The European Mobile Industry – A Case for Consolidation? Wolfgang Kopf, LL.M. Executive Vice President T-Mobile International AG & Co. KG Transatlantic.

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The European Mobile Industry – A Case for Consolidation?

Wolfgang Kopf, LL.M.Executive Vice PresidentT-Mobile International AG & Co. KG

Transatlantic DialogueMontpellier, FranceNovember 22, 2005

Page 2==!"§==Mobile= Wolfgang Kopf, T-Mobile International

About T-Mobile European Mobile Markets US Mobile Markets Key difference between

European and US Mobile Markets

Main hurdles for Consolidation in Europe

Agenda


T-Mobile International AG & Co. KG was established in December 1999 and is one of the largest mobile communications operators worldwide (3rd place in terms of Revenues, 4th place in terms of subscribers)

T-Mobile International was the first seamless transatlantic mobile network operator and is still the only one

DT Group holds direct or indirect investments in mobile communications companies in 15 countries with more than 83 million subscribers

Net revenue of T-Mobile International was 25,0 billion Euros in 2004 (eoy)

About T-Mobile


Our Footprint

T-Mobile NL (100%) No. 3 player

T-Mobile UK (100%) No. 1 Player (w/ Virgin Mobile)

T-Mobile AT (100 %) No. 2 player

T-Mobile US (100%) No. 4 Player *

T-Mobile D (100 %) No. 1 Player

T-Mobile CZ (56.0%) No. 1 player

• T-Mobile Hungary (59.2 %)** • No. 1 Player

• PTC (Poland, 49 .0%) • No. 1 Player

• T-Mobile Croatia (51.0 %)** • No. 1 Player

• Monet (Montenegro, 45.5%)**• No. 2 Player

•T-Mobile Slovakia (51.0 %)**•No. 2 Player

• Mobimak (Macedonia, 30.2%)**• No. 1 Player

• Eronet (Bosnia, 25.0%)**• No. 3 Player

• Not T-Mobile branded

• T-Mobile brandedNotes: Ranking based on subscribers number (status as of Q2/2005). Percentage of stakes in brackets.* No. 4 player after closing of Sprint / Nextel merger** Pro rata as (local) fixed line is holding the shares in the local mobile operation


T-Mobile US

Established under the name of VoiceStream in 1994; in July 2002, the company became T-Mobile US

Subsidiary of T-Mobile International (100%) More than 20.0 million subscribers Market share 10% US-Penetration rate 66 % T-Mobile US has the largest GSM network in the USA T-Mobile US is the largest Wi-Fi provider in the USA Four awards by J.D. Power and Associates in 2004,

among them “Highest Overall Satisfaction Among Wireless Telephone Users”, and already two further awards in 2005, among them “Highest Overall Business Customer Satisfaction”


EU25 Communications Market VolumesEU25 communications markets growing faster than GDP. Mobile and fixed data services main growth drivers. Fixed voice service revenues steadily declining.

EU25 Communications Market Volumes(€ bn)

Source: EU Commission (10th Communications report)

238 254 264 277

98 107 114 122

92 92 9091

51454236

14141312

2001 2002 2003 2004E

Mobile Services

Fixed Voice Services

Fixed Data ServicesCable TV Services

1.7%

1.1%

0.9%

2.4%EU25 GDP growth

38.6%

41.4%

32.5%

44.1%

... %= share at total market volume

15.1%

18.3%

5.3%

6.7%

3.9%

4.9%Yearly growth

CAGR

7.6%

--0.7%

12.3%

5.3%


Mobile Subscribers (SIM cards) and Penetration in EU 15 & EU 25(in m)

371359328301282

236

431415Subscriber EU 15Subscriber EU 25

Sources: Mobile Communications/Baskerville, Merrill Lynch (April/September 2005), Eurostat, own calculationsNote: Total EU25 population of 458m by end of 2004, EU15 with 384m population. End of year penetration rate.CAGR = Compound Annual Growth rate; EU = Europe

63%

75%

79%

86%

94% EU1591%

Populationpenetration

EU15/EU25 Mobile Subscriber DevelopmentEuropean mobile markets approaching saturation. Addressable market penetration already higher than 100%. Prepaid main growth driver.

2000 2001 2002 2003 2004

CAGR 00-04:11%

(EU15)

Prepaid penetration

96%94%

62% 63%

2Q 2005

EU25


European Mobile Competition – Key EU25 countriesFierce Competition but no Consolidation yet.

Sources: EU Commission (10th Communications report), Merrill Lynch (September 2005), own analysisMVNO = Mobile Virtual Network Operator ; SIM = Subscriber Identity Module

3 3 3 3 4 4 4 5 3 4 4 4 4 3 5 53 8 10 13 16 21 2937

59

3 3 3 3 4 4 4 8 11 14 17 2025

3242

64

CZ POL POR SPA IRE GRE ITA AT FRA FIN D DK SWE BE NL UK

Mobile Network operators & service providers / MVNOs / mobile brandsKey EU25 countries – 2Q 2005

Service providers / MVNO / mobile brandsMobile network operators with GSM and/or UMTS licenses

95%

Mobile penetration 2Q 2005 (SIM cards as of population)

108% 67% 109% 103% 109% 114%99% 75%102% 100% 90% 88%111% 106%103%


US Mobile Subscriber Market DevelopmentUS market with considerable subscriber growth. 66% population penetration reached by end of June 2005.

140,8 158,7182,1 194,4

33,8 44,0 55,3 69,2 86,0109,5 128,4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2Q05

Source: CTIA, own estimates

Total US Mobile Subscriber(in m)

Key subscriber growth drivers Introduction of digital network technologies (TDMA, GSM & CDMA

in 1994/95) Better handset selection (especially related with introduction of

GSM & CDMA) Attractive price plans (e.g. minute buckets, prepaid tariffs, family

tariff plans) Introduction of national roaming Improved network quality & coverage, especially in-house and in

rural areas Mobile data services (e.g. SMS, corporate applications used via data

cards), mostly since 2002

CAGR 95-04:

20.6 %

+ 6.7%

66 %

Penetration


US Mobile CompetitionMarket already consolidated.

Cingular26,5%

T-Mobile9,9% Verizon Wireless

24,4%

Others21,3%

Sprint9,6%

Nextel8,3%

100% = 194,4m subs (+14.7% yoy)

US Subscriber Market Shares 2Q 2005

Total US Subscribers 2Q 2005(in m)

Source: CTIA, reported company data, own calculations.Note: Sprint figures without wholesale & affiliates (included in others). Sprint / Nextel merger closed in August 2005 yoy = year on year ; BTA = Basic Trading Areas (see page 20 for overview)

Key competition characteristics

After consolidation, four (from initially six) national operators controlling about 79% of total US subscriber base

Remaining 21% controlled by affiliates of national operators (e.g. Sprint / Nextel affiliates), regional/local players (e.g. Alltel, US Cellular, Cincinnati Bell) and MVNOs/resellers (e.g. Virgin Mobile, Boost Mobile, TracFone)

51,6 47,434,8

16,119,241,4

18,7

Cingula

rVZW

New Spr

intTMUS Spr

int NXTL

Others


Key differences between Europe & USASix key differences

Market structure / Regulatory Characteristics

Network technologies installed / Coverage

Competition level Subscriber growth / penetration

development Pricing schemes Usage behavior (voice, data)


De facto spectrum cap Licensing areas determine the

relevant geographic market New EU Merger Rules and SIEC

Test No clear division of jurisdiction

among competent authorities Culture?

Main hurdles for Consolidation in Europe


Thank you for your attention.

Wolfgang Kopf, LL.M.Executive Vice President Public & Regulatory AffairsT-Mobile International AG & Co. KG Landgrabenweg 151, D-53227 Bonn, Germany Mail: [email protected]

The European Mobile Industry – A Case for Consolidation? Wolfgang Kopf, LL.M. Executive Vice President T-Mobile International AG & Co. KG Transatlantic.

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