Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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How to build Prepaid users ARPU (and loyalty) with innovative and

segmented offers

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

2

French Mobile Telephony Market :penetration still behind rest of Europe

Penetration rates and subscriber base in Western EuropeJuly 1st, 2004

Source : Mobile Communications – July 20, 2004

0

10

20

30

40

50

60

70

Sweden

Portu

gal

Italy

Greec

e

Denm

ark

Spain

Finlan

d

Austri

aUK

Irelan

d

Switzer

land

Nethe

rland

s

Norway

Belgium

Germ

any

Franc

e 0%

20%

40%

60%

80%

100%

120%

Subscriber base Penetration rate

(million)

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

3

French Prepaid Segment :well behind rest of Europe

Prepaid / Postpaid Mix in Western EuropeJuly 1st, 2004

84%

16%

80%

20%

74%

26%

67%

33%

65%

35%

63%

37%

57%

43%

58%

42%

50%

50%

43%

57%

34%

66%

30%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Italy

Portugal

Ireland UK

Belgium

Netherlands

Spain

Sweden

Germany

France

Switzerla

nd

Denmark

Source : Mobile Communications - july 20, 2004 -

Prepaid Postpaid

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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French Mobile Telephony Market Evolution

Source : Autorité de Régulation des Télécommunications

0

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

dec. 99 dec. 2000 dec. 2001 dec. 2002 dec. 2003 mid 2004

Pre-paid

Post-paid

Total

Subscribers growth in France – prepaid/postpaid mix

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Bouygues Telecom Suscriber Base Evolution*

62%59 %

45%48 %

55 %41 %

38 %

52 %

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2000 2001 2002 2003

Pre-paid

Post-paid

* Excluding B to B

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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French Pre-Paid Market :uncertain economics

• ARPU : Around 15 € (more than half of post-paid packages)

• Loyalty : Uncertain churn rate but believed to be significantly higher than post-paid packages

• SAC : Significantly declined over the last 2 years but remain under tight control

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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As a result, highly priced but very basic offers and services

• Handsets not subsidized (>100 € price difference vs post-paid)

• Price per minute high (3 to 4 times higher than post-paid)

• Not all services available (e.g. I-Mode)

• Very limited loyalty reward programs

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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However, french Pre-paid usersare extremely diverse

Pre-Paid offers

Only pay forwhat is consumed

No contract No commitment

Budget ControlDiscretion

Cash payment Budget Flexibility

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Also, the French pre-paid market is moving from a prospect market to a churner market

Churners 60 %

Prospects 40 %

- Budget « controllers »

- Budget « constrained »

- « Freedom » seekers

- Kids

- Senior people

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Bouygues Telecom : creativity and segmentationto better address pre-paid users

• Launch of 3 different pre-paid offers that allow consumers to double their communication potential

Flash (mars 2004)

Spot (avril 2000 + Sept 2002)

Night and Week-End (not exclusive)

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Flash :The best deal for high users

• Consumers who choose Flash get :

Half-price on price/min

Half-price on SMS

• In return the validity of their credit is also reduced by half

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Spot : The best deal for constrained budgets

• Consumers who choose Spot get :

Additional free minutes to call fixed lines and other Bouygues Telecom lines

(free minutes amount is the same as topped-up minutes)

Each time they use these minutes they listen to a 20s advertising before getting through to their correspondant

They always have the choice to use regular minutes (no ads) or free minutes (with ads)

• In return they have to fill in a short qualification form (paper, web, phone)

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Very encouraging results to date

• Nomad gained share since launch of Flash (estimated 1-2 points)

• Acquisitions volume is up + 18% since launch of Flash although market is estimated to be up 7% on the same period

• 35% of Nomad base on these segmented offers (June 2004)

• 45% of Nomad ARPU delivered by the segmented offers

• Lower churn rate (Spot)

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Focus on Flash : High value offer

• An offer which very quickly found its target

Launched March 1, 2004

> 200M suscribers

20-25 years suscribers

Very high SMS users (x 8 vs regular Nomad)

Very high voice users (x 4 vs regular Nomad)

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Focus on Spot : A win/win/win service

Customer Bouygues Telecom

- Free minutes

- Targeted advertising

- Special offers

- Higher Arpu (+30 %)

- Lower churn Rate (-1pt)

-Well qualified base

-Specific Segment

(15-20 years)

Advertizer

- Qualified prospect

- High quality contact

- Flexibility of campaigns

Prepaid Mobile Conference - Budapest - 2004, Sept 27th

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Conclusion

• Prepaid is full of opportunities due to the diversity of users

• Key is to be able to segment the base and design offers to specific groups…

… but of course watch out for increased complexity