1

Walking on Hot Rocks

Dick Simpson, CEO, REACH

2

Overview of a Disrupted Industry

• 1990s

• Large Cash Flows

• Infrastructure Assets

3

International Connectivity

0

200

400

600

800

1000

1200

1400

1600

1989 1991 1993 1995 1997 1999 2001 2003 2005

Lit Capacity

Trans-Pacific Lit Submarine Cable Capacity, excluding US-Australia cables

4

The Perfect Storm

5

Bright Lights

6

Wireless Opportunities

China

• 1.2 billion people

• 15% wireless penetration

• 60 million customers per year

Vietnam

• 85 million people

• 2% wireless penetration

Indonesia

• 200 million people

• 3-4% wireless penetrationIndia

• 1 billion people

• 1% wireless penetration

7

Broadband

Source: ITU World Telecommunications Indicators Database

Broadband and mobile growth in the United States (millions)

8

Broadband Penetration

21%

15%

11.5%10%SOUTHKOREA

HONG KONG

JAPAN CANADA

9

Where is the Value Moving to?

10

Focus on the Customer

• Greatest asset = customer

relationship

• Therefore, get closer to

customers

11

Re-think Cost Base

• Cost structure

• ROI

• Core business

• International network

12

Focus on Core Business

• Do you need to own the asset or have the use of it?

• Do you have the scale to go it alone?

13

Quote

“Some companies have figured out that the network doesn’t matter anymore. For the last 100 years, telcos have believed that their business was owning and operating a complex mesh of wires and switches. Now,…they’re beginning to realize that their true job is helping people communicate. And their focus has to shift from managing infrastructure to making sure customers are satisfied. Companies still split along technology lines are missing the point.” (BusinessWeek, October, 2003)