© Copyright Yankee Group Research, Inc. All rights reserved. Page 1 India: Ultra Low-Cost Handsets, January 2007 – October 2007

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 2March 5, Description of Contents: The attached file contains Yankee Group’s analysis of the price and volume relationship of handsets imported into the Indian market. The analysis is based on comprehensive import data from Indian government sources. Data describes the landed cost of imported units by manufacturer, primary air- interface technology, unit volume, and model designation. In this exercise, particular attention is paid to the comparative trending between CDMA and GSM units. Data in this analysis does not represent the entirety of handset volumes selling into the Indian market at a wholesale or retail level. The Yankee Group notes that, since 2004, significant domestic manufacturing capacity has been established by leading manufacturers such as Samsung, LG, and Nokia, among others. Units produced in these facilities are estimated to contribute 44% of total market volumes. Units produced in these facilities are also known to be exported. The price data used in this and previous analysis does not include additional fees and costs such as import duties, insurance, and other costs related to distribution that may be reflected at the retail, wholesale, or transfer level. Average selling price (ASP) terminology refers only to landed price data reported by official Indian government sources, and does not convey wholesale or retail price expectations. Since additional costs are generally applicable to all units, Yankee expects that the relative trends between GSM and CDMA volumes highlighted are valid. Yankee Group has reported on this market’s dynamics previously, relying on exhaustive Indian Customs import data obtained from a third party, Infodrive India Pvt. Ltd of Calcutta, India.

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 3March 5, Summary of Findings for the Period from January to October, % of imported units are sub-$50 78% of sub-$50 imports were CDMA units 94% of CDMA imports were Sub-$50 Total CDMA import volumes exceed GSM by a margin of 52% to 48% Favorable reaction to broadening low-end offerings evident There are indications of a high degree of demand elasticity evident in overall price:volume trending Nokia shows a 34% ASP premium on average over the total GSM ASP CDMA ASPs are 68% lower than the GSM market average

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 4March 5, CDMA Imports Leading GSM, With Volumes Driven by Low Cost Units CDMA models accounted for 52% of all observed imported units for the period Massive ASP delta of $72 between GSM and CDMA averaged over the period

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 5March 5, Sub-$50 Units Dominate Imports for All Technologies On average, sub-$50 units accounted for 62% of all observed handset imports for the period with a distinct growth trend Price:Volume trend lines show the market responding favorably to broader availability of low-cost models in all technologies

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 6March 5, CDMA Imports Dominate Sub-$50 Import Volumes Import Market Origin Summary: –China: 34% –Korea: 29% –Taiwan: 18% –Other: 19% Chinese Manufacturer Summary –ZTE: 57% –Huawei: 23% –Haier: 8% –TCL: 4% –Jinpeng: 3% –Other: 5% Strong Chinese vendor presence with balanced contribution from other key global supply bases

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 7March 5, CDMA vs. GSM Sub-$50 Import Volume Comparison CDMA accounts for 78% of Sub-$50 imports observed in the period –3.5x more units imported than GSM Total CDMA imports are almost exclusively Sub-$50 for the period –94% of all CDMA imports were sub-$50 % of Sub-$50 split by Tech Device Volume (000)

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 8March 5, Sub-$50 GSM and CDMA Volume and ASP Observations Sub-$50 GSM and CDMA ASP gap shows signs of narrowing, but unit volume disparity remains significant ASP gap closure driven by sub-$30 GSM import average increase of 56% per month from August-October Nokia’s contribution to sub-$30 volumes increased from 15% from January-July to 22% from August-October

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 9March 5, Nokia’s Import Volume and ASP by Technology Nokia's GSM average import volume is substantial, ~40% of total GSM imports in the first nine months of 2007, while commanding a price premium of ~35%. Nokia's CDMA average import volume is relatively small, < 5% of total CDMA imports, since their pricing is ~150% higher than the market average. Nokia’s CDMA volume is nominal relative to both Nokia GSM and all CDMA volume CDMA unit ASPs still higher than total market by ~ 2x month-on-month

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 10March 5, Vendor Diversity a Hallmark of CDMA Sub-$50 Imports 13 handset manufacturers currently active in the CDMA sub-$50 category –Haier –Huawei –Jinpeng –Kinpo –Kyocera –LG –Motorola –Nokia –Rose Telecom –Samsung –TCL –UTStarcom* –ZTE Significantly greater vendor diversity in top selling CDMA models Over 30 handset manufacturers compete in the GSM sub-$50 category *UTStarcomm C1122 (aka Reliance “Smarty”) not observed in import data but known to be retailing at ~1,600INR (~$40)

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 11March 5, Sub-$50 CDMA Handset Availability Across Global Markets A cursory examination of device availability in other global markets shows a general availability of multiple very low-cost CDMA models from a variety of vendors (see Table) The table reflects retail prices, which are not thought to be subsidized. Ex-Factory prices are likely to be lower due to the application of value- added tax, import duties, and markup in distribution channel Sample of Unsubsidized Retail Price Observations in Key CDMA Markets as of February 2008 In the U.S., Leap Wireless (Cricket) recently launched unsubsidized Cal-Comp device (“Cricket EZ”) at $49.99 price point

India: Ultra Low-Cost Phones, Jan – Sept 2007 © Copyright Yankee Group Research, Inc. All rights reserved.Page 12March 5, Conclusion: CDMA Imports Dominate Affordable Sub-$50 Volume Categories CDMA dominates sub-$50 volumes –Sub-$50 GSM and CDMA ASP gap shows signs of narrowing, but unit volume disparity remains significant Massive overall ASP Delta –Average price of entire portfolio of imported CDMA handsets is $72 less than GSM Low cost CDMA handsets have become critical drivers to mobile teledensity expansion in the Indian market Affordability complemented by choice: –CDMA import volumes have ramped impressively as numerous very low cost models from multiple vendors have become mainstream CDMA handsets are very well positioned to continue meeting the market’s requirement for low-cost products* *Assuming no significant departure in trending for domestically manufactured units: