Innovation Norway-MadridMobile and wireless market overviewPresentation June 1st, 2005

By Rodrigo Ballesteros Cruz

Senior Market Adviser

Innovation Norway-Madrid

3

Innovation Norway-Madrid

Ole HombCommercial Counsellor (2005)

Juan Bergas NegreSenior Market Advisor (1980)

ICT, Construction, ProcessIndustry, Environment, Seafood, Establishment

Rodrigo Ballesteros CruzSenior Market Advisor (1997)

ICT, Energy, Offset, IFU

Carola JennergårdSecretary (1994)

Accounting, assistance toprojects

Line BergTrainee (2005)

Assistance to projects

- Good match between “sector demand” and competence.

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Client Projects 2004 – Sectors and type of projects

ICT in 2003: 48%

11%

8%

9%

21%

45%

6%

Explore market

Market study

Meeting assistance

Partner search

Service agreement

Rental

20%

19%

13%10%

8%

30%MaritimeICTEnergySeafoodHealthOther

5

Some references

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ICT – some success cases

Movilisto – Company establishment

Conax – Market info and contacts with local companies

Telenor – Market information, payment settlement, contacts

EDB4Tel – Company establishment, market info, contacts with local companies and authorities

Tandberg – Market information, sales seminar organisation

SpainSome facts

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Some basic dataSome basic data

Sources: SSB, INE, World Bank Group

2003 Spain Norway Surface (Square Km) 506 000 388 155 Population 42 717 000 4 579 000 GDP in Million Euros 798 672 195 328 GDP (growth) 2,5% 0,4% Inflation 2,6% 2,5% Unemployment 10,5% 4,5%

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Regions of Spain

MadridBarcelona

Bilbao

Valencia

Sevilla

Cataluña (6,3 milioner inb.) Handel, IKT, bilindustri, finans, legemidler, kjemisk industri, elektronikk, design, reklame, consulting

Cataluña (6,3 milioner inb.) Handel, IKT, bilindustri, finans, legemidler, kjemisk industri, elektronikk, design, reklame, consulting

Valencia (4,2 milioner inb.) Mye småindustri: møbler, tekstil, lær, keramikk, frukt, mm.

Valencia (4,2 milioner inb.) Mye småindustri: møbler, tekstil, lær, keramikk, frukt, mm.

Andalusia (7,3 milioner inb.) Stor service-sektor, viss industri, frukt og grønsaker, mye jordbruk.

Andalusia (7,3 milioner inb.) Stor service-sektor, viss industri, frukt og grønsaker, mye jordbruk.

Baskerland (2,1 milioner inb.) Skipsbygging, stål, jernvarer, maskiner

Baskerland (2,1 milioner inb.) Skipsbygging, stål, jernvarer, maskiner

Madrid (5,4 milioner inb.) Offentlig forvaltning, bank og finans, elektronikk, legemidler, telecom, gen. industri, consulting

Madrid (5,4 milioner inb.) Offentlig forvaltning, bank og finans, elektronikk, legemidler, telecom, gen. industri, consulting

Galicia (2,7 milioner inb.) Fiske, akvakultur, mineraler, skipsbygging

Galicia (2,7 milioner inb.) Fiske, akvakultur, mineraler, skipsbygging

Santiago

Trade relations: Norway-Spain

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Import / Export

Source: SSB

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

Mil

lio

n N

OK

Import

Eksport

Export growth 04:Spain: +39%France: +35%UK: +20%Germany: +14%USA: +12%Denmark: +10%Sweden: +4%China: +1%Japan: 0%Italy: -21%

ImportExport

Mill

ion N

OK

12

35

13

108119

10

46

Travel, Real estate

Maritime, Shipping

Consulting, law firms

Health

ICT

Media

Seafood

Other

Norwegian companies establishedin Spain

0

10

20

30

40

Før1970

1970-1979

1980-1984

1985-1989

1990-1994

1995-1999

2000-2004

- About 150 Norwegian companies- 3.500 employees- Turnover about 1 billion Euro- About 10 new companies per year- Alicante (44), Madrid (38), Barcelona (16), Málaga (8), Cádiz (7)

38

18

4

451

5

16

1

7 1

1

1

13

Spain is getting closer…

20,000 Norwegian people established in Spain

50,000 has bought a residence

700,000 visits Spain yearly

Mobile phone and wireless market in SpainMarket, Penetration, Operators, Development and Potential

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Spain: One of the large mobile telephone markets

% Penetration in Market - June 2004

98,30 %92 % 91,10 %

81,20 %

67,00 %

0,00 %

20,00 %

40,00 %

60,00 %

80,00 %

100,00 %

120,00 %

Italy Spain Portugal Norway France

Country

%

Italy Spain Portugal Norway France

Subscribers (Million)

57

40,337

9,2

3,7

0

10

20

30

40

50

60

Italy France Spain Portugal Norway

Italy France Spain Portugal Norway

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Mobile communication Market

• 37 Million Mobile subscribers• 7% Annual Growth• 92% Mobile penetration• Major mobile operators:

• Telefonica (19 million users)• Vodafone (11,4 million users)• Amena

• Monthly average expenditure on mobile services (2003): 30 Euros

• Turn over in 2003: 34,4 billion €, 8% increase from 2002

• Investment in 2003: 4,5 million €• The sector represents 4,6% of GDP in 2003• January & February 2005: 571.000 clients

changed operator (CMT)

Source: Paul Budde Communication Pty Ltd) – June 2004, Actualidad Económica 2004

Market Share 2004

Amena; 24 %

Vodafone; 28 %

Telefónica; 48 %Telefónica

Vodafone

Amena

Mobile Phone Market (% of income).

Amena; 19 %

Vodafone; 27 %Telefónica; 54 %

Telefónica

Vodafone

Amena

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Mobile phones market share: 2004

Nokia33 %

Siemens24 %

TSM11 %

Motorola10 %

Alcatel6 %

Sony-Ericsson6 %

Samsung2 %

Others8 %

Mobile Communication

• 4 active networks:• Telefónica´s analogue • Telefónica´s GSM 900/1800 networks• Vodafone´s GSM-900 • Amena’s GSM-1800 networks

• Prepaid cards have been the main driver of growth – still accounting for some 60% of all subscriptions.

• SMS, MMS, WAP, GPRS and i-mod all available – but only SMS has had any success• In 2003, 11,7 billion SMS were sent. 47% of these are premium SMS. • SMS generates 13,7% of the mobile operators turnover. Turnover related to GPRS

(MMS is included) reached 47€ million. • The wireless services (using the GSM network) are very new in the Spanish market

and therefore there are not official statistics available. Estimations are that 9,7% of companies use wireless connection

• The Ministry is studying the convenience of changing the regulation to invite virtual mobile operators to the market.

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Mobile subscribers

0

5 000 000

10 000 000

15 000 000

20 000 000

25 000 000

30 000 000

35 000 000

40 000 000

1996 1997 1998 1999 2000 2001 2002 2003 2004

Mobile Subscribers

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3G/UMTS

• 3G/UMTS licences auctioned for 520M Euros in 2000: Telefónica, Vodafone, Amena and Xfera.

• The first commercial 3G services became available in February 2004.• Less than 2% of phones bought in Jan & Feb 2005 were UMTS – phones.• Due to high prices – cost over 100 Euros (Half of phones bought by Spaniards cost

less than 100E)• Lack of information about the advantages that this new technology offers.• Network technology not sufficient developed => problems zona de UMTS and zona de

GSM• Total UMTS antennas displayed in Spain: 2600, mainly owned by Telefónica and

Vodafone. The antennas needed to cover 95% of the territory are between 8000 and 9000 this means an investment of 6300 million Euros. About 140 municipalities had access to UMTS in the end of 2004, and this is less than half of the Spanish population. The operators have not disclosed any numbers on how many of their customers are using UMTS.

• The companies already selling UMTS terminals in Spain: Nokia, Motorola and Samsung. 14 million new terminals are expected to be sold in 2005, many of them UMTS and Multimedia

Internet Data in SpainUsage, penetration, applications

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Internet

Internet users: there is no uniformity about official figures:• 12 mill (33,1%) AUI (march 2004)• 14 mill (Nilsen-2003)• 42,8% (AECE-2003) out of 35 million people• 40% (Eurostat, 2004)• 9,8 mill Paul Budde Communication

Penetration of broadband low in a European context, but adoption has accelerated rapidly. One factor in the limited take-up is the analogue infrastructure in regional areas. These lines do not support Internet access, but the government is investing in their upgrade.

In mid-2004, 71,5% of all broadband connections were made through ADSL, 23,2% were through cable modem and the rest through satellite, fiber or Powerline broadband (5,3%).

More than three million ADSL lines (+58% in comparison with data from April 2004). Source: Telefónica

76,2% of the companies are connected to the network (87% Eurostat, 2004) 32,8% have their own web page (2004) 86,5% of the companies uses PCs (2004) The sales of portable PCs has increased in 31% in 2004 Approx. 620 licensed Internet Service Providers (ISPs) in Spain in 2004.

Internet Users 1996-2003

0 %

5 %

10 %

15 %

20 %

25 %

30 %

1996 1997 1998 1999 2000 2001 2002 2003

Year

Pen

etra

tio

n

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Internet access locations

In june 2004 AIMC presented a research; a 21% annual increase in Internet use.

62% connected from home

• ADSL: 42.8%

• Telephone line: 35.5%

• Cable Modem: 17.8%

32% used the Internet at work

13% accessed the Internet at school/university

Highest user – penetration: Madrid (39%), Basque Country (35%) and Catalonia (34%)

Opportunities and areas of interestsubtitle

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Why Spain is interesting

• High penetration of market – ”everyone” has at least one mobile• Pressure from the government to lower prices• High profitability in the market• Auna up for sale – changes in market• Three new GSM-900 licences (June 2005): one for Telefónica (4 megahertz) and

two Amena (6 megahertz). The investment committed by the operators for the rural areas sums 532 million Euros

• Process to grant the UMTS licence not operated by Xfera (if this company does not begin to operate by the beginning of 2006)

“There is a growing market for mobile services and equipment with an important demand for value-added services for both the consumer and the business world. One of the main reasons for a good expectations for the year 2005 is the beginning of operations of the 3G mobile phone market and the increase in the activity and business for the wireless services. There is a need for solutions in areas such as premium SMS, mobile games, MMS, interaction with TV, payment systems, surveillance, direct marketing, mobility solutions for enterprises and professionals among others.” (Source: Expansión, US Commercial Service, Actualidad Económica, January 2005.)

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What's hot in the market?

• UMTS (3G):

• This new technology expects to reach a market penetration of at least 50% by 2007.

• The market will need services, technology, applications, mobile-video conferencing features and technology to increase the security.

• Wireless technologies:

• WiFi: In need to increase the security users level, to develop a better “Roadming”, to define a more competitive business model, to develop devises (dispositivos) and to work on technology to avoid interference with Bluetooth and other frequencies.

• WiMax, Mobile-Fi, ZigBee and Ultrawideband: will develop future business in Spain.

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What's hot in the market?

• Voice over IP: it needs to generate new services with an added-value to the clients

• 4G: The media begin to talk about the development to new technologies for a fourth generation

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Challenges

• Provide enough terminals

• Lower the price of the terminals and services

• Improve quality of the services

• Invest in the 3G network (investment committed: 6,300 million Euros)

• To build a 3G culture

• To improve the security in the communication

(Source: Tiempo de Hoy, 22/11/2004)

Some issues to be taken into accountDoing business in Spain: a cultural approach

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SOME KEYS AND ADVISE BASED ON THE NORWEGIAN EXPERIENCE IN SPAIN

Confidence is a key word. Business will not happen until confidence is established. Most business is in Spanish. English is often NOT sufficient. Things take time, even more in smaller or traditional companies. Are NOT slaves of time, but are relatively on time. Bureaucracy still very present, also in larger companies. Make sure you have a meeting, reconfirm close to date Start meeting with small talk, this can take long Often conclusions are made over lunch, or dinner. That allows you to socialise, shows respect for the Spanish culture, and also provides the opportunity for positive feedback and deals. Much improvisation. Less preparation than in Germanic countries. Personal services are exchanged for confidence. Be patient and long term. Do overall planning. Mobilise resources; Time, people and money. Be honest. Go for confidence. Take time needed to get close to your partner. Social Contact is the key. Invest your time.

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SOME KEYS AND ADVISE BASED ON THE NORWEGIAN EXPERIENCE IN SPAIN Know your data. Updated Hard Facts are often difficult to get. Make sure you invest in good “glasses”. This will be a strength in setting priorities, and in negotiations. Select your priority and stick to it but allow for adaptations along the way. Select your right partner, you will need one. Get close to him. Make sure your contract is conceived so that there is a cheap way out, if he deceives you. Communicate clearly, written conclusions as base for follow up and next step. Allow for repeated visits. Follow-up is vital. Fulfill all promises like supply of information, letters confirming conclusions, … If not, he will forget you rapidly.Remind him or her on your agreement before coming on next visit. Make sure you plan for one more step. Read the signals. Much communication will be between the lines; the Latin people communicate more discretely than the Germanic. Being “too direct” can be mistaken as a rude or arrogant attitude.

Thank you for your attention!

Contact details:

Innovation Norway Tel: +34 91 344 09 87

Paseo de la Castellana 31 Fax: +34 91 344 09 47

Planta Baja

28046 Madrid

Mail: rodrigo.ballesteros@invanor.no