2. Presentation Agenda A Little History Snapshot of 1990-2000 Companies Involvement Consumer Habits Conclusions and Outlook

3. A Little History 1989: Carlos Menem is elected president of Argentina ~ High inflation and high debt ~ Platform focuses on economic reforms ~ Initiates privatization of Telecommunications Sector EnTel becomes: ~ Telecom Argentina (North): France Telecom, Telecom Italia ~ Telefonica de Argentina (South): Telefonica of Spain ~ Telintar (Long distance): 50/50 Telecom and Telefonica Exclusive Until 1997

4. Sector Growth Infrastructure Growth First 4 years: ~ 5 billion USD ~ Digitization: 13% to 65% ~ Lines per employee: 75 to 150 Rate Issues Persist ~ EnTel: subsidized local with long distance and installation ~ 1992: CNT set goals for Deregulation ~ 1994: Failure to pass real restructuring LD is still most expensive in LA and TWICE incoming calls

5. Full Deregulation in 2000 1997 Duopoly extended to 2000 ~ Incumbents fear cherry picking by new competitors ~ New entrants fear strong arming of incumbents due to last mile possession The Government Plan ~ Reduced connection fees $.0235 to $.011 ~ Decreed investment of $2 per inhabitant and 1% of revenue to fund less developed areas ~ Single license for range of services

6. Cellular Emergence 1989: Compania de Radiocommunicaciones Moviles ~ Bellsouth and Motorola, Socma and BGH ~ Area II (Greater Buenos Aires) ~ Movicom 1993: Competition in area II, action in I and III ~ Area II: Miniphone enters Buenos Aires ~ Area I and III: CTI (3 US and 3 Argentine companies) gets exclusive license until 1996 1996: Miniphone enters areas I and III

7. Deregulation Comparison 1990 The Companies ~ State owned monopolies low productivity, corruption, poor mgmt ~ 10% customer satisfaction The Network ~ 3m landlines, 11% teledensity, voice only, 11% digitalization, 7.5% phones out of service ~ 40 day average repair time, 4 years average install time ~ $1,500-2,500 cost of new line ~ 15,000 cellular lines 2000 The Companies ~ New competitors monthly ~ Corporate restructuring and stream-lining ~ 92% customer satisfaction The Network ~ 8m landlines, 21% teledensity, voice, video, and data services, 100% digitalization, 0.1% phones out of service ~ 10 hr average repair time, 10 days average install time ~ $90 cost of new line ~ 3.3million cellular lines

10. The Deregulated Telecom Company Strategic Imperatives Efficiency and Quality ~ Rebuild Networks-Digitalization ~ Improve productivity and Increase quality Customer-centric ~ Enhance Customer Service ~ Restructure organizational cultures Market liberalization ~ Prepare to compete in open market environment

12. Total Telecom Revenue in 1999 Company (top 6) Telefonica de Argentina Telecom Argentina Movicom CTI Miniphone Telintar Revenue in Mil (USD) 3,400 2,200 720 608 542 520

14. MNC Activity ~ Bell South Owns or has interest in mobile phone operators Plans to issue a tracking stock ~ AT&T Latin America Local acquisitions Provides voice & data services for businesses ~ IMPSAT Fiber Networks Internet, data and voice services Infrastructure investments – satellites, fiber network ~ WorldCom Entered LA market in Sept. 2000; Internet backbone ~ AOL Latin America Late entrant – Fall 2000 Multi-National Corporations

15. Telecom Development What are these companies doing? Fiber optic network infrastructure build-outs ~ Domestic and international connections ~ 6 major int’l fiber infrastructure projects underway – expected completion 2001-2003 ~ Expected Internet growth is genesis for much of network investment Cellular and satellite wireless service ~ Vast distances and rugged terrain make satellite attractive

16. Major Projected Investments CompanyInvestment$(millions) Global Crossing/Impsat Fiber Network300 General ElectricSatellite over Argentina150 AT&TExpansion of fiber & wireless networks 100 NextelExpansion – 40 new locations 140 Telecom Argentina & Telefonica Miscellaneous investments 800 each (As of September 2000)

17. Economic Overview ~ 96% literacy rate ~ Export-oriented agricultural sector Poor nationwide telecommunications infrastructure ~ Over 4 million public telephones Landscape Market Trends

18. Current Uses Internet access has only begun to make a footprint in Argentina ~ Only 10% of homes have computers; less than 5% have Internet access ~ Cost is critical! Long Distance Telephone Costs have been Slashed ~ Due to deregulation, greater competition in the market has reduced forced the rates to be reduced. Alternative Access ~ NetKiosk has begun to franchise Internet kiosks in Argentina

19. Current Uses Cont’d Mobile Internet has seen explosive growth ~ Small market size, but major wireless application protocol (WAP) and content players ~ 12% of individuals own mobile phones; estimated 39% by 2005 Argentina is Latin America’s most cabled nation ~ 54% penetration rate

20. Current Uses Cont’d Satellite Services ~ Market is still in its infancy Broadband beginnings show promise ~ Provider’s are entering market in its earliest stage ~ No metering is a strong selling point DSL launched ~ High price tag may stifle growth

21. Price Plays Key Role Jupiter Analysis, 12/00

22. The Original Intent of Deregulation Raise Capital for the Government Attract Long-Term FDI Ease customer suffering Prepare Argentina for the 21 st Century

23. And the Results of Deregulation So far so good! ~ Decreased waiting times and cost for installation & repair for consumers ~ Installation of modern and competitive communication systems in Argentina ~ Significant FDI into telecom infrastructure ~ Government has received proceeds from license auctions and tax on new phone and cellular phone use.

24. Argentine GDP

25. What does the Future hold for Telecommunications in Argentina? On the Good Side ~ Argentina will have the most advanced communication system in the Mercosur region ~ Reliable and efficient communications will give a competitive advantage to domestic and foreign company’s alike ~ Will provide thousands of jobs to Argentines ~ Creates a tax base for the government On the Bad Side ~ With the current state of the economy in Argentina & the World, returns on investment in telecom could be slow in coming ~ Large debts of US and foreign telecom companies could hamper their efforts to expand in Argentina and the rest of Latin America

26. Thank you.

27. Today’s Market Leaders Former State-Owned Enterprises ~ Telefonica de Argentina 95% owned by Telefonica of Spain Largest telecomm provider; 2 nd largest company Revenues of $3.4 billion in 1999 ~ Telecom Argentina Owned by Telecom Italia and France Telecom Revenues of $2.2 billion in 2000