S Curve

“ Triggering the S -curve with M-Plug” How become a successful MVNO ? MVNE business venture

Agenda- The 3 « S » of the S-curve S urvey S uccess factor S uccess story

Survey-Telecom, a new era ? Change of paradigm « Telco 2.0 » New opportunities New behaviors Multimedia Fixed and Mobile Market size NICHE RENT NEWCOMERS Telephony Fixed or Mobile MATURITY 2007 INCUMBENT OWN 2008 We are HERE Time

Survey-Trends in the mobile industry Mobile markets are saturated Acquisition costs for new subs are too high: MVNO enables MNO to wholesale networks to have access to new customer databases Delivery of mobile services requires a complex technology infrastructure " "When you compare the growth of establishments to the growth of managed network connections, the increasing need for managed services is unmistakable.“ -- Robert Rosenberg, President Insight ARPU Acquisition costs Offer MVNO Mobile Virtual Network Operator: Company that does not own a licensed frequency spectrum, but resells wireless services under their own brand MNO Mobile Network Operator: (Historic) Mobile phone operator (owning a licensed frequency spectrum) MVNE Mobile Virtual Network Enabler: Enabler of MVNOs or/and MNOs

Survey- MVNO Revenues, worldwide Source: IN-Stat TODAY 300 MVNOs WORLDWIDE 2009 MVNO = 25% MARKET SHARE

Survey- 25% of mobile subscribers to be owned by MVNOs ! Most active MVNOs: UK + Nordics (e.g. Denmark MVNO=25% of subs) Netherlands: lots of activity Belgium, Germany: MVNOs really present Italy, Spain: to start

Survey -MVNO market share in Europe as of mid 2006 (Source: IDATE) Nordics: too deregulated Germany: lots of competition UK: open France: low penetration Italy, Spain, Portugal: to start 15% 30% 22% 15% 3% 1% 1% 0%

The MVNO Business Models Customer Control Multi-country Multi-Operators Indépendency Service Control Services Advanced Voice and Data services 1 host MNO Entry level Own MVNO offer Data services 1 host MNO Offer Brand License Brand Distribution network 1 host MNO Brand MVNO Light Branding Distribution & Sales Service & Application CC & Billing Access Network Core Network Real Time Services MVNO Medium Access Network Core Network Branding Distribution & Sales Service & Application CC & Billing Real Time Services Full MVNO Access Network Branding Distribution & Sales Service & Application CC & Billing Real Time Services Core Network Service Service & Application CC & Billing Branding Access Network Core Network Real Time Services Distribution & Sales

Where does the value stand ? MVNO CONTROL Network Services Premium Services Real time Services Offer & Billing New Value Access Network MVNO Model MEDIUM REVENUE SPLIT SERVICE PROVIDERS Marketing & Distribution SMS, Kiosk, Video, IVR LIGHT FULL MOBILE OPERATOR CONTROL CRM, Billing, Rating IN Basic Voice Basic Data 45% 25% 5% 10% 15% Multi-country (roaming), Corporate Services, etc Presence, IMS Applications, Advertisment, Convergent Services, etc + X % + X % M-PLUG

Connecting MVNO to Mobile Operators  BENEFITS FOR MOBILE OPERATORS  INCREASE TRAFFIC WITH LIMITED INVESTMENT REDUCED FIX COSTS to connect new MVNOS Multi-country footprint: EXPAND MNO BUSINESS To New Countries REDUCED RISKS of dealing with non-telecom players  BENEFITS FOR MVNOs  SECURE SERVICE LAUNCH AND CREATE NEW REVENUE STREAMS Fast and EASY CONNECTION to MNO MULTI-COUNTRY footprint (M-Plug already connected to many operators) DIFFERENTIATED SERVICES per MVNO segment Limit upfront FINANCIAL RISKS SHORT TIME- TO- MARKET MVNO MOBILE OPERATORS MVNE (Alcatel-Lucent)

M-Plug Business Models: MVNx actors – Revenues & Profits Revenues Revenues & profits repartition will evolve with the MVNO’s model and market share Gross Margin MVNO GM: 25% / 30% Example: 15€ bill MVNO GM = 3.75€ Gross margin on airtime used Contribution for usage risk (ratios incoming/outgoing, on-net/off-net, peak/off-peak) Interconnect net cost Contribution to cover full network cost (invest, licence, etc.) Network variable / marginal cost Extra margin on airtime not used (call set-up, 1st minute, unused bundle) 30% 5% 20% 30% 10% 5% Reference Retail Price G.M. COSTS

Success factors-Be different ! Customer MNO Technology Business plan

Success factors- MNO challenge (Be attractive) Brand Distribution NNew customers LLow acquisition cost IIncrease brand DDestroy value LLower ARPU IIncrease churn rate How MNO see MVNO:      

Success factors- Techno challenge (Be simple) Operator1 Operator 2 Operator 3 MNO MVNO Standard Interconnection Personnalized Services Limited Investment Limited Investment Connect a MVNO in 2 months Connect a MNO in 2 months Telecom Expertise IT & Telecom Expertise A Turn Key Solution An IT & Telecom Platform available

Success factors- Customer challenge (Be accurate) Customer ownership Customer database Efficient CRM Customer segmentation C ustomer base C ommunity C ontent

Success factors- Business plan challenge (Be innovative) Differentiate with: Simplicity Service Price Define real value proposition Expected revenues Associated costs MNO/MVNE MVNE/MVNO MVNO MVNO Network Services Distribution Marketing

Success story 1-Virgin Mobile Target: Young Simple: Illimited SMS In UK: 5 M subs (MNO: 12 M subs) Brand

Success story 2- Kajeet Target: pre teen to early teen Simple: 5 cents per SMS 10 cents per comm 35 cents/ day for illimited access to portal No contract Phone: Fun Dedicated Community

Success story 3- MTV Networks Target: Teenage (10-29) Rather female Purpose: Constant screen ownership « Poptainment » In Germany: Associated with an MVNO Content

Sum up- Why asking for an MVNE ? CASH-MACHINE: To reduce risk To shorten the time-to-market To improve the Return On Investment DIFFERENTIATE: To leverage on best practices detected by the MVNE To have only one single interface Focus on differentiating factors (customer, business plan)

Sum up- Strengths of the MVNO Content Community Customer base Brand Distribution

S Curve

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