Global Wireless Data Market 1H 2007 Update Chetan Sharma Consulting

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Global Wireless Data Market – 1H 2007 Update As you read this first half (1H) 2007 Global Wireless Data Market update this week, somewhere in China, the 500 millionth subscription is being signed up for services. In India, the 200 millionth subscription mark was crossed in the last two weeks. In the US, the 250 millionth subscriptions will be reached by end of the year. In total, these three top mobile markets account for 32% of the total number of global subscriptions continued to enhance mobile data’s role in the operator ecosystem. From the true and trusted SMS messaging to new services such as Mobile TV, LBS, and others, different services helped in adding billions to the revenues generated for the first half of Japan and Korea remain the envy of the global markets and the countries to study and learn from. The US market has been steadily making strong comeback and equaled Japan in terms of most service revenue generated from mobile data. Chetan Sharma Consulting conducted its bi-annual study on the global mobile data industry. We studied wireless data trends in over 40 major countries - from developed and mature markets such as Japan, Korea, UK, and Italy to high-growth markets such as China, India, Brazil, and Russia. The study also took a detailed look at over 35 prominent operators. This note summarizes the findings from the research. The worldwide markets continue to grow at an explosive pace reaching 3B subscriptions by Q207 up 13% from 2006 levels. Significant growth is coming from India and China with both countries registering close to 7M net adds on average in Q2. India recorded 8M net adds (its highest) in July. Overall, the world market is almost at 50% penetration. US equaled Japan as the most valuable mobile data market (in terms of service revenue) with both nations reaching just over $11B in mobile data service revenues for the first half of China with $5.9B was ranked number three. NTT DoCoMo continues to dominate the wireless data service revenues rankings with over $5.5B in service data revenues however Q/Q growth has dropped to single digits. DoCoMo crossed 70% in 3G penetration and is expected to cross 80% within 9 months. DoCoMo was followed by China Mobile, KDDI, Verizon Wireless, AT&T, Sprint Nextel, Softbank, O2 UK, SK Telecom, and China Unicom to round up the top 10 operators by wireless data service revenues. All the top 10 carriers exceeded $1B in data revenues for the first six months of Most of the major operators around the world have double digit percentage contribution to their overall ARPU from data services. Operators like KDDI, DoCoMo, 3 Italy, 3 UK, and O2 UK are topping 30%. SingTel reported the highest increase in data ARPU from 4Q06 with 39% growth. Other notable percentage increases in ARPU were from Rogers, AT&T, Verizon Wireless, and T-Mobile Austria. The biggest drop in percentage terms were registered by the Indian operators.

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Global Wireless Data Market – 1H 2007 Update In terms of absolute dollar amount, 3 UK became the first operator (qualifying limit: 4 million subs) to crack the $30 data ARPU mark. By comparison, rest of the top 4 operators are below $18. In fact, 3 UK reported the highest ARPU recorded at approximately $94. Other operators who reported overall ARPU above $60 were SingTel, Rogers, Sprint Nextel, and 3 Sweden. The biggest jump in data revenues was experienced by Softbank, Japan. Since taking over from Vodafone, it has turned the operations around and has experienced a 42% jump in data revenues since EOY06. In 1H07, SMS’s vice like grip on data revenues continued to loosen a bit with many carriers seeing an increase in non-SMS data revenues. On an average, Japan and Korea have over 70-75% of their revenue coming from non-SMS data applications, US around 50-60%, and Western Europe around 20-40%. The top 10 operators increased their revenue by 17% during the first half of 2007 compared to second half (2H) 2006 to reach $29 billion in data service revenues. NTT DoCoMo’s position at the top of the wireless data world has been challenged recently by several carriers esp. by its archrival KDDI. Their data coordinates stand at ($17, 32%) and ($18, 32%) respectively (please see PowerPoint for reference). The biggest percentage contribution by data ARPU has been consistently registered (since mid 2002) by two Philippines carriers – Smart Communications and Globe Telecom with almost 52% (or $3.6) contribution coming from data services. Even though China reported approximately $5.9B in data revenues for 1H07, and the % contribution is over 20%, data ARPU is around $2. For India data ARPU dropped below $1 for all major carriers. China Mobile with 338M remains the #1 subscriber followed by Vodafone at 200M and China Unicom with 152M subscriptions. Telefonica, América Móvil, SingTel, Deutsche Telekom (T-Mobile), and Orange (France Telecom) are the next five largest telecom groups in the world. In terms of individual carriers in a given country, AT&T and Verizon Wireless occupy the #3 and #4 spot respectively ahead of NTT DoCoMo, which is at #5. The two Chinese carriers round up the top two positions and are likely to stay perched at their lookout vistas for some years to come. Telecom groups in mature markets are under enormous pressure to either come up with a global expansion strategy or accelerate their existing plans. Carriers in Japan and Korea are the most under duress.

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Global Wireless Data Market – 1H 2007 Update As far as 3G is concerned, GSA reported the crossing of the 200 millionth subscription in Q207. Both Japan and Korea continue to expand their 3G base with both reporting over 50% penetration. 3G has picked-up steam in both western Europe and North America per our discussion in the cover story article “3G: Hitting the Mass Market” published in Wireless World Magazine. Western Europe and US are approximately at 15% penetration (Italy being the exception reaching 35%).Wireless World Magazine China and India represent the biggest opportunities for Infrastructure providers. China has postponed its 3G decision for the umpteenth time and is having technical and political problems to get something in place before the 2008 Olympics. India is going through its 3G spectrum policy but unlike China is likely to resolve the issues in short order. Some of the biggest infrastructure contracts will come from these two countries that are looking to expand coverage into rural area. Carriers with nationwide 3G networks and good distribution of handsets are seeing uptick in data ARPU. The Japanese and Korean carriers along with operator 3, Verizon, Sprint Nextel are all seeing benefits of rolling out their 3G service. Deployment of 3.5G technologies such as HSDPA and EV-DO Rev A (and B) are also gaining momentum. Networks are getting deployed and market is being seeded with some of the early handsets. In terms of applications, messaging accounts for lion-share of data revenues. However, other services such as Mobile Music, Mobile TV and video streaming, Mobile Games, IMS, LBS, Mobile advertising, and others have captured industry’s imagination. Though not much talked about, enterprise applications are also being adopted widely esp. in North America as more workers become mobile and corporations seek efficiencies in their operations and supply-chain. 1H07 also saw the demise of yet another high-profile MVNO in the form of Amp’D. Helio continues to struggle while the newer ones like Sonopia and Blyk are testing the treacherous waters. Nokia eclipsed 100M unit sale in Q207 for the second time in history (first being in Q406). Its 1H07 tally stood at 191.9M followed by Motorola at 80.9M and Samsung at 72.2M. Nokia’s share of the market went up to 37.9%. Motorola lost significant ground dropping 3.2% Q/Q to 12.4%. Samsung gained as a result and ascending again to the number 2 spot with a 14.1% market share. Sony Ericsson with 9.4% and LG with 7.2% rounded up the top 5. Several operators reported Mobile Advertising as their key strategic focus for the coming quarters, esp. China Mobile and Vodafone. Sensing the opportunity to seek new sources of revenue stream, Nokia launched its ad service as well. 1H07 saw tremendous M&A activity in both the online and mobile advertising space. In a matter of weeks, several billion dollar transactions took place highlighting the intensity in preparing for the next battleground. 1H07 was also the time when we were right in the middle of writing a book on the subject and just submitted the manuscript last month.

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Wireless Data ARPU in different global markets

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Wireless Data ARPU of major global carriers (Q207)

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Top 3 nations: Wireless Data Service Revenues

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Monthly Net Adds: India vs. China

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Top Carriers by Wireless Data Revenues

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept

© Chetan Sharma Consulting, All Rights Reserved, 2007 Sept Coming FEB 2008