Future value creation in the mobile operator business

INFOBALT conference “Information Society 2003” 21 October 2003

Darius MasionisCEO and Chairman of the Management Board

BITĖ GSM UABwww.bite.lt

2

2

The vision of BITĖ

Each further step in making life easier for our customers is a win for us.

Therefore BITĖ will be number one in serving the customers, as we deliver easy-to-understand and easy-to-use communication

services and we add heart in what we do. Because we care.

3

3

BITĖ today• 8 years in the Lithuanian market

• Full scale mobile operator providing mobile communications services to the Lithuanian market and adding data and internet solutions for the business market

• 100% owned by TDC

• GSM 900 and 1800 mobile network covering 99% of population

• EUR 30 million investment on a yearly basis

• 440 employees

• EUR 102 million turnover in 2002 (51% growth compared to 2001)

• 485 thousand customers EOY 2002 (56% growth compared to 2001)

• Ranked among Top 20 companies in Lithuania

Sources: BITĖ GSM; SIC Market Research, 2002

4

4

The changing Lithuanian telecommunications landscape

In Q2 2003

• 51% owned mobile phones • 25% owned regular phones• 28% used internet• 14% used internet banking

In the beginning of 2000

• 13% owned mobile phones • 32% owned regular phones• 10% used internet• 0.5% used internet banking

Out of 3.5 million population in Lithuania:

Sources: Lithuanian Department of Statistics; INFOBALT Lithuania; Hansabankas; BITĖ GSM

5

5

The growing Lithuanian telecommunications market

627 695521

0

100200

300400

500

600700

800

2001 2002 2003

The Lithuanian telecommunications market revenues, mEUR

Source: BITĖ GSM, 2003 figure is forecast

6

6

Source: BITĖ GSM, Q2 2003

BITĖ maintains 30% of the Lithuanian mobile market

70,0%69,6%70,0%69,8%70,3%

30,0%30,4%30,0%30,2%29,7%

0%

25%

50%

75%

100%

Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003

BITĖ

Othermobileoperators

Mobile voice revenue market development, %

7

7

34% 33% 28% 25%

26%47% 57%

34%

13%9%

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

1999 2000 2001 2002 2003

Fixed penetration Mobile penetration

2002

The Lithuanian mobile telecommunications historic

breakthrough

Source: BITĖ GSM; 2003 figures are forecasts

8

8

Global communications market has changed significantly since 2000

In 2000

• Optimistic growth prognosis• Hype over new economy• Increased penetration • Number of customers• Long term growth• Third generation, UMTS• Consolidation

From 2002

• Heavy debts, growth slowdown• Back to balance sheet approach• Penetration peak• Increase Revenue per user• Reduce customer acquisition costs• Cash, Return on Investments• Consolidation

Shift in boardroom priorities in global communications

9

9

Market players are in search for growth opportunities and new

business models

Development within current businesses

Development within current businesses

Expansion within the value chain

Expansion within the value chain

Deployment of intangibles into other industries

Deployment of intangibles into other industries

+ +

+

+

Continues to be top priority• Current markets• New markets

Option to explore• Content provider• Content owner/ developer• Device design, offering and installation• Service outsourcing for clients• Redeploying intangibles into adjacent industries

10

10

BITĖ’s approach to future value creation to customers

• Simple and convenient grouping of products and services in order to promote unlimited usage possibilities

• Usage-oriented rate plans and points-based loyalty programs for all customer segments in the CRM environment

• Integrated solutions for business customers combining their needs for communication within mobile, Internet and data services including international connectivity and VPN solutions

• Consumer content and applications delivered independently of transport technology, provision of fixed and mobile portal services

• Partnerships as a cost effective channel to new competencies

11

11

Private clients Business clients Pre-paid clients

Rate plans

Subscriber groupings related services

Loyalty programs

Internet self-care

Mobile solutions: mail, internet, office

BITĖ plus portal: mobile internet services and entertainment integrated with SMS, MMS, IVR and M-Pay

BITĖ’s products and services portfolio to make life easier for the customer

12

12

MobileVoice and SMSCommunication

MobileData

Communication

Internet andIntranet

Communication

DataCommunicationfrom A to B =>Z

Access @ mail Hosting

VirtualPrivate

Network

High SpeedData

GPRSMobileOffice

RatePlans

CityPlans

Valueadded

services

Self care

Connectsubsidiaries

Leasedlines

Internationalconnectivity

BITĖ’s integrated solutions for business customers

13

13

BITĖ Plus portal: mobile internet services and entertainment integrated with SMS,

MMS, IVR and M-Pay

www.bite.lt/en/plus

• Services in BITĖ Plus are organised according to basic consumer needs:

– Entertainment (Logos / Ring-tones / Games / Fun&Crazy)

– Information (News / Sports / Information)

– M-commerce (Payments / Banking)

– Socializing (Chatting and Communicating / Dating)

• BITĖ Plus combines all content services BITĖ has or is running them together with more than 50 partners

• BITĖ Plus structure is open for partners to add content or links and charge BITĖ users

14

14

The non-voice/data part is a major future driver of the mobile operator business, which involves application of competencies and technologies outside the scope of traditional mobile operator activities

…services and applications serving the customer on the move

…entertainment services stimulating customer’s leisure time

The future is about…

Partnerships are perceived at BITĖ as primary vehicles on the non-voice

services growth highway

15

15

Non-voice traffic growth and variety on non-voice services are expected to open

up new revenue streams

EUR 385 billion market revenue split EOY 2001

Non-voice7 %

Voice93 %

Estimated EUR 810 billion market revenue split EOY

2006

SMS14 %

Advertising 4%

Voice65 %

Business services

4%Games and

entertainment

5 %

Transactions

2 %

Other6 %

Source: NOKIA, 2002

16

16

In 2002 BITĖ’s non-voice revenues reached 12% of total revenues

Within 10 years BITĖ is aiming to achieve that 50% of its total revenues are non-voice related

BITĖ believes in the non-voice services demand in Lithuania

BITĖ will keep offering flexible and easy to use mobility services that contribute to our customers’ business success and will help people create a better life.

Leveraging voice with non-voice services…