33% send MMS messages when they are with friends, and 27% send them at the
weekends. Other situations mentioned by 11% of the sample are: when they want to send photos to relatives or as
a surprise, when they want someone’s opinion about something they are going to buy or want to show someone a
photo taken in an unusual situation.

| 25 |

Chart 21
In which situations do you send Multimedia Messages (MMS). Base: Users sending at least one MMS in the last
three months (325 cases). Multiple responses.

On special occasions (eg:
anniversaries, birthdays, 69%
etc..)

When hanging out with
33%
f riends

On holidays 27%

For some labor issue 19%

Other situation 11%

0% 10% 20% 30% 40% 50% 60% 70% 80%
Percentage of cases

As the user base is so low (12% of active users), we asked why people didn’t use MMS more. 41% said that
sending MMS messages is expensive. 18% believe that the service does not work properly and 16% said that they
did not use the service more regularly because they are not sure if the messages are received. Among other
reasons not listed (13%), people said they didn’t see a need to use MMS, they preferred not to send photos in
messages and email is better for sending photos.

Chart 22
What are your reasons for not using MMS messages on your cell phone (or not using them
more)? Base: total sample (1,493 cases). Multiple responses.

It is very expensive 41%

I do not have how to conf irm if the receiver
16%
received the message

My cell phone is easy to send MMS 8%

My cell phone is not conf igured to send MMS 8%

MMS service does not work well 18%

Never try sending a multimedia message 24%

Other reasons 13%

0% 10% 20% 30% 40% 50%
Percentage of cases

| 26 |

Response to incentives

55% of interviewees said that one incentive for MMS usage would be lower prices. Another, similar to SMS, would
be delivery confirmation (29%).

22% believe that MMS messaging packages would also encourage usage.

Among the 5% of responses presenting other incentives, the most interesting are: faster delivery, offering support
for using the service on mobile phones and that all devices should be able to open these types of message.

Chart 23
What would encourage you to use MMS messaging more (or more frequently)? Base: total sample
(1,493 cases). Multiple responses.

Cost per message should be lower (f or
55%
example: it could cost the same as SMS)

Be sure that the message will reach the
29%
destination

Operators would have to of f er MMS
22%
bundle

Owning a cell phone able to send MMS 13%

Others 5%

Don't know 16%

0% 10% 20% 30% 40% 50% 60%
Percentage of cases

| 27 |

3.3. Instant messaging (IM)
44% of participants have used some sort of instant messaging service from their mobile phones in the past three
months.

Chart 24
Access to instant messaging. Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q
2011: 1,493 cases)

100%

80%
Percentage of cases

60%

44%
40%
33%
28%

20%
20%

0%
4Q 2010 1Q 2011 2Q 2011 4Q 2011

Chart 25
Use of instant messaging. Base: total sample (1,493 cases)

Yes, I made use of Instant Messaging
37% services during the last three months
44%

No, I didn't make use of Instant Messaging
services during the last three months

19% I never made use of Instant Messaging
services during the last three months

IM usage increases when people switch to new devices. 56% of people who bought their device in the last six
months have used instant messaging. This percentage drops to 51% and 33% among people who have had the
same device for between 6 months and one year and for more than one year, respectively.

| 28 |

IM usage is higher if people have smartphones (66%) compared with people who use traditional phones (27%).

Men (47%) use instant messaging more than women (40%).

Of those who use instant messaging (44%), the most frequently mentioned chat service is Facebook (29%),
followed by Twitter (20%) when used as a messenger. While Twitter is not an instant messaging service, rather
more of a social network, the immediate delivery and short message length result in users treating the service in
roughly the same way as an instant messaging service.

Chart 26
Use of instant messaging as a platform. Base: IM users (653 cases). Multiple responses.

Facebook Chat 29%

Twitter 20%

eBuddy XMS 10%

Google Talk 10%

iMessage 7%

Skype Messenger 7%

BlackBerry Messenger/Ping 2%

WhatsApp 2%

Others 4%

0% 5% 10% 15% 20% 25% 30% 35%
Percentage of cases

We asked people who said they used the IM services in Chart 27 how many messages they sent and received on
average every week over the past three months. The results show that some platforms are used to send messages
and others to receive them.

Twitter, BBM and Skype are preferred to send messages and GTalk, eBuddy, iMessage, Facebook Chat and
WhatsApp to receive them.

eBuddy posts the biggest difference between the average number of messages sent and received: 15 places.
Twitter (2.4 posts) and Facebook Chat (1.5 posts) are the most balanced services in terms of messages sent and
received.

| 29 |

Chart 27
Average number of messages sent and received via instant messaging services. Base: Users who
have used each of the services.

37.3
Google Talk
29.1

48.0
eBuddy XMS
33.1

28.3
Twitter
30.8
Average messages
39.6 received per week
iMessage
32.8
Average messages sent
21.5 per week
BlackBerry Messenger/Ping
30.1

39.0
Facebook Chat
37.5

26.7
Skype Messenger
30.8

39.1
WhatsApp
35.5

0 10 20 30 40 50 60
Messanges per week

Barriers to instant messaging adoption

The main reason that people do not use instant messaging from their mobile phone is that their phone does not
allow for installation of this type of application (54%). Second ranked is the low speed and reliability of mobile
internet connections (20%). Third place is the fact that people prefer to access these services from a PC or
notebook, make voice calls or use SMS (8%).

Chart 28
What reasons keep you from using (or using more often) instant messaging services from the
cell phone you use with the greatest frequency? Base: total sample (1,493 cases). Multiple responses.

My phone does not support IM 54%

Internet connection is too slow 20%

I pref er to access in my computer in the of f ice /
8%
f azer chamadas de voz ou enviar SMS

Not interesting / need / time 7%

The internet connection f rom the cell phone is
expensive / i don't have credit or data bundle to 5%
access the internet

Don't know how to use or access the application 4%

Others 4%

0% 10% 20% 30% 40% 50% 60%
Percentage of cases

| 30 |

Requirements for a new instant messaging service

Interviewees were asked what the main characteristics should be for a new instant messaging service.

In first place are reasons based on the type of contract. 59% of the sample said that the cost of using the service
should be included in the plan (this is the most common form of benefit).

In second place are reasons linked to guaranteed performance. 56% said it should work smoothly.

Chart 29
Features a new instant messaging service should offer. Base: total sample (1,493 cases). Multiple responses.
It must be without cost / included in the contract 59%

Service should always work, without troubles 56%

Cost must be reasonable 52%

It must be sure message is received af ter seconds 51%

Service should be used also in the computer 40%

Able to share f iles, images, videos with my f riends 39%

Able to see when the other party is typing an answer 38%

Able to contact anyone 35%

Able to contact all SMS users 32%

Able to chat with others in the contact group 27%

Able to see the latter conversations 25%

Able to share status and f eelings with f riends 20%

Able to share my location 14%

Others 4%

0% 20% 40% 60% 80%
Percentage of cases

| 31 |

If the new service meets the quality and feature requirements described, 76% of those interviewed said they would
use the service. Potential for instant messaging is greater among people between 18 and 24 years of age (81%)
and 25-34 (79%).

Chart 30
What would be your attitude towards using a single instant messaging service? Base: total sample
(1,493 cases)

100%

80%
Percentage of cases

76%
60%
Would use it

41%
40% 35%
4%

Would not use it 18%
20%

3% 2% 2%
0%
Don't know Certainly would Probably would Maybe yes or Probably would Certainly would
not use not use no use use

22% of people who said they used instant messaging reported they would only do so if it is free of charge. 9% did
not say how much they were willing to pay.

58% of people who use the service would be willing to pay between 0.25 and 2.00 BRL per month.

How much would you be willing to pay for these services? Base: total sample (1,493 cases)
Value people would be willing to pay %
Nothing or would only use if free of charge 22%
Less than 0.25 BRL per month 14%
Between 0.25 and 0.50 BRL per month 17%
More than 2.00 BRL per month 12%
Don't know 9%

| 32 |

3.4. Advantages of SMS over instant messaging
We asked people the advantages each service had over the other.

46% of people said that SMS costs less than instant messaging. While the total amount a user pays for SMS
messages depends on usage, the view that text messaging is cheaper than instant messaging can be linked to the
position that, generally speaking, better quality phones like smartphones are needed to use instant messaging, as
well as a data plan. The importance of this response is that the user’s perceptions can be altered through product
communication proposals.

Another 33% said that unlike instant messaging, people know that when someone receives an SMS text message,
the message is important. This response reveals that instant messaging is a communication method used in more
informal situations.

In third place as a comparative advantage over instant messaging, with 32%, is the ability to communicate with
anyone. This response may indicate the users know that only more expensive devices provide IM access, while
SMS is available on almost any device on the market.

Chart 31
In your opinion, what are the advantages of SMS compared with instant messaging services
used from your mobile phone? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant
advantages for illustrative purposes.

Have low cost 46%

When I use SMS I know that the recipient
33%
knows it's an important message

I can communicate with any person 32%

I can easily send a message to a large
25%
quantity of people

To know that the message is received
23%
af ter seconds

0% 10% 20% 30% 40% 50%
Percentage of cases

Other advantages of SMS over IM mentioned: ease of use (no additional application needed), no Internet access
required and unlimited SMS packages are available.

| 33 |

3.5. Advantages of instant messaging over SMS
Among the advantages of instant messaging over SMS, 41% of interviewees mentioned low cost. In this case, we
can presume that when a user has chosen a more expensive device that allows for instant messaging and
subsequently pays for a data plan, they realize that in general terms, instant messaging does not incur any
additional cost. The fact that the advantage of both services are linked to a perception of lower cost for subscribers
means that operators need to pay special attention to their pricing models when expanding either service.

38% said that one advantage is IM can be used on a PC. This is important because it reveals all communication
options need to be available on several devices (voice, messaging, emails, video, etc.).

38% also said that an IM advantage over SMS is knowing the message will be received in a matter of seconds.

Chart 32
In your opinion, what are the advantages of instant messaging services (e.g.: WhatsApp, Skype
Messenger, Facebook Chat, BlackBerry Messenger, Google Talk, etc.) Compared with
SMS/MMS? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant advantages for illustrative
purposes.

Have low cost 41%

Use the service also in the
38%
personal computer

To know that the message is
38%
received af ter seconds

Be sure that the answer will be
35%
received f ast

Be sure the receiver will read the
35%
message promptly

0% 10% 20% 30% 40% 50%
Percentage of cases

Other benefits of IM over SMS mentioned by interviewees is that IM is free, you can speak to people whose
telephone number you do not know, it can be used over Wi-Fi and you can see the status of other contacts.

| 34 |

3.5.1. Service preference among recipients

In this edition of MAVAM, we asked whether recipients preferred to receive messages by SMS or IM, when sent by
a friend, relative, business partner, colleague or based on the message content: work vs. personal.

SMS was the preferred option in each situation, especially in the workplace. 39% of the sample said they prefer
SMS when they need to communicate with work colleagues and 40% prefer text messages when dealing with work
issues.

Chart 33
Preferred method of communication for each recipient. Base: 1,322 cases. Note: We have omitted percentages for
people who said they would not use either service to facilitate viewing. Multiple responses.
100%
SMS (Text Messages)

Sometimes SMS, sometimes
80% Instant Messaging
IM sent f rom my cell phone
SMS is mostly used
Percentage of cases

within work situations
60%

38% 38% 39% 40%
40% 35% 36%36%
33%
31%
25% 25%
19% 21% 20% 20%
19%
20% 16%

9%

0%
Friends Relatives Boyf riend/ Work Work issues Others
Girlfriend - colleagues
Husband/Wif e

| 35 |

3.5.2. Service preference based on circumstances

37% of people said they prefer SMS over IM when they send what they consider to be “important information”.

When the importance of a message means it needs to be received as quickly as possible, 31% prefer sending their
message via IM, rather than SMS.

Chart 34
Under what circumstances would you prefer to use SMS instead of instant messaging from your
cell phone? Base: 1,322 cases. Multiple responses.

When I answer an incoming SMS / When I answer an 53%
incoming instant messaging 39%

37%
When I send important inf ormation
20%

26%
When I want to make sure the message will be received
21%

When the person that I want to contact doesn't have the 40%
instant messaging that I use/ When I have the cell phone
number of the person that I want to contact 46%

When the person that I want to contact is not available 51%
(not online)

28%
When I need the message being received quickly
31%

SMS is mostly used when important
When I want to be assured that the message will be read 27% inf ormation has to be sent
as soon as possible 24% when compare to IM.
The latter is mostly used when a
message has to be received quickly
4%
Others
11%
SMS is pref erred over IM
5%
Don't know IM is pref erred over SMS

0% 20% 40% 60% 80% 100%
Percentage of cases

| 36 |

3.5.3. Service speed and reliability

For 42% of participants, instant messaging services are as reliable as SMS, but 31% believe SMS is more reliable
than IM. These two variables show us that users tend to believe that SMS is more reliable.

Chart 35
Speed and reliability of SMS and IM. Base: total sample (1,493 cases)
Services Reliability Service delivery speed

The SMS is more reliable/f ast as
13% instant messaging
14% 15%
The SMS is as reliable/f ast as
40%
instant messaging
18%
42% 31% Instant messaging is more
reliable/f aster than SMS

28%
Don't know

The main advantage of the SMS messaging system is the perception of “speed” or immediate communication. 40%
of people say that instant messages are delivered faster than SMS.

| 37 |

3.6. Use of messaging during end of year festivities
69% of interviewees said they intended to use some sort of
messaging service over Christmas and New Year8.

Chart 36 31%
Intention of using messaging services for festive
greetings. Base: total sample (1,493 cases)
69%

Yes, I have planned to send Christmas messages

No, I won't use this type of service

94% of people who said they planned to use messages over the year-end period were inclined to use SMS. The
second largest group (37%) intended to send Christmas greetings via Facebook. In third place is MMS multimedia
messaging (12%).

Chart 37
Service you intend to use for festive greetings. Base: users using messaging services to send festive greetings (1,026
cases). Multiple responses.

SMS 94%

Facebook Messenger 37%

MMS 12%

Google Talk 9%

Skype Messenger 7%

BlackBerry Messenger 2%

WhatsApp 2%

Other service 6%

0% 20% 40% 60% 80% 100%

Percentage of cases

More women (72%) than men (66%) intended to send year-end greetings.

Messaging as a means of communication during year-end festivities is more popular among lower classes C1 and
C2 (70%) compared with higher classes A1 and A2 (65%).

8
The survey was carried out between December 5 and 16, 2011.

| 38 |

3.7. Use of advertising to reduce SMS prices
In this edition of MAVAM, we asked whether people would accept insertion of operator advertisements at the end
of their text messages in exchange for lower SMS service prices. 43% said they would, while 36% said no.

Chart 38
Permission to attach advertising to users’ messages. Base: total sample (1,493 cases)
Yes, I certainly would allow

Yes, maybe I would allow 4%

26% 23% 43% of interviewees
Maybe yes, maybe no would accept insertion of
operator advertisements
No, it's unlikely that I would versus 36% who said
allow 10% they woldn't.
20%
No, I certainly wouldn't allow 16%

Don't know

Interviewees were asked how they felt about receiving promotional SMS or MMS messages for products or
services with the possibility of making a secure purchase by automatically responding to an SMS.

Only 18% of interviewees said they would probably or definitely make the purchase. 29% of the sample said they
definitely would not make a purchase, an opinion shared by 31% of the lower socioeconomic classes C1 and C2
and 26% of higher A1 and A2 classes. Men and women shared similar opinions, as did different age ranges.

Chart 39
Buying products or service via SMS. Base: total sample (1,493 cases)
Yes, I certainly would allow

Yes, maybe I would allow 29%
4%

Maybe yes, maybe no 6%
18% of interviewees would
22% probably or def initely make
No, it's unlikely that I would 12% the purchase via SMS
buy

No, I certainly wouldn't buy 28%

Don't know

| 39 |

4. MAVAM Brazil
4.1. Entertainment
4.1.1. File types (images, music, games, ringtones and videos)

Images (88%) and games (87%) are the file types most commonly stored on cell phones. In second spot is MP3
songs (81%), followed by ringtones (73%) and finally video files (41%).

Chart 40
Storage of files on cell phones based on the type of entertainment. Base: total sample (1,493 cases)

Games 87% 13%

Videos 41% 59%
Type of file

Images/Pictures 88% 12%

MP3 Music 81% 19%

Ringtones 73% 27%

0% 20% 40% 60% 80% 100%
Percentage of cases

User has f iles User does not have f iles

| 40 |

4.1.2. Mobile TV (viewing)

9% of participants tuned in to a free-to-air television program on their cell phones in the last three months. Digital
TV remains at the same level as last quarter (2%).

Chart 41
TV on mobile phones Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)
25%
2Q2011
4Q2011

20%
Percentage of cases

15% 9% of sample tuned in to
a f ree to air TV program on
their cell phone in 4Q2011

10% 9%

5%
3% 2%
1%
0%
watch any program on broadcast TV I saw some TV digital program

4.2. E-Mail
36% of those interviewed said they had an email account configured on their mobile phone. This is up 38% on the
second quarter of 2011. We can presume that this is linked to the rising number of smartphones among
participants, now representing 42% of the base, compared with 32% in the second quarter of 2011.

More men (40%) than women (33%) have an email account on their cell phone. The age range with the biggest
number of people setting up email accounts on their cell phones is the 18-24 age group (41%).

| 41 |

Chart 42
Has an email account on their cell phone. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011:
1,494 cases)
100%

80%
Percentage of cases

60% 36% of participants have an email
account on their cell phone.
This f igure is growing continuously

40% 36%

24% 26%

20%

0%
1Q2011 2Q2011 4Q2011

36% of those who have an email account on the mobile phone say they send and receive messages daily. 26%
send and receive email ph mobile phone between one and three times a week, while the remaining 38% check
their email occasionally, three times or less per month.

Chart 43
Email send and receive frequency. Base: people who have an email account on their cell phones (536 cases)

On daily basis 36%

Twice or three times a week 16%

On a weekly basis 10%

Every 10 days 4% 62% of people with an
email account on their
cell phone send and receive
Every 15 days 5% email at least once a week

Monthly / Once a month 5%

Occasionally 25%

0% 10% 20% 30% 40%
Percentage of cases

| 42 |

4.3. Mobile Internet
The user base of people owning mobile phones offering the ability to access the Internet has remained stable at
79% of the total sample in this edition (compared with 78% in the second quarter of 2011). Of these 79%, 57%
accessed the Internet via their cell phone in the last three months. This reveals that 44% of those interviewed
accessed the Internet in the last quarter, mirroring the previous quarter (45%). 46% of people who accessed the
Internet from their mobile phone do so daily.

Chart 44
Cell phones able to access the Internet and Internet access over the last three months.
Base: total sample (1,493 cases)

57%
Yes, my mobile
phone is enabled f or
21%
Internet access
79% 25%
18%

No, my cell phone hasn't this characteristic
Yes, I connected on the internet in the last three months by my cell phone
No, I don't connected on the internet in the last three months by my cell phone
I never connected on the internet with my cell phone

Internet access is more concentrated among men (64%) between 18 and 34 years of age (59% - 60%) with high
social and economic status (70%).

More people access the Internet if they have smartphones (73%) than traditional phones (40%).

More people access the Internet if they have unlimited post-paid plans (68%) than pre-paid plans phones (54%).

| 43 |

Chart 45
Internet access by age, gender, socioeconomic profile and contract plan. Base: all participants (1,493
cases)

Post-Paid 66% 34%
Hired
Plan

Pre-Paid 54% 47%

35 years old or more 50% 50%

From 25 to 34 years old 59% 41%
Age


17 years old or less 45% 55%
Gender

Women 51% 49%

Men 64% 36%

C 55% 45%
Economic
Socio-

Level

B 55% 45%

A 70% 30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Yes, I accessed the Internet f rom my cell phone No, I don't accessed the Internet f rom my cell phone

The main reason people do not use Internet on their mobile phone is because they have no need to do so (30%).
This barrier to adoption has dropped 10 percentage points since the second quarter of 2011.

Other reasons are cost/benefit, with mobile internet being seen as expensive in terms of the quality on offer (23%)
and people being uncertain how much they will have to pay (14%). 25% were dissatisfied with the browsing speed.

Chart 46
Reasons for not accessing the Internet. Base: respondents who did not access the Internet in the last three months via their
mobile phones (4Q 2011: 818 cases; 2Q 2011: 868 cases). Multiple responses. Note: In order to improve viewing, we have displayed the
reasons representing the largest percentage of answers.

40%
Because I do not need it There is a reduction
30%
in the number of
Because surf ing the Web on the cell phone is too 21% people not needing
slow 25% network access
Because I f ind it expensive in relation to the service 21%
I am rendered in exchange 23%
Because I f ind my cell phone really uneasy to 21%
access the Internet 18% Between 12% and 23% of
Because I do not know for sure how much I will end 16% cases mention reasons
up paying per month/I guess it might be expensive 14% related to service cost

18%
Because I imagine that it must be expensive
13%
9%
Because I can’t af f ord it
12%
Because I tried the service and it was a poor-quality 11%
service 11% 2Q2011
6% 4Q2011
Because the service is not reliable
10%

0% 20% 40% 60% 80% 100%
Percentage of cases

| 44 |

4.4. Social Networks
55% of users accessed social networks in the last quarter of 2011. The percentage of social network users almost
doubled between the first and third quarters and we expect this trend to remain positive throughout 2012.

Chart 47
Social network access. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011: 1,494 cases)
100%

80% There is continuous
growth of social network
access via mobile
Percentage of cases

phones
60%

45%
40%
40%
29%

20%

0%
1Q 2011 2Q 2011 4Q 2011

Access to social networks is relatively higher among people with post-paid plans (51%), men (49%), people
between 18 and 24 (52%) and people in social classes A1 and A2 (56%).

Chart 48
Social network access by age, gender, socioeconomic profile and contract plan. Base: total sample
(1,493 cases)

Post-Paid 51% 49%
Hired
Plan

Pre-Paid 43% 57%

35 years old or more 29% 71%

Age


17 years old or less 44% 56%
Gender

Women 41% 60%

Men 49% 51%

C 45% 55%
Economic
Socio-

Level

B 43% 57%

A 56% 44%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Yes, I have accessed a Social Network f rom my mobile phone
No, I haven't accessed a Social Network f rom my mobile phone

| 45 |

The social network with the most visits was Facebook (91%), followed by Orkut (49%) and Twitter (43%). The
figures reveal a trend noted by MAVAM in previous editions, reflecting the fact Facebook is progressing faster than
Orkut.

Access frequency varies by social network. 43% of Facebook users visit the social network daily, compared with
just 29% of Orkut users. 33% of Twitter users access the service daily.

Other social networks mentioned by users (11%) include Google+, Foursquare and StumbleUpon.

Chart 49
Social network access. Base: Social network users (1Q 2011: 439 cases; 2Q 2011: 628 cases; 4Q 2011: 663 cases). Multiple
responses.
100%
90%91%
1Q 2011
82% 2Q 2011
80% 75% 4Q 2011

65%
Percentage of cases

60%
60% 57%

49%
46%
43%
40%

20%
12% 13%
10% 11%

4% 4% 4%
0%
0%
Facebook Orkut Twitter LinkedIn Myspace Others

| 46 |

4.5. Mobile Marketing
80% of interviewees received a text message (SMS) or multimedia message (MMS) containing advertising
messages on their mobile phone during the last quarter of 2011. This figures show an 8 percentage point drop for
these types of messages compared with previous editions of MAVAM. At present, this drop cannot mean to be a
trend.

Chart 50
Receiving advertising messages. Base: total sample (1,493 cases)
Yes, I received I never received these kind of messages

20%

80%

16% of people receiving these messages said they arrived daily, while 45% said they receive one to three
messages a week.

Chart 51
Frequency advertising messages are received. Base: users receiving this type of message (1,192 cases)

Daily 16%

2-3 times a week 23%

Weekly 22%

Each 10 days 7%

Each 15 days 7%

Once a month 9%

Occasionally 16%

0% 5% 10% 15% 20% 25%
Percentage of cases

| 47 |

The operator from which the user has contracted their service continues to be the biggest sender of these
messages (85%).

The number of messages sent by consumer product companies has risen by five percentage points. Growth
between the first quarter of 2011 (15%) and the third quarter of 2011 (22%) is seven percentage points. This series
helps ensure that there is a positive trend for adopting mobile telephones as a channel for advertisers to reach their
clients.

Chart 52
Sending advertising messages. Base: Users receiving these messages (4Q 2011: 1,192 cases; 2Q 2011: 1,381 cases; 1Q
2011: 1,363 cases). Multiple responses.

From the operator/the company I receive the 83%
84%
service 85%

From a dif f erent Mobile Phone service company 5%
7%
that is not mine 10%
4%
From a politician/political propaganda 4%
7%
1Q 2011
From Provincial, Municipal or Federal 3%
2%
Government Authorities 4% 2Q 2011

12% 4Q 2011
From a service rendering company 13%
16%
15%
From a consumer goods company 18%
22%
4%
From a dif f erent company 5%
6%

From a car dealership
6%
15%
I do not remember 7%
5%

0% 20% 40% 60% 80% 100%
Percentage of cases

55% of people receiving advertising messages said they read them closely (similar to the 51% figure reported in
the second quarter). People with pre-paid contracts (57%) or limited access post-paid contracts (54%) said they
read them more closely than people with unlimited post-paid contracts (45%).

Of those reading these messages carefully, 23% said the message offered SMS, data and weekend calling
packages. Around 12% said they were promotions to extend the number of minutes or SMS, such as “refill and
win” packages. Another 15% said the messages were linked to plan changes, promotions or charge reductions.

| 48 |

4.6. Cash and mobile banking
Cell phone usage as a payment method or to access banking services has remained similar to the last three
quarters. The most popular function is consulting the bank balance or bank statement (13%). Access a bank’s
website for any other type of transaction comes in second place (9%).

Chart 53
Cash and mobile banking. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases; 1Q 2011: 1,494 cases)
25%
1Q2011
2Q2011

20% 4Q2011
Balance or statement consultation
still the most f requent transaction (13%)
Percentage of cases

15%
15%
13%

10%
10% 9%
8% 8%
7% 7%

5% 5% 5% 4% 5%
5% 4% 4%

0%
Pay bills via users Check balances Make bank User accessed the Other transactions
cell phones and account transf ers Bank's site to use
statements some service

| 49 |

4.7. GPS and maps
23% of participants said they have downloaded maps on their cell phone. And 21% said they have used some sort
of geolocation service in the last three months.

In the MAVAM sample, map usage on cell phones almost doubled this quarter. Possible reasons include the rising
number of smartphone users among interviewees.

As the survey is conducted over the Internet and interviewees are more familiar with these technologies, we cannot
project that 23% of mobile telephone subscribers in Brazil use maps services and that adoption of this type of
service has double nationwide. On the other hand, these data are valid if we want to draw a correlation between
the increasing number of smartphones and map and geolocation service usage.

Chart 54
GPS usage on cell phones. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)
In the 4th quarter, 22% of users
said their cell phones of f ered
100% geolocation services
2Q 2011
86%
4Q 2011
78%
80%
Percentage of cases

60%
Of all users, 23% had
maps on their devices
in 4Q2011
40%

21% 23%
20%
11% 11%
4%
1%
0%
My cell phone doesn't I use localization I didn't use location I have maps f or GPS in
has GPS technology service/GPS service/GPS my cell phone
integrated

| 50 |

5. Conclusions
Between July and September 2011, sales per value added services (VAS) posted R$ 2,601 billion, 36% more than
in the same period the previous year. VAS income accounts for 19.83% of the sales of Brazilian mobile operators.

Sales volume of SMS in Brazil during the third quarter of the year was of 964 million reales (37.1% of the VAS);
sales growth represented 14% in comparison with 2010.

During 2011, Brazilian operators launched aggressive SMS packages to highlight the importance of the service,
which is broadly used in the rest of Latin America but has low penetration in the Brazilian market. Subscribers have
responded positively to better pricing alternatives; and this has resulted in higher consumption of SMS increasing in
traffic of operators by up to 4 times, depending on the operator.

The base numbers of mobile subscribers using SMS remained stable throughout 2011, with almost 90% of
subscribers using the service.

The big change of the year was the average number of SMS deliveries as a consequence of better offers; for
example, MAVAM indicates that the average number of SMSs per month per user was 48 in the fourth quarter of
2010, and by September 2011 had almost doubled, reaching an average of 81 SMSs per month per user.

Looking at additional SMS services, the report showed an acceptance higher than 50%; with the three mostly
required services being: acknowledgement of receipt (86%); Multiple SIM (85%) and reminders (82%). Willingness
to pay for additional services varies between 27% for the alias functionality and 44% for the reminder functionality.
For these new messaging services, users are willing to pay between R$3.1 and R$ 5.1 per month depending on
the functionality.

The use of MMS sees no changes. In the quarter, only 12% of users stated having sent at least one MMS during
the week. The MMS subscribers’ base could grow if the price of the service is reduced, as 41% of surveyed
considered that they would use the service if price is reduced.

Use of instant messaging climbs to 44% of those surveyed, and it rises up to 56% when considering new devices
(being at least 6 month old).

Facebook chat application is the mostly used (29% of instant messaging users), and Twitter is ranked second. This
would fall in line with global trends, which are seeing an increase in the usage of IP based over-the-top ‘OTT’
services. However, while usage is increasing, global text messaging volumes are still expected to continue to grow
this year, from the 4.2 billion SMS users today to over 5 billion users globally and 8 trillion messages. This growth
will be driven by new innovations in trusted messaging applications, personalized messaging and rich
communication services – some of which are tracked in by MAVAM. (Sourse: Teletime)

| 51 |

6. Glossary
The description of the services presented in this report is presented in the following sections.

Messages The services in this category can be defined as:

Answering Machine or Voice Messaging: gives access to the
automatic messages recording service offered by the carrier, in case
of receiving calls that can’t be answered.

E-mail: receives or sends emails via cell phone. Receiving or sending
can be done manually, in other words by user’s initiative, or can be
activated through the push mechanism, which periodically and
automatically receives and sends mail.

Instant Messages: service which permits access to instant messaging
systems like MSN or Yahoo.

MMS (Multimedia Message Service): sends short text messages with
image, photo, or video.

SMS (Short Message Services): sends short text messages.

| 52 |

Entertainment The services in this category can be defined as:

Games: service which provides the download of games to be played
on the cell phone, individually, or through internet or Bluetooth
connections, in groups. The cell phone must be able to run the games
available in the device and also the downloaded ones, and
additionally provide Bluetooth or data connectivity for internet access
(e.g.: EDGE, EVDO, or 3G).

Images: service which provides the download of images and photos to
be displayed on the cell phone. The handset must be able to display
several formats of pictures and images such as JPEG, GIF, among
others.

Music: service which provides the download of songs to be played in
the cell phone. The handset must be able to play several music
formats such as MP3, AAC, MP4, WAV, among others.

Open TV: This feature is present in some cell phones and permits
user to watch free TV programs with the handset acting as an
analogue or digital TV receptor and capturing contents through the
same signals (frequencies) received by traditional TV’s at home.

Ringtones: service which provides the download of ringtones to be
used in the handset. The cell phone must be able to play multiple
formats of ringtones, such as MIDI, AAC, MP3, MP4, WAV, among
others.

Video: service which provides the download of videos or video
streaming to be played on cell phone. The handset must be able to
play downloaded videos or received video streaming. The cell phone
must be able to play videos in 3GP, MP4, WMV, AVI, among others.

| 53 |

Internet and Location The services in this category can be defined as:

Internet Access: service which provides broadband access to the
Internet via cell phone or modem. In both cases users must have a
data plan contract with the mobile operator.

This service has the following characteristics:

Cell phone or Mobile Phone: the internet access from cell phone can
be done in the following ways:

1) Using a browser to access the same websites accessed by fixed
internet through a computer. Examples of browsers: the ones
offered by the cell phone or smartphone (Internet Explorer Mobile,
for Windows Mobile), or alternative browsers such as Skyfire or
Opera.

2) Accessing the WAP websites inside the Carrier network through
WAP browser.

3) Through specific programs installed in the handset (Widget, Web-
App) provided by companies like Yahoo Mobile.

4) Modem: devices which can be connected to desktop computers or
notebooks. Provides Internet broadband connection using a
computer browser (Internet Explorer, Firefox, and others).

Location Based Services: service which provides users’ geographic
location. These services have the following characteristics:

Location: can be provided as the following:

1) Through a process of triangulation using information from cell sites
and application systems provided by the operator for this purpose;

2) Through the GPS installed in the cell phone.

| 54 |

Offered Services:
1) Location: service usually offered by the mobile operator which
allows informing the geographic location of a particular subscriber.
E.g.: service hired by parents to monitor their children’s habits, or
with the purpose of promoting safety.

2) Maps: service offered by other companies providing maps on cell
phones, usually to locate addresses, and also permits to locate
users in the map if their handsets have a built-in GPS.

3) Contextual Filter: permits the mobile operator, or other service
providers, to offer addresses or other types of promotions at
stores, restaurants, movies, among others, based on the instant
location of users.

Payments and Banking: usually offered by banks or other credit
institutions, which allows the access to users accounts in these
institutions. These services can range from simple balance consults to
the payment of bills or conclusion of investment transactions.

Social Networks: service which includes all the necessary elements to
provide access to social networks such as Orkut, Twitter, Facebook,
and others. This access can be done through browser and internet
access, both present on cell phones, or through a specific application
provided by mobile operators or other companies.

Mobile Marketing The services in this category can be defined as:

Mobile Advertising: similar to Mobile Marketing, Mobile Advertising is
also an advertising service implemented by mobile operators or other
companies. If the subscribers agree to receive it they can participate
of promotions such as free minutes, free SMS packages, and others,
as a reward for receiving advertisements.

Mobile Marketing: these services are implemented by mobile
operators, to advertise the operator itself or other companies for the
subscriber base. Usually these ads are sent via SMS. The
advertisements can also be sent directly by competitor carriers or
other companies, again using SMS messages.

| 55 |

7. Technical File
Universe Cell phone users who also access the Internet

CAWI (Computer-assisted web interviewing)
Techniques
CATI (Computer-assisted telephone interviewing)

Instrument 15-minute semi structured questionnaire

Sample 1,493 cases (193 CATI + 1,300 CAWI)

Statistical Error Margin ± 2.5 p.p. with 95% statistical confidence

Market Brazil

December 5th through December 15th, 2011 (CATI)
Date of the Survey
December 5th through December 16th, 2011 (CAWI)

Gender Sample
Male 710 47.6%
Female 783 52.4%

Age Sample
From 14 to 17 years old 34 2.3%
From 55 to 65 years old 60 4%

Residence Sample
North 44 2.9%
North-East 266 17.8%
South-East 840 56.3%
South 256 17.1%
Center-West 87 5.8%

Socioeconomic Sample
Status
C2 135 9%
C1 342 22.9%
B2 521 34.9%
B1 337 22.6%
A2 148 9.9%

| 56 |

Operator Sample
Claro 301 20.2%
Oi 361 24.2%
Tim 449 30.1%
Vivo 340 22.8%
CTBC 4 0.3%
Nextel 35 2.3%
Embratel (Livre) 3 0.2%

Hired Plan Sample
Prepaid 1,090 73.0%
Post-paid. Not subject to any
237 15.9%
restrictions on consumption
Post-paid + control 166 11.1%

| 57 |

MAVAM Brasil 10th edition - MESSAGING

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MAVAM Brasil 10th edition - MESSAGING