Budget 2007 presentation template v10.ppt

1Telecel BOLIVIABUDGET MEETING Asuncion 2006

Budget Meeting 2007 – Bolivia

September 15, 2006


Macroeconomic OverviewMacroeconomic Overview

Political Highlights: During this year the political situation has been very unstable in Bolivia due a election for a Constituent Assembly that dominate the political scene. Also, the Nationalisation of Gas is another issue that the new government will need to work out in order to give favourable signs to foreign investors

Macro Economic Highlights: The regional stability , high commodity prices ( gas, woods and soybean) added to a certain debility of the US dollar set the grownds for a 4-6% GDP growth for year 2006.

Market Penetration: The market penetration grew from a 20% in Dec 2005 to a 26% in 2006. Forcast shows the trend continuing and reaching a 29% penetration at the end of 2007.

2005 2006 2007 2008 2009Total Population 9.545.143 9.747.499 9.865.115 9.984.149 10.104.620

Total Population - % Penetration 20% 26% 29% 33% 36%MARKET SIZE

Addressable Market 3.722.606 3.936.087 4.154.874 4.385.823 4.629.610Covered Addressable Market 3.238.667 3.539.090 3.826.463 4.137.170 4.473.107

Mobile (Own + Competition) Market 1.898.288 2.510.699 2.849.402 3.264.821 3.679.950


BoliviaTIGO Extreme Coverage


Commercial Culture Billing SystemScratch Card Distribution Coverage SMS PlattformSales Channels Segmentation Network CapacityImage Automatic International RoamingBest Coverage GSMCreativity (Promotions)Team SpiritHuman resources are focus on sox procedures

Opening new markets in rural and suburban Constituent Assembly Resultsareas (samall cities) Entel Nationalization ( monopoly practices)VAS developing as a basic service Legal insecurityNew segments (tweenies,junior& S&M enter) Telecomunications Superintendency Disolution

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

SWOT


Key Issues

KEY ISSUES

Key Issue I:

Key Issue II:

Key Issue III:

Key Issue IV:

Key Issue V: Spectrum Clearance: as our customer intake increases we could eventually face a spectrum shortage, options include: applying for 1900Mhz licence or an agressive tdma migration plan.

Commercial coverage Increase: We are proposing the acceleration on Coverage investments, as of today we have blindspots and lack of capacity in principal BTS. We are confident that these investments will fuel our revenue

Focus on Billing/ IT: In order to back up the customer base growth we have to climb a step into a carrier class Billing and Datawarehouse systems that allow us to have a solid back office operation

Financing: As FMO,BLB,IF loan ends this year we have to restructure our financing in orther to continue with proposed investments

Labour Law: As new labour law is issued there is certain risk (overed in regulatory) of increased headcount


Key Data

TELECEL S.A. - Key Data

Revenue (US$m) & Growth (%)

53 76117

166209

41,4%

54,7%

41,9%

26,2%

0

50

100

150

200

250

2005 2006 2007 2008 2009

0%

10%

20%

30%

40%

50%

60%

EBITDA (US$m) & Growth (%)

19 2748

80110

43,1%

74,1%67,0%

37,8%

0

20

40

60

80

100

120

2005 2006 2007 2008 2009

0%

10%

20%

30%

40%

50%

60%

70%

80%

Net Profit (US$m) & Growth (%)

2

0

21

43

68

-117%

-7062%

108% 58%

-100

1020304050607080

2005 2006 2007 2008 2009 -80-70-60-50-40-30-20-10010

Capex (US$m) & as % of Revenue

9

24

3525 26

17,7%

31,6% 29,8%

14,8%12,4%

05

10152025303540

2005 2006 2007 2008 2009

0%

5%

10%

15%

20%

25%

30%

35%


P&L Summary

TELECEL S.A. - Summary P&L

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

REVENUE 53,5 75,6 117,0 166,0 209,5 Revenue Growth % 41% 55% 42% 26%

GROSS MARGIN 34,8 52,2 82,7 122,2 157,8 Gross Margin % 65% 69% 71% 74% 75%

SALES & MARKETING (8,3) (14,7) (22,2) (28,3) (32,4) S&M % of Revenue -16% -19% -19% -17% -15%

G&A Costs (7,3) (10,1) (12,8) (14,4) (15,8) G&A % of Revenue -14% -13% -11% -9% -8%

EBITDA 19,1 27,3 47,6 79,5 109,6 EBITDA % 36% 36% 41% 48% 52%EBITDA Growth 43% 74% 67% 38%

TSF - - - - -

Depreciation (12,2) (20,8) (13,4) (17,2) (15,6) Interest cost (3,2) (3,8) (4,7) (3,3) (2,2) Interest income 0,1 0,1 - - - Exchange gain/loss (0,1) (0,7) (1,9) (1,5) (1,0) Gain/Loss on disposal of assets (0,1) - - - -

Profit before Tax 3,6 2,1 27,6 57,5 90,8 PBT % 7% 3% 24% 35% 43%

Tax (1,8) (2,4) (6,9) (14,4) (22,7) % of Profit before Tax -50% -114% -25% -25% -25%

NET PROFIT AFTER TSF 1,8 (0,3) 20,7 43,1 68,1 NET PROFIT % 3% 0% 18% 26% 32%


Market Overview

TELECEL S.A. - Market Overview

Mobile Market ('000) & Penetration (%)

1.8982.511 2.849 3.265 3.680

19,9%

25,8%28,9%

32,7%36,4%

0500

1.0001.5002.0002.5003.0003.5004.000

2005 2006 2007 2008 20090%

5%

10%

15%

20%

25%

30%

35%

40%

Total Subscribers ('000) & Growth (%)

645929

1.2161.544

1.886

44,0%

30,9%26,9%

22,1%

0200400600800

1.0001.2001.4001.6001.8002.000

2005 2006 2007 2008 2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Prepaid Subscribers ('000) & Growth

622901

1.1751.491

1.821

44,8%

30,4%26,9%

22,1%

0200400600800

1.0001.2001.4001.6001.8002.000

2005 2006 2007 2008 2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Postpaid Subscribers ('000) & Growth

23 2842

5364

22,9%

46,8%

26,9%22,1%

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Market Overview

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

PopulationTotal Population 9.545.143 9.747.499 9.865.115 9.984.149 10.104.620Growth rate (%) - 2,1% 1,2% 1,2% 1,2%

Market ShareMarket Share (%) 34,0% 37,0% 42,7% 47,3% 51,2%

Penetration RatePenetration Rate (%) 19,9% 25,8% 28,9% 32,7% 36,4%

Subscribers

Postpaid Subscribers 23.051 28.321 41.578 52.772 64.450Prepaid Subscribers 622.367 901.073 1.174.884 1.491.175 1.821.155TOTAL Subscribers 645.418 929.394 1.216.462 1.543.947 1.885.605Growth rate (%) 44% 31% 27% 22%


Telecom Market

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Total Mobile Subscribers 1.898.288 2.510.699 2.849.402 3.264.821 3.679.950Growth rate (%) 22,6% 32,3% 13,5% 14,6% 12,7%

Total Fixed Line Subscribers 646.291 659.298 687.503 715.707 743.911Growth rate (%) 3,3% 2,0% 4,3% 4,1% 3,9%


Market Competition

Market Share by Operator

0%

10%

20%30%

40%

50%

60%

70%80%

90%

100%

2005 2006 2007 2008 2009

Telecel Entel Viva


MIC• Market share & position: 2nd • Ownership structure: 99.99% MIC• Brand: TELECEL and TIGO• Technology: TDMA and GSM 850• Strategy: affordability, availability, accessibility• Strengths: good customer care, good distribution, best coverage in GSM• Weaknesses: Intl roaming, low corporate penetration.

ENTEL•Market share & position: 1st • Ownership structure: 50% TIM, 50% Bol.GOV. • Brand: Entel• Technology: TDMA and GSM 1900• Strategy: coverage, technology, corp bundle• Strengths: High subsidy levels, good coverage (TDMA)• Weaknesses: bad billing, poor customer service, bad coverage (GSM)

VIVA•Market share & position: 3rd • Ownership structure: Western Wireless• Brand: Viva• Technology: GSM 1900• Strategy: transparency, image, price • Strengths: good customer service, high subsidy levels, strong with young segments, lots of advertising• Weaknesses: poor technology, weak coverage.

COTASMVNO VIVA

Competitors


E-Pin Launch

Assuring RevenueNew Billing

Data Warehouse Project

Commercial Intel

Visibility Use Public Telephony

2006

2007

Focus on Comercial Coverage

SMS as Part of Basic

Service

From Efficacy To Efficiency

Strategic Axis 2006-2007

3 A’s Path to Market Leadership

SOX Certification


Affordable Accessible Available

Continue Price Leadership

SMS as part of the Basic service ( include Free SMS in teleph Plans)

Lower denomination Scratchcard ( USD 1,20)

E-Pin ( USD 0,25 & 0,50)

Gis Based Distribution System

Visibility throug Public Telephony.

Focus On Comm Coverage

Cover Every Town where there is a Marketplace.

1900Mhz Licence (urban Cov)

Focus On Network Planning and QoS by means of . Tech ops restructuring.

Market – “Our Strategy”


Products: Consolidate Current Strategy

•Prepaid: TIGO ,Telecel Prepago -> Consolidate current growth trend E- PIN launch by Q4Focus on High Arpu Prepaid

•Postpaid: Consolidate leadership in terms of coverage and cust care. Develop brand loyalty by targeting Friends & Family segments•VAS: Consolidate SMS as basic service. Call Ringback tone. Tele vote. Missed Call Alert.

•Public Telephony: Use PT as means for Increased Visibility in Rural Areas.

•Long distance: No focus



• Market: • Santa Cruz: Leadership in traffic and connections • La Paz: Increase its actual revenue by gaining High-End Leadership (south zone) customers, By means of a more aggressive marketing approach, increased visibility and better coverage.• Cochabamba: Continue its actual growth trend.• Small Cities: Reinforce quality and coverage, continue finding “ hidden treasures” (Vallegrande, Center LPZ, San Ignacio de Velasco).

• Promotion: Few promotions and decentralization.

•Promotion Based on In network MOU , SMS , Friends & Family convenience!!



KPI’s

TELECEL S.A. - Key Performance Indicators

Prepaid ARPU (excl. Roaming)

6,2 6,47,8 8,8 8,9

0,01,02,03,04,05,06,07,08,09,0

10,0

2005 2006 2007 2008 2009

Postpaid ARPU (excl. Roaming)

42,933,6

40,8 40,6 39,8

0,05,0

10,015,020,025,030,035,040,045,050,0

2005 2006 2007 2008 2009

Prepaid Minutes ('000) & Growth (%)

291.128583.937

958.2831.411.262

1.822.471

100,6%

64,1%

47,3%

29,1%

0200.000400.000600.000800.000

1.000.0001.200.0001.400.0001.600.0001.800.0002.000.000

2005 2006 2007 2008 2009

0%

20%

40%

60%

80%

100%

120%

Postpaid Minutes ('000) & Growth (%)

125.932 106.068170.441

227.395283.553

60,7%

33,4%24,7%

0

50.000

100.000

150.000

200.000

250.000

300.000

2005 2006 2007 2008 2009

0%

10%

20%

30%

40%

50%

60%

70%


KPI’s

TELECEL S.A. - Executive Summary (US$million)

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Churn Postpaid % 0,0% -3,4% -1,7% -1,1% -1,1%Churn Prepaid % 0,0% -5,9% -2,9% -1,0% -1,0%

Minutes - Cre 125.932 106.068 170.441 227.395 283.553 Minutes - Pre 291.128 583.937 958.283 1.411.262 1.822.471 Minutes - Inbound roaming 10 14 183 409 639 Minutes - Total 417.070 690.019 1.128.907 1.639.066 2.106.664

Growth rate % 65% 64% 45% 29%

ARPU incl. Roaming - Cre 42,9 33,6 40,9 40,7 39,9 ARPU incl. Roaming - Pre 6,2 6,4 7,8 8,8 8,9 ARPU incl. Roaming - Total 7,9 7,8 9,0 9,9 10,1

ARPU excl. Roaming - Cre 42,9 33,6 40,8 40,6 39,8 ARPU excl. Roaming - Pre 6,2 6,4 7,8 8,8 8,9 ARPU excl. Roaming - Total 7,9 7,8 8,9 9,9 10,1

MOU - Cre 462 344 406 402 403 MOU - Pre 50 64 77 88 92 MOU - Total 68 73 88 99 102

Rec Rev/min - Cre 0,09 0,10 0,10 0,10 0,10 Rec Rev/min - Pre 0,13 0,10 0,10 0,10 0,10 Rec Rev/min - Total 0,12 0,11 0,10 0,10 0,10

Incoming postpaid minutes reallocation


Revenues

Revenues US$ FY 2005 % FY 2006 % FY 2007 % FY 2008 % FY 2009 %Yr 0 Yr 1 Yr 2 Yr 3 Yr 4

CELLULAR REVENUEConnection 2 0% 0 0% 0 0% 0 0% 0 0%Subscription 3.027 6% 2.028 3% 0 0% 0 0% 0 0%

Outgoing Airtime 22.342 46% 35.286 47% 55.554 48% 76.646 46% 94.700 45%Other Outgoing 973 2% 1.709 2% 4.419 4% 9.787 6% 13.276 6%

Incoming Airtime 20.777 42% 31.310 42% 49.181 42% 69.063 42% 88.212 42%Unused Expired Balance 429 1% 764 1% 1.106 1% 1.553 1% 1.929 1%

VAS 767 2% 1.850 2% 3.769 3% 5.426 3% 7.217 3%Voicemail 0 0% 0 0% 0 0% 0 0% 0 0%Roaming 5 0% 31 0% 247 0% 503 0% 765 0%

T&E 376 1% 1.033 1% 833 1% 733 0% 708 0%Sim Cards 0 0% 480 1% 757 1% 731 0% 706 0%

Other Non Recurring 253 1% 293 0% 429 0% 591 0% 731 0%Total 48.952 100% 74.785 100% 116.296 100% 165.033 100% 208.243 100%

Rev growth % 53% 56% 42% 26%

NON-CELLULAR REVENUEData 0 0 52 299 602

Gateway 4.540 834 634 632 631ISP 0 0 0 0 0

Call centre 0 0 0 0 0TV 0 0 0 0 0

Total 4.540 834 686 930 1.234Rev growth % -82% -18% 36% 33%

TOTAL REVENUE 53.492 75.619 116.982 165.963 209.477Rev growth % 41% 55% 42% 26%


• Telecel Bolivia SA is developing its roaming services; four international roamer partnerships have been projected until September 2006 and 15 by December 2006. According to market projections, a total of 30 partnerships will be created by September 2007.

Roaming


International Gateway

TOTAL 2005 2006 2007 2008 2009

Minutes 53.165 5.716 2.091 2.357 2.654

Revenue US$ ' 000 4.540 834 634 632 631

TOTAL MINUTES

0

10.000

20.000

30.000

40.000

50.000

60.000

2005 2006 2007 2008 2009

Minutes

REVENUE US$

$0

$1.000

$2.000

$3.000

$4.000

$5.000

2005 2006 2007 2008 2009

Revenue US$


International Gateway

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

Q32006

Q42006

Q12007

Q22007

Q32007

Q42007

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

TELMEX

TELENOVA

TELECOM USA

TELECOM ARG

ORBITEL

MERA

LATINOODE

IONOSPHERE

IDT

IBASIS

GO2TEL

EMBRATEL

CTI

CONVERGIA

COMSAT

COMPUTER TEL

CHANCE

CAPCOM

BELLSOUTH

ATT

ACCESSUS

INTERNATIONAL CARRIER THROUGH TIMEINTERNATIONAL GATEWAY


VAS

Value Added Services Aug. 2006

YTD 2006 FY 2007 FY 2008 FY 2009 FY

Revenue US$ ‘000 767 1.850 3.769 5.426 7.217

SMS/Dig Subs 81 132 205 257 312

Penetration (%) 34% 37% 40% 40% 40%

• Back Tone Service was launched on 13/ 9, being Tigo the first operator offering this service in Bolivia.

• At the end of September, agreements will be closed with suppliers to offer the GPS service.

• International SMS service will be launched commercially on November 06

• An aggressive commercial campaign for SMS usage will be launched as soon as platform stability is solved.

• TV and Radio Vote and contest will be an important part on the VAS strategy.


Back Tones

Backtone sevice launch campaign is aimed at young segment,Launch date : September 13Result: 1800 subs in 1st day.

VAS Advertising


TV & Radio Vote

This service is experiencing a usage growth , we are planning to expand its use via JV with different TV & Radio Programs.

VAS


• Data Concession was awarded to Telecel Bolivia on May 11th 2006.

• CAR was approved for the WiMax network.• 4 WiMAX RBS sites, 1 Broadband CORE, 432 CPEs.

• As a first stage, the sites will be installed in Santa Cruz, one of the 3 main cities of Bolivia. The central offices of the most important companies of Bolivia are located in Santa Cruz (especially oil companies), and they are located in the rural areas where there is no Internet coverage offered by the competitors.

Wimax


Distribution

DISTRIBUTION NETWORK OVERVIEW2005 2006 2007 2008 2009

Proprietary Direct Sales Force 37 40 45 50 60

Third-Party Indirect Distributors 4 4 4 4 4

Total Direct Sales Force 41 44 49 54 64

Proprietary Distribution Outlets (Connections, Scratch Cards, ePIN) 1.355 1.000 1.200 1.500 2.000

Third-Party Distribution Outlets (Connections, Scratch Cards, ePIN) 8.157 12.000 15.000 20.000 25.000

Total Distribution Outlets 9.512 13.000 16.200 21.500 27.000


DISTRIBUTION

Telecel Bolivia is taking good advantage of its mixed distribution system formed by indirect distributors and direct sales distribution force. The principal actions taken were:

• Expansion of the direct sales force in order to open new scratch card outlets and attending small locations and towns where we have coverage and are far away from the cities. E.g. El Chapare (in Cochabamba), Montero, Portachuelo, Cotoca, Warnes, Pailas, San Pedro, Okinawa, etc. (in Santa Cruz).

• Total support to indirect distributors activities improving commercial and administrative procedures in order to give them a better accessibility to the scratch cards. E.g. Decentralization of warehouses in all the small cities like: Oruro, Potosí, Sucre, Trinidad, Tarija, etc. This action allowed us an annual saving of U$D 9K in transport costs and increase drastically our efficiency (the scratch cards are always physical available in the place of the purchase).

• Non-traditional channel development (electronic outlets: Virtual Cash, mobile rechargers, ATMs) also have a notable growth through commercial actions like Promo Bs. 50 in order to capture more clients as users of Virtual Cash system. This promotion consists in the free recharge of Bs. 50 to every new client. This channel is used also for the direct sales force to recharge credit through this virtual system to Chalequeros, minicabinas and telecentros.

• E-PIN will be launched during Q4 2006

ACTIONS TAKEN


Distribution Coverage

El Calvario (La Paz)

The salesmen periodically monitor outlets regarding: scratch cards provision, stock, merchandising material, promotion information, contests, problems resolution and others. Tinto (La Paz)

Our distribution routing system include periferic areas, for example, “El Calvario” and “Tinto” in La Paz and El Alto cities.The salesmen has to serve the outlets of their route on the assigned days, go for area development and serve the emergency calls.


Distribution

Doing merchandising job to a candy shop in Cochabamba.Visiting a grocery shop in

La Paz.

Visiting an ironworks shop in Santa Cruz.Updating an outlet information in El Alto.


Outlet Status: Santa Cruz

Green: Active

Blue: Interested

Red: Non interested


Distribution Routing System

OUTLET STATUS ROUTE 301

Green: Active

Blue: Interested

Red: Non interested


Routing System- Direct Sales Force

DAILY ROUTING OF THE SALESMAN ROUTE 301

Green: Monday

Light Blue: Thursday

Blue: Wednesday

Orange: Tuesday

Pink: Friday

Saturday: Yellow


New Card Denomination

Launch date: 4th September, 2006

Validity: 10 days

Characteristics:

-Accessible to market´s low income segment.

- It is the lowest denomination scratchcard in the market (USD 1,2).


Analysis of Card Denomination

US$ (000́)CARD

DENOMINATION Q105 Q205 Q305 Q405 Q106 Q206Forecast

Q306Forecast

Q406BS. 10 0 0 0 0 0 0 500 2.005

BS. 20 1.804 2.088 2.559 2.999 3.450 4.325 5.035 4.906

BS. 30 1.168 1.362 1.367 1.806 1.756 1.890 2.172 1.989

BS. 50 1.333 1.550 1.590 1.685 1.387 1.479 1.610 1.841

BS. 100 205 255 252 277 287 402 479 563

TOTAL SALES US$ 4.510 5.255 5.768 6.766 6.880 8.096 9.797 11.304

IN %

CARD DENOMINATION Q105 Q205 Q305 Q405 Q106 Q206

Forecast Q306

Forecast Q406

BS. 10 0 0 0 0 0 0 5% 18%

BS. 20 40% 40% 44% 44% 50% 53% 51% 43%

BS. 30 26% 26% 24% 27% 26% 23% 22% 18%

BS. 50 30% 29% 28% 25% 20% 18% 16% 16%

BS. 100 5% 5% 4% 4% 4% 5% 5% 5%

TOTAL SALES (%) 100% 100% 100% 100% 100% 100% 100% 100%


Analysis of Card Denomination

Card Analysis in US$ (000´)

01.0002.0003.0004.0005.0006.000

US

$

BS. 10

BS. 20

BS. 30

BS. 50

BS. 100


Summary of Fixed Assets

Capex

Fixed Assets - US$ 2005 2006 2007 2008 2009

Network Equipment - GBV 112.507 122.315 152.432 172.691 182.163 Deferred cost - Network Establishment - GBV - - - - - Land and Building - GBV 7.596 8.278 7.990 7.712 7.444 Other - GBV 6.392 7.904 13.397 13.855 24.869 Work In Progress - GBV 1.050 11.170 5.561 3.498 2.440 Total Fixed Assets - GBV 127.545 149.667 179.380 197.758 216.916

Network Equipment - Depreciation (70.709) (89.077) (96.994) (108.011) (116.491) Deferred cost - Network Establishment - Depreciation - - - - - Land and Building - Depreciation (2.451) (2.898) (3.302) (3.675) (4.019) Other - Depreciation (3.950) (4.560) (5.975) (7.772) (10.077) Total Fixed Assets - Depreciation (77.110) (96.534) (106.271) (119.458) (130.587)

Network Equipment - NBV 41.798 33.238 55.439 64.681 65.672 Deferred cost - Network Establishment - NBV - - - - - Land and Building - NBV 5.145 5.380 4.688 4.037 3.426 Other - NBV 2.443 3.345 7.421 6.083 14.791 Work In Progress - NBV 1.050 11.170 5.561 3.498 2.440 Total Fixed Assets - NBV 50.435 53.133 73.108 78.300 86.329


Capex

NETWORK OVERVIEW2005 2006 2007 2008 2009

Number of Switches 7 7 5 6 2

Number of Base Station Controllers (BSC) 3 3 5 5 5

Number of Base Stations 294 340 451 446 521

Number of Transceivers (TRX) 3.706 4.283 4.849 3.122 4.168

Maximum Network Capacity (Subscribers '000) 672 1.009 1.516 1.877 2.340

Network Population Coverage (%) 30% 45% 51% 59% 65%


CAPEX – Main Projects Summary 2006

Aug. 2006 YTD FY 2006 CAPEX FY 2006 CARs CAPEX per Subs (US$) CAPEX per Erlang's

Capacity 1.061 5.883 9.018 20,72 1.341,31

Coverage 15.393 23.961 8.456 84,38 5.463,09

VAS/SMS 184 535 496 1,88 NA

Billing 345 663 318 2,33 NA

Customer Care & Finance 282 919 686 3,24 NA

IT 80 329 363 1,16 NA

Land & Buildings 154 154 154 0,54 NA

Others 149 455 665 1,60 NA

Total 17.648 32.899 20.156 115,85 6.804,40

Main Project Summary 2006



FY 2007 CAPEX FY 2007 CARs CAPEX per Subs CAPEX per Erlang'sCapacity 23.762 23.103 82,77 3.070

Coverage 6.762 6.482 23,56 874

VAS/SMS 1117 909 3,89 NA

Billing 1900 1900 6,62 NA

Customer Care & Finance 411 160 1,43 NA

IT 590 490 2,06 NA

Land & Buildings 0 0 0 0

Others 858 297 2,99 NA

Total 35.400 33.341 123,32 3.943,67





Coverage 7.252 6.958 22,14 1.027

VAS/SMS 380 500 1,16 NA

Billing 500 500 1,53 NA


IT 250 250 0,76 NA

Land & Buildings 0 0 0 0

Others 54 108 0,16 NA

Total 24.981 23.843 76,28 3.334,32





Coverage 4.585 4.204 13,42 573

VAS/SMS 500 500 1,46 NA

Billing 500 500 1,46 NA


IT 250 250 0,73 NA

Land & Buildings 0 0 0 NA

Others 81 27 0,24 NA

Total 26.428 25.306 77,35 3.104,71



Main Projects SplitCAPEX 2006 CAPEX 2007

CAPEX

Capacity18%

Cover age72%

VAS/ SMS2%

Bi l l ing/ CC&Finance/ IT / Other s

8%

Capaci ty65%

Cover age19%

VAS/ SMS3%

Bi l l ing/ CC&Finance/ IT / Other s

13%


Investment Supplier Split 2006

CAPEX

Huaw ei36%

Ericsson17%

Comverse7%

Others (Civil Works incl. tow ers)

40%


Network Quality

CAPEX

Aug. 2006 YTD FY 2006 FY 2007 FY 2008 FY 2009Capacity (Erl.) 8.934 11.101 18.841 25.902 33.905

Carried Traffic (Erl.) 6.824 10.223 15.122 21.304 27.318


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FYCivil Works 3.899 4.004 2.608

CORE 283 1.134 3.862 2.473 1.473

BTS 660 2.645 10.813 6.924 4.125

Transmission 1.638 1.682 1.095

GPRS/EDGE 772 495 295

Other* 118 2.104 2.779 718 10.667

Total 1.061 5.883 23.762 16.295 20.262

Capacity Expansion


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FYCivil Works 7.696 11.981 3.381 3.626 2.293

CORE 1.116 1.737 490 526 332

BTS 3.125 4.864 1.373 1.472 931

Transmission 3.233 5.032 1.420 1.523 963

GPRS/EDGE 223 347 98 105 66

Other*

Total 15.393 23.961 6.762 7.252 4.585

Coverage Expansion


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FYCivil Works 0 0 0 0 0

SMS 923 150 150

MMS

OTA 45 109 130 250

GPRS/EDGE 100 100

Call Ring Back Tone 306

Blackberry 85

E pin 184 184

Total 184 535 1.117 380 500

Value Added Services


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FY

Interconnection Billing System 345 345Real Time Billing hardware & software for post paid users 250

Provisioning Application replacement 300

Software Licenses Billing System 100Billing New CRM Software/Hardware Functions 1.500

Billing Capacity 500 500

Billing Others 68

Total 345 663 1.900 500 500

Billing


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FY

Fraud Management System 124 124

Basset Recon Tool 123 250

DWH Project 0 331

PBX 7 112

Contact Center / CallCenter 0 0 250

Revenue Assurance control 0 0 160

Others 35 101 1 250 250Total 289 918 411 250 250

Customer Care & Finance


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FY

Backup Robot 0 120

Sun Ray (Upgrade of 50 computers) 0 74

Software Licenses Microsoft 0 0 100

IT Hardware upgrade and replacement 0 0 150Single Sign On (SSO) Solution 0 0 70Software Licenses Oracle DB 0 0 70Networking Infrastructure (LAN/WAN) upgrade 0 0 90Network access ports security control (IDS/IPS 0 0 50

Others 80 135 60 250 250

Total 80 329 590 250 250

IT, LAN/WAN, PCs


CAPEX

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FYCivil Works - Offices 154 154 0 0 0

Total 154 154 0 0 0

Land & Building


TELECEL vs. Competition COVERAGE

Cobija

Beni

La Paz

Oruro

PotosíChuquisaca

Sucre

Santa Cruz

Cochabamba

Tarija

Trinidad

Pando

TELECEL GSM Coverage

TELECEL-ENTEL Coverage


Analysis and Actions on Urban and Rural Deployment

Network

• AMPS network to be decomissioned by Dec 06. No investment on TDMA network.

• Urban Deployment– Main investments due to capacity requirements which includes new

sites and expansions of existing sites.– Coverage/quality sites are required in specific areas in important cities

• Rural Deployment– Expansion of existing sites.– New coverage will target small & medium size cities around the country

still outside the reach of competitors. Such deployments have demonstrated to be very successful during 2006.


Analysis / Actions on Design and Redundancy

Network

CORE - Installation of BSC and Media Gateway for important small cities in order to improve network stability

Transmission: - Backbone reinforcement - Fiber Optic links implementation between main transmission nodes and BSC’s

VAS: - Actual SMS service using Paraguay platform over satellite links. Own platform to be installed during 2007


Improvement

Quality

Quality initiatives•Improve Indoor coverage.•Improve areas with poor coverage.•New Quality Team to start working before Dec 06

Workgroups•Bi-monthly technical meeting for KPI and capacity analysis.•Quarterly regional meeting to review and to document best practices papers in the following areas: RF, CORE, GPRS, VAS, Civil Work and Transmission.•Monthly feedback meeting with Customer Care and Sale personnel.

Detailed action plans•De-installation of AMPS Network Dic 2006•Installation of 2 additional MGW & BSC.•Increase dedicated time slots for GPRS where needed


Benchmark Plans

Quality

Benchmark:•Competitor’s Coverage•MIC LA Quality KPI

Workgroups•Drive test teams .•Regional Quality groups.

Detailed action plans•Bi-annually Massive drive test.•Netcom network audit- CORE/RF/GPRS/TX scheduled for Oct 13th.•Monthly meeting to review KPI, rollout results and others areas of improvement.


Analysis / Actions on NOC

Network

•Remote NOC working in Telecel Paraguay

•Bolivia Network is big enough and is growing fast

•Satellital Transmission is not stable and cost is expensive

•Local NOC to be installed before the end of the year resulting in benefits like:

Best control of our network statusMinor response time in case of problemSatellite link cost reduction


Network

Quality KPIs Targets Ago-06 Dic-06 Dic-07 Dic-08 Dic-09Service Provision

Accesibility 97,50% 97,03% 97,57% 97,62% 97,59% 97,55%Serveability 95% 97,02% 97,56% 97,61% 97,58% 97,54%

PerformanceHand Over Success Rate >95% 93,11% 95,00% 95,87% 95,63% 95,44%TCH Drop calls <1.5% 0,56% 0,65% 0,98% 1,21% 1,43%SDCCH Drop conexions <0.7% 0,43% 0,48% 0,59% 0,63% 0,68%

SMS SuccessSMS Success Rate (%) >85% 70,33% 80,00% 86,70% 86,56% 85,40%

GPRS performanceGPRS throughput per user (kbps) >30 Kbps N/A 30,00 33,52 35,78 37,59

AvailabilityCell availability (%) >99% 99,54% 99,64% 99,68% 99,73% 99,79%

Efficiency KPIsNetwork Size

Network Carried Traffic (Erlang) 2654 3391 10944 21304 27318Number of Sites (Nr) 179 218 329 446 521Number of Subscribers (Nr) 219.010 308.228 880454 1544101 1885644

Network UtilisationGOS (%) <5% 3,80% 3,56% 3,43% 3,21% 3,00%


Month by Month Roll Out Plan Analysis

Capex

• 10/06 Implementation of 18 GSM BTS – Enf of BO1 06-04-14 CAR.

• 10/06 Implementation of GSM Network TRX capacity

• 12/06 Implementation of 16 GSM BTS - BO1 06-07-20 CAR



• 05/07 Implementation of SMS platform

• 06/07 Implementation of 16 GSM BTS - B01-12-06 CAR

• 07/07 Implementation of 23 GSM BTS - B01-12-06, B01-02-07 CAR





IT Plan– Server hardware upgrade and replacement for in voice and VAS traffic increase.

• Additional DW Server & Storage Upgrade. • Other critical Server upgrade.

– New applications development with ISVs (Independent Software Vendors) to support new products and services, subscriber retention and system integration.

• Billing System and integration development and new functionalities• EPIN interface development.

– Operating System, Database and Application Software Licenses and Support• IBM iSeries / Oracle Licenses / Microsoft Licenses / CRM License / Linux License

– Physical and Logical Security improvements• Device Access control.• Single Sign On (SSO) solution

– New Billing System

– Provisioning Application replacement

– PCs upgrade

– Content manager application with new capabilities

IT/Billing


Direct Costs

TELECEL S.A. - PROFIT & LOSS (US$) FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Yr 0 Yr 1 Yr 2 Yr 3 Yr 4

CELLULAR DIRECT COSTConnection 0 -224 -606 -585 -565Scratchcard 0 -661 -953 -1.166 -1.428

Interconnection -8.722 -13.410 -20.869 -26.974 -31.717Other Outgoing -373 -312 0 0 0

VAS -274 -594 -1.484 -2.137 -2.852Voicemail 0 0 0 0 0Roaming -61 -68 -86 -115 -143

T&E -735 -1.157 -820 -722 -697Other Non Recurring -729 -583 -868 -1.270 -1.638

Bad debt -638 -882 -1.330 -1.792 -2.211Leased line charges -1.434 -2.139 -2.539 -2.451 -2.365Frequency charges -1.450 -2.581 -4.236 -5.844 -7.221

Royalties 0 0 0 0 0Total -14.416 -22.611 -33.791 -43.054 -50.835

57% 49% 27% 18%

NON-CELLULAR DIRECT COSTData 0 0 -38 -198 -383

Gateway -4.309 -843 -474 -472 -471ISP 0 0 0 0 0

Call centre 0 0 0 0 0TV 0 0 0 0 0

Total -4.309 -843 -513 -669 -854-80% -39% 31% 28%

TOTAL DIRECT COST -18.725 -23.454 -34.304 -43.723 -51.689Rev growth % 25% 46% 27% 18%


Direct Costs

Key Assumptions

• Connection & Scratchcard costs are been showed separately starting from 2006 (before were included in T&E).

• Other outgoing included in Lease lines starting from 2007.

• Interconnection & VAS costs increasing in accordance with traffic.

• T&E, monthly average of 400 handsets cost for CRE & 175 for PRE.

• Projected Bad Debt same level as the current one.

• Leased Lines, increase in number from 50 to 63 in 2007.

• Projected Frequency Charges same level as the current one (3.5%).

• DATA business lauch by April, 2007


GM Analysis

No connection fees

New VAS products with higher costs

Roaming service starts to generate

positive GM by 2007

Introduction of DATA


TOTAL GROSS MARGIN 34.767 52.165 82.678 122.240 157.787

Connection GM% 100% -89900% 0% 0% 0%Subscription GM% 0% 0% 0% 0% 0%

Airtime GM% 73% 72% 73% 75% 77%VAS GM % 64% 68% 61% 61% 60%

Voicemail GM% 0% 0% 0% 0% 0%Roaming GM% -1252% -117% 65% 77% 81%

T&E GM% -95% -12% 2% 2% 2%Data GM% 0% 0% 27% 34% 36%

Gateway GM% 5% -1% 25% 25% 25%ISP GM% 0% 0% 0% 0% 0%

Call Centre GM% 0% 0% 0% 0% 0%TV GM% 0% 0% 0% 0% 0%

Others GM% -188% -99% -103% -115% -124%


S&M

TELECEL S.A. - PROFIT & LOSS (US$) 2005 2006 2007 2008 2009Yr 0 Yr 1 Yr 2 Yr 3 Yr 4

SALES & MARKETINGA&P -1.516 -2.154 -2.951 -3.218 -3.242

Acquisition subsidy -169 -1.296 -1.157 -1.157 -1.157Retention subsidy -210 -974 -4.036 -6.828 -8.501

Dealer commission -3.077 -4.774 -4.889 -4.759 -4.699Card commission -2.565 -4.324 -7.031 -9.899 -12.187

Employee related cost -674 -1.141 -2.106 -2.393 -2.516External services -5 -0 -2 -10 -19

Other shared costs -107 -64 -56 -65 -75S&M Total -8.324 -14.727 -22.229 -28.329 -32.397

Acquisition Subsidy only for Gross Add

GSM postpaidRetention Subsidy only for the 10% of

GSM postpaid customer base

(US$130 per user).

Projected % of commissions same

as current ones.

New employees for Retention & Distribution.


A&P Breakdown 1

2005 2006 2007 2008 2009

106 103

190 192

Agency Fee 75

Above the Line: production costs 103 102 175

79 109

Below the Line: production costs 63

Above the Line: media costs 644

Promotions 358 384 403

1.136 1.570

554 544

1.861 1.895

401 404

69 102

2.154 2.951

383 592 Others 273

TOTAL A&P 1.516

106 105

3.218 3.242


A&P Breakdown 2

ADVERTISING & PROMOTION 2005 2006 2007 2008 2009

Agency Fee Creativity (75) (79) (109) (106) (103)

Production (tv/ radio/ billboard/ press,etc) (103) (102) (175) (190) (192)

Total (178) (181) (284) (296) (294) Media buying as % of Media Investments 0,0% 0,0% 0,0% 0,0% 0,0%

Agency fee as % of media spending 25,2% 15,0% 17,0% 15,1% 14,7%

Above the Line TV (253) (535) (704) (916) (943)

Radio (16) (40) (65) (71) (72)

Newspaper (83) (115) (150) (164) (165)

Magazine (46) (88) (147) (161) (162)

Billboards (242) (357) (504) (549) (553) Internet (4) (0) - - -

Total (644) (1.136) (1.570) (1.861) (1.895)

Below the Line POS Materials (63) (69) (102) (106) (105)

Total (63) (69) (102) (106) (105)

Promotions Roadshows (358) (384) (403) (401) (404)

Total (358) (384) (403) (401) (404)

Sponsorship (249) (328) (428) (430) (418)

Corporate image - (96) (47) (45)

Market research (7) (37) (48) (56) (59)

Loyalty Programs (17) (18) (19) (21) (22)

Total (273) (383) (592) (554) (544)

TOTAL A&P (1.516) (2.154) (2.951) (3.218) (3.242)


Acquisition Subsidy

Subsidy Acquisition US$ ́ 000 Aug. 2006 YTD 2006 2007 2008 2009

Postpaid GSM -565 -1.065 -1.157 -1.157 -1.157Growth rate % 0,0% 8,7% 0,0% 0,0%

% of Total Revenue -1,2% -1,4% -1,0% -0,7% -0,6%Postpaid Non-GSM -98 -98 0 0 0

Growth rate % 0,0% -100,0% 0,0% 0,0%% of Total Revenue -0,2% -0,1% 0,0% 0,0% 0,0%

Prepaid GSM -43 -43 0 0 0Growth rate % 0,0% -100,0% 0,0% 0,0%

% of Total Revenue -0,1% -0,1% 0,0% 0,0% 0,0%Prepaid Non-GSM -94 -94 0 0 0


TOTAL -801 -1.300 -1.157 -1.157 -1.157Growth rate % 0,0% -11,0% 0,0% 0,0%

% of Total Revenue -1,8% -1,7% -1,0% -0,7% -0,6%


Retention Subsidy

Subsidy Retention US$ ́ 000 Aug. 2006 YTD 2006 2007 2008 2009

Postpaid GSM -207 -720 -4.036 -6.828 -8.501Growth rate % 0,0% 460,4% 69,2% 24,5%

% of Total Revenue -0,5% -1,0% -3,5% -4,1% -4,1%Postpaid Non-GSM -199 -199 0 0 0


Prepaid GSM -11 -11 0 0 0Growth rate % 0,0% -100,0% 0,0% 0,0%

% of Total Revenue 0,0% 0,0% 0,0% 0,0% 0,0%Prepaid Non-GSM -48 -48 0 0 0


TOTAL -464 -977 -4.036 -6.828 -8.501Growth rate % 0,0% 313,0% 69,2% 24,5%

% of Total Revenue -1,0% -1,3% -3,5% -4,1% -4,1%


Acquisition and Retention Costs

Aug. 2006 YTD 2006 2007 2008 2009

Acquisition Costs per Gross New SubscriberPrepaid -0 -0 0 0 0

Growth rate % -100,0% #¡DIV/ 0! #¡DIV/ 0!% of Total Revenue 0,0% 0,0% 0,0% 0,0% 0,0%

Postpaid -64 -74 -86 -86 -86Growth rate % 16,7% 0,0% 0,0%

% of Total Revenue -0,1% -0,1% -0,1% -0,1% 0,0%

Retention CostsPrepaid -0 -0 0 0 0

Growth rate % -100,0% #¡DIV/ 0! #¡DIV/ 0!% of Total Revenue 0,0% 0,0% 0,0% 0,0% 0,0%

Postpaid -15 -32 -97 -129 -132Growth rate % 199,2% 33,3% 1,9%

% of Total Revenue 0,0% 0,0% -0,1% -0,1% -0,1%


New Commission StructureConnections

Direct Channel2 equal payments to 60% of the value of the loaded card

1 payment to 60% of the value of the loaded card

Indirect Channel3 equal payments to 60% of the value of the loaded card

1 payment to 60% of the value of the loaded card

Direct Channel

2 equal payments to 60% of the value of the loaded card. The prepaid customer paid Bs.40 (Bs.10 for the sim card and Bs.30 for airtime)

n payments equivalent to 40% of the value of the card loaded till reaching at a top of Bs.50. The prepaid customer paid Bs.15 for the sim card (without airtime).

Indirect Channel

3 equal payments to 60% of the value of the loaded card. The prepaid customer paid Bs.40 (Bs.10 for the sim card and Bs.30 for airtime)

n payments equivalent to 40% of the value of the card loaded till reaching at a top of Bs.60. The prepaid customer paid Bs.15 for the sim card (without airtime).

TDMA Before Actual

GSM Before Actual


• Scratchcard Commission

Card Commissions

Denomination

Validity (days)

Grace Period (days) Quantity Volume in

US$ Share Total Commission %

Commission in US$

Bs. 20 30 30 755.158 1.876.169 55% 13% 243.902

Bs. 30 45 30 218.725 815.124 24% 13% 105.966

Bs. 50 90 30 87.761 545.099 16% 13% 70.863

Bs. 100 120 30 13.487 167.540 5% 13% 21.780

Bs. 250 120 30 658 20.435 1% 2% 409

TOTAL 1.075.789 3.424.368 100% 442.920Data as of August06


Card Commissions

• E-pin Commission

Denomination

Validity (days)



Commission in US$

4 10 30 11%

10 10 30 11%

20 30 30 11%

30 45 30 11%

50 90 30 11%

100 120 30 11%

150 120 30 11%

200 120 30 11%

250 30/120 30 11%

500 30/120 30 11%

750 30/120 30 11%

1000 30/120 30 11%Data as of August06


• Other Electronic distribution channels (EVD, IVR, ATM)

Card Commissions

Denomination

Validity (days)



Commission in US$

Bs. 10 10 30 596 740 3% 5% 37

Bs. 20 30 30 62 154 1% 5% 8

Bs. 30 45 30 693 2.583 9% 5% 129

Bs. 50 90 30 233 1.447 5% 5% 72

Bs. 75 90 30 1 9 0% 5% 0

Bs. 100 120 30 1372 17.043 60% 5% 852

Bs. 250 120 30 115 3.571 13% 5% 179

Bs. 500 120 30 43 2.671 9% 5% 134

TOTAL 3115 28.219 100% 1.411Data as of August06


G&A

TELECEL S.A. - PROFIT & LOSS (USD) FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Yr 0 Yr 1 Yr 2 Yr 3 Yr 4

G&AEmployee related costs -2.719 -3.537 -4.944 -5.597 -6.104

Office rental and lease payments -199 -403 -430 -439 -448Network Maintenance Costs -1.521 -2.376 -4.213 -5.020 -5.863Billing and Collection costs -311 -396 -481 -495 -509

External services -681 -1.282 -1.139 -1.197 -1.258Other shared costs -1.895 -2.097 -1.620 -1.627 -1.633

G&A Total -7.327 -10.091 -12.827 -14.374 -15.816-14% -13% -11% -9% -8%


Headcount by Cost Center

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009Acquisition - Sales & Marketing 26 36 47 51 52

Growth rate % 38% 31% 9% 2%Customer - Operation 48 62 82 92 97

Growth rate % 29% 32% 12% 5%Credit Collection 7 8 10 10 10

Growth rate % 14% 25% 0% 0%Technical - Operation 21 32 49 57 59

Growth rate % 52% 53% 16% 4%Technical - Planning 1 6 6 7

Growth rate % 100% 500% 0% 17%Finance & Administration 43 54 67 70 74

Growth rate % 26% 24% 4% 6%Information & Technology 20 27 31 31 31

Growth rate % 35% 15% 0% 0%Total Headcount 165 220 292 317 330Growth rate % 33% 33% 9% 4%


Network maintenance costs

Aug. 2006 YTD 2006 FY 2007 FY 2008 FY 2009 FYCivil Works -121 -210 -351 -465 -558

Technical -683 -1.054 -1.445 -1.379 -1.563

Electricity -574 -910 -1.250 -1.639 -1.898

Site Leases -416 -680 -1.032 -1.368 -1.642

Security -10 -26 -62 -82 -99

Others*

Total -1.804 -2.880 -4.140 -4.933 -5.760

Network Maintenance Costs US$


Organization

HEADCOUNT ANALYSIS

2006 2007 2008 2009

Monthly Revenue per Headcount US$ 28.644 33.385 43.629 52.898

Subscriber per HeadcountPersonnel Cost as % of Revenue

-6% -6% -5% -4%

4.225 4.166 4.870 5.714


NAME ACTUAL POSITION DATE OF CHANGE PREVIOUS POSITION

IVER AVALOS Commutation and Platform Responsible 01/01/2006 MSC Engineer

KARINA PEREDO Customer Care Specialist 01/01/2006 Customer Service Operator

ALEJANDRO HORVATH IT Manager 01/01/2006 Nat. Switch Network Operations and VAS

JUAN CARLOS MENESES Billing Manager 01/01/2006 IT Manager

VERONICA WEISE Customer Service Operator 03/02/2006 Express Operator

ROXANA HURTADO Express Operator 03/02/2006 Customer Service Operator

ELIANA SAUCEDO Executive Account VIP 01/04/2006 Customer Care Specialist

LEDA YBARNEGARAY Customer Care Specialist 01/04/2006 Customer Service Operator

JIMENA PRUDENCIO Customer Service Operator 02/05/2006 Reception

CAROLINA LEAÑOS Business Analyst 01/06/2006 Product Head

MARIANNE WENDE Product Head 01/06/2006 Executive Account VIP

GINA GONZALES Executive Account VIP 01/06/2006 Customer Care Specialist

KARINA CASTEDO Customer Care Specialist 01/06/2006 Customer Service Operator

LIMBERG DAROCA Regional Manager La Paz 01/06/2006 Regional Manager CBBA

PABLO GUARDIA Sales Manager 01/06/2006 Regional La Paz and Sales Manager

Employees Rotation During 2006

Rotation plan


Rotation plan

NAME ACTUAL POSITION DATE OF CHANGE PREVIOUS POSITION

SUSANA SOLIZ Regional Manager CBBA 01/06/2006 Customer Care Supervisor Cbba

KARLA CESPEDES Customer Care Supervisor Cbba a.i. 01/06/2006 Customer Care Specialist

MAURICIO DECKER Customer Care Supervisor La Paz - Hansa 01/06/2006 Call Center Supervisor

OMAR VERGARA Indirect Sales Supervisor La Paz 20/06/2006 Direct Sales Supervisor

FERNANDO LIZON National Credit Risk Supervisor 01/07/2006 National Activation Supervisor

KAREN DIPP Customer Care Specialist 01/07/2006 Customer Service Operator

ALEJANDRO ARCE Call Center Supervisor La Paz 01/07/2006 Customer Care Specialist

GUISELLY URQUIDI Customer Service Operator 01/07/2006 Express Operator -reception

HEIDY MARTINEZ National Collections Supervisor a.i. 18/07/2006 Regional Collection Supervisor

ANA ANTELO Call Center Collections Auxiliary 01/03/2006 Call Collections Operator

ANA ANTELO Collection Supervisor Cochabamba 24/07/2006 Call Collections Auxiliary

DUCY ONO Call Collections Auxiliary 01/08/2006 Call Collections Operator

DANIEL VACA VAS OFFICER 01/08/2006 Technical Support-Call Center Operator

CLAUDIA LANDIVAR Customer Service Sub-manager 01/08/2006 Customer Service Supervisor

YIMMY MEALLA Technical Support-Call Center Operator 01/08/2006 Call Center Operator

JIMENA JIMENEZ Collection Supervisor La Paz 01/08/2006 Collection Supervisor Cochabamba


Rotation plan

Alejandro HorvathElectronic Engeenier30 Years Old

TELECEL BACKGROUNDValue Added Services and Regional Supervisor (LPZ)National Switch Network Operations and VAS Supervisor.IT Manager

TELECEL NEXT LEVELC.T.O.


Rotation plan

Claudia LandivarCommercial Engineer28 Years Old

TELECEL BACKGROUNDCustomer Service OperatorCustomer Care SpecialistVIP Account ExecutiveCustomer Service SupervisorCustomer Service Sub Manager

TELECEL NEXT LEVELCustomer Service Manager


Rotation plan

Carolina LeañosBusiness Administration25 Years Old

TELECEL BACKGROUNDMarketing TraineeDistribution AssistantCustomer Service OperatorVIP Account ExecutivePost Paid Product HeadBusiness Planning

TELECEL NEXT LEVELTechnical PlanningMarketing Manager


Tigo Experience

Telecel image is being replaced in our Main Office in La Paz, a new office opened in Zona Sur.


TIGO Experience


TIGO Experience


Tigo Experience

Team Tigo Events


Below EBITDA

Accelerated depreciation for

AMPS network (End by Dec 06)

Final Depreciation for TDMA network (End

by Dec 08)New loans interest (IFC & local bank)

TAX 3% over revenue till 2006/ TAX 25% over profit before

taxes


EBITDA 19.117 27.347 47.622 79.538 109.574

Technical Service Fee 0 0 0 0 0Depreciation -12.192 -20.779 -13.325 -17.180 -15.552Amortisation 0 0 0 0 0

Amortization - Licensing cost -34 -34 -33 -31 -30Interest expense -3.202 -3.812 -4.732 -3.339 -2.214Interest income 129 56 0 0 0

Exchange Gain/Loss -132 -678 -1.926 -1.518 -1.019Gain/Loss on disposal of Assets -112 0 0 0 0

Profit before taxes 3.573 2.101 27.605 57.469 90.760

Taxes -1.790 -2.398 -6.901 -14.367 -22.690Withholding Taxes 0 0 0 0 0

Adjustments 0 0 0 0 0

Net Profit 1.783 -297 20.704 43.101 68.070


TRANSMISSION DATA LICENSE Description:

Non-exclusive license to operate a data transmission network in the whole country.

Grant date: RAR 2006/0786 - 17th April of 2006 Subscription contract date 11 de Mayo de 2006. Term: 40 years – valid from 11th May 2006, until year 2046. Service must be launched maximum until one year from contract subscription

date. Launch date: Not launched yet License Fee: Regulatory fee: 1% of monthly gross recurring revenue (to be paid to the telecommunications authority) Other payments or fees By the use of frequencies used (additional to the license fee) Renewal terms: Further renewals are subject to negotiations with the government ISSUES: Main Concession Obligation:

Since 2nd year of operation, there are obligations to install and operate free of charge lines for Internet Access The installation of each line includes the user terminal provision, without cost and the respective maintenance costs of the line. The sites to install yearly will be choused from a list of the regulator before the 15th of January of each year. The summary of choused sites should be given to regulator with the schedule of installation. In case to be defined in Bolivia obligations of universal service, this obligation will be cancelled and only the USO will be applied.

Regulatory License


Regulatory - Technology

TECHNOLOGY

Technology currently used

Frequency band in license I

Frequency band in license II

One way frequency Channels

GSM/TDMA/AMPS 800 A A` A`` N/A N/A

AMPS 800 A A` A`` N/A N/A 299-333 (35)

TDMA 800 A A` A`` N/A N/A 103-298 (196)

GSM 800 A A` A`` N/A N/A 145-175 (31)


Regulatory – Issues

BOLIVIA FORECASTED REGULATORY RISK 2007

ISSUE EXPECTED DATE ESTIMATED RISK COST (USD) PROBABILITY

Labor law changes On going 50% medium risk: USD200.000 10% low risk: USD 220.000

Probable. We are making adjustment to contracts in order to adjust the risk to the indicated value, calculated upon the legal consultancy conclusions.

Imposition of new Universal Service Obligation contribution. It could range between 1.5 and 3% over annual gross income.

Last quarter of 2006 – first quarter 2007

Approx. U$D 2MM

Probable

Solidarity tariff 1st semester 2007 Alternatively, a special plan, with mobility restriction, could be applied

Posible

Stolen and lost terminals Control System

1st semester 2007 Between USD 150.000 - 250.000 per mobile operator in the market

Probable

The government will eliminate the Superintendencies.

First quarter of 2007 NIL Probable


Taxes

• 2005 & 2006 taxes paid as 3% over revenues.

• Starting from year 2007, we should pay 25% over net revenue before taxes .


Taxes -1.790 -2.398 -6.901 -14.367 -22.690


Balance Sheet

• Capex investments.

• Increase in Revenues.

• Capex financing.

• IFC new loan (US$25m) + Local bank new loan (US$5m).

• MIC loan payment.

• Dividends Proposed.


Operating Cash Flows USD ´000

Cash Flow

• Projected US$ 25m IFC loan by May/2007.

• Projected US$5m local bank loan by June/2007

• Cash Upstream by 2008 & 2009

TELECEL S.A. - CASHFLOW (US$) FY 2006 FY 2007 FY 2008 FY 2009

EBITDA 27.347 47.622 79.538 109.574

Change in Working Capital -5.904 -9.768 -14.777 -19.505

Net Operating Cashflow * 21.442 37.854 64.761 90.069* of which TSF 0 0 0 0

INVESTMENTCAPEX -19.547 -33.908 -27.951 -31.072

License Payments 0 0 0 0Time Deposits & Other 0 0 0 0

Total Investments -19.547 -33.908 -27.951 -31.072

Net Cashflow - Operations & Investment 1.896 3.946 36.810 58.998

FINANCINGExternal - Financing Drawn (incl vendor financing) 17.201 30.000 0 0

External - Financing Repayments -11.728 -26.618 -11.392 -10.083External Interest received 57 0 0 0

External Interest paid/Bank charges -1.779 -2.159 -37 -19I/Co Loans Drawn 15.000 0 0 0

I/Co Loans Repayments -3 0 -1.000 -10.900I/Co Interest Paid 0 0 -423 -5.008

Dividend Payments 0 0 0 -13.301Other 0 0 0 0

Total Financing 18.748 1.224 -12.853 -39.312

Total Taxes -2.397 -6.877 -14.321 -22.636

Net Cashflow 1.400 -1.708 9.637 -2.950

Opening Bank Balance 1.896 3.096 941 10.325Currency Adjustments -199 -447 -253 -875

Opening Bank Balance 1.697 2.649 689 9.450

Closing Bank Balance 3.096 941 10.325 6.500


Cash Upstream & Downstream – USD ´000

Financing

Cash UpstreamYTD Aug-2006 Full Year 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Full Year 2007

Loans MIC + Interests 0 0 0 0 0 0 0

Dividends 0 0 0 0 0 0 0

TSF 0 0 0 0 0 0 0

Corporate Recharges, Reimbursment 0 0 0 0 0 0 0

Others (Release of SBLC / Corporate Guarantee, …) 2.800 2.800 0 0 0 0 0

TOTAL 2.800 2.800 0 0 0 0 0

Cash DownstreamYTD Aug-2006 Full Year 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Full Year 2007

Loans MIC 0 0 0 0 0 0 0

Others (SBLC, Corporate Guarantee, …) 0 0 0 0 0 0 0

TOTAL 0 0 0 0 0 0 0


Debt & Financing

USD ‘ 000Source Current Outstanding

as of Aug-2006Projected

Outstanding End of 2006

Projected Outstanding End of 2007

Projected Drawdown in 2006 (Aug to

Dec)

Principal Repayment in 2006 (Aug to

Dec)

Interest rate in 2006

Maturity

IFC A 3.333 2.222 0 0 -1.111 Libor + 3.75% 31-Dec-07

IFC B 1.429 0 0 0 -1.429 Libor + 3.75% 31-Dec-06

IFC C 5.000 5.000 0 0 0 Libor + 3.75% 31-Dec-07

IFC X 0 0 25.000 0 0 Libor + 3.75% 30-Nov-10

FMO 1.429 0 0 0 -1.429 Libor + 3.75% 31-Dec-06

BLB 976 0 0 0 -976 Libor + 3.75% 31-Dec-06

Standard Bank 15.000 15.000 0 0 0 Libor + 3.75% 31-Dec-07

Banco Bisa 2.001 1.201 0 0 -800 8,00% 30-Jun-07

Banco Bisa X 0 0 4.751 0 0 8,00% 31-Jul-09

TOTAL 29.168 23.424 29.751 0 -5.745


Covenants for Year 2007

Debt & Financing

CovenantsSource Type of Ratio Current Limit Levels

IFC/ FMO/ BLB SENIOR DEBT / EBITDA < 1.5 0.64

IFC/ FMO/ BLB LONG-TERM DEBT SERVICE COVERAGE > 1.1 1.35

IFC/ FMO/ BLB SENIOR DEBT / EQUITY < 1 0.65


• Implementation Status

SOX

0268. Bill and Collect for Interconnect/ Other Operators047. Recording for Disposal of Assets0326. Purchase & Pay for Assets & Expenses

N/ AN/ A9. Bill and Collect for Roaming

3645b. General Network Control Procedures6645a. General IT Controls Procedures054. Estimate Excess and Obsolete Inventory Reserves1103. Depreciate Property and Equipment1152. Cost and Record Sales of Inventory1221. Compute and Pay Payroll

NoYes (if 100%)

Process

0268. Bill and Collect for Interconnect/ Other Operators047. Recording for Disposal of Assets0326. Purchase & Pay for Assets & Expenses

N/ AN/ A9. Bill and Collect for Roaming

3645b. General Network Control Procedures6645a. General IT Controls Procedures054. Estimate Excess and Obsolete Inventory Reserves1103. Depreciate Property and Equipment1152. Cost and Record Sales of Inventory1221. Compute and Pay Payroll

NoYes (if 100%)

Process


SOX

0918. Assess Assets for Impairment0717. Amortize Prepayment0516. Recording of Subscribers’ Numbers

1519. Calculate and Pay Income Tax

0915. Cash Receipt21414. Cash Disbursement1513. Billing Adjustments

N/ AN/ A12. Bill and Collect for Sales (Wireless)73211. Bill and Collect for Sales (Prepaid)44410. Bill and Collect for Sales (Postpaid)

NoYes (if 100%)

Process

0918. Assess Assets for Impairment0717. Amortize Prepayment0516. Recording of Subscribers’ Numbers

1519. Calculate and Pay Income Tax

0915. Cash Receipt21414. Cash Disbursement1513. Billing Adjustments

N/ AN/ A12. Bill and Collect for Sales (Wireless)73211. Bill and Collect for Sales (Prepaid)44410. Bill and Collect for Sales (Postpaid)

NoYes (if 100%)

Process


SOX

0827. Revalue Foreign Currency Balances0226. Record and Monitor Capital Increase/ Decrease0725b. Issue, record and monitor Debt (Local Financing)

0928. Accounting for Intercompany Transactions

N/ AN/ A25a. Issue, record and monitor Debt (Group Financing)11524. Financial Statement Close51623. Estimate Commitments and Contingencies1622. Estimate Allowances for Doubtful Accounts and Bad Debt 0721. Capitalize and Amortize License Cost01220. Calculate and Pay Other Taxes

NoYes (if 100%)

Process

0827. Revalue Foreign Currency Balances0226. Record and Monitor Capital Increase/ Decrease0725b. Issue, record and monitor Debt (Local Financing)

0928. Accounting for Intercompany Transactions

N/ AN/ A25a. Issue, record and monitor Debt (Group Financing)11524. Financial Statement Close51623. Estimate Commitments and Contingencies1622. Estimate Allowances for Doubtful Accounts and Bad Debt 0721. Capitalize and Amortize License Cost01220. Calculate and Pay Other Taxes

NoYes (if 100%)

Process


Risks/Opportunities

In only 9 months since its introduction TIGO has positioned itself as the Brand to recommend to Friends and Family, results from the branding strategy started to show, generating an increased customer intake.

We now have the Brand, The product and the Human Resources to challenge Entel for the Market Leadership.

Main Weaknesses are Network capacity and Billing /IT systems under investment in the past Years.

Mayor Risk lies in the political situation , nevertheless we are sure that this is the right moment to accelerate investment as the competitors seem to be waiting for us to lead the moves.

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