Africa's leading market analysts in IT, telecoms and banking

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• Africa's leading market analysts in IT, telecoms
  and banking

SA Telecoms Industry Briefing
29th March 2006
By Tertia Smit
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Overview

• Who is BMI-T
• SA Telecoms Industry
• Fixed Line Market
• Fixed/Mobile market
• Mobile Market
• Broadband
• Opportunities..

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Who is BMI-T? A Trusted Source

• Africas leading provider of market intelligence
  and research-based advisory services
• More than 15 years of experience, focusing
  exclusively on the
• IT industry
• Telecoms industry
• Banking and financial services industry
• Pan- African representation
• Successfully completed in-country research in
  over 40 African countries

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BMI-T/ IDC PartnershipWorld-class Methodologies
and Insight

• BMI-T is the African representative of IDC, the
  world's leading market intelligence and advisory
  firm in ICT
• Our research is fully compliant with IDCs
  international methodology and definitions
• BMI-T forms part of IDCs EMEA region
• Enables BMI-T to conduct global projects
• Responsible for providing IDCs Africa research
  More than 775
• About IDC
• Research offices in more than 50 countries
• More than 775 analysts in a global information
  network
• More than 40 years experience analysing ICT
  markets

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Telecommunications - Core Research
Voice, Data and Value-Added Services
Telecoms in Africa
Mobile Data Solutions and Applications
Telecoms Customers
Telecoms Research Areas
Wireless
Regulatory
Technology Adoption
Convergence
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BMI-Ts Custom Research
Technology/product/serviceadoption and
substitution analysis
Branding and positioning
Concept optimisation
Customer acquisitionand retention research
Custom Research
Market segmentation
Competitor analysisand positioning studies
Market demandand pricing strategies
Channel anddistribution analysis
Customer satisfactionand loyalty surveys
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Telecommunications Custom Work

• Major projects
• Investment Motivation Support for Nigerian Fixed
  Wireless Operator
• Major Multi-country Fibre Network
• Nigerian Operator Due Diligence
• SNO Due Diligence
• Mobile Data Solutions
• MVNO market entry assessment
• Assessment of a Telecoms platform for the SA
  weather service
• .and others

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• Africa's leading market analysts in IT, telecoms
  and banking

SA Telecoms Industry Overview
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SA demographics

• Population of about 47 million (30 million
  households)
• SA GDP 2005, R1,340,billion ( 174 billion)
• Telecoms industry in 2005, R85,000 billion (
  11.1 billion)
• Telecoms about 6.34 of GDP spend
• 4.6 million fixed line users (about 2 million are
  business lines)
• 31 million cell phone subscriptions (about 25
  million unique users)- penetration over 50
• 1.5 million internet subscribers, 4 million users

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Fixed vs. mobile growth
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SA Operators and Service Providers
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ARPUs can be sustained to some extent

• Factors that could sustain ARPU in future
• Pent-up demand for bandwidth in general
• Access/ lines
• VPNs
• Price elasticity of demand for certain types of
  voice services
• Triple play / TV
• Massive growth in broadband services and
  bandwidth

Note Scenario based, using traditional service
categories
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Telecommunication services revenue forecasts,
Rbn, 2004-2009
Still some growth left in the market even under
most likely accelerated competition scenario
An even more accelerated scenario could claim
some of the revenue growth but
Note Scenario based, most likely accelerated
competition scenario
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Mobile market outlook
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Mobile Revenues
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Voice vs. Data Revenue Growth ( RM)
Source Vodacom, MTN, Cell C, BMI-T forecast
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Mobile Revenues (including handsets)-Rm
Note Accelerated competition scenario Upside
potential exists Assumes some limited regulatory
impact on interconnection pricing
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Service and Solution Providers for Mobile Data
and Banking Applications
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Pre-paid vs. post-paid per operator
Postpaid -15 Prepaid - 85
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Cell phone application awareness and adoption
Potential growth opportunity
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Broadband South Africa
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Broadband access technologies in SA

• Fixed Line
• Digital subscriber line (DSL)- Telkom
• 3G Wireless access
• 3G TD-CDMA - Sentech WBS
• 3G WCDMA - MTN Vodacom
• HSPDA- Vodacom and MTN

• Niche (in SA) emerging technologies
• CDMA 2000 EV-DO- USALs
• Power line communication (PLC)
• WiFi - UniNet
• Pre-WiMax City of Johannesburg

BMI-T SA Wireless Access and Broadband Market
Report, July 2005
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Broadband household penetration (end of 2004)
India 0.12
Brazil2
Source IDC and BMI-T, 2005
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Worldwide home broadband services average revenue
per subscriber by region, 20052009
We are now here
Entry level (incl ISP fee)
Source IDC and BMI-T, 2005
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Broadband services by technology
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SA PC broadband access trends

• Download speeds will increase dramatically
• Entry-level service prices will decline by 50
  within two years
• Broadband Internet access using PCs currently
  100 000 connections, growing to 870 000 in 2009
• ADSL will continue to account for the majority
  of all broadband connections over the forecast
  period (and could be accelerated further)
• Mobility needs will drive 3G broadband
  connectivity in SA
• The net result being accelerated broadband
  penetration, but still well below what could
  happen in an even more accelerated competition
  environment where prices come down even faster

Source BMI-T, Wireless Access and Broadband
Market, June 2005
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Adoption by of Internet Applications
Potential growth opportunity
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Opportunities in the Telecoms sector
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Opportunities in the fixed line market

• Second Network Operator just been licensed, VSNL,
  India is a majority shareholder
• IP converged network for incumbent operator,
  Telkom, offering IP TV etc.
• Triple play services
• VOIP services
• Broadband internet services and applications

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Opportunities in the mobile market

• Virgin going to be an MVNO in SA con CellCs
  network
• 3 G networks with HSPDA just being launched
  allowing for mobile broadband, and increased
  download speeds
• Mobile banking, payment purchasing
• Mobile TV currently being launched by Vodacom
• 2010 world cup in SA

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Other opportunities in the telecoms market market
,cont

• Solutions for the 2nd economy- previously
  disadvantaged, poor digitally excluded
• TDD CDMA networks will be able to offer voice,
  therefore handsets, therefore all applications
  and services that go with it.
• VANS can self provide now, so thus opens up the
  landscape
• Municipal networks are starting to proliferate
• Government contemplating their own telecoms
  network
• Opportunities into Africa

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Good websites for reference

• Telecoms
• BMI-T.co.za
• ITWeb.co.za
• ICTWorld.com
• Cellular.co.za
• MyADSL.co.za
• Waspa.org.za

• Business
• Moneyweb.co.za
• Fm.co.za
• Busrep.co.za
• Businessday.co.za