==!"§==Mobile=
The European Mobile Industry – A Case for Consolidation?
Wolfgang Kopf, LL.M.Executive Vice PresidentT-Mobile International AG & Co. KG
Transatlantic DialogueMontpellier, FranceNovember 22, 2005
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About T-Mobile European Mobile Markets US Mobile Markets Key difference between
European and US Mobile Markets
Main hurdles for Consolidation in Europe
Agenda
Page 3==!"§==Mobile= Wolfgang Kopf, T-Mobile International
T-Mobile International AG & Co. KG was established in December 1999 and is one of the largest mobile communications operators worldwide (3rd place in terms of Revenues, 4th place in terms of subscribers)
T-Mobile International was the first seamless transatlantic mobile network operator and is still the only one
DT Group holds direct or indirect investments in mobile communications companies in 15 countries with more than 83 million subscribers
Net revenue of T-Mobile International was 25,0 billion Euros in 2004 (eoy)
About T-Mobile
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Our Footprint
T-Mobile NL (100%) No. 3 player
T-Mobile UK (100%) No. 1 Player (w/ Virgin Mobile)
T-Mobile AT (100 %) No. 2 player
T-Mobile US (100%) No. 4 Player *
T-Mobile D (100 %) No. 1 Player
T-Mobile CZ (56.0%) No. 1 player
• T-Mobile Hungary (59.2 %)** • No. 1 Player
• PTC (Poland, 49 .0%) • No. 1 Player
• T-Mobile Croatia (51.0 %)** • No. 1 Player
• Monet (Montenegro, 45.5%)**• No. 2 Player
•T-Mobile Slovakia (51.0 %)**•No. 2 Player
• Mobimak (Macedonia, 30.2%)**• No. 1 Player
• Eronet (Bosnia, 25.0%)**• No. 3 Player
• Not T-Mobile branded
• T-Mobile brandedNotes: Ranking based on subscribers number (status as of Q2/2005). Percentage of stakes in brackets.* No. 4 player after closing of Sprint / Nextel merger** Pro rata as (local) fixed line is holding the shares in the local mobile operation
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T-Mobile US
Established under the name of VoiceStream in 1994; in July 2002, the company became T-Mobile US
Subsidiary of T-Mobile International (100%) More than 20.0 million subscribers Market share 10% US-Penetration rate 66 % T-Mobile US has the largest GSM network in the USA T-Mobile US is the largest Wi-Fi provider in the USA Four awards by J.D. Power and Associates in 2004,
among them “Highest Overall Satisfaction Among Wireless Telephone Users”, and already two further awards in 2005, among them “Highest Overall Business Customer Satisfaction”
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EU25 Communications Market VolumesEU25 communications markets growing faster than GDP. Mobile and fixed data services main growth drivers. Fixed voice service revenues steadily declining.
EU25 Communications Market Volumes(€ bn)
Source: EU Commission (10th Communications report)
238 254 264 277
98 107 114 122
92 92 9091
51454236
14141312
2001 2002 2003 2004E
Mobile Services
Fixed Voice Services
Fixed Data ServicesCable TV Services
1.7%
1.1%
0.9%
2.4%EU25 GDP growth
38.6%
41.4%
32.5%
44.1%
... %= share at total market volume
15.1%
18.3%
5.3%
6.7%
3.9%
4.9%Yearly growth
CAGR
7.6%
--0.7%
12.3%
5.3%
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Mobile Subscribers (SIM cards) and Penetration in EU 15 & EU 25(in m)
371359328301282
236
431415Subscriber EU 15Subscriber EU 25
Sources: Mobile Communications/Baskerville, Merrill Lynch (April/September 2005), Eurostat, own calculationsNote: Total EU25 population of 458m by end of 2004, EU15 with 384m population. End of year penetration rate.CAGR = Compound Annual Growth rate; EU = Europe
63%
75%
79%
86%
94% EU1591%
Populationpenetration
EU15/EU25 Mobile Subscriber DevelopmentEuropean mobile markets approaching saturation. Addressable market penetration already higher than 100%. Prepaid main growth driver.
2000 2001 2002 2003 2004
CAGR 00-04:11%
(EU15)
Prepaid penetration
96%94%
62% 63%
2Q 2005
EU25
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European Mobile Competition – Key EU25 countriesFierce Competition but no Consolidation yet.
Sources: EU Commission (10th Communications report), Merrill Lynch (September 2005), own analysisMVNO = Mobile Virtual Network Operator ; SIM = Subscriber Identity Module
3 3 3 3 4 4 4 5 3 4 4 4 4 3 5 53 8 10 13 16 21 2937
59
3 3 3 3 4 4 4 8 11 14 17 2025
3242
64
CZ POL POR SPA IRE GRE ITA AT FRA FIN D DK SWE BE NL UK
Mobile Network operators & service providers / MVNOs / mobile brandsKey EU25 countries – 2Q 2005
Service providers / MVNO / mobile brandsMobile network operators with GSM and/or UMTS licenses
95%
Mobile penetration 2Q 2005 (SIM cards as of population)
108% 67% 109% 103% 109% 114%99% 75%102% 100% 90% 88%111% 106%103%
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US Mobile Subscriber Market DevelopmentUS market with considerable subscriber growth. 66% population penetration reached by end of June 2005.
140,8 158,7182,1 194,4
33,8 44,0 55,3 69,2 86,0109,5 128,4
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2Q05
Source: CTIA, own estimates
Total US Mobile Subscriber(in m)
Key subscriber growth drivers Introduction of digital network technologies (TDMA, GSM & CDMA
in 1994/95) Better handset selection (especially related with introduction of
GSM & CDMA) Attractive price plans (e.g. minute buckets, prepaid tariffs, family
tariff plans) Introduction of national roaming Improved network quality & coverage, especially in-house and in
rural areas Mobile data services (e.g. SMS, corporate applications used via data
cards), mostly since 2002
CAGR 95-04:
20.6 %
+ 6.7%
66 %
Penetration
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US Mobile CompetitionMarket already consolidated.
Cingular26,5%
T-Mobile9,9% Verizon Wireless
24,4%
Others21,3%
Sprint9,6%
Nextel8,3%
100% = 194,4m subs (+14.7% yoy)
US Subscriber Market Shares 2Q 2005
Total US Subscribers 2Q 2005(in m)
Source: CTIA, reported company data, own calculations.Note: Sprint figures without wholesale & affiliates (included in others). Sprint / Nextel merger closed in August 2005 yoy = year on year ; BTA = Basic Trading Areas (see page 20 for overview)
Key competition characteristics
After consolidation, four (from initially six) national operators controlling about 79% of total US subscriber base
Remaining 21% controlled by affiliates of national operators (e.g. Sprint / Nextel affiliates), regional/local players (e.g. Alltel, US Cellular, Cincinnati Bell) and MVNOs/resellers (e.g. Virgin Mobile, Boost Mobile, TracFone)
51,6 47,434,8
16,119,241,4
18,7
Cingula
rVZW
New Spr
intTMUS Spr
int NXTL
Others
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Key differences between Europe & USASix key differences
Market structure / Regulatory Characteristics
Network technologies installed / Coverage
Competition level Subscriber growth / penetration
development Pricing schemes Usage behavior (voice, data)
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De facto spectrum cap Licensing areas determine the
relevant geographic market New EU Merger Rules and SIEC
Test No clear division of jurisdiction
among competent authorities Culture?
Main hurdles for Consolidation in Europe
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Thank you for your attention.
Wolfgang Kopf, LL.M.Executive Vice President Public & Regulatory AffairsT-Mobile International AG & Co. KG Landgrabenweg 151, D-53227 Bonn, Germany Mail: [email protected]
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