Caribbean Roaming Market:Potential Revenue: 2005 – 2010

Jose F. OteroSignals Telecom Consulting

CANTO 21st Annual ConferenceSaint Kitts – June 22, 2005

CANTO 21st Annual Meeting | Saint Kitts, June 2005

About Signals

Founded in August 2004 Headquarters in Miami CANTO Associate Member Regional Offices

– Buenos Aires, Argentina (December 2004) More than 25 associate consultants Partnerships with consultancies in six countries

including– Brazil, Colombia, Mexico, UK and USA

Services– Market Intelligence– Competitive Analysis– Business Strategy

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Signals in the Press

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Signals @ Upcoming Events ITU Americas 2005 – Bahia, Brazil

– Convergence & Triple Play

GSM Association Plenary Meeting – Lima, Peru– Mobile Data Services

CDMA Americas – Miami, Florida– Caribbean CDMA Roaming Market– UMTS/WCDMA Potential in Latin America & Caribbean

Caribbean Prepaid Markets – Aruba– Prepaid & Churn Prevention Workshop

Broadband Latin America – Rio de Janeiro, Brazil– WiMAX Workshop– PLC Market in Latin America & the Caribbean

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Agenda The Caribbean Context Liberalization Present The Opportunity

– Bahamas– Barbados

Conclusions

CANTO 21st Annual Meeting | Saint Kitts, June 2005

The Caribbean is not Western Europe, Japan, Korea or the US

– Total Population does not equal potential addressable market Haiti & Cuba

– Lower GDP per Capita in many islands– Disparity on Income Distribution

Levels Infrastructure is on different evolution

levels on each market– Needs are different for each market

Haiti, Guyana Voice Aruba, Puerto Rico VAS Dominican Republic, Jamaica

Reaching low-end Users

The future is wireless– Success depends on business plan not

technology– Vertical integration is the region’s

major trend

Caribbean Context

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Liberalization Present Asymmetric development

throughout the region– Delayed entrance of competition

in the English speaking Caribbean– Young regulatory entities:

education is needed! Liberalization is just beginning…

– Guyana, Trinidad & Tobago, Suriname, Bahamas, etc.

Liberalized Markets– Regulation impacting Opex/Capex

Number portability, E911, etc. Caribbean Telecommunications

Fast-track!

CANTO 21st Annual Meeting | Saint Kitts, June 2005

OECS Commercial Mobile Operations 1Q05

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Liberalization : Positive Developments

Rapid increase of the mobile telephony subscriber base with most markets surpassing 70% penetration levels;

Benefits to consumers– Improvement in coverage– Improvement in QoS– Introduction of new services– Introduction of new technologies– Diversity of subscription plans

Telecom operators’ new paradigm– HOW TO MAKE MONEY REVISITING

ROAMING

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Main target for deployment of roaming-specific network for roaming should be incumbent mobile operators:– Most challenged by the arrival of

competition at the hands of pan-Caribbean operators

– Lack of large quantities of GSM 850 MHz-enabled handsets limits the ability of these networks of capturing roaming revenues

New entrants to mobile arena– Could use roaming as a additional

“captive” revenue to speed-up the operator’s ROI

– Could leverage networks to provide WLL services

– ILECs, ISPs, CATVs

The Opportunity

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Population: 299.697 (July 2004)

Area: 13.940 Km2

Political Status: Commonwealth Nation

Language: English

Telecommunications market still is a monopoly in most services. Privatization and liberalization efforts have failed.

Mobile incumbent Batelco launched GSM 1900 MHz in February 2004, but coverage needs to improve to reach the same level of service of the old TDMA network

Digicel & Cingular Wireless interested in entering the market

Bahamas

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Bahamas - Tourism by Region of Origin

USA87%

Northern Europe3%

Southern Europe1%

Western Europe2%

Canada4%

Caribbean1%

Other Regions1%

Asia1%

Bahamas

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Bahamas Total CDMA Revenues

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

EVDO Revenues $189,315 $427,295 $768,571 $1,221,470 $1,627,682 $1,983,929

Canada CDMA Roaming $3,103,012 $3,099,299 $3,110,616 $3,053,371 $2,998,051 $2,929,151

US CDMA Roaming $28,297,074 $30,444,472 $32,014,600 $32,392,478 $34,878,340 $34,899,138

2005 2006 2007 2008 2009 2010

Bahamas

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Population: 278.289 (July 2004)

Area: 431 Km2

Political Status: Commonwealth Nation

Language: English

Barbados has one of the most competitive mobile markets in the Eastern Caribbean with three players offering commercial service: Cable & Wireless (GSM 1900 MHz), Digicel (GSM 900/1800 MHz), and Cingular Wireless (GSM 900/1900 MHz).

4th mobile licensee, Sunbeach Communications, wont be able to launch mobile services due to financial troubles.

Barbados

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Barbados - Tourism by Region of Origin

Asia1%

Caribbean17%

Canada9%

USA24%

Northern Europe41%

Western Europe3%

Southern Europe1%

South America4%

Barbados

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Barbados Potential Roaming

2005 2006 2007 2008 2009

CDMA RevenuesTotal 3,877,841$ 4,175,149$ 4,392,767$ 4,445,502$ 4,787,667$

Business Travelers 655,898$ 701,743$ 734,961$ 742,486$ 798,158$ Leisure Travelers 3,221,944$ 3,473,405$ 3,657,806$ 3,703,016$ 3,989,509$

Total Voice Revenues 3,800,586$ 4,059,845$ 4,247,156$ 4,288,752$ 4,608,169$ Business Travelers 653,297$ 697,862$ 730,060$ 737,210$ 792,116$

Leisure Travelers 3,147,289$ 3,361,983$ 3,517,097$ 3,551,542$ 3,816,054$ Total SMS Revenues 77,255$ 115,303$ 145,611$ 156,751$ 179,498$

Business Travelers 2,601$ 3,881$ 4,902$ 5,277$ 6,042$ Leisure Travelers 74,655$ 111,422$ 140,709$ 151,474$ 173,455$

Source: Signals Telecom Consulting

2005 2006 2007 2008 2009

GSM RevenuesTotal 34,166,152$ 33,924,924$ 33,363,099$ 32,421,729$ 31,519,488$

Business Travelers 5,801,216$ 5,732,564$ 5,617,987$ 5,452,167$ 5,292,936$ Leisure Travelers 28,364,935$ 28,192,360$ 27,745,112$ 26,969,562$ 26,226,553$

Total Voice Revenues 33,647,226$ 33,209,326$ 32,517,261$ 31,546,921$ 30,614,718$ Business Travelers 5,783,748$ 5,708,475$ 5,589,514$ 5,422,718$ 5,262,479$

Leisure Travelers 27,863,478$ 27,500,850$ 26,927,747$ 26,124,203$ 25,352,240$ Total SMS Revenues 518,926$ 715,599$ 845,838$ 874,808$ 904,770$

Business Travelers 17,468$ 24,089$ 28,473$ 29,448$ 30,457$ Leisure Travelers 501,457$ 691,510$ 817,365$ 845,359$ 874,313$

Source: Signals Telecom Consulting

CANTO 21st Annual Meeting | Saint Kitts, June 2005

Caribbean mobile operators interested in increasing their revenues will start considering focalized network deployments that will allow them to provide roaming services to visitors subscribed to CDMA2000 and WCDMA/UMTS mobile services.

Key potential Caribbean CDMA roaming markets include Aruba, Bahamas, Cayman Islands and the British Virgin Islands.

While intensive data usage is not likely for vacationers, image and location based services are well positioned to stimulate future growth.

Due to the expected growth in CDMA market share of US mobile subscribers through 2010, the potential CDMA roaming revenues will grow from 45,2% of all US roaming revenues in the region in 2005 to 51,3% in 2010.

As of 1Q05, Western Europe had less than 10 million UMTS/WCDMA subscribers. Nevertheless, lower terminal costs and increased competition will accelerate uptake of this technology during the next 12-18 months.

Conclusions

Jose F. OteroPresident

Signals Telecom ConsultingJose.Otero@SignalsConsulting.com

Tel: +1 786 866 9729

GRACIAS / THANK YOU BEDANKT / MERCI / DANKI