Deployment of national 3G network Oksana Ferchuk Marketing & Sales Director September 2006, Kyiv

Inevitability of 3G future 3G 1x Technology is not end in itself Steps to success Contents

Inevitability of 3G future \ From 2G to 3G

Source: Strategy Analytics, January 2006 Inevitability of 3G future \ Global 3G Subscriber Growth

Inevitability of 3G future \ Market in progress

169 commercial operators 75 countries 163 commercial 1X networks 30 1X networks in deployment 49 commercial 1xEV-DO networks 40 1xEV-DO networks in deployment 275,200,000 3G 1x subscribers (2Q 2006) 36,122,000 3G 1xEV-DO subscribers (2Q 2006) 1260 devices have been introduced in to the market including 285 1xEV-DO devices (as of September 20, 2006) 3G 1x \ Facts

3G 1x \ Accessibility Source: Signals Research Group, LLC, July G Handset ASP Forecast ( )

3G 1x \ Availability

3G 1x \ Network Total Cost of Ownership (TCO)

After billions of dollars spent on 3G licensing, most European WCDMA(UMTS) operators have delayed their plans to launch WCDMA networks until technical and market hurdles are overcome 3G operators in Japan, South Korea and USA find 3G 1x technology as the major factor of upgrowth: 3G 1x poised to dominate in entry-level markets for 3g services 3G 1x \ Cost effectiveness

Overstated licenses cost Overrated potential subscribers interest Lack of major benefits (for examples video call and video download as most promoted 3G services is not prevailing yet) Poor handsets performance Insufficient coverage Technology is not end in itself \ Main 3G deployment problems

3G wireless services can enable consumers to experience voice quality as well as a wide array of compelling data services, including:  Mobile Internet connectivity  Mobile  Multimedia services, such as digital photos and movies taken by and shared via wireless handsets  Wireless application downloading  Video-on-demand and short-format Clipcast™ content  Real-time multiplayer gaming  Enhanced emergency and location-based services  Low-latency push-to-talk and push-to-video message services Technology is not end in itself \ What Does 3G Offer and Who Benefits from It?

3G will succeed if operators focus on practical applications of the technology, driven by real customer needs and usage patterns The enterprise market should be the initial area of focus. Remote access is currently exhibiting strong growth, and 3G – with its advanced security features – can be superior to WiFi as a remote access solution Operators should approach the 3G consumer market with services that are incremental improvements over successful 2G services, from ring tones to mobile Technology is not end in itself \ Delivering practical benefits

Steps to success \ Mobile industry of Ukraine * Without Telesystems of Ukraine

WCDMA(UMTS) national license ( MHz): Steps to success \ Current 3G status in Ukraine CDMA national mobile license (800 MHz): CDMA national mobile license (450 MHz):

Focus on special segment of customers Growth based on both new comers and existing mobile subscribers Not be involved into the price war with the other Ukrainian operators Building strong product based on quality of services Mobile terminals subsidizing Steps to success

Detailed market research is finished, the main target segment for the phase one has identified Tender for brand main values and positioning was finished in July. Tender for brand creation, visualisation – was finished in September Product design phase is in progress Steps to success \ Marketing Status

Aggressive deployment activity was started in July in all major regions of Ukraine For the commercial start of the project TSU will have coverage in 4 major cities and their outskirts, as well as connecting railroads and highways – around 25% of population Second stage – to cover 80% of population, to be completed after 5 years of the project Steps to success \ Technical status

3G soon in Ukraine!