3 q11 netherlands mobile operator forecast executive summary

3Q.2011 Netherlands Mobile Operator ForecastThe Dutch mobile market to have 24 million subscriber connections in 2015 with KPN taking market share of 22%

October 2011

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

INDUSTRY AVERAGE SUBSCRIBER GROWTH IN THE DUTCH WIRELESS MARKET INCREASES TO 4.1%

The operator-wide average subscriber growth (YoY) was 4.1% in 2Q.2011, up from -3.7% in 2Q.2010.

KPN Mobile saw its subscriber growth increase from -6.1% in 2Q.2010 to 1.5% in 2Q.2011.

Vodafone Netherlands’ subscriber growth (YoY) was 8.2% in 2Q.2011, up from 2.3% in 2Q.2010.

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KPN Mobile Vodafone Netherlands T-Mobile Netherlands Industry Total

Chart 1: Subscriber Growth (4Q08 – 2Q11), %

Subscriber growth increases in the Netherlands4.1% industry average subscriber growth in 2Q.2011

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Source: IEMR

THE AVERAGE ARPU IN THE NETHERLANDS CONTINUES TO INCREASE

The industry average monthly ARPU was US$ 38.14 in 2Q.2011, down -8.5% YoY.

ARPU growth was negative at all of the major operators in the latest quarter.

KPN Mobile’s monthly ARPU decreased by -11.6% (YoY) to reach US$ 34.22 in 2Q.2011.

T-Mobile Netherlands saw the largest fall in ARPU numbers with its ARPU decreasing by -14.1% (YoY) in 2Q.2011.

Vodafone Netherlands’ ARPU growth also remains negative at -6.9% in 2Q.2011, down from -4.2% in 2Q.2010.

Chart 2: ARPU Growth (4Q08 – 2Q11), %

ARPU growth in the Netherlands turned negative-8.5% industry average ARPU growth in 2Q.2011

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Source: IEMR

The operator-wide average Minute of Use (MOU) per subscriber was 161 minutes per month in 2Q.2011, up +4.5% YoY.

MOU/Sub at Vodafone Netherlands is higher than MOU/Sub at KPN Mobile and Vodafone Netherlands.

MOU per subscriber at Vodafone Netherlands, T-Mobile Netherlands and KPN Mobile was 164 minutes, 144 minutes, and 158 minutes respectively in 2Q.2011.

Chart 3: MOU/Sub Growth (4Q08 – 2Q11), %

Minutes of Use per Subscriber is increasingIndustry average MOU/Sub is 161 minutes per month

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Source: IEMR

Chart 4: EBITDA Growth (4Q08 – 2Q11), %

Negative EBITDA growth at Vodafone and T-Mobile in 2Q.2011

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-4.6% INDUSTRY-AVERAGE EBITDA GROWTH IN 2Q.2011

• The industry average EBITDA growth rate (YoY) in 2Q.2011 was -4.6%, down from 9.8% in 2Q.2010.

• T-Mobile Netherlands' EBITDA growth was negative at -7.8% in 2Q.2011, down from 35.0% in 2Q.2010.

• KPN Mobile’s EBITDA growth in 2Q.2011 was 0.0%, up from -3.5% in 2Q.2010.

• Vodafone Netherlands’ EBITDA growth was -8.8% in 2Q.2011, down from 17.3% in 2Q.2010.

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Source: IEMR

We forecast that the number of total wireless subscriber connections in the Netherlands will increase from 21 million in the end of 2010 to 24.1 million in the end of 2015.

Given the latest quarter numbers, our model predicts that KPN Mobile will have approximately 10.1 million mobile subscribers in 2015.

KPN Mobile continues to hold a dominant position as the largest operator in the Netherlands with a 41.8% market share in 2015.

We forecast that Vodafone Netherlands will have 5.4 million wireless subscribers in 2015 (22.4% market share).

We expect that T-Mobile Netherlands will have 5 million mobile subscribers in 2015 (20.9% market share).

Chart 5: Subscribers by operator (CY09 – CY15F)

So what is IEMR’s Forecast? Total subscriber connections in the Netherlands to reach 24 million in 2015

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KPN Mobile Vodafone Netherlands T-Mobile Netherlands

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Source: IEMR

WE EXPECT THE OPERATOR-WIDE AVERAGE ARPU LEVEL TO REMAIN AT EUR 22 – EUR 23 OVER THE NEXT TWO YEARS

Our forecasting model does not predict major changes in the industry average ARPU over the next two years.

The industry average ARPU will be EUR 22.60 per month in 2013, according to our model.

We expect that Vodafone Netherlands’ARPU level will continue to be the highest among the Dutch operators over the forecast period at about EUR 30.55.

Chart 6: Average Revenue per User (ARPU) per month (CY09 – CY13F), EUR

So what is IEMR’s Forecast?ARPU levels in the Netherlands to remain stable

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KPN Mobile Vodafone Netherlands T-Mobile Netherlands Average

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Source: IEMR

Our model is predicting that Vodafone Netherlands’ EBITDA margins (calculated as EBITDA/service revenue) will remain stable at about 37% from 2012 to 2013.

We forecast that KPN Mobile‘s EBITDA margin will remain at about 40% over the next two years.

T-Mobile Netherlands’ EBITDA margin will be lower than those of KPN Mobile and Vodafone Netherlands at about 30% in 2013.

Chart 7: EBITDA margins (CY09 – CY13F), %

So what is IEMR’s Forecast? KPN Mobile to enjoy the highest profitability

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KPN Mobile Vodafone Netherlands T-Mobile Netherlands Average

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3 q11 netherlands mobile operator forecast executive summary

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