TNS SOFRES - Telecoms practice Alain IMBERT

16, rue Barbes - 92129 Montrouge cedex - France  : +33 (0)1 40 92 27 52  : [email protected]

Job reference: 460301018 AIT

3G Monitoring

European mobile users' behaviours and interest in UMTS Syndicated research overview January 2003

Contents

 Context, objectives and methodology Questionnaire frame  Deliverables and examples of results Example of results  Subscription conditions  Appendix The TNS Group and its telecoms dedicated teams Terms of contract 3 7 9 12 28 30 31 34 - 2 -

Context, objectives and methodology

- 3 -

Gaining key insights from the European markets

 How successful 3G launch will be? How to prepare it? Who will be the early adopters? How much are they willing to pay to gain access to 3G services? What revenues to expect and which business model to build? How the market will segment? ...

 Further to its successful 2001 UMTS Monitor survey, the propose to launch a

syndicated research TNS Group telecoms experts*

especially designed to mobile services industry practitioners, bank executives and consultants to: -

Measure 3G services appealing

and understand their

Identify most attractive applications Determine market segments Assess willingness to pay drivers

of the European consumer market  The survey is aiming to provide

key insights

from access to

countries across Europe

.

benchmarks and learnings from

* Taylor Nelson Sofres is world's N °4 in market and opinion research, with operating units in more than 50 countries and more than 300 dedicated telecoms experts world wide.

- 4 -

A research covering 10 European countries

* Austria, Belgium, Czech Republic, Denmark, Eire, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, The UK, Turkey 

Ten European countries

, representing

more than 436 million consumers

and counting for

89% of the European Union and its potential candidates population*

, will be involved in this research: Belgium Czech Republic France Germany Italy Netherlands Poland Spain The UK Turkey  The TNS Group operating in more than 50 countries world-wide, we can optionally

extend the coverage of this research to Asia-Pacific, Australian, North or Latin American and Scandinavian countries

. Please ask your TNS local contacts for more information.

- 5 -

An omnibus based research process

 To minimise interviewing costs and ensure the best representativeness of each local sample, we collected data through

local TNS omnibus waves

.

 Each wave consisted in

mobile users over 15 years old

.

 Interviews were carried out from

September 18 th to October 23 rd 2002

.

Belgium 701 interviews Czech Republic 569 interviews Germany 650 interviews France 662 interviews Italy 731 interviews Ireland 700 interviews Netherlands 500 interviews Poland 303 interviews Spain 1 000 interv.

Turkey 542 interviews The UK 601 interviews

Those interviews were carried out on the behalf of specific clients but can be subscribed as an option.

- 6 -

A questionnaire to feed operators' needs

Through preliminary working sessions with major mobile operators or mobile manufacturers, we have designed a questionnaire frame that will explore: •

Equipment

- Q1 Mobile ownership or use - Q2  Length of time since purchase of 1 st mobile

To help building market segmentation and 3G adoption scenarios

- Q3 Mobile handset brand - Q4  Type of contract

To help building future ARPU assessment

- Q5 Mobile network service provider - Q6  Churn propensity

To help building market segmentation and 3G adoption scenarios

•

Mobile budget

- Q7  Average spending on mobile per month

To build ARPU assessment

- Q8  Average number of SMS sent per month

To help building future ARPU assessment

- Q9 Use of advanced services (roaming, text alert messaging, ring tones downloading, icons downloading, advanced games, WAP, GPRS) 

To help building market segmentation and future ARPU assessment

- 7 -

Questionnaire frame

(continuing)

•

Attitudinal questions

- Q10 Agreement towards 9 technology, consumption and life-style related statements 

To provide a market segmentation that goes further demographics

- Q11 Internet use 

To help building market segmentation

- Q12 To Internet users: frequency of use for 7 key applications 

To help building market segmentation and compare with 2001 "UMTS Monitor" results

•

3G attractiveness

- Q13 3G concept attractiveness

Reaction to a consumer-benefice oriented text



To compare with 2001 result

- Q14 3G handset price sensitivity measurement 

To analyse price sensitivity and define optimum prices and thresholds by market segment

- Q15 Interest in using 8 key 3G services 

To compare with 2001 results

- Q16 Price they are ready to pay for 3G services they are interested in 

To help building future ARPU assessment

•

Image

- Q17 Image of local mobile providers ability to market reliable 3G services on time 

To assess mobile operators image in the 3G perspective

•

Demographics

- Technological equipment, sex, age, profession and city size, professional mobility - 8 -

Deliverables and examples of results

- 9 -

An exhaustive report

 The

survey report in English

includes: An

executive summary

and

considerations for the future

A

detailed analysis of results

, on

both European and local levels

• Illustrated with tables and charts : • Highlighting each significant differences in terms of country, standard demographics, type of contract, mobile expenditures, service provider and handset brand • Comparing results with UMTS Monitor 2001 survey when relevant A

life-style based typology

to go further demographics and expenditures analysis, and to make results more synthetic and actionable: • Describing the profile of each type of consumers • Stressing its own propensity to adhere to 3G services A

price sensitivity measurement to 3G handset

 Additionally, subscription includes an

oral presentation

. This will enable us to answer questions you may have concerning the results and their interpretation and should help you in turn, to communicate them clearly to others within the company.

 Results can be also supplied as

PDF tables

or contact your local TNS office for more information.

ASCII or Excel file

(raw data). Please - 10 -

Report table of contents

• Background, objectives and methodology of the survey • Detailed results Mobile phone equipment Mobile phone usage Internet access and usage 3G attractiveness Perceived prices for 3G services 3G handset price expectations Market segmentation • Conclusions • Appendix

- 11 -

p. 4 p.6

p.7

p.16

p.27

p.30

p.40

p.50

p.63

p.83

p.86

Finland Norway United Kingdom Netherlands Denmark Italy Portugal Sweden Ireland Spain Germany France Slovakia Belgium Greece Czech Republic Hungary Poland Turkey Romania

Mobile penetration over Europe

30% 30% 28% 86% 85% 62% 62% 60% 59% 58% 55% 76% 75% 73% 73% 73% 73% 70% 67% 65% Countries included in the survey Countries out of survey scope - 12 Source: TNS local offices; September 2002; penetration of mobile phone among individuals over 15

4,5 4 45,5 12 In millions of users 4 42 7,5 6,5 2,7 26,5 53,5 36,7 3,4 6,2 6,2 6 5,6 11,6 20 6,3 260

Mobile network providers market shares

Q5. Who is your current network provider?

UK

Orange Vodafone O2 T-Mobile Virgin

XX% XX% XX% XX% XX% Belgium

Proximus Orange Base

XX% XX% XX% Base: All Netherlands

KPN Mobile XX% Vodafone

XX%

O2 Dutchtone

XX% XX%

Ben

XX%

Tele2Mobiel XX%

France

Orange SFR

XX% XX%

Bouygues T XX%

Germany

T-Mobile Vodafone E-Plus O2

XX% XX% XX% XX% Overall market share* (Considering the 10 countries) Vodafone XX% Orange T-Mobile O2 XX% XX% XX%

*including the companies where those providers have shareholding

Poland

Era GSM Plus GSM Idea Centertel

XX% XX% XX% Czech Rep.

Eurotel Oskar

XX%

T-Mobile XX%

XX% Italy

TIM

XX%

Vodafone

XX%

Wind Blu

XX% XX% Turkey

Turkcell XX% Telsim

XX%

Aria Aycell

XX% XX% Spain

Movistar Vodafone

XX% XX%

Auna group XX% - 13 -

Q6. Which of the following statements apply to you?

Churn analysis

Base: All Gender and age Total Same provider

Never changed provider nor contract Several contracts with the same provider (internal churn)

Have used several providers All % Male % Female % Under 25 % 25 to 34 % 35 to 49 % 50 to 64 % 65 & + % Profession and city size Total Same provider

Never changed provider nor contract Several contracts with the same provider (internal churn)

Have used several providers All % Upper class % Lower class % Unemployed % Rural (<2,000 inh.) %

ZBC e - 14 -

Handsets manufacturers market shares

Base: All

Q3. What is the brand or make of your main current mobile phone handset?

Sub-total 3 leaders* Nokia* Siemens* Motorola* Alcatel Sony + Ericsson Ericsson Sony/Sony-Ericsson Philips Panasonic Sagem Samsung Trium/Mitsubishi Bosch ALL % % BELG.

% CZECH % GERM. FRANCE % % ITALY % NLD % POLAND SPAIN TURKEY % % % UK %

- 15 -

SMS penetration and frequency of use

Base: All

Q8. On average, how many brief text messages (SMS) do you send from your mobile per month?

SMS / Month

Mean in SMS Median in SMS 0 SMS 1 to 10 SMS 11 to 20 SMS 21 to 30 SMS 31 to 50 SMS Over 50 SMS Don't know % % % % % % % ALL

BELG.

CZECH GERM.

FRANCE ITALY NLD POLAND SPAIN TURKEY UK

- 16 -

Mobile services penetration

(downloading, roaming, WAP, GPRS, ...)

Base: All

Q9. Which, if any, of the following services do you currently use with your mobile phone?

Services used with mobile Gender and age

At least one of those services - Making international calls - Receiving text information alerts - Downloading ringtones - Downloading icons / graphics - Downloading advanced games - Visiting WAP sites - Using GPRS functions

All

%

Male

%

Female

%

Under 25

%

25 to 34

%

35 to 49

%

50 to 64

%

65 & +

% - 17 -

Interest in 3G

Q13. To what extent would you be interested in accessing these applications using your phone? Please give an answer on a scale from 1 to 6 where 6 means "very interested" and 1 "not interested at all"

Base: All

1 Not interested at all 2 3 4 5 6 Very interested

All Turkey Poland Germany Czech Rep.

Italy France Spain Belgium Netherlands UK

- 18 -

Interest in 3G according to demographics and other illustrative variables

Q13. To what extent would you be interested in accessing these applications using your phone? Please give an answer on a scale from 1 to 6 where 6 means "very interested" and 1 "not interested at all"

Base: All Male Female Under 25 25 to 34 35 to 49 50 to 64 65 &+ Big city (> 100,000) Gender and city size Mean Median Interested

6 "very interested" 5 4

Not interested

3 % % 2 % 1 "Not interested at all" % % % % %

All

- 19 -

Provider's ability to market reliable 3G

(score from 1 to 10)

Providers ability to market 3G services in customers' eyes according to their market share

Provider's market share

- 20 -

Perceived value of 3G services

Q16. How much would you be willing to pay each month, in addition to your current mobile expenses, in order to benefit from ?

Base: Interested in service

% of respondents ready to pay the related price scale, to use the service Cumulative % of respondents ready to pay up to the maximum scale, to use the service 1

Mean: XX euros Median: XX euros

0 euro 1 to 3 euros 4 to 6 euros 7 to 10 euros - 21 11 to 15 euros 16 to 30 euros More than 30 euros

Strategic positioning of 3G services

Q15. Which of the following future services would you be interested on a mobile, as a part of your daily life? Q16. How much would you be willing to pay each month, in addition to your current mobile expenses, in order to benefit from ?

90% 85% 80% 75%

% of interest

70% 65% 60% 55% 50% 45% 40% 9 9,5 10 10,5 11 11,5 12 12,5 13 13,5

Additional price willing to pay for the service (Euros)

- 22 14

Price sensitivity measure approach

Q14. If you were to buy a "UMTS" or "3rd generation" mobile handset, which amount among the following proposals would you consider as...

Not expensive at all Not expensive Too expensive Far too expensive 100% 80% 60% 40% 20% 0%

Example

Optimal price Optimal price range The price sensitivity measure allows definition of price-levels which suggest optimal price and studies the threshold effect.

The method consists of 4 measures: • The price above which the interviewees consider the service/product is too expensive to be bought.

•The price below which the service/product is so cheap that the interviewees might perceive poor quality being likely.

•The price above which the interviewees think that the service is expensive.

•The price below which the interviewees find the service cheap.

The interviewee has to position each level of price on a price scale (too expensive, far too expensive, not expensive, not expensive at all).

Thanks to the answers, which are aggregated, a zone of acceptable price can be determined. This zone is represented by the intersection of the 4 curves and corresponds to the zone of psychological acceptable price.

Price scales used: •Price scales have been determined to be consistent with the real market price levels • Price mentioned in this curves is for handset costs only - 23 -

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

70%

Optimal price for a 3G handset

84%

Cumulated % NOT EXPENSIVE AT ALL Cumulated % NOT EXPENSIVE Cumulated % TOO EXPENSIVE Cumulated % FAR TOO EXPENSIVE

71% 52% Optimum price EUR XXX 5% 55% 46% 40% 10% 4% 25% 16% 40% 26% 15% 12% 34% 25% 18% 7% 7% 26% 14% 5% Optimal range: EUR XXX 56% 34% 8%

- 24 -

46%

Price in Euros

Market segmentation: types weights according to countries

Belgium Czech Republic France Germany Italy Netherlands Poland Spain Turkey United Kingdom 3G enthusiasts Followers Dynamic functionals Conservatives Consumers' types

are also described in terms of

demographics, mobile usage or expenses and other relevant variables

.

- 25 -

Mobile expenses x consumers' types Mobile monthly expenses

1 to 10 euros / month 11 to 20 euros / month 21 to 30 euros / month 31 to 50 euros / month 51 to 100 + euros / month Don't know Mean Median All 3G enthusiasts Followers Dynamic functionals Conservatives

Prepaid/Postpaid

Prepaid Postpaid All 3G enthusiasts Followers Dynamic functionals Conservatives

- 26 -

Interest in 3G services x consumers' types

Interest in 3G services

Mean and % of interest

Emails Video phone Location services MMS High-speed Internet Downloading music Video clips Advanced games All

Mean % (6,5,4)

3G enthusiasts

Mean % (6,5,4)

Followers

Mean % (6,5,4)

Dynamic functionals

Mean % (6,5,4)

Conservatives

Mean % (6,5,4) - 27 -

Subscription conditions

- 28 -

Subscription conditions

 The

subscription fee

is of

EUR 19,900

local VAT excluded, including results for all 10 countries and oral presentation. Report is

available within 24 hours

after receiving a purchase order.

 Specific subscription: -

One country results only: EUR 6,000

Two countries results only: EUR 9,500 Three countries results only: EUR 13,000 Four countries results only: EUR 16,500

Timing: 4 to 5 working days

depending on countries scheme - 29 -

Appendix

(The TNS Group and its telecoms activities; terms of contract)

- 30 -

TNS Group main facts and figures

      The TNS Group is

world's N °4 in market and opinion research

• N °1 in France, the Netherlands and the United Kingdom Operating units in Turnover in 2001 More than

more than 50 countries over 945 million of euros 9,000 permanent employees

The company is quoted on the London Stock Exchange All TNS offices are already or about to be

ISO 9001 accredited

(or equivalent) •

TN Sofres France is ISO 9001 since August 1997

demanding certification) (first French institute to have earned this most • TNS is the first market research company which has made such a commitment on a global scale - 31 -

TNS Telecoms: a unique position in the market research industry



A skilled and knowledgeable sector

of TNS relying on

world-wide, exclusively dedicated

to the telecoms area

more than 300 market researchers

• Ability, availability, adaptability and long-term relationship in our customers' service 

Beforehand or downstream market studies

• Domestic carriers or new comers, Internet service providers, equipment manufacturers, handset manufacturers, distributors, regulator or consulting firms • Covering the fixed and mobile markets, prepaid cards or Internet • • Involving professionals and consumers On both domestic and international level - 32 -

TNS Telecoms: a strong expertise of telecoms issues



Qualitative and quantitative surveys

• Focus groups, face to face interviews, observation, mystery shopping • • Offer or concept tests Design test as regards new mobile terminals • • • Awareness, image, advertising pre and post tests Satisfaction, loyalty, brand equity, segmentation, scoring Market evaluation as part of licence bidding (UMTS or WLL) 

Syndicated research program

•

UMTS Monitor

: 3G attractiveness among mobile and Internet users over 15 in 12 European countries and the US •

Mobile Panel

: consumer mobile market tracking studies in several European countries, including churn analysis and long-term evolution of users' behaviours •

NTI (Nordic telecoms index)

: equipment, expenditures and behaviours of mobile phone users in Denmark, Finland, Norway and Sweden •

Global e-commerce

world-wide : annual analysis of e-commerce behaviours in 36 countries •

...

- 33 -

Terms of contract

Article 1 - General clause

The following general conditions are applicable to contracts that deal either with the undertaking of a study, or subscription to a panel (s).

Article 2 - Nature of contract

In keeping with the code of good practice (Code de Pratiques Loyales) established by both UDA and SYNTEC, between survey companies and their clients, the contract linking TN SOFRES to its clients is undertaken with all necessary care, diligence, and professionalism, regardless of study results.

Article 3 - Establishment of a contract 3.1

Contractual documents:

The documents that constitute a contract are: the most recent TN SOFRES proposal that describes the service, budget, and terms of payment; these same terms and conditions annexed to the proposal, which take precedence over those of the client.

3.2

Initiation of contract:

The initiation date is : • The date of signature when the parties simultaneously sign the contractual documents, • The date of reception of the first signature from the other party where the parties separately sign the contractual documents, • The commencement date of work, in the case where there is no formal exchange of documents.

Article 4 - Obligations of the parties 4.1

Taylor nelson sofres obligations:

TN SOFRES will bring to bear all due care and diligence in the realisation of services that are subject to the contract.

TN SOFRES undertakes to maintain the confidentiality of the client at all times as well any confidential information provided by same client, in addition to the results of an exclusive ad-hoc study.

In the case of a syndicated multi-client study, TN SOFRES undertakes to clearly state in the proposal document the exact nature of the results, either exclusive or non exclusive. In non exclusive multiple client/syndicated studies, client identity (either participating or potential) shall be kept confidential.

If the client provides TN SOFRES at any time with documents or files necessary for the study, TN SOFRES undertakes not to use these for any other purpose and to destroy them at the end of the study (unless specified otherwise by the client).

4.2

Clients obligations:

From the initiation of the contract as defined in section 3.2 the client will make freely available to TN SOFRES all necessary documents, information and/or products in order to undertake the study.

The client undertakes to keep confidential and not divulge, in full or part, to any third party, costs, proposals, documents and / or information that TN SOFRES would have communicated, and of which the client would have knowledge, prior to during or after the execution of the contract.

In cases where the client would communicate/make public or available the results of the study in such a manner that doubt may be cast upon the professionalism of TN SOFRES , and or upon the quality of the study and or the interpretation of results, TN SOFRES would be authorised to communicate to relevant parties all information and /or documentation pertaining to the study without fear of civil or criminal proceedings: TN SOFRES will have the right to commence legal proceedings to protect its interest and seek damages.

Proceeding for breach of contract and damages

- 34 -

Terms of contract

(continuing)

In cases where for contractual needs the client entrusts TN SOFRES with funds, products, material, the client: • Undertakes to respect all existing laws regarding such a transaction, • • • • • Provides TN SOFRES all relevant information necessary for the security of the material(s), transport, storage, and usage of same material(s), Assumes full financial responsibility for transport of material(s), Assumes full responsibility in case of third party claims against TN SOFRES of any nature that arise as a result of the survey, and undertakes to renounce any proceedings against TN SOFRES in this regard.

Unless advised to the contrary any remaining products at the end of the study will be destroyed by TN SOFRES.

Authorises TN SOFRES to use his trade mark name as reference.

Article 5 - Intellectual property 5.1

Ownership of Ad-Hoc survey results are transferred to the client upon full and final payment of fees / costs / study price.

5.2

Ownership of syndicated / multi client study data remains that of TN SOFRES, allowing free use of same data, conferring upon client (s) right of access only to results / data.

5.3

Results and other documentation made available by TN SOFRES are for the exclusive use of the client company / companies or their agents, to the exclusion of all other companies, and professional groups / body.

Any direct or indirect reproduction and or dispersal of whole or part of same results and/or documents, either freely or for a fee, at the client’s initiative, shall only be done with the full prior written consent of TN SOFRES.

5.4

5.5

Supporting documentation material (s) information remains TN SOFRES property. TN SOFRES reserves the right to destroy all material(s) two years after submission of results, unless agreed otherwise with client (5 years in case of panels).

The client will not have access to the identity of respondents.

Article 6 - Responsibility

The client is solely responsible for the usage that he makes of the study results.

In the case where TN SOFRES fails to meet one of his contractual obligations, the indemnification of the client shall not exceed the yet sum received by TN SOFRES regarding the contract.

In the case of product tests on behalf of a client, the client indemnifies TN SOFRES from any third party actions linked to the use of these products.

Article 7 - Prices-payment conditions and penalties

All prices are stated excluding all taxes. Value added tax (where applicable) is calculated based upon rates enforced by tax authorities. This shall be specified in the contract.

Unless mentioned in the proposal, studies are payable 50 % upon commissioning of TN SOFRES, the balance remaining due upon shipment of results.

Unless stated otherwise, all invoices are payable immediately.

Delay in payment, for any reason, shall render all further payments immediately due. Furthermore, a monthly interest rate of 1,5 % of sums due shall be levied by TN SOFRES in accordance with the French penal code and specifically the law 92.1442 of Dec. 31st December 1992.

Where fee recovery has to be undertaken by recourse to law, the client shall pay a minimum of 1,5 % of the outstanding amount as a fixed sum, independent of further requirements contained in article 700 of the French civil proceeding code.

Article 8 - Recourse to law

In case of failure to meet contractual obligations by one of the parties to the contract, the other party shall be entitled to cancel the contract and enter to obtain redress (damages plus interest) from the defaulting party.

Such appeal to law will take place 15 days after the dispatch by registered mail of relevant documentation, which remain unanswered.

Article 9 - Applicable law and claims

French law governs all contracts into which TN SOFRES enters.

All claims regarding the current sale, even in cases of breach of guarantee or multiple defendants would be under the jurisdiction of the commercial court of Nanterre.

- 35 -

Thank you for your attention

UMTS Monitor 2001 results can be downloaded for free from the TNS Corporate Web site at http://www.tnsofres.com/umts>