CDMA Prospects in Bulgaria

Tim BuisseretGeneral ManagerRTC Mobikom

18th June 2004

RTC Company Profile

• JV between Cable & Wireless (49%), Bulgarian Telephone Company (39%), Radioelectronic Systems (12%)

• Founded December 1992• Three main product lines:CellularNationwide NMT450 cellular network with about 100,000 customers, offering

voice, SMS and value-added servicesPayphone7000 'Mobika' payphones nationwide, supporting phone card, credit/debit card

and cash paymentIP ServicesNational IP network with 46 POPs, for dial-up and leased line Internet access,

IP-VPN and Voice over IP (VoIP)

Cellular Market Overview

1998 1999 2000 2001 2002 2003 2004

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

Mobikom Globul Mtel

No. of Subscribers

Mobile penetration 45%

Coverage areaMobikom 90%M-Tel 88%GloBul 75%

ARPUMobikom BGN 22M-Tel BGN 38GloBul BGN 22

Handset pricesnew $160 grey market $70second hand $30

Mobikom Status Summary

Mobikom remains a valuable shareholder asset

• National cellular, payphone and IP infrastructure• Debt-free, generating cash• Experienced and well-motivated staff• Loyal customer base• Strong brand and excellent business reputation

Mobikom Potential Development Routes

• Cellular – the natural platform for BTC GSM service • CDMA wireless local loop – cost-effective rural voice + Internet

service to meet USO, high-speed data in urban areas• Payphone – proven base for BTC payphone business• IP Services – retail market strength to complement BTC Net

wholesale business

What is CDMA?

• high-performance digital cellular technology• originally developed for US military• commercialised by Qualcomm• endorsed by ITU/CEPT

CDMA Worldwide Subscribers

CDMA450 in Europe

Why CDMA?

• high quality voice service• high speed data/Internet (up to 144 kbit/s, with potential

upgrade to 2 Mbit/s)• excellent network coverage and capacity• inherently very secure/difficult to intercept• supports ‘push-to-talk’ service for police, fire brigade, etc• supports ‘wireless local loop’ for telephone service/Internet

access to remote communities

WLL Market Drivers

• What is WLL ?– A telephone system where subscribers are connected to

the PSTN using radio signals rather than copper wire for part or all of the connection between the subscriber and the switch

• Current WLL Market Drivers – To offer toll-quality telephony at relatively low cost– To provide universal telephone & Internet access– An affordable alternative to wireline for low teledensity

areas

• >40 WLL trial & commercial operators in 2003

• ~ 45% CDMA

Source: EMC Cellular Report

CDMA has becomethe de facto

standard

WLL Global Deployments

45%

2%26%

7%

20%

CDMA GSM TDMA PHS Others

Technology Comparison

------+++Business WLL Term. Avail / Variety

++++++------+++Able to evolve users to mobile easily

++--------++Spectrum Option Variety

++--++++Terminal Cost

++++-++Economies of scale – mass

---

---

---

---

---

---

-

--

DECT, CT2

--

+

-

2000

++

++

+

++

+++

UMTS

++--++Roaming with Asia

--

--

64

--

+

---

--

--

PHS

++++Standards Availability

++++Roaming with America

++--Roaming with Europe

402400High Peak Data Rates (kb/s)

-++Voice Quality

--++Spectral Efficiency

++++Consumer WLL Term. Avail / Variety

++++Infrastructure Availability

GSM/ GPRSCDMA

Spectral efficiency(cost) and data

rates make CDMA a natural choice

Capacity Comparison

0

50

100

150

200

250

300

350

400

Erl

an

gs

/sit

e/5

MH

z

cdma2000EVRC

cdma2000SMV Md 1

cdma2000SMV Md 2

UMTS AMRMd 7

UMTS AMRMd 6

UMTS AMRMd 5

UMTS AMRMd 4

GSM EFR

cdma2000 vs. UMTS vs. GSM Voice Capacity

CDMA is 3-5 times more efficient than GSM

Coverage site count

CDMA 800MHz saves 54% of site count over GSM 900MHz CDMA 1900MHz saves 63% site count over GSM 1900MHz

Better coverage implies fewer BTS for the same subscriber base.

30831126Sites per 100 KM^2

3.281.218.743.96Area covered by 1 site (Km^2)

1.30.792.121.43Max. Cell Radius (Km)

19001900835945RF Frequency Band (MHz)

CDMA EVRC8K

GSM EFR12K

CDMA EVRC8K

GSM EFR12K

Services

Source: Nortel Networks, June 2003Note: This comparison is for initial coverage limited deployment. In the real world, the coverage may be limited by terrain

WLL Market Trends

• Convergence of WLL and Mobility Networks– License terms can be stretched or evolve over time– CDMA cellular platform is easily transformed to WLL

• CDMA 1X EV-DO offers wireless ISP option– up to 2.4 Mbps peak data rates for Internet access– lower cost per bit versus cable modems, MMDS/LMDS, xDSL

1X / EV-DO Fixed TerminalsPanTech & CuriTel (1x)

http://61.111.128.201/company/english/overview/index.html

Telular (1x)http://www.telular.com

FloSys (1x)http://www.flosys.com/lts42.html

Gtran EV-DO Card readerhttp://www.gtranwireless.com/products/IndexCarder_english.php

AxessTel (1x)http://www.axesstel.com

WesTech (1x)

Terminal Pricing TrendsCDMA 1XCDMA 1X

•• Mobiles: Mobiles: • Low - Mid Tier (tri mode): $85 - $140

•• Fixed Terminals: Fixed Terminals: ((Terminal /Phone) $175 / $225

•• PC Cards: PC Cards: Multi-band $250-$275•• PDA Phones: PDA Phones: $500-$800

EVEV--DO: DO: Initial Mobiles are highly featured with large color displays + digital cameras.•• Mobiles: Mobiles: High Tier (tri mode) ~ $400-$500 (est. at launch)•• Fixed Terminals: Fixed Terminals: Terminal ~ $225-$275 (est. at launch)•• PC Cards: PC Cards: Dual-band ~ $300-$500 (est. at launch)•• PDA Phones: PDA Phones: Dual-band ~ $900 (est. at launch)•• Card Reader: Card Reader: GTRAN PC Card ~ $100 (single unit price)

Summary of Benefits

• CDMA2000 benefits include spectral efficiency, voice capacity, voice quality

• Better CAPEX and OPEX structure than GSM/GPRS• Lower CDMA2000 handset costs• Wide choice of terminals, devices & applications for WLL• EV-DO 2.4 Mbit/sec forward link rate makes it a viable DSL

alternative

WLL Market Opportunity in Bulgaria

•Cost-effective rural coverage•solution to universal service obligation•voice and 144 kbit/s data•limited mobility option

•Fast service provisioning and high-speed data in urban environment:•Up to 2.4 Mbps peak data rates•Lower cost per bit versus cable modems, MMDS/LMDS, xDSL•Dynamic allocation of spectrum to serve different busy hours for voice and data•limited mobility option

CDMA WLL Network Topography

CDMA WLLFunctional Description

•Cellular network provides basestations and backhaul

•Local Exchange (LE) provides switching function

•Voice service based on LE

•Value-added services based on fixed IN

•Packet data service support

•High-speed data for various applications

CDMA WLLMobility Service

•To support regulatory requirements mobility can be “limited” to geographical zones by creating User Zones•Mobility function managed by BSC •Support of handover and roaming in limited zones

WLL Case Study

BTC/RTC have analysed CDMA WLL opportunity

• 800 rural and remote areas• 10-100 inhabitants each • fixed terminal ($175) in customer premises• voice service• BTC standard tariff• low usage (36 minutes/month)

� CDMA WLL is the most cost effective means to meet the Universal Service Obligation

Summary/Conclusions

• radio spectrum is a valuable national resource

• efficient use of lower frequencies reduces costs/increases ‘reach’ of advanced technologies

• CDMA450 offers best potential for RTC 450MHz spectrum

• CDMA450 WLL can:•address the ‘digital divide’ - telephone service/Internet access to remote communities•deliver broadband services to homes and businesses