1. Enabling Growth through Mobility Services
Dr Walid Moneimne
Senior Vice President
Nokia Networks
Europe, Middle East and Africa

2. Mobile market development in Middle East
2003
2007
Middle East & Turkey 58M
Middle East & Turkey 125M
1.38 Bn
2.15 Bn
Source: EMC Mobile Subscribers Forecast December 2003

3. Diverse markets in Middle East and Turkey
Prepaid share of markets:
UAE: 83.9%
Kuwait: 79.8%
Bahrain: 60.1%
Qatar: 40.6%
Turkey: 33.2%
Jordan: 24.3%
Saudi Arabia: 23.1%
Oman: 17.4%
Lebanon: 14.5%
Palestine: 11.1%
Egypt: 8.0%
Yemen:3.9%
Pakistan 2.3%
Syria:1.5%
Afghanistan: 0.5%
Iran: 0%
UAE, Kuwait, Bahrain, Qatar, Turkey, Saudi Arabia and Oman penetration over 50% by 2007
Other countries steadily reaching 20-30% penetration level by 2007
Strong correlation between prepaid market share and mobile penetration level
Source: EMC Mobile Subscribers Forecast December 2003

4. Comparison of Monthly ARPU by Region
US$
Source: EMC December 2003

5. Success in Middle East requires a two-fold strategy
Focus on mobile
voice
Targeting new mobile users
Driving fixed to mobile substitution
Targeting new mobile users
Driving fixed to mobile substitution
Drive
mobile
multimedia
Enrich service offering to current subscribers
Openness for market growth and long-term success
A mobile operator, particularly in the growth markets with low penetration, can implement a dual service and network strategy:
focused approach to capture a broad base of new price sensitive users within and outside of current mobile service area. This builds on mobile voice/SMS service. .
2) enhancing the service offering to current subscribers in higher ARPU segments in order to increase revenue
Next, we will take a closer look at reaching the lower ARPU customers profitable with a voice based service.

6. Growth shifts to lower income segments
Example income distribution
Subscriber growth in Middle East coming from markets with low mobile penetration
Revenue potential from high volume of low ARPU increments
Share of population
High
Upper mid
Mid
Low
Very low
Income classes
Expected penetration in 2008
Penetration now
Population

7. Profitability in entry segments based on lowered costs
Key driver for growth: Affordability
Operator competitiveness through cost-effectiveness
16$ 8$
Subscriber acquisition
HANDSET 6$
Service OPEX 8$ 4$
Network OPEX
Depreciation 4$ 2$
SERVICE
Profit
TODAY
2010
2015
Example ARPU levels $/month
Subscriber acquisition costs
Services costs
Network costs
Handset subsidies
Distribution
Promotion
Customer care
Prepaid refill
Service offering
Content and interconnection
Coverage rollout
Capacity upgrades
Network operations

8. New distribution solutions for growth and lower subscriber aquisition costs
Cost per USD 5 refill
Electronic prepaid refill:
Reduced costs and dealer commissions
Small (0.5 USD) prepaid denominations possible
Affordability increases usage
SMART Philippines:
SMART launched e-refill “Load” 2Q 2003
Dealer numbers increase to > by 1Q 2004
Variety of new distribution channels
Results:
1Q m transactions/day
86% of prepaid subscribers use “Load”
Capture ~70% of new subscribers in 2003 (three-player market)
Subscriber growth is acceleratng
Scratch
card
E-refill
Voucher system management
Voucher printing & logistics
Transaction cost

9. Full mobility saves enterprise costs while boosting mobile operator revenue
Total voice communication costs (Jan. – June)
Fixed and mobile infrastructure
Total: $
Mobile voice services
(with fixed lines for fax and modem)
Total: $ 20 15 10 5 K$
2002
2003
21 % cost savings with one voice infrastructure
for the customer
and….
66 % revenue
increase for the
operator
220 € per employee per year for this enterprise!
Case Motoman Robotics Finland
Fixed Telephony Costs
Mobile Telephony Costs

10. Success in Middle East requires a two-fold strategy
Focus on mobile
voice
Targeting new mobile users
Driving fixed to mobile substitution
Drive
mobile
multimedia
Enrich service offering to current subscribers
Openness for market growth and long-term success
A mobile operator, particularly in the growth markets with low penetration, can implement a dual service and network strategy:
focused approach to capture a broad base of new price sensitive users within and outside of current mobile service area. This builds on mobile voice/SMS service. .
2) enhancing the service offering to current subscribers in higher ARPU segments in order to increase revenue
Next, we will take a closer look at reaching the lower ARPU customers profitable with a voice based service.

11. Healthy Growth continues in Mobile Services Market
2003
2008
Data services CAGR 30% ( )
Data and messaging
Person-to-person messaging
Content and business services
13%
87%
11%
18%
71%
Voice and other calls
KEY MESSAGE: Healthy growth ahead in Mobile services market. Voice dominates revenues still, non-voice has the fastest growth.
Additionally:
Growth in Mobile Services Market between 2002 and 2007: CAGR 10%
of which:
Voice and other calls CAGR 5% and Data services CAGR 35%
Entertainment & Media: 3.5% of 400 BEUR = 14BEUR in > 11% of 635 BEUR = 70 BEUR in 2008
Total 400 BEUR
Voice and rich call services CAGR 5% ( )
Total 635 BEUR
Source: Nokia March 2004

12. SMS was just the beginning Standardized enablers will increase revenue from non-voice services
Person-to-person
services
Real time
video sharing
Content-to-person
services
Push-to-talk
Video messaging
Photo and audio messaging
Business
services
Full Internet
browsing experience,
high-value videos
Enhanced
browsing,
versatile
applications
these new enablers are building on the existing well-received services
SMS -> MMS with photos, audio and eventually video messages
downloading of riging tones and icons -> application and video content
B&W wap browsing -> color and access to web content
basic voice telephony -> richer variety of telephony services
but all new evolution steps are seamlessly interoperable with existing mobile services
Short
videos
Improved performance
and usability
Basic
applications
Basic browsing,
rich terminal
personalization
Messaging and mobile
Secure corporate connectivity

13. Services adoption will be very personal%
100
Voice
Number of different services will explode
Text messages 90
Ringtones 80
Entertainment & media 70
Icons/Wallpaper
Individuals will adopt selected services initially 60
Multimedia messages
Browsing & service discovery 50
Few services exceed 20% subscriber penetration
A huge number of services will be bubbling under 40
Adult entertainment
Online gaming 30
Instant messaging & chat 20
KEY MESSAGE: No one global killer application for all but rather a large variety of different services
Constant innovation and market testing of new ideas.
This sets a challenge to operator / service provider to manage the whole process.
Downloadable games 10
Video call
Streaming music
2001
2002
2003
2004
2005
2006
2007
Source: Nokia Service Forecast Dec 2003

14. Network evolution for richer service experience at reduced cost
EDGE: Seamless coverage and capacity extension for 3G services
200
400
600
800
GPRS
EDGE
WCDMA
HSDPA
Practical bit rate [kbps]
WCDMA:
Highest bandwidth and mass-market capacity
WCDMA kbps
EDGE
kbps
Cost of delivery example (CAPEX) 50
100
150
Mbyte/sub/month
Relative cost
GPRS
EDGE
WCDMA
Cost of data capacity per MB
GPRS
EGPRS
WCDMA
HSDPA

15. US SMS interconnection agreements No SMS interconnections
Learning from SMS success: Open technology Interconnections, Roaming and IOP are key for mass market growth of mobile services
SMS penetration in USA
35%
US SMS interconnection agreements
SMS market in USA grew % when interconnections were in place
30%
25%
20%
% using SMS
15%
No SMS interconnections
Optus: 100 % increase in MMS traffic when interconnections were in place
10%
Another set of key enablers for volume markets include interoperability, interconnections and roaming. Openness and standardization are the best ways to achieve these benefits.
When interconnections have been introduced between operators, the SMS usage has soared (e.g. UK 5-fold growth, in the US very similar effect).
On MMS side the very same type of growth is taking place, with Optus in Australia the MMS traffic increased 100% after interconnections were put in place.
The growth is not a surprise, when considering the user need: communicate with other users regardless of their serving network. 5% 0%
Dec.99
Jun.00
Dec.00
Jun.01
Dec.01
Jun.02
Dec.02
Jun.03
Date
Source: Nokia

16. Nokia market update
GSM: Nokia supplies GSM systems to over 120 operators in over 50 countries
GPRS: Nokia has close to 80 operators use Nokia GPRS solutions
MMS: Nokia has delivered 60 MMS solutions
EDGE: 16 commercial networks launched as of April 2004 – Nokia supplying to 12 of them
77 customers rolling-out Nokia GSM/EDGE hardware in 38 countries
Nokia has 25 public EDGE references
Over 75% of Nokia GSM hardware deliveries EDGE
3G WCDMA: 26 commercially launched networks – Nokia is a supplier for 12 of them
Nokia has 43 public WCDMA 3G references
Source: Nokia April 2004

17. Conclusions
Success in rapidly growing markets requires a dual focus: Mobile voice and multimedia
Full benefits of mobile voice opportunity are achieved with strict cost controls and innovative business models
Mobile multimedia services based on openness help to boost ARPU and customer loyalty with high spending users
Dual market strategy results in growth and improved profitability

18. Thank you!

20. Backup material

21. 16 Public EDGE launches Nokia delivering EDGE network solution for 12 of the operators
Finnet
TeliaSonera
Rogers
Bite GSM
Pannon
Cingular Wireless
Bermuda Telecom
Westel
AT&T Wireless
AT&T Wireless, BE
CSL
AT&T Wireless, PR
AT&T Wireless, BA
Dialog GSM
AIS
Telefonica Movil
Sources: Nokia and GSM mobile Suppliers Association
Nokia as a supplier

22. 26 Commercial WCDMA networks today 12 supplied by Nokia
Based on public sources
26 Commercial WCDMA networks today 12 supplied by Nokia
**Shared network,
no own license/ subscribers
3GIS SE**
VF DE
3 UK
3 DK
VF UK
3 SE
VF SE
VF NL
VF PR
TeliaSonera SE
VF SP
Mobitel SL
SFR FR
NTT Docomo JP
VF Omnitel IT
VF KK JP
MTC-VF Bahrain
3 IT
3 AT
3 HK
TMN PR
Connect AT
STET Hellas GR
T-Mobile DE
tele.ring AT
Launched commercial
3 AU
Mobilkom AT
Supplied by Nokia

23. EDGE is in commercial use!
77 customers rolling-out Nokia GSM/EDGE hardware in 38 countries
Nokia has 25 public EDGE references
Over 75% of Nokia GSM hardware deliveries EDGE
Global operator commitment to EDGE from e.g.:
North-America: AWS, Cingular, T-Mobile USA…
Latin-America: Comcel, Conecel, TIM Brazil…
Europe: TIM, TeliaSonera, Bouyges…
Asia-Pacific: CSL, Smart, AIS, DTAC…
Sixteen commercial networks launched as of April 2004
Nokia delivered 12 of the 16 operators, e.g. AWS, CSL Hong Kong, Telefonica Movil Chile and TeliaSonera Finland
Virtually all new Nokia GPRS and WCDMA terminals will be EDGE capable
Twelve models already launched by Nokia
Nokia alone expected to ship close to 100M EDGE phones by 2005
Other commercial launches are Cingular & AIS
Pannon has soft launched

24. WCDMA subscribers increasing rapidly
26 commercially launched WCDMA networks in addition to world’s first shared network launch. Nokia is a supplier for 12 of them.
4.9 million subscribers in WCDMA networks
Nokia is a leader in WCDMA deployment
30, 000 base stations delivered
43 public references
27 roll-outs in 15 countries
First Commercial 3GPP compliant Network launched with J-Phone in Dec 2002
World’s first WCDMA/GSM terminal Nokia 6650 and Nokia 7600 WCDMA/GSM terminal
WCDMA/GSM subscribers early days
WCDMA
GSM
4.9 M WCDMA subscribers
end of March 2004
subscribers 1Q 2Q 3Q 4Q 5Q 6Q 7Q 8Q 9Q
10Q
11Q
Quarters since first launch
Source: EMC database