New Zealand Mobile

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New Zealand Mobile

• Lorraine Witten
• 14 March 2002

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Contents

• The challenges for 2001
• What we delivered
• Brand
• Distribution
• CDMA
• Strategies
• Our focus

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The challenges

• We said we would deliver
• CDMA Q1 and 1X Q2
• New Mobile Portal and Voice Portal
• M-Commerce Q1
• Packages
• Stronger Branding
• Increased use of SMS and WAP
• Relationships with solution developers

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What we have delivered

• CDMA - on time and budget
• 1X - being tested
• Portals - Word Up and djuice
• M-Commerce - ASB and credit card trial
• Strong Branding - favourability
• Bundled packages - Xtra email, specials
• SMS 8 m/mth and WAP 3m/mth
• Build relationships - dgtzone

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Issues from 2001

• ARPU profile - not focused enough on high value
  customers
• Connection growth versus profitability
• No TDMA upgrades 1H 2001
• boosted churn

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Brand - Market Share Improving
Source Phoenix Research covers June quarter
2000 to December quarter 2001
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Brand - Market Share Breakdown

• segment market share ARPU
• of phones
• Young 32 29.01
• Family/Home 71 15.41
• SME/HB 69 86.45
• Large/corp 92 43.84
• source Phoenix Research for Dec quarter 2001

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Distribution

• Re-branded 120 stores - improved dealer and owned
  store performance
• Reorienting distribution footprint to accommodate
  data sales - e.g. Data Direct Connect
• Retention and win-back

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CDMA

• Delivered on time and on budget
• Technological leadership
• 110,000-plus customers
• Traffic - lt10 customers and approx 20 traffic
• 1XRTT - 2H launch, testing now

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CDMA/TDMA ARPU comparison - Profile of Customers
who Migrated
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2002 proposed product range (TDMA/cdma/1xRTT)
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Average prepaid handsets price(to customer)
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Handset Acquisition Strategysource Gartner
Group/Telecom
USD
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Strategic Summary

• Four Key Drivers are
• Value
• Innovation
• Retention and Win-back
• Brand

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Value Strategies

• Focus on profit and margin
• Emphasis on business and SME market
• Capex allocated where best returns
• ARPU growth from existing customers spending more
  on
• data
• voice stimulation and new applications
• education of phone features

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Innovation Strategies

• Technology - Data direct, enhanced SMS
• Partnerships (Microsoft, Hutchison) to deliver
  applications and content
• Extract maximum value from technologies (e.g.
  TDMA, 1X), IT, outsourcing
• Focus on a small number of key innovations

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Data ARPU Trend graph
1.400
1.200
1.000
ARPU
P2P SMS
0.800
Voice portal ARPU
VA SMS ARPU
WAP ARPU
0.600
CDMA Data Direct ARPU
CDPD
0.400
0.200
-
Jul-01
Aug-01
Sep-01
Oct-01
Nov-01
Dec-01
Jan-02
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Retention and Win-back Strategies

• Segmented approach
• Youth, singles, family, business, corporate
• Boost one of those segments
• Focus dealer and sales force effort on retention
  and win-back
• Service emphasis on high value customers

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Churn Trend graph
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Brand Strategies

• Up-skill customers through education of phone
  features
• Show benefits - not features
• Target high value segments
• Build on Telecoms full service capability
  through packages and pricing

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Our Focus

• Business, corporate and high value consumer
  segments - including service
• Leverage whole of Telecom
• Extract full value from what weve built -
  especially data
• Educate people about what weve got
• Target relevant offers

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Disclaimer
This presentation contains not only a review of
operations, but also some forward looking
statements about Telecom and the environment in
which the company operates. Because these
statements are forward looking, Telecoms actual
results could differ materially. The second
quarter media release, management commentary and
various documents filed with the US Securities
Exchange Commission, including the Annual Report
on Form 20-F, contain additional information
about matters which could cause Telecoms
performance to differ from any forward looking
statements in this presentation. Please read this
presentation in the wider context of material
previously published by Telecom and filed with
the SEC.