Mark Alexander Shalaby

May 2011

Contents

THE GLOBAL

THE LOCAL THE HOPE &

THE HYPE

Key messages – Global Mobile Internet Consumers

•  New devices: Proliferation of new connected devices – spurring mobile Mobile Internet growth: cameras, GPS, tablets, smartphones, etc.

•  New uses: social networking, commerce, etc.

•  Dropping entry costs – equipment and dataplans

•  Better access - coverage

Providers •  Voice revenues stagnating –

ARPU levels dropping •  Data appetite – new revenue

stream opportunity •  Technological development – LTE

coverage & capacity •  Business model challenges –

value chain fragmentation & consolidation

"Mobile is going to be the next big internet

phenomenon.” Eric Schmidt, CEO

Google 2005

•  + 5 Billion Mobile subscribers out of 6.9 billion people at the end of 2010

•  Nearly 80% penetration •  0.5 Billion Mobile

Internet users in 2010; increasing to 1 Billion 2011

•  Mobile will overtake PCs •  Usage will double in next

5 years

A More Mobile World

By the end of 2009… •  470 M daily circulation of all

newspapers •  825 M registered cars •  950 M total cable/satellite TV

subscribers •  1.1 B total fixed landline

phones •  1.2 B All types of PCs in use

incl laptops, netbooks

•  6 B total TV sets in use •  1.7 B total internet users incl

PC, mobile, web café •  1.8 B total unique holders of

credit cards •  2.2 B total unique holders of

bank accounts •  4.0 B total FM radios in use

But 4.6B mobile phone subscriptions

globally... Source: Tomi Ahonen A Look at M-Sports Around the World

2010

Billions

2010 - Mobile Dominates Globally •  Mobile is “the” ubiquitous device •  The Internet is becoming Mobile: Many Mobile Internet users are

mobile-only, i.e. they do not, or very rarely use a desktop, laptop or tablet to access the Web.

•  In Egypt, already 70% of Mobile Internet users are mobile-only.

Source: Tomi Ahonen The Insider’s Guide to Mobile 2010

THE GLOBAL

THE LOCAL THE HOPE &

THE HYPE

Contents

2010 Egyptian Telecom Indicators

Source: Egyptian Ministry of Communications and Information Technology (MCIT), Company reports, Mobinil analysis

Egypt ranks 21st globally in terms of Internet subs

More Internet users than fixed line! 2nd largest number of Internet users in Africa after Nigeria Largest in MENA –but penetration still lags more developed nations – Egyptians love the Internet.

–  Adoption has been helped by “Free Internet initiative”: dial up Internet at cost of local call

–  Increasing availability of Internet services in work areas, libraries and Internet cafes

–  Falling PC costs

–  Increasing Smartphone penetration

–  Increasing Arabic & Local content

Sources: Egyptian Ministry of Communications and Information Technology (MCIT), Business Monitor International (BMI)

Broadband (DSL) - booming DSL is a very small – but rapidly growing market.

–  Introduced commercially in 2000 – spectacular growth rates

–  Adoption has been helped by government sponsored efforts to reduce subscriber costs

–  Arab Advisors 2008 survey found that 63.4% of Egyptian households share DSL connection with their neighbors – demonstrates extent of demand

–  Top 5 Internet Sites in Egypt (Alexa – 30th April)

Sources: Egyptian Ministry of Communications and Information Technology (MCIT), Business Monitor International (BMI) http://www.alexa.com/topsites/countries;0/EG

1 Facebook 2 google.com.eg 3 YouTube - Broadcast yourself 4 Google 5 Yahoo!

Internet Users by Mode of Access – December 2010

Internet Access thro Mobile or USB

Source: Egyptian Ministry of Communications and Information Technology (MCIT)

THE GLOBAL

THE LOCAL THE HOPE &

THE HYPE

Contents

The Broadband Opportunity

In Egypt, as elsewhere in the world, there is a tremendous growth opportunity for Mobile Internet & Mobile Broadband

– Voice reaching tipping point – both mobile & fixed operators suffering from drop in voice revenue and falling ARPUs

– Continuing subscriber growth will not compensate for pricing pressures – Data opportunity to re-coup some of revenue shrinkage – but needs business

model re-alignment, including increased efficiency, partnerships, etc.

Source: Egypt: Political Instability Threatens Telecom Development, but Opportunities Remain, Pyramid Research February 2011

•  Mobile data services currently contribute about 9% of total mobile service revenue

–  Pyramid forecasts this will increase to 30% by 2015, stimulated by mobile Internet adoption.

•  Voice will still remain “bread & butter” of the business

•  Mobile voice continues to be largest single contributor to total Egyptian telco revenue:

–  $4.2bn in 2010, representing + 50% of total telecom revenue.

•  Data services, particularly Broadband, have potential to support future growth for operators

The Hope & the Hype: Potential & Obstacles

Mobile Internet and fixed & mobile Broadband have huge potential – but Egypt penetration still lags behind other countries

•  High adult illiteracy •  Low income levels •  Infrastructure limitations –

coverage and capacity, especially outside of capital – national digital divide

•  Opaque pricing & 3G costs remain high for many

•  Relatively High handset/device costs

•  Lack of compelling local content

Social Networks & Revolution 1/2

“The role of the internet in Egypt's revolution has definitely been overstated” --Micah L. Sifry, CNN February 11

"People protested and brought down governments before Facebook was invented. They did it before the internet came along." --Malcolm Gladwell, February

"This is the revolution of the youth of the internet, and now the revolution of all Egyptians." --Wael Ghonim, February 7

Social Networks & Revolution 2/2 •  Internet & social networks played role in

the Egyptian revolution –supporting mobilization of already politicized groups & getting the message out to those already “on-line”

•  But social networking via Broadband was a tool – not the catalyst for revolt

•  But looking deeply see that of more importance: –  Large % of youth as proportion of Egyptian

population –  Large urban population –  Increasing social and income divisions

Using Mobile Broadband for Health: Pilot project •  Partnership between Qualcomm’s Wireless Reach initiative, Mobinil, Click

Diagnostics and the Egyptian Ministry of Health, supported by the Ministry of Communication

•  Using Mobinil’s 3G HSPA Mobile Broadband network, physicians on location photograph patients’ skin conditions, write up symptoms in text and transmit the information to remote specialists to obtain or confirm diagnosis

Example dermatology app for iPad: Logical Images' VisualDX

•  Program pilot phase will be used to determine the potential success of a large-scale deployment across Egypt to provide specialist medical consultation for regions in need

•  3G Mobile Broadband has the ability to dramatically improve the speed, efficiency and quality of health care, especially in developing countries where medical resources may be limited.

Source: http://www.qualcomm.com/news/releases/2011/04/21/qualcomm-and-mobinil-announce-pilot-program-using-3g-mobile-broadband-remot

Thank You