1 © 2006 Nokia

New Growth Markets- Nokia view

Anne Larilahti

2 © 2006 Nokia

Global mobile penetration

08 e

Source: Informa & Nokia estimate, Dec 2005

0-92 -93 -94 -95 -96 -97 -98 -99 -00 -02-01 -03 -04 -05 e -

200400

600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000

3 billionby 2010

2 billionin

September 2005

0-92 -93 -94 -95 -96 -97 -98 -99 -00 -02-01 -03 -04 -05 e -

200400

600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000

3 billionin 2008

2 billionin

September 2005

08 e0

-92 -93 -94 -95 -96 -97 -98 -99 -00 -02-01 -03 -04 -05 e -

200400

600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000

3 billionby 2010

2 billionin

September 2005

0-92 -93 -94 -95 -96 -97 -98 -99 -00 -02-01 -03 -04 -05 e -

200400

600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000

3 billionin 2008

2 billionin

September 2005

TODAY• Penetration 38%• 2.5B subs

3 © 2006 Nokia

Source: The Impact of Telecoms on Economic Growth in Developing Countries, Waverman, Meschi & Fuss

Socio-economic benefits of mobility

Macro level: GDP GrowthIn a typical developing country, an increase of ten mobile phones per 100 people boosts GDP growth by 0.6 percentage points.

Micro level: Productivity increase• Being reachable• Travel avoidance• Access to information• Mobile phone as a business• Financial transactions

4 © 2006 Nokia

Affordable Connectivity is the key enabler

UniversalAccess

Affordablecommunications

Total cost of ownership

Regulatory environment

Cash barrierfor entry

5 © 2006 Nokia

Total cost of ownership

handset14%

tax15%

service71%

Source: GSMA Report, “Tax and the digital divide”, Sep 2005

1984: $18001984: $1800

2003: $1002003: $1002008: ?2008: ?

Time

Pric

e

Cost of lowest priced handset to end-user

Source: Nokia research

6 © 2006 Nokia

Consumer segmentation

LOWERINVOLVEMEN

T

RATIONAL

ASPIRATIONAL

HIGHERINVOLVEMEN

T

7 © 2006 Nokia

Consumer driven productsHIGHER

INVOLVEMENT

LOWERINVOLVEMEN

T

RATIONAL

ASPIRATIONALFamily Providers

Nokia 1112

8 © 2006 Nokia

Consumer driven productsHIGHER

INVOLVEMENT

LOWERINVOLVEMEN

T

RATIONAL

ASPIRATIONALStyle Followers

Nokia 2310

9 © 2006 Nokia

Consumer driven productsHIGHER

INVOLVEMENT

LOWERINVOLVEMEN

T

RATIONAL

ASPIRATIONAL

Nokia 2610

Life Builders

10 © 2006 Nokia

Total cost of ownership

handset14%

tax15%

service71%

How can operators and Nokia help to reduce the cost of service and thus the total cost of ownership?

Source: GSMA Report, “Tax and the digital divide”, Sep 2005

1984: $18001984: $1800

2003: $1002003: $1002008: ?2008: ?

Time

Pric

e

Cost of lowest priced handset to end-user

Source: Nokia research

11 © 2006 Nokia

Cash barrier

Mid income Low income

Cash at handCash at hand

• Handset: microfinance• Service: micro top-ups, balance transfer

12 © 2006 Nokia

GOVERNMENT INTERVENTION TOEXTEND SERVICE INTO THIS AREA

POLITICALLY &SOCIALLYDESIRABLE

REGULATORY OBSTACLES NEEDED TO BEREMOVED AND/OR NEW BUSINESS MODELSWITH LOWER COST STRUCTURE NEEDED TOEXTEND SERVICE INTO THIS AREA OR SEGMENTS

COMMERCIALLYFEASIBLE

MARKETEFFICIENC

YGAP

CURRENTEXPANSIONPLANS

Regulatory EnvironmentPO

VER

TY

GEOGRAPHIC AND AFFORDABILITY ISOLATION

EXISTING ACCESS ANDPENETRATION TODAY

13 © 2006 Nokia

Summary• The strongly continuing mobile growth brings socio-economic benefits• Mobile penetration is driven by affordable connectivity

• Total Cost of Ownership• Cash barrier• Regulatory environment

• Handsets – one size does not fit all• Networks – choose technologies based on TCO• Public – private cooperation is key

14 © 2006 Nokia

Thank you!