www.myTMN.pt

Pedro PinheiroTMN

October 19th, 2001

INSTITUTO SUPERIOR TÉCNICOM. Sc in Engineering and Management of Technology

www.myTMN.pt

1. The Mobile Business of Group Portugal Telecom

2. Mobile Telecommunications in Portugal: a market near saturation

3. TMN’s strategy for the new economy: myTMN

4. Challenges to mobile operators imposed by the new economy

Agenda

www.myTMN.pt

PT Móveis

83% 7,3%41,2%100% 30,5% 66,4%

CRT Celular

Móveis

Portugal BrasilSao Paulo

BrasilRio Grande

Do Sul Marrocos Botswana

# 1Market share

50%

# 1Market share

64%

# 1Market share

76%Market share

33%

# 1Market share

65%

BrasilParaná e

Santa Catarina

Market share

29%

# 2 # 2

9,6 million clients (1H2001)

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Clear Leadership in Portugal

Market leader in PortugalClients: 3.5 Million (October 2001)Market share: 49% (Source: Marktest)Mimo: Pre-paid card with the highest brand awarenessBest Company of the Year 1998, 1999, 2000 (Diários de Notícias)9th in the Best Companies to Work For 2000 (Exame)(highest ranking among Portuguese companies)Telecommunications Company of the Year 2000 (Exame)

3/1991: Birth of TMN9/1995: Launch of MIMO (1st pre-paid mobile service in the world)5/1998: 1 Million clients11/1999: 2 Million clients3/2000: WAP launch11/2000: GPRS launch (1st in Portugal)12/2000: UMTS License3/2001: 3 Million clients10/2001: 3.5 Million clients

TMN’s Milestones

TMN

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Leadership in Brazil

Telesp Celular (são Paulo)

Largest mobile operator in South AmericaClients: 5 Millions (October 2001)Market Share: 64%Penetration rate SP: 21% (15% Brazil)WAP clients: 1,4 millions (30%)

Global Telecom (Paraná, Stª Catarina)

Clients: 628 thousandMarket share: 29%First operator to launch WAP in Brazil

Telesp Celular and Global Telecom reach a population above 51 million people and 45% of Brazilian's GDP

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Joint Venture PT/Telefonica in Brasil

Largest operator in South America

More than 9.3 million clients, representing 42% of the total Brazilian mobile market

Market potential of 94 million people, representing 72% of Brazil’s GDP

Opportunities to create value based on synergies

Significant savings and risk reduction regarding auctions for new licenses

Joint management between PT and Telefonica, being all important decisions taken in agreement. Each shareholder detains 50% of the JV.

CEO appointed by PT and CFO appointed by TEF

Telesp CelularSão Paulo

TeleSudesteRio J.e E.Santo

CRT CelularRio Grande do Sul

Global Telecom Paraná e

Santa Catarina

Teleleste(Bahía e Sergipe)

Current Presence PT- Telefonica Joint Venture

www.myTMN.pt

1. The Mobile Business of Group Portugal Telecom

2. Mobile Telecommunications in Portugal: a market near saturation

3. TMN’s strategy for the new economy: myTMN

4. Challenges to mobile operators imposed by the new economy

Agenda

www.myTMN.pt

Penetration Rate in Portugal

More mobile than fixed line phones

0

2.000.000

4.000.000

6.000.00019

95

1996

1997

1998

1999

1º T

rim

. 00

2º T

rim

. 00

Mobile Fixed Line

Source: ICP

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Mobile Penetration Rate in Portugal

Source: Marktest, June 2001

It’s getting harder to grow more...

60 61,1 62,5 61,463,4 64,3 65,7 66,1 67 68,2 68,7 69,4

0

20

40

60

80

100

Set-00 Out-00 Nov-00 Dez-00 Jan-01 Fev-01 Mar-01 Abr-01 Mai-01 Jun-01 Jul-01 Ago-01

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Mobile Penetration Rate in Europe

Portugal has one of the highest penetration rates in EuropePortugal: 7.2 Million Clients

Source: ICP, June 2001

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Market Share

Source: Marktest, June 2001

TMN is the clear leader in Portugal

49,2 49,8 50,2 50,3 48,8 47,1 48,4 49,3 49,9 48,6 47,5 48,8

16,8 17,8 17,9 16,8 16,8 18 19 19,6 19,8 21,5 22,3

29,529,528,928,929,631,3343432,731,532

33,5

20,9

0

20

40

60

80

100

Set.00(3928) Out.00(4004) Nov.00(4093) Dez.00(4019) Jan.01(4149) Fev.01(4207) Mar.01(4300) Abr.01(4330) Mai.01(4388) Jun.01(4468) Jul.01(4501) Ago.01(4543)

%

TMN

Telecel

Optimus

Base(000): Owners/users of a mobile phone

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Mobile Phone Acquisition Plans

Source: Marktest, June 2001Base (000): People that do not own/use a mobile phone

A market near saturation

5,7 5,2 4,5 5,3 5 4,9 3,3 3 2,8 3,8 4,36,7

16 16,8 17,1 16,9 16,3 15,312,8 12,3 12,4 12,1 11,7 12,7

74,3 74 74,3 73,7 75,1 76,980,5 79,5 79,8 77,9 78,9

75,8

0

20

40

60

80

100

Set.00 (2620)

Nov.00(2455)

Jan.01 (2399) Mar.01(2248)

Mai.01 (2160) Jul.01 (2047)

%

Will buy

Might buy

Is not going to buy

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Type of Current Contract

Source: Marktest, June 2001

Less and less ownership of the client

79,1 77,976,1 76,8 77,3 78,5 78,8

66,462,5

58,155,5 56,4

16,3 17 18 17,8 17,7 16,7 15,9 16,3 17,2

3 3,2 3,3 3,2 3,3 3,6 3,8 3,4 2,4 2,4 3 3,1

17,4 16,7 16,312,8 16,8

2123 22,3

0

20

40

60

80

100

Set.00(3928) Out.00(4004) Nov.00(4093) Dez.00(4019) Jan,01(4149) Fev.01(4207) Mar.01(4300) Abr.01(4330) Mai.01(4388) Jun.01(4468) Jul.01(4501) Ago.01(4543)

%

Pre-paid

Postpaid

Package minuts

No mandatory recharges

DK/Dr

Base(000): Owners/users of a mobile phone

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Type of Future Contract

Base (000): Potential owners/users of a mobile phone

67,7

57,3

50,2

34,932,3

27,9

47,1

17,114,6 15,5 14,4

16,7

3,15,3

10,87 5,9 6,7

2,7 0,22,1

4,3

2,1 1,6

45,9

18,8

29,1

44,5

14,3

0

20

40

60

80

100

Mar.01 (362) Abr.01 (340) Mai.01 (329) Jun.01 (332) Jul.01 (327) Ago.01 (388)

%

Prepaid

Postpaid

Package Minuts

No mandatory recharges

Dk/Dr

Less and less ownership of the client

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Profile of the Future Mobile User

Source: Marktest, June 2001

Only the low end of the market is still up for grabs…

Base (000): Potential owners/users of a mobile phone

7,9

11,9

15,2

15,6

12,8

9,3

10,5

9,3

9,9

7,3

7,3

7,8

26,2

24,2

23,7

22,8

24,9

26,9

24,6

20

14,5

16,4

19,2

19,6

65,9

63,9

61,1

61,6

62,3

63,9

64,8

70,6

75,6

76,3

73,5

72,6

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

Set.00(569)

Out.00(558)

Nov.00(532)

Dez.00(561)

Jan.01(511)

Fev.01(472)

Mar.01(362)

Abr.01(340)

Mai.01(329)

Jun.01(332)

Jul.01(327)

Ago.01(388)

A/B

C1

C2/D

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New Focus for Operators

High penetrationrates

Voice and access are becoming commodities (low prices and margins)

Stabilization ofMarket shares

Pressure on growth rates and ARPU

Operators don’t want to be just pipes

Broaden the offer to more profitable servicesFocus on growing ARPU and less on growing customer base

Migrate from being a capacity provider to a full-scale service provider

www.myTMN.pt

1. The Mobile Business of Group Portugal Telecom

2. Mobile Telecommunications in Portugal: a market near saturation

3. TMN’s strategy for the new economy: myTMN

4. Challenges to mobile operators imposed by the new economy

Agenda

www.myTMN.pt

TMN’s Strategy

Aggregate all value added/content based services under a strong brand associated to TMN

Partner with the best content providers

Provide multi-channels (SMS, WAP, WEB, voice) to access the same content

Focus on personalization/customization

Open access policy

Learn with the mistakes of Internet based business models: make money is still the goal; grow in a sustainable way

www.myTMN.pt

myTMN- WAP

Favoritos

Gestão Pessoal1 Easy Messaging2 Microsoft Outlook3 E-mail Sapo4 E-mail TMNnet

Chat Mania1 Chat City2 Chat Brasil

Lazer1 Melodias e Imagens2 Jogos3 Anedotas4 Horóscopo5 TV6 Música e Livros7 Curiosidades

Aqui Perto1 Farmácias2 Postos GALP3 Restaurantes4 Bares5 Discotecas6 Clínicas7 Galerias de Arte8 Museus

Fora de Casa1 Cinema2 Cultura3 Noite4 Gastronomia5 Viagens

Informação1 Notícias2 Desporto3 Social4 Economia5 Trânsito6 Tempo7 Transportes8 Listas Telef9 Saúde10 Serviços

Finanças1 Bolsa2 Bancos3 Telemultibanco4 Serviços

Navegação1 Portais2 Directório de sites3 Por palavra4 Por endereço

TMNApoio myTMNApoio ClientesTMN OnlineActiv. Automát. ServNúmero AmareloGuia TelemóvelSOS Telemóvel

Votações

Destaques

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myTMN- SMS

SMS PUSH (Mensageiro Confort)

INFORDESPORTOFutebol: Golos, resultados, classificações, melhores marcadores, notícias, directos TV (I Liga, II Liga, Taça de Portugal, Competições europeias), Futebol internacionalBasquetebol: Resultados, classificaçõesAndebol: Resultados, classificaçõesHóquei em Patins: Resultados, classificaçõesFutebol salão: Resultados, classificaçõesGolfe: Resultados, rankingsTénis: Resultados, rankingsAutomobilismo; MotociclismoTotojogos

LANETROMúsica: concertos da semana; Teatro: estreias da semana; Cinema: estreias da semana; Arte: estreias da semana; Destaques do dia

SPACE VIAGENSCursos de inglês; estadias/autoférias; futebol europeu; golf; neve/promoções; pacotes de férias/promoções; sugestões de fim-de-semana; voos promoções

SMS PUSH (Mensageiro Confort)

NEGÓCIOSNotícias por palavra chave; Notícias por empresa PSI20; Notícias de última hora; Price Target acções; Sessão

SAPOCâmbios; Destaques TV; Top 5 VoxPop; Estreias de cinema; espectáculos; previsão do Tempo; previsões da Maya; Mensagem dos Anjos; Provérbio do dia; Notícias jogos

DIÁRIO DIGITALTítulos Diário Digital; Títulos imprensa do dia; múltimédia; cultura; outros temas; Notícias muito urgentes

DINHEIRO DIGITAL

DESPORTO DIGITALNotícias principais clubes; Notícias futebol nacional; Notícias futebol internacional; Notícias motores; Notícias outras modalidades

SUPER ELITENotícias

TSFCrise EUA

SMS PULL (Mensageiro Expresso)

INFORDESPORTOFutebol: Directos TV, resultados, classificações, melhores marcadoresTotojogos a pedido

TELEMULTIBANCOConsultas; pagamentos de serviços; transferência entre contas; outras operações

BOLSA ON-LINEConsultas; personalizar carteira de títulos; notificação de eventos (alarmes); recepção automática de informações;

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myTMN- Voice

IVR (Voz Online)

TMN NotíciasInformações de última hora 24h por dia

Bolsa On-LineInformações sobre índices e acções

TelemultibancoAcesso a operações de Multibanco

InfoMadeiraInformações de interesse turístico, cultural, desportivo, de lazer e de carácter geral, sobre a ilha da Madeira

InfoAçoresInformações sobre o Arquipélago dos Açores

SOS LarServiços domésticos de canalização, electricidade, desentupimentos, refrigeração, chaves e fechaduras, baby sitting, vidros, assistência médica, envio de flores, etc

22 EuroConversões de valores em Escudos para valores em Euros e vice-versa

22 MarInformações sobre as principais praias Portuguesas

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myTMN- WEB

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myTMN- WEB

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myTMN Partnerships

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myTMN

Total WAP cards- 460.000

% from total TMN cards- 14%

Daily mobile originated SMS- 2,2 M

% distinct SMS users- 50%

% data revenue from total TMN revenue- 7%

Most popular services- Amusement and Entertainment (Ring tones, icons, Chat, SMS Push)

www.myTMN.pt

1. The Mobile Business of Group Portugal Telecom

2. Mobile Telecommunications in Portugal: a market near saturation

3. TMN’s strategy for the new economy: myTMN

4. Challenges to mobile operators imposed by the new economy

Agenda

www.myTMN.pt

New challenges for mobile operators

Changes in corporate cultureMore flexibility to react to a fast changing market, very competitive, difficult to predict and much less stable than voiceMigrate from a culture focused on selling cards and voice minutes to a full-scale service providerAttract a different type of human resources

Changes in its core infrastructure and high investments requirementsMore flexible billing systemsUMTS investments

New type of partners and business modelsDepend on good content and applicationsManage non traditional partnersShare revenue with partners

Identify the right killer applications/ bet on the right services

Retain current customers is the highest priority

www.myTMN.pt

Moving Forward…

MMS

EMSWi-Fi Bluetooth

UMTS

GPRS