Etude de cas Business Case Wireless Broadband Mangotel Module 1: Méthodologie - Revenus & trafic

Etude de cas Business Case Wireless Broadband Mangotel Module 1: Méthodologie - Revenus & trafic Consulting Juin 2015 1 Consulting 2015

OBJECTIFS DU MODULE 1 Description de la méthodologie et de la finalité de l étude Description du contexte de l opérateur Mangotel Principes de segmentation du marché basé sur les 5 types de devices Projection des abonnés d une part et des revenus d autre part Principes de modélisation de trafic data qui vont servir au dimensionnement réseau du Module 2 2 Consulting 2015

ASSUMPTIONS FOR THE CASE STUDY Fictive Country in Western Africa Relative low penetration at 20m Subs by 2015 but increasing subscribers over the years 2G only subscribers by end of 2014 : GSM/EDGE 4 operators are sharing the Mobile Market Mangotel is a fictive operator with 30% Operator 3 18% Market Shares Mangotel 30% Operator 2 24% 3 Consulting 2015 Operator 1 28%

ASSUMPTIONS FOR MANGOTEL Fictive Country in Western Africa with 21m Subs in 2015 2014 2021 2022 2023 2024 TOTA SUBS Country 20,000,000 21,200,000 22,472,000 23,820,320 25,249,539 26,764,512 28,370,382 30,072,605 31,876,961 33,789,579 35,816,954 Mangotel is a fictive operator with 30% Market Share Mangotel Market Share 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% TOTAL Subs Mangotel 6,000,000 6,360,000 6,741,600 7,146,096 7,574,862 8,029,353 8,511,115 9,021,782 9,563,088 10,136,874 10,745,086 Mangotel has 2G and launched 3G in Jan 2015 2G only 2014 3G Launch 2015 2016 2017 2018 2019 2020 4 Consulting 2015

SCENARIOS DEFINITION SCENARIO 1: 3G+LTE Scenario 1: 3G in 2.1GHz + LTE in 800+1800MHz 3G launched in 2015 LTE launched in 2016 Constant market share at 30% Total Wireless Broadband market addressed by first 3G then LTE Split of 3G & LTE that evolves over time 3G in 2.1GHz LTE in1800mhz in Urban/suburban LTE in 800MHz in rural Full reuse of existing 2G sites + limited site creation for LTE 2G only 3G Launch LTE Launch 2014 2015 2016 2017 2018 2019 2020 5 Consulting 2015

SCENARIOS DEFINITION SCENARIO 2: 3G only Scenario 2: 3G only in 2.1GHz 3G launched in 2015 no LTE Constant market share at 30% Total Wireless Broadband market is addressed by 3G only 3G in 2.1GHz No LTE over the period Full reuse of existing 2G sites + creation of new sites for 3G notably for Rural coverage & roads 2G only 3G 2014 2015 2016 2017 2018 2019 2020 6 Consulting 2015

SCENARIOS DEFINITION TECHNOLOGY MIX IN SUBSCRIBERS 2G vs Wireless Broadband Subscribers Scenario 1: 3G+LTE 800MHz+1800MHz 12,000,000 10,000,000 Subscribers Split - Wireless BB vs 2G 100% 90% Wireless Broadband Technology Mix 8,000,000 6,000,000 4,000,000 Remaining 2G Subscribers 77% 80% 70% 60% 50% 40% LTE 3G 2,000,000 3G Subs 0 LTE Subs 10% 13% 30% 20% 10% 0% 7 Consulting 2015

SCENARIOS DEFINITION TECHNOLOGY MIX IN SUBSCRIBERS 2G vs Wireless Broadband Subscribers Scenario 2 3G only in 2.1GHz 9,000,000 Subscribers Split - Wireless BB vs 2G 100% Wireless Broadband Technology Mix 8,000,000 90% 7,000,000 80% 6,000,000 70% 5,000,000 4,000,000 3,000,000 Remaining 2G Subscribers 60% 50% 40% 3G 2,000,000 30% 1,000,000 3G Subs 0 20% 10% 0% 8 Consulting 2015

METHODOLOGY - 3 INTERDEPENDENT ANALYSIS COVERING REVENUES NETWORK COSTS & COMPETITIVE ANALYSIS 1. MARKET ANALYSIS REVENUES & TRAFFIC PROJECTION Market segmentation & take up rates Wireless BB Subscribers & Revenues Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Traffic Modeling 9 Consulting 2015

METHODOLOGY - 3 INTERDEPENDENT ANALYSIS COVERING REVENUES NETWORK COSTS & COMPETITIVE ANALYSIS 1. MARKET ANALYSIS REVENUES & TRAFFIC PROJECTION Market segmentation & take up rates Wireless BB Subscribers & Revenues Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Traffic Modeling 2. NETWORK DIMENSIONING & TCO Network TCO & Network Cost/GB Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario 10 Consulting 2015

METHODOLOGY - 3 INTERDEPENDENT ANALYSIS COVERING REVENUES NETWORK COSTS & COMPETITIVE ANALYSIS 1. MARKET ANALYSIS REVENUES & TRAFFIC PROJECTION Market segmentation & take up rates Wireless BB Subscribers & Revenues Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Traffic Modeling 2. NETWORK DIMENSIONING & TCO Network TCO & Network Cost/GB Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Business cases 3. BUSINESS CASE & CONCLUSIONS CONCLUSIONS & STRATEGIC RECOMMENDATIONS 11 Consulting 2015

1. SUBSCRIBERS DEVICE SEGMENTATION Feature phone Prepaid low end subscriber Cheap handset with basic features 2G only Small form factor small screen Smartphone Low end Prepaid low/mid end subscriber More advanced features camera, possibly GPS 2G, 3G & possibly LTE Larger form factor large touch screen Smartphone High end Postpaid high end Residential or Business subscriber Advanced smartphone Galaxy or iphone: 2 cameras, GPS Higher memory 2G, 3G & LTE Larger form factor large touch screen Dongles & Tablets Postpaid Data residential or Business subscribers 2G, 3G (& soon LTE) capable Data centric usage Expected high Data consumption Fixed Wireless Enterprises Postpaid Enterprise Subscribers Addressed NEW SUBSCRIBERS as DSL substitute 12 Consulting 2015

1. SUBSCRIBERS WIRELESS BROADBAND ADOPTION Users Segmentation based on existing 2G 2014 2020 Fixed Wireless Enterprise) 120% Wireless BB Take up rates per segment Dongles Tablets & MiFi 2% 10% 100% Smartphones High end 3% 15% 80% Fixed Wireless Smartphones Low end 25% 45% 60% 40% Smartphones High End Dongles & Tablets Smartphones Low End Feature Phones Feature phones 70% 30% 20% 0% 2021 2022 2023 2024 Assumption: No migration of Feature phones to Wireless Broadband = Voice centric 2G subscribers 13 Consulting 2015

1. SUBSCRIBERS SUBSCRIBERS PROJECTION - CONSTANT MARKET SHARE 2014 TOTA SUBS Country 20,000,000 21,200,000 22,472,000 23,820,320 25,249,539 26,764,512 28,370,382 Mangotel Market Share 30% 30% 30% 30% 30% 30% 30% TOTAL Subs Mangotel 6,000,000 6,360,000 6,741,600 7,146,096 7,574,862 8,029,353 8,511,115 3,000,000 Scenario 1: 3G+LTE 800MHz+1800MHz Wireless Broadband Subscribers 3G+LTE 2,500,000 Scenario 2 3G only in 2.1GHz Wireless Broadband Subscribers 3G 2,500,000 Fixed Wireless 2,000,000 Fixed Wireless 2,000,000 Dongles & Tablets 1,500,000 Dongles & Tablets 1,500,000 1,000,000 Smartphones High End 1,000,000 Smartphones High End 500,000 Smartphones Low End 500,000 Smartphones Low End 0 Feature Phones 0 Feature Phones 14 Consulting 2015

2. TRAFFIC MODELING TRAFFIC PROJECTION SCENARIO 1: 3G+LTE 800+1800MHz 2015 basis 3G Data MB/month/user LTE Data MB/month/user Dongles Tablets & MiFi Smartphones High end 2% 3% 25GB per entity Smartphones Low end 25% 8GB 1GB 16GB 2GB 500MB 1GB Feature phones 70% N.A. N.A. 15 Consulting 2015 Average Data Traffic Usage Wireless Broadband YoY Basis +15% +9% +6% +3% +3%

2. TRAFFIC MODELING TRAFFIC PROJECTION SCENARIO 1: 3G+LTE 800+1800MHz Dongles Tablets & MiFi 2015 basis 2% 3G Data MB/month/user LTE Data MB/month/user 250,000,000 3G+LTE Data Traffic in GB Smartphones High end Smartphones Low end 3% 25% 8GB 1GB 25GB per entity 16GB 2GB 200,000,000 150,000,000 100,000,000 Fixed Wireless Dongles & Tablets Smartphones High End Smartphones Low End Feature phones 70% 500MB 1GB 50,000,000 Feature Phones N.A. N.A. 0 16 Consulting 2015 Average Data Traffic Usage Wireless Broadband YoY Basis +15% +9% +6% +3% +3%

2. TRAFFIC MODELING TRAFFIC PROJECTION SCENARIO 2: 3G only in 2.1GHz Dongles Tablets & MiFi 2015 basis 2.3% 2015 basis 3G Data MB/month/user 120,000,000 3G Data Traffic in GB Smartphones High end 3% 8GB 100,000,000 80,000,000 Fixed Wireless Smartphones Low end 25% 1GB 500MB 60,000,000 40,000,000 Dongles & Tablets Smartphones High End Smartphones Low End Feature Phones Feature phones 70% N.A. 20,000,000 0 17 Consulting 2015 Average Data Traffic Usage Wireless Broadband YoY Basis +15% +10% +5% +5% +3%

3. REVENUE MODELING METHODOLOGY & ASSUMPTIONS 2015 Basis Fixed Wireless Dongles & Tablets 3G ARPU /m FCFA/m X2 Data Usage LTE Premium 25 16 700 30 +20% LTE ARPU /m FCFA/m(*) 80 53 300 20 000 Smartphones High end 30 20 000 +20% 36 24 000 Smartphones Low end 7 4 700 +20% 8.5 5 600 Feature Phones N.A. N.A. 1 =656 FCFA (*) due to HIGHER DATA USAGE in LTE N.A. N.A. ARPU Erosion Basis -15% -10% -10% -5% -5% As first assumption, LTE ARPU based on the same pricing elasticity for all segments 18 Consulting 2015

3. REVENUE MODELING SCENARIO 1: 3G in 2.1GHz and LTE in 800+1800MHz Wireless Broadband Subscribers 3G+LTE 2015 basis Wireless Broadband revenues 3G+LTE 3,000,000 2,500,000 Fixed Wireless LTE ARPU /m FCFA/m(*) 80 53 300 500,000,000 450,000,000 400,000,000 Fixed Wireless 2,000,000 Dongles & Tablets 30 20 000 350,000,000 300,000,000 Dongles & Tablets 1,500,000 250,000,000 Smartphones High End 36 24 000 200,000,000 1,000,000 150,000,000 Smartphones Low End 8.5 5 600 500,000 100,000,000 50,000,000 0 Feature Phones N.A. N.A. 0 Smartphones High End Smartphones Low End Feature Phones 378m Revenues by 2020 Additional Fixed Wireless segment generates 67m 19 Consulting 2015 1 =656 FCFA (*) due to HIGHER Data usage in LTE

3. REVENUE MODELING SCENARIO 2: 3G only Wireless Broadband Subscribers 3G 3G ARPU Wireless Broadband revenues 3G 2,500,000 /m FCFA/m 400,000,000 2,000,000 1,500,000 Fixed Wireless Dongles & Tablets 25 16 700 350,000,000 300,000,000 250,000,000 Fixed Wireless Dongles & Tablets 1,000,000 500,000 0 30 20 000 200,000,000 Smartphones High End 150,000,000 7 4 700 Smartphones Low End 100,000,000 50,000,000 N.A. N.A. Feature Phones 0 Smartphones High End Smartphones Low End Feature Phones ARPU Erosion Basis -15% -10% -10% -5% -5% 90m less revenues by 2020 vs scenario 1, mainly due to the enterprise segment only addressed in LTE 20 Consulting 2015

ACQUIS DU MODULE 1 Comprendre la méthodologie et la finalité de l étude Comprendre les principes de segmentation du marché basé sur les types de devices Comprendre la méthodologie utilisée pour la projection des abonnés d une part et des revenus d autre part Comprendre les principes de modélisation de trafic data qui vont servir au dimensionnement réseau du Module 2 21 Consulting 2015

METHODOLOGY - 3 INTERDEPENDENT ANALYSIS COVERING REVENUES NETWORK COSTS & COMPETITIVE ANALYSIS 1. MARKET ANALYSIS REVENUES & TRAFFIC PROJECTION Market segmentation & take up rates Wireless BB Subscribers & Revenues Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Traffic Modeling 2. NETWORK DIMENSIONING &TCO Network TCO & Network Cost/GB Scenario 1 LTE Acceleration Scenario 2 Conservative Scenario Business cases 3. BUSINESS CASE & CONCLUSIONS CONCLUSIONS & STRATEGIC RECOMMENDATIONS 22 Consulting 2015