某著名企业中国某著名企业电话客户服务设计

China’sMobileTelServices

IndustryOverview02PDChinaMobileTelsServiceIndustry020403.pptACKNOWLEDGEMENTSANDREFERENCESMGMsandCSSinvolvedintherelevantstudiesincludethefollowing:TonyPerkins(BEI)StefanAlbrecht(BEI)ChipperBoulas(HKO)PeterKenevan(TOK)PerchowJosephChang(SHA)AndrewWu(HKO)HaiWu(BEI)JaneXing(HK)YiFeng(BEI)ShengFLi(SHA)YoshinobuTakanuki(TOK)GraemeHunter(JOH)JuliaYang(BEI)EricXu(BEI)JasonLiu(BEI)ShirleyChen(BEI)TheseriesofPDsincludethefollowing:#ChinaMacroeconomicEnvironment#China’sMobileTelServiceIndustryOverview#China’sInternetIndustryOverview#ChinaTelEquipmentandServicesOverview#China’sMobileHandsetSectorOverview#ChinaTelIndustryRegulatoryOverview#KeySuccessFactorsandCaseStudiesofMNCsEntrytoChina02PDChinaMobileTelsServiceIndustry020403.pptKEYMESSAGES1.China’smobiletelservicemarketishugeandfastgrowing,representingUS$21billionmarketsizein2001andUS$38billionin2005.Thismarketissupportedbytheworld’slargestsubscriberbaseat145million,alreadyprising15%oftheworld’stotalin2001andgrowingtopotentially218millioninalowcaseor300millioninahighcaseby20052.Thepetitivelandscapeformobileserviceshasevolvedfromasingleregulatorandoperatortotoday’sduopolyofChinaUnandChinaMobile,bothofwhomareunassociatedwiththeMinistryofInformationIndustries.AsecondbreakupofChinaTelisexpectedtoformtwolargeteloperators,ChinaTelandChinaNeGroup,whoarelikelytoreceivemobilelicenses.Afifthteloperator,ChinaRai,alsohasthepotentialofreceivingathirdgenerationlicenseandbuildingamobilebusiness.Fornow,ChinaMobiledominatesthemarketwith82%valueshareand72%subscribershareandownsmuchofthehighvalueuserbase.Howeverchurnisalreadyhighandisexpectedtoincreasewithcontinuingpricingpressuresandincreasedpetition.3.WirelessdataservicesareexpectedtogrowquicklyinChinatoamarketofpotentiallyoverUS$4billionby2005,usedby43%ofallmobileusers.Interestfromconsumersurveyshavebeenhighandoperatorsandotherplayersareactivelybuildingservicesinthemarket.WhileearlyWAPserviceshavefailedtocatchon,SMShasgrownexponentiallywithupto20billionSMSmessagesin2001.Theearlyadopterswillbemobileprofessionalsandmodernyouth,whowillrequireservicesanddevicestailoredtotheirneeds.4.Regulatorychangesloom,particularlywiththeaccessionofChinatotheWTO.WhileforeignerswillbeunlikelytosetupMVNOs,WTOwillallowgreaterparticipationofforeignersinbasicandvalueaddedservices,althoughgeographiclimitationswillexistthrough2004andChineseplayerswillberequiredtoownatleast50%oftelserviceventures(51%forbasicservices).Regulatoryrisksremain,withnomeanstoappealregulatordecisions,unclearinterpretationofregulationincludingWTOmitments,andthegovernment’strackrecordofintransparentandunpredictabledecisionmaking.(SeeseparateregulatoryPDfordetails)AppendixPlayersprofiles3Gtechnologystandardschoices02PDChinaMobileTelsServiceIndustry020403.pptKEYMESSAGES1.China’smobiletelservicemarketishugeandfastgrowing,representingUS$21billionmarketsizein2001andUS$38billionin2005.Thismarketissupportedbytheworld’slargestsubscriberbaseat145million,alreadyprising15%oftheworld’stotalin2001andgrowingtopotentially218millioninalowcaseor300millioninahighcaseby200502PDChinaMobileTelsServiceIndustry020403.ppt1997-2001MOBILESERVICEREVENUEGROWTHOF30%CAGRHASOUTPACEDOTHERTELSERVICESECTORSANDISPROJECTEDAT16%THROUGH2005Revenues

US$BillionsCAGRvs.otherindustries(1997-2001)PercentMobileFixedlinePagingCAGR30%CAGR16%

Source:DeutscheBank;某著名企业analysis02PDChinaMobileTelsServiceIndustry020403.ppt * RevenuesdonotequaltheproductofARPUassubscriberfiguresareprovidedforyearend,notaveragesubscribersduringayear.Detailedinformationonthetimingofnewsubscriptionsandchurnrequiredforthecalculationofaveragesubscribersduringagivenyearisnotavailable**AllCAGRsarecalculatedontheannounceddataSource: DeutscheBank;JPMorgan;MIIEXTRAORDINARYSUBSCRIBERGROWTHISTHEPRIMARYDRIVEROFREVENUEEVOLUTION,MORETHANMAKINGUPFORLARGEDECLINESINARPUDUETOSTIFFPETITIONMobilerevenues*

$BillionsNumberofsubscribers–lowcaseMillionsCAGR30%CAGR16%CAGR83%ARPUUS$/monthCAGR-24%CAGR-7%PenetrationinitiallylowGovernmentbackingforincreasingsubscribernumbersRelativelylowfixedlinepenetrationLow-endprepaidsubscriberincreaseDriversDeclineduetoincreasedprepaidandlowerspendingbylateentrantsTariffreductionaspetitionincreasesSlightlyoff-setbyincreaseindatatrafficinlateryearsCAGR19%20823526329117161515Effective02PDChinaMobileTelsServiceIndustry020403.ppt *05forecastuselowcase,netsubsafterinactiveandmulti-sim-cardreduction**MajorEuropeancountriesinclude:UK,France,Italy,Germany,Netherlands,Spain,Sweden Source: JPMorgan;WEFA-WMM;MII;某著名企业analysisJapanCHINAISTHEWORLD’SLARGESTMARKETINTERMSOFSUBSCRIBERS,HAVINGOVERTAKENTHEUSIN2001USMajorEuropean**countriesCAGR=30%CAGR=14%CAGR=7%NumberofmobilesubscribersMillionsCAGR=13%20002005China–lowcase*China–highcase*CAGR=22%02PDChinaMobileTelsServiceIndustry020403.pptCHINA’SMOBILESUBSCRIBERBASEISGROWINGMORERAPIDLYTHANANYOTHERMAJORMARKET,PRISING15%OFWORLDTOTALIN2001 * Afirca,EasternEurope,MiddleEast,Canada ** Forecastof02-05usethehighcase,netsubsafterinactiveandmulti-sim-cardreduction Source: JPMorgan;Gartner2001;DeutscheBank;MerrillLynch;PiperJaffray19971998199920002001E2073004827279651,1781,3931,633100%=GlobalmobilesubscribersMillionsubscribers;percentWesternEuropeUSSouthandLatinJapanandAsiaPacificChina**Restofworld*CAGR1997-2005percent2918452847452002E2003E2004E2005E1,85002PDChinaMobileTelsServiceIndustry020403.pptCHINA’SMOBILEMARKETISPROJECTEDTOGROWSIGNIFICANTLYNetsubscriber*additionsMillions199719981999200020012002E2003E2004E2005E–10847133-98-4711AnnualgrowthPercent1237912131516PenetrationPercent47.143.946.345.75.511.516.939.435.9LowcaseHighcaseLow–10847103-9225-13HighLowHigh123791216192302PDChinaMobileTelsServiceIndustry020403.ppt0%5%10%15%20%25%CHINA’SSUBSCRIBERBASEOF218MILLIONIMPLIESA47%PENETRATIONOFANADDRESSABLEMARKETOF460MILLIONBY2005*Lowcase,netsubsafterinactiveandmulti-sim-cardreduction Source: JPMorgan;DRI;Asiandemographics;Literaturesearch;Analystreports;TeamanalysisIepercapita(US$p.a.)2001AddressablemarketNumberofmobilesubscribersImpliedpenetrationoftheaddressablemarket2005E345mn145mn42%463mn218mn*47%ChinaiedistributionandaddressablemarketPercent1,8151,77220012005China’saddressablepopulationformobileservicesisprojectedtoincreaseby8%p.a.forthenextfiveyearsto460millionin2005Thekeyassumptionsindeterminingtheiethresholdare:Chineseconsumerswillingtospend5-10%%oftheirieonmunicationservices–higherthantheaverageof3.5-4%formoredevelopedmarketsasagreaterportionofieisavailablefornon-essentialgoodsasaresultofChina’srelativelylowlivingcostHalfofthisassumedspentonmobileservices(5.5%)Un’sprepaidARPUwilldecreasefromUSD8.3for2001toUSD8.1for2005;thereforethethresholdiewilldropfromUSD1,815(8.3*12/5.5%)for2001toUSD1,772for2005(8.1*12/5.5%)2005Addressablemarket:35%Addressablepopulation:460mnpersons2001Addressablemarket:27%Addressablepopulation:345mnpersonsPercentofpopulation02PDChinaMobileTelsServiceIndustry020403.pptMOBILESUBSCRIBERPENETRATIONOFLESSTHAN7%IN2000,LEAVESSIGNIFICANTROOMFORGROWTH100%199619971998199920002001E2002E2003E2004E2005EMobilesubscriberpenetrationin2000PercentItalySwedenNetherlandsUKSpainGermanyFranceUSChina**AllsubscribersDataservicesubscribers1,2181,2301,2421,2541,2651,2761,2871,2981,3091,319Aspercentageoftotalpopulation–lowcase*Millions(totalpopulation)ChinaUrban*** *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction**Penetrationovertotalpopulation***Penetrationoverurbanpopulation.0.61.01.92.96.68.91.12.03.97.10.412.013.415.016.402PDChinaMobileTelsServiceIndustry020403.pptCHINA’SRICHERPROVINCESGENERALLYHAVEMORESUSCRIBERSANDAREGREATERPENETRATED…PopulationMillionsPenetrationPercent,2000SubscriberCAGRPercent,1998-2000NumberofsubscribersMillionsProvinceGuangdongLiaoningZhejiangJiangsuShandongFujianHeilongjiangShanghaiHebeiSichuanBeijingHenanAnhuiHubeiHunan02PDChinaMobileTelsServiceIndustry020403.ppt…WHILETHEPOORWESTERNANDINTERIORPROVINCESHAVELESSSUBSCRIBERSANDARELESSPENETRATED * Growthratefrom1999-2000 Source: ChinaStatisticalyearbook,JPMorganReport,某著名企业analysisPopulationMillionsPenetrationPercent,2000SubscriberCAGRPercent,1998-2000NumberofsubscribersMillionsProvinceJilinGuangxiYunnanShaanxiChongqingShanxiTianjinInnerMongoliaJiangxiGansuXinjiangHainanNingxiaQinghaiTibetGuizhou02PDChinaMobileTelsServiceIndustry020403.pptKEYMESSAGES2.Thepetitivelandscapeformobileserviceshasevolvedfromasingleregulatorandoperatortotoday’sduopolyofChinaUnandChinaMobile,bothofwhomareunassociatedwiththeMinistryofInformationIndustries.AsecondbreakupofChinaTelisexpectedtoformtwolargeteloperators,ChinaTelandChinaNeGroup,whoarelikelytoreceivemobilelicenses.Afifthteloperator,ChinaRai,alsohasthepotentialofreceivingathirdgenerationlicenseandbuildingamobilebusiness.Fornow,ChinaMobiledominatesthemarketwith82%valueshareand72%subscribershareandownsmuchofthehighvalueuserbase.Howeverchurnisalreadyhighandisexpectedtoincreasewithcontinuingpricingpressuresandincreasedpetition.02PDChinaMobileTelsServiceIndustry020403.pptCHINA’SMOBILEOPERATORLANDSCAPEHASEVOLVEDSIGNIFICANTLY,CULMINATINGINSECONDBREAKUPOFCHINATELChinaTelChinaUnBecamethesecondmobilenetworkoperatorinmid1994However,ChinaTelasthesoleproviderofbothbasicandwirelesstelephonyservicesmadeitdifficultforUntogrowChinaUnChinaRaiChinaUnMinistryofPostsandTelmunicationsCreatedin1994whenformerMPTseparatedintoregulatoryandoperatingfunctionsChinaTelownershiptransferredtoMinistryofFinance,withregulatoryfunctionsplacedinthenewMinistryofInformationIndustries(MII)ChinaTelChinaMobile(CMCC)ChinaTelChinaMobile(CMCC)Underthegovernment’santi-monopolyplan,inthe1sthalfof1999,ChinaTelwassplitinto4operatingpanies:CTfixed,ChinaMobile,CTPaging,CT

SatelliteThechangebecameofficialonApril20,2000Priorto1994,theMPTactedastheregulatorandsoleoperatoroftelmunicationsIn1993,announcementwasmadetoseparateoperatingandregulatoryfunctionsalongwiththeestablishmentofa2ndoperatorGreatWallEstablishedin1995toharnessPLA’sradiospectrumThepanyundertakes“theCDMAproject”atthedirectionofthegovernmentGreatWallDuetogovernmentmitmenttoseparatePLAfrommercialactivities,GreatWalldissolvedwithdecisiontotransferCDMAassetstoChinaUnmadeinOctober2000(transferyettobepleted)2ndlargestfixedlinenetworkEstablishedDecember2000OfferslimitedGSMserviceoverit’srailwaynetworkPre1994RegulatorandOperator1994to1999VirtualMonopoly1999To2002Deregulation/Breakup2002andbeyond2ndbreakupandfuturelandscapeChinaNeEstablishedinSept.1999withinternetbackboneLikelylicensewinnerJitongJitongSetupin1994todevelopdatamunicationserviceBegantoofferVoIPservicesLeadingplayerinvoiceoverIPChinaNeGroupChinaRaiChinaTelbrokenupintoNorthandSouthwithCTNorthmergingwithChinaNeandJitongtobeChinaNeGroupChinaTelSouthcontinuesoperationasChinaTelOperatingCDMAlocalloopservicesinseveralcitiesChinaMobileunaffectedbysecondbreakup,survivingproposaltomergeitwithJitong,givenconcernsaboutconsequencesofforcedmergersforpubliclylistedpaniesChinaUnunaffectedbysecondbreakup,survivingproposaltomergeitwithRaiWhileGreatWallCDMAassettransferhasyettobepleted,UnwillbefirstmajoroperatorintheworldwithbothCDMAandGSMservices,withlaunchofitsownCDMAnetworkin2002Operatorbiddingfor3Glicense,withopennesstowardsadoptingChina’s3Gstandard,TD-SCDMA02PDChinaMobileTelsServiceIndustry020403.pptBeforeAfterCTbreak-upMOSTRECENTBREAK-UPOFCHINATELTOLEADTOALANDSCAPEOF5OPERATORSPETINGACROSSBOTHMOBILEANDFIXEDLicensesLicensesAnnouncementonNovember26tomergeJitongwithChinaNeandChinaTelNorthernunitpetitionwillincreaseasmergedtelgiantsobtainlicensesforprehensiveteloperations,includingFixed-linephoneMobilephoneInternet-relatedservicesOriginalplantomergeChinaMobilewithJitongandChinaUnwithChinaRai,metwithstrongdissentfromthecapitalmarketswhosawthisasanaffronttoChinaMobileandChinaUn’sgovernanceaspubliclyheldpaniesMobileMobileFixedMobile(GSM-R)FixedFixedFixedFixedGROUPChinaTelNorthChinaTelSouthMobileFixedMobileFixedMobileFixedMobileFixedChinaRaiChinaRaiMobileFixedHavelicense02PDChinaMobileTelsServiceIndustry020403.pptPROFILESOFCURRENTANDLIKELYFUTUREPLAYERSMobilestrategyCurrentpartnershipsStilltobedecided~96millionmobilesubscribers~30millionmobilesubscribersServicescovering

over180citiesLargestnationaltelnetworkcovering2,000

citiesFirstoperatortointroduceinternetaccesscards,andannouncedon-lineshoppingcardtobelaunchedin2001Internetbackbonecovering17majorcitiesStartedIPphoneservicesinJanuary20002ndlargestnetworkinChina;coveringallmajorcities(>500cities)Betechnologyleader,thuseagertoenter3GFocusonhigh-endcustomersTrialingGPRSwith7vendorsStronglysupportingWAPShiftingattitudesontechnology,nowfirstplayertocoverbothGSMandCDMAFocusingattentionondevelopingCDMAnetworksTrialingGPRSwith4vendorspeteonserviceofferingwithexistingoperators,leveraginggovernmentandsupplierexpertiseActivewithWLLandlocalmobilityGostraightto3GifpossibleObtainmobilelicenseasquickaspossibleregardlessoftechnologystandardRolloutwirelessdataservicesevenifitmeanstakingGSM/GPRSfirstMayfocusinitiallyonGZ,BJ,SHLikelyintendsfollowing2-tierstructureObtain3Glicensetotargethigh-endusersUse2GPHStotargetvoicesubscribersVodafoneHPHutchisonKDDISKTelTelstraAT&TJapanTelBritishTelNewsCorporationGoldmanSachsSingTelNoneExistingExistingCurrentplayersChinaMobileChinaUnLikelyfutureplayersChinaTelChinaNeChinaRai02PDChinaMobileTelsServiceIndustry020403.pptOTHERPLAYERSUNLIKELYTOATTAINMOBILELICENSESCenturyMobileJitongForeignJVEntrantsNewtelcosWhotheyareBasisforentryObstaclesConsortiumof10enterpriseswhohavejoinedtogethertotrytosetupmobileenterpriseSetupin1994todevelopdatamunicationservicesPotentialJVsinvolvingforeignpaniesNewplayersexpandingintotelSomegovernmentcontactsOriginallyconsideredtakeoverofGreatWall’sassetsOwns70%ofVoIPmarketGovernmenthasindicateddesiretoseemultipleoperationswithmultipleserviceofferingsGovernmentmaybepressuredtoshowmarketprogressandWTObenefitsForeignoperatorsandentitieseagertoinvestDesiretoenterwirelessgivenopportunitiesandconvergence

oftechnologiesGreatWallassetsmovedtoChinaUnNocurrentdiscussionregardingmobileservicesobservedLowcapabilitytoutilizemobilespectrumifallocatedWTOagreementsdonotrequirethatnewtellicensesbeissuedtonewentrantsNationwidepresenceofforeigninvestmentnotpossibleforinitial3yearsunderWTOMIIwilllikelylimittheinfluenceofotherministriesontheirturf(e.g.,blockingSARFTentryintoInternet)02PDChinaMobileTelsServiceIndustry020403.pptEXISTINGANDPOTENTIALMOBILEOPERATORSHOLDBROADBUTDIFFERENTPETITIVEPOSITIONINGSANDSERVICEOFFERINGSBasicservicesChinaMobileChinaUnChinaTelChinaNeMobilevoiceserviceMobiledataserviceIPMultimediaservice

MobilevoiceserviceMobiledataserviceIPMultimediaserviceLocalcallDLDIDDPaging

IPMultimediaserviceLocalcallDLDIDD

WebhostingNetworkelementleaseandsale

IP

IDD

WebhostingLeaseandsaleofbandwidthValue-addedservicesFaxVoicemailCallerIDCallwaitingSMSVPN/VPDNIDC

FaxVoicemailCallerIDCallwaitingSMSVPN

FaxVoiceVASCallerID

VPNIDCISDN/DDNEDIISPE-mail

DatamunicationPublicmultimediaservices

Source: MII;Asi;Analystreport02PDChinaMobileTelsServiceIndustry020403.pptEACHEXISTING/POTENTIALMOBILEOPERATORHASSTRENGTHSANDWEAKNESSESChinaMobileChinaUnChinaNeChinaTelChinaRaiStrengthsWeaknessesIncumbentoperatorservinghighervaluecustomersDominatesmarketwith74%ofsubscribersand84%ofrevenuesAlliedwithVodafonewhoseCEOsitsonboardAccesstoglobalcapitalviaCMHKOfferspletepackagetocorporatecustomersAbletounderpriceCMandattainmarketshareGovernmentandpolicysupporttopromotepetitionNofrequencyconstraintduetoCDMAnetwork(13msubcapacity)AccesstoglobalcapitalviaUnHongKongStrongmanagementteamwithexecutiveshailingfromsuccessfulstartup(Asia-info),consultingfirmsandbulgebracketinvestmentbanksStronggovernmentalconnectionswithJiangZemin'ssononboardRemainsdominantfixed-lineoperatorDominantindatamunicationsandinInternetservice2ndlargestfixed-linenetworkFacing2Gspectrumshortageinmajorcities2002/2003Unhas10%priceadvantagebyregulationManagementandbusinessstructurenotyetpletelysetupWeakerbrandandpublicpenetrationthanCMHKFacingplexityofdualnetworkmanagementInfrastructurespendhightobuildCDMAnetworkLacksfixed-networkreachHasnomobileoperatinglicenseLacksmobileexpertiseRegulatoryconcernsasMIIprohibitingJVswithSOEstargetsrelationshipwithSARFT(oneofthefounders)HasnomobileoperatinglicenseLacksmobileexpertiseCarriesmonopolycultureandlacksbusiness-drivenaggressivenessBoundtofinanciallynonviableruralareaexpansionoffixed-linenetworkUncertaintiesinitsbreak-upplanHasnomobileoperatinglicenseLacksmobileexpertiseLacksscaleandsupportExisting/potentialoperator02PDChinaMobileTelsServiceIndustry020403.pptMOSTOPERATORSHAVEEXISTINGPARTNERSHIPSWITHFOREIGNPLAYERSChinaMobileChinaUnChinaTelChinaNeTypeofpartnershipVodafoneHPHutchisonTelKDDISKTelTelstraAT&TJapanTelBritishTelNewsCorporation,GoldmanSachs,etc.SingTelEquantVodafoneowns2%equityshareinChinaMobile(HK)StrategicallianceagreementwithVodafonetobeCMHK’slongtermpreferredpartnerinareasincludingR&Dtechnicalexpertise,standardandprotocoldevelopmentetc.WirelessdataR&DJVbetweenmajorityownedsubsidiaryAspireandHPHutchisonowns1.5%ofChinaUn(listed)JointdevelopmentoftechnologyforhighspeedmobilephoneKDDItosupplyCDMAOnemobilephonesStrategicAlliancetoaidChinaUn’sCDMAOnenetworkdevelopmentand3GtransitionStrategicalliancetoaidUndevelopCDMAnetworkAT&Towns25%ofShanghaiSymphonyTelmunicationsMOUinfixedline,mobilephoneandfast-datatransmissionareasforclientpaniesMOUsignedin1998tocooperateintechnologyandbusinessopportunitiesJointventureprovidingend-to-enddatamunicationserviceforMNCssetupin1999Partnersbought12%ofChinaNefor$324millioninprivateplacementStrategicalliancetoprovidesafe,efficientdatatransmissionforSingaporepanieswithsubsidiaries,partnersinChinaServiceagreementtoco-developVPNofferings02PDChinaMobileTelsServiceIndustry020403.pptINMOBILETELSERVICEMARKET,CHINAMOBILEWILLLIKELYREMAINTHEDOMINANTOPERATORINBOTHREVENUE…100%=1998199920002001E2002E2004EChinaUnChinaMobile2003E2005E363710Otheroperators000008.411.816.221.127.932.034.538.4US$Billions,percentCAGR

1998-2005EPercent6718N/A

Source: 某著名企业Analysis02PDChinaMobileTelsServiceIndustry020403.ppt…ANDSUBSCRIBER*SHARE1997ChinaUnChinaMobile3100%=5112543851451551761972181998199920002001E2002E2003E2004E2005EOtheroperator(s)Millions,percent *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction Source: DeutscheBank;JPMorgan;某著名企业analysis02PDChinaMobileTelsServiceIndustry020403.ppt *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction**AcquiredbyCMHKfromparentinOct2000 Source: JPMorgan;Industryinterviews;某著名企业analysisPROPORTIONOFEACHOPERATORS’SUBSCRIBERS*INCLUDEDINLISTEDENTITYMillions,percentChinaMobile23.537.866.3111.0108.4112.9118.7126.61998199920002001E2002E2003E2004E2005E666168656666CMHK100%=Un1.55.218.744.047.055.263.567.81998199920002001E2002E2003E2004E2005E626365616162Un

Listed100%=8682CMHKProvincesBeijing**FujianGuangdongGuangxi**HainanHebei**Henan

JiangsuLiaoning**Shandong**Shanghai**Tianjin**ZhejiangUn(HK)ProvincesAnhuiBeijingFujianGuangdongHebeiHubei

JiangsuLiaoningShandongShanghaiTianjinZhejiang412802PDChinaMobileTelsServiceIndustry020403.pptCHURNISALREADYSIGNIFICANTWITHBOTHOPERATORSANDWILLCONTINUETOINCREASEDRIVENBYINCREASINGPETITIONWITHIMPACTGREATESTONCHINAMOBILEPercentChinaMobileHKChinaUnmentsChinaMobile'sbroadernetworkcoverageleadsinitiallytofarlowerchurnratethanforChinaUnChinaUn'srapidlyexpandingnetworkandhigher-qualityCDMAconnectionwillincreaseCMHK'schurngoingforwardIntensifyingpetitioncausesbothsetsofchurnratestoriseAsnetworksbesimilar,customersappreciatelowerChinaUnprice02PDChinaMobileTelsServiceIndustry020403.pptmentsDecreasingtrendduetoIncreasedpetitionandlowertariffsIncreasedmixoflow-valueprepaidusersDeepeningpenetrationwhichincreaseslow-valueusershipChinaMobile'sARPUhigherduetoHigherpricesthanChinaUnGreaterconcentrationofhigh-endusersbecauseofbreadthofcoverageandmarketpresenceCHINAMOBILEENJOYSGREATERARPU,ALTHOUGHLISTEDPANIESFORBOTHOPERATORSGENERATEGREATERARPUTHANUNLISTEDCMHKUn(listed)CM(unlisted)Un(unlisted)US$/month

Source: DeutscheBank;某著名企业analysis02PDChinaMobileTelsServiceIndustry020403.ppt * 100%=75.9millionsubscribersin2001and111.9millionin2005 ** 100%=28.6millionsubscribersin2001and54.9millionin2005 Source: GoldmanSachs;MorganStanley;Teamanalysis-6CHINAMOBILE'SARPUEXCEEDSCHINAUN'SDESPITE

ALARGERPROPORTIONOFPREPAIDCUSTOMERSBlendedARPUUS$/monthCMHKChinaUn(listed)20012005CAGRPercent-5Prepaidvs.postpaidARPUparisonUSD/monthCAGRPercent-5200120050CMHKChinaUn(listed)-1-4PrepaidsubscribersaspercentageoftotalsubscribersPercentCAGRPercent19*20012005CMHKChinaUn(listed)43**WAChinaMobile’sARPUexceedsChinaUn'sdespitealargerproportionofprepaidcustomersduetoafarhigherpostpaidARPUChinaMobile'shigherpostpaidARPUisduetoitshigh-endcustomerbaseandsuperiormarketingaswellasChinaUn'slowertariffscharged02PDChinaMobileTelsServiceIndustry020403.pptSharepriceHK$SHAREPRICESFORBOTHOPERATORSHAVEDETERIORATEDIN2001PRIMARILYDUETOPRICINGPRESSURESCMHKChinaUnChinaMobileannouncesnewlowertariffpackagesSharepricetookahitonfearsthattariffcutsandspendingonanewCDMAnetworkwilleatintoearningsMIIannouncescancellationofregistrationfeeMarketcapitalizationUS$billions120.469.520.917.5

Source: HongKongstockexchange;DataStream02PDChinaMobileTelsServiceIndustry020403.pptNONETHELESS,BOTHOPERATORSSTILLENJOYHEALTHYEBITDAANDRETURNONASSETS,DRIVENBYLOWERCOSTBASES,ESPECIALLYPAREDTOCHINATELUS$Billions,2000Player***RevenuePercent

ofrevenuePercent

ofrevenueCMHKChina

Un(listed)China

TelEBITDAN/ANetprofitROAPercent0.154.744.8N/A18.813.80.5 * TotalChinaMobilerevenue14.3billion ** TotalChinaUn(Listed+unlisted)mobilerevenueisUS$1.9billion;listedportioncontributes1.5billion(balancepagingandfixedline) *** NeandRaifinancialsN/A Source: JPMorgan

02PDChinaMobileTelsServiceIndustry020403.pptKEYMESSAGES3.WirelessdataservicesareexpectedtogrowquicklyinChinatoamarketofpotentiallyoverUS$4billionby2005,usedby43%ofallmobileusers.Interestfromconsumersurveyshavebeenhighandoperatorsandotherplayersareactivelybuildingservicesinthemarket.WhileearlyWAPserviceshavefailedtocatchon,SMShasgrownexponentiallywithupto20billionSMSmessagesestimatedfor2001.Theearlyadopterswillbemobileprofessionalsandmodernyouth,whowillrequireservicesanddevicestailoredtotheirneeds.02PDChinaMobileTelsServiceIndustry020403.pptRESULTSOFACHINESEWIRELESSSURVEY(2000)INDICATEDSTRONGINTERESTINMOBILEDATASERVICES * InternetusernumberissignificantlyhigherthanInternetsubscriptionnumber,becauseofthesharingInternetaccessamongusers Source: Mobileusersurvey,2000VeryinterestedInterestedNotinterestedNeutralVerydisinterestedKeysamplecharacteristicsInterviewof100randomlychosenrespondentsinShanghai,BeijingandGuangzhou,representingagoodcross-sectionofdifferenttypesofmobileusers68%ofrespondentsexpressinterestinreceivingdataservices20%ofrespondentsarefixedlineinternetusers*MedianInternetusageof30hours/monthMedianmobilebillofRMB300/month02PDChinaMobileTelsServiceIndus