MAVAM Argentina - English version 04/04/2011

MAVAMAcision Monitor for Mobile VAS

1˚ EDITION

© Copyright Acision March 2011

Prepared by

ARGENTINA

MAVAM | Acision Monitor for Mobile VAS

MAVAM Argentina

By mid of 2010, Latin America became the second region of the world regarding number ofmobile phone service subscribers. Globally-speaking, sales in the region account for 10% ofmobile operators revenues.

Main countries in Latin America already exceed the 100 lines per 100 inhabitants. Today, anew stage begins in the region, in which the Value Added Services (VAS) will be increasinglymore relevant for the growth of mobile operators’ revenues. Besides the proportionalincrease of VAS, the region’s economic growth is added, where most of the countries willgrow at rates over 4% annual of GDP.

VAS in the region already accounts for 21% of mobile operators’ revenues, while in mostdeveloped countries this segment already reached 50%. With no doubt, Latin America willfollow this trend regarding the VAS share in the operator’s total business.

In Argentina, during 2010, VAS accounted for 37% of mobile operators’ revenues; thusArgentina is ranked first within Latin America regarding this category.

Acision, global mobile data solution leader, has created MAVAM (Acision Monitor forMobile Value Added) in September 2009, in order to assess status and evolution of maintrends in the VAS market. Each edition of MAVAM monitors six VAS areas: messaging, data(mobile broadband), mobile marketing / advertising, mobile banking / payment,entertainment and social networks.

Since its launch in 2009, MAVAM is quarterly published in Brazil. In December 2010,MAVAM started to expand throughout Latin America and it presented its first edition ofMAVAM Mexico.

Acision is today honored to present first edition of MAVAM Argentina, thus providing ahalf-term report that will enable to keep track of the evolution of value added business.

Thus, through this study, our intention is to provide systematic and recurrent informationfor all players of the telecom industry. It is a consultation and forum tool for the newgeneration of mobile businesses.

Worth reading it.

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Editorial

Rafael Steinhauser

Acision

President for Latin America

MAVAM | Acision Monitor for Mobile VAS

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2 Editorial

4 1. Introduction5 1.1. Value Added Services in the World 9 1.2. Value Added Services in Latin America

10 1.3. Value Added Services (VAS) in Argentina

12 2. MAVAM (Acision Monitor for Mobile VAS)

13 3. MAVAM Argentina13 3.1. Message services15 3.1.1. SMS 16 3.1.2. MMS 17 3.1.3. Instant Messages (IM) 17 3.1.4. Voice mail 18 3.1.5. E-mail 19 3.2. Entertainment21 3.2.1. Games (Use and downloads)23 3.2.2. Music (Use and downloads) 24 3.2.3. Ringtones (Downloads) 24 3.2.4. Images ( Downloads) 25 3.2.5. Video ( Downloads) and Mobile TV (Watching)25 3.3. Mobile Internet27 3.3.1. Social Networking28 3.3.2. Mobile Money and

Mobile Banking29 3.3.3. GPS and Maps29 3.3.4. Mobile Marketing and Advertising

32 4. Conclusions

33 5. Technical Data Sheet

34 6. Glossary

37 7. Team

Index

MAVAM | 1. Introduction

By the end of the year 2010, there were 5.41 billion service subscribers worldwide, out of the6.92 billion total inhabitants, which means a penetration of 78 cell phones every 100inhabitants. Pursuant to the estimations made by Convergencia Research América Latina3,by the end of 2010 there were 559.74 million mobile subscribers equivalent to 10.37% ofthe total global lines. The average penetration in the region is 96 lines every 100inhabitants; and between 2011 and 2012 every country, except for Cuba and Nicaragua,will exceed 100% penetration.

In 2010 the global revenue generated by mobile phone services was equal to around 800billion Dollars5, which is equivalent to 1.3% of the Gross World Product (GWP). Pursuantto the estimations made by Convergencia Research, the revenue derived from mobile phoneservices in Latin America in 2010 was about 81 billion Dollars, which amounts to 8.5% ofthe global business of mobile services.

Latin America is not an exception to the transformation of the mobile services industry,which is taking place globally: saturation of penetration rates, new devices, and increase inthe data traffic, among others. Notwithstanding that, the economic projections made bymost countries with their gross domestic products growing above 4%, generate conditionswhich are more than optimistic to face this transformation process in which value addedservices (VAS) will play a key role.

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Introduction1

1 Source: Report by Telecoms & Media

WCIS+, 4G Américas’ Web site

2 Source: Estimations made by the World Bank.

3 Includes Latin America, Caribbean, Central

America and Mexico.

4 Data assessed on the basis of balance sheets,

regulators and own estimations.

5 Source: Estimations made by Convergencia

Research.

Graphic 1.

Mobile Subscribers 2010 Total world as of Q4 2010: 5400 Million

Mobile Revenues 2010Total world 2010: 796 billion

Source: Convergencia Research based on the balance of the operators, local regulators and the Internacional

Telecommunication Union (ITU).

In order to show the global impact of VAS on the business of mobile phone services, asample was selected which includes seven companies with presence in different countries(See graphic 2). At each company, an analysis was conducted of the total revenue evolutionfrom December 2009 to December 2010, and the evolution of the participation of therevenues obtained from VAS in relation to each company’s total sales.

VAS services basically include: SMS and MMS (messaging service), music, videos, games,ringtones (entertainment), mobile banking and payments, mobile broadband, socialnetworks, and marketing / mobile advertising.

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1. Value Added Services in the World 1

Graphic 2.

Operators analyzed

1. AT&T - Unites States of America

2. China Mobile - China

3. France Telecom

4. América Móvil Latin America

5. Telefónica

5.1. Telefónica Spain

5.2. Telefónica Ireland

5.3. Telefónica Latin America

6. Vodafone

6.1. Vodafone United Kingdom

6.2. Vodafone Germany

6.3. Vodafone India

7. NTT Docomo Japan

8. SKTelecom Korea


Variation in the revenues obtained from the Voice Servicesvs. VAS

The mobile voice business faces a generalized downward trend (See graphic 3). In this sampleof countries, which is varied as to geography and typology, there have been up to 12%yearlyfalls, except for such countries as China (+ 6%) and India (+21). These countries areundergoing pure expansion processes, with a mobile phone penetration rate below the globalmean (77 %) and with 3G technology which is just taking off. In the particular case ofChina, with almost 860 million mobile subscribers by the end of 2010, only 25 million(3%) use 3G technology services and Vodafone India, with 124 million mobile customersaims at launching mobile broadband services through 3G technology on the January-Marchquarter of 2011. There are currently almost no 3G services in India.

In the particular case of the VAS business, there is a general 2-digit increase, highlightingTelefónica Latinoamérica (Telefónica Latin America) (+ 43%), Vodafone India (59%), andAmérica Móvil (40,4%).

It may be further observed that the gap –between countries with higher and lower economicdevelopment– in VAS use and market penetration ratios is increasingly reduced as lessdeveloped countries introduce more customers and as the counties with more developedeconomies enter a phase of solely vegetative growth.

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Graphic 3.

Variation in the revenuesobtained from Voice

Services vs. VASDecember 2009 vs. December 2010

Source: Convergencia Research on

the basis of the financial reports

of the operators.


The countries with lowest mobile phone penetrationrates are undergoing a natural evolution stage, which hasalready been undergone by those countries with higherpenetration rates. This evolution path ranges from thoseVAS mainly based on SMS (a feature which is operationalon almost all the telephones) to those VAS based onmobile Internet (in developed countries with moresophisticated devices).

Not only is the annual growth of mobile VAS important inabsolute values, but its increasing contribution to the mobileARPU is also relevant. On many occasions, not only does itcompensate the losses in the voice business but it also makesit possible to increase the total ARPU. A good example ofsuch situation is Telefónica Latinoamérica, where in spite of a6%-yearly fall in the voice business as a consequence of the

increase in the use of VAS, the total ARPU has also been increased by almost 2% (-0,2% inconstant currency).

Considering the development of more mature countries such as the United States, Germany,and the United Kingdom, this contribution figure exceeds 35% with a clear upward trend.In particular, in Japan the revenues obtained from voice services have just been put in thesame level with the revenues from VAS.

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Graphic 4.

Analysis of VAScontribution to the

mobile ARPUDecember 2010

Source: Convergencia Research on the

basis of operators’ balance sheets


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Source: Convergencia Research on the

basis of the operators’ balance sheets,

local regulators and International

Telecommunication Union (ITU).

Graphic 5.

ARPU fluctuation: Total vs. Voice. vs. Service Penetration and Data

December 2009 vs. December 2010


1.2. Value Added Services in Latin America

By the end of 2010, the nucleus of mobile subscribers in Latin America consisted of 83%prepaid and 17% postpaid. The high prepayment level has not constituted a restriction onthe growth of revenues for value added services (VAS), which represent between 15% and25% of the operators’ revenues, and may even reach values between 35% and 40% insome cases.

By the end of December, the average ARPU in the region was closet to USD 11,28. TheARPU values in Dollars have remained almost unaltered over the last three years as aresult of a combination of effects which are related both by the value proposals and by theARPU’s own increases in local currency, depending on the operator’s country. In mostcases, except in the case of Brazil, the main value added component is the one generatedby SMS.

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Graphic 6.

VAS by componentAverage Total Region 2010

Source: Estimations Convergencia

Research

Graphic 7.

ARPU Voice vs. Data in Latin America per country

Source: Convergencia Research

1.3. Value Added Services (VAS) in

Argentina

Argentina is one of the countries with highest mobile service penetration levels. By theend of 2010, there were 52,256,7506 cell phone lines, equivalent to 130% of penetrationon the population. Mobile clients increased 7% between 2009 and 2010. Although thereare different points of views and estimates as to the number of lines related to a singleuser (does not have more than one cell phone line) or active user (consumes voiceminutes), the fact is that regardless of the estimate made, percentages show thatpenetration has reached a saturation point as to connecting people.

In 2010, sales increased 20.5% and amounted to 28,696 million Argentine pesos (almost)USD 7,192 million, equivalent to 9% of the Latin-American mobile services market.

Argentina is the third Latin American market in number of subscribers, after Brazil andMexico. However, regardless of this feature there are other factors that make it special. Oneof them is that post-paid users represent 27% of the market, while the Latin Americanaverage barely exceeds 17%. This is due to the fact that “controlled accounts” cover part ofthe market (controlled accounts refer to fixed rate agreements and recharging options) whichare not usually seen in the countries of the region. “Controlled accounts” are an interestingbasis when offering packages and value added services.

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Graphic 8.

Market share 2010

Source: Convergencia Research based on

balances and own estimates.

Market share per total sales Market share per number of lines

6 Estimates of subscribers and percentage of

prepaid users against post-paid users

include Nextel.

However, the most particular feature inArgentina is that it is the country thatmostly contributes with VAS (value addedservices – SVA7) to the operators’ totalsales. In 2010, value added servicesrepresented 36.88% of the market,equivalent to a sales volume of almost9,445 million Argentine pesos (USD2,369million).

The increase in value added services salesin relation to 2009 was nearly 40% whilevoice mail services increased 13%.

SMS segment represents 68% of valueadded services. However, data segment isthe segment that mostly increased, almost50% annually.

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7 Followed by Venezuela with 33% of VAS

contributions to mobile operators’ total sales.

Graphic 10.

Argentina: VAS 2010

Source: Convergencia Research.

Only includes Claro, Movistar

and Personal

Graphic 9.

Prepaid vs. Post-paidTotal market 2010

Source: Convergencia Research based on

balances and own estimates

VAS per typeVAS vs. Voice

MAVAM | 2. MAVAM (Acision Monitor for Mobile VAS)

MAVAM aims at analyzing the trends of value-added services in Latin America. Since 2009,this study has been carried out in Brazil. In 2010, it was carried out in Mexico, while, in2011, the survey will focus on Argentina.

With the launch of Acision MAVAM Argentina, conducted by Convergencia Research,every six months the mobile market will be provided with a tool that allows monitoring thedevelopment of value added services within the country.

The services analyzed in this edition include: • Messages

• SMS • MMS • E-mail • Instant messages• Voice mail

• Entertainment• Music• Images• Games• Ringtones• TV • Video

• Internet access• Social networking• Location Based Services (LBS)• Payments and banking• Mobile Marketing

MAVAM Argentina was carried out through a survey addressed to mobile phone userswithin Argentina, through Computer Assisted Web Interviewing (CAWI) with a sampleof 800 respondents from Februarty 28th through March 18, 2011.

The methodological bias in Internet surveys turns some cases inapplicable to the wholemarket and thus they can only be used as reference and guidance. These cases areexplained along this study.

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MAVAM (Acision Monitor for Mobile VAS)

2

MAVAM | 3. MAVAM Argentina

3.1. Message services

Message services, particularly SMS, are the mostly used value-added services. However,the adoption level at Latin American countries differs from one country to another.Differences are generally explained by cultural and offer aspects. For instance, the ratiobetween SMS relative costs and voice mail costs per minute.

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MAVAM Argentina3

Graphic 11.

World: SMS averageper month by user 2010

Graphic 12.

Latin America: SMS per month

by user 2010

Source: Convergencia Research

based on regulators.

* Mexico: Two sources. Cofetel (regulator) 58 SMS per month. Other market sources estimate the number in

138 SMS. These estimation differences usually occur in most Latin American countries data due to the use of

non-standardized methods.

**Argentina: 126 SMS per day, based on data from Indec-CNC. 270 SMS per day, MAVAM data for active users.


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Graphic 13.

SMS sent per monthby user

Selected countries 2010

According to the Argentine Communications Regulatory Board (CNC for its initialsin Spanish), in 2010, there was a 19.2% increase in the SMS sent, thus amounting to75,669 million of short messages sent. This means that, in average, during 2010, 126messages were sent per subscriber.


3.1.1. SMS

This MAVAM edition shows that 97% of users have used SMS in the last three months.This percentage shows that the use of SMS in Argentina is as popular as the use of voicemail and the SMS business growth will be encouraged by the increase in use and inapplications among people and devices using short messages to communicate.

For this sample, 270 SMS are sent in average permonth; it mostly duplicates the market´s average.The reason for this estimate is that users are usuallyfamiliar with technology. These percentages areinteresting as reference data as they show the extentto which the use of SMS can be stimulated amongcurrent mobile subscribers.

33% of respondents cannot determine how muchthey pay for SMS. In average, within this sample,users spend $38 per month in SMS.

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Graphic 14.

Use of SMS


3.1.2. MMS

It can be noted, that at a worldwide level, a broad number of cell phones, consideredbasic phones, can send MMS (multimedia messaging) and many of them also havecameras (which can be considered a logical element to exchange pictures through cellphones). However, this service is not widely used. Today, the development of sophisticateddevices and the increase in social networking is changing the way users share pictures. Ingeneral, pictures (or other images related to people´s privacy) are not sent from oneperson to another; but from one person to many others. Users tend to “upload” or“publish” them in the social networks they are registered in.

72% of respondents said that their cell phones allow them to send MMS8. However, only16.3% of respondents have used MMS in the last three months. If we consider activepeople those who send more than one MMS per week, we can conclude that only 7% ofrespondents have adopted MMS as a habit in their cell phones.

It is worth mentioning that, as the survey is made on the Internet, those much moresophisticated uses, unlike SMS, are affected due to the user´s familiarity with technology.Therefore, these percentages are used as reference or guidelines. The whole market maynot act alike, but they are considered a guide to adoption and development levels.

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Graphic 15.

Use of MMSReference percentages.

Applicable to this sample only.

Not applicable to the whole

market.

8 Probably, the number of cell phones that

allow sending MMS is greater, but it is

interesting to consider that only 72% of

users are aware of it.


The difference among the types of cell phones including MMS and their use means thatthere is a margin of growth within this service if interested offers are found and if theservice is not left behind by other picture exchange methods, like the abovementionedsocial networks.

3.1.3. Instant Messages (IM)

According to this sample, 11% ofrespondents have used instant messaging inthe last three months. In average, they useInstant Messages 19 times a month.

3.1.4. Voice mail

48% of respondents use voice mail. In average, respondents use voicemail 9 times a month and its frequency is focused on an occasional use(38%). The remaining percentage is evenly distributed among daily,weekly and fortnightly use of voice mail.

It is worth mentioning that due to the fact that users are most familiarwith technology, the relatively low use of this service may showreplacement effects that may be a sign that the voice mail is turning

obsolete. Some of the replacement effects include, not listening to the voice mail andanswering it by text messaging, not listening to the voice mail and answering the callbecause the user has caller ID, not listening to the voice mail to avoid expending on theservice and waiting until the person calls again.

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Graphic 16.

Used mobile InstantMessaging in the last

three months


3.1.5. E-mail

57% of respondents said that they have a cell phone allowing the setupof an email account and 19% thereof have Push mail in their phones,

regardless of their use or not. Percentages are somehow high and should notbe considered valid at the country´s level as the users surveyed are familiar

with technology.

14% of respondents confirmed that they have set up an email account intheir cell phones. However, if we consider only those who use email on a

daily basis or use it several times a week, the percentage is reducedto 9.1% of respondents. Today, this adjustment is the best e-mail

market estimator.

As regards Push mail, those who have set up this option and used it in the last threemonths (5.75% of respondents), use the service on a daily basis.

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Graphic 17.

Use of Voice mailBasis: 48% of the respondents


3.2. Entertainment

Mobile entertainment can be divided into two large groups; one whereentertainment is available through preloaded games, radio or MP3, and theother, where entertainment is available through the download of ringtones,video, images and music.

Except for ringtones and for the use of games in the cell phone, it should be notedthat this MAVAM´s edition, the data of which was collected through Internet,represents a group of users particularly familiar with technology (advanced users).This highly affects the adoption of value-added services in relation to the wholemarket and should be taken as reference and should only represent a group ofinhabitants using cell phones and having access to the Internet.

As regards downloads for entertainment, images and pictures (21%) and music(14%) have been largely downloaded in the last three months. However, itshould be noted, that there is no detail on whether these downloads weremade through mobile network or through device data exchange (Bluetoothor computer phones).

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Graphic 18.

E-mail in cell phones:Devices and use

Active user: Used e-mail in the last

three months and have used it daily

or several times a week


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As regards ringtones, music and images and games, download percentages are extremelyreduced if active users are considered; that is to say, those who download them on a dailybasis, several times a week or once a week.

As regards videos, the gap between active users and frequent users is narrower; but the basisis very small (less than 50 cases).

Figures show that within the entertainment market there is space to grow in terms ofpenetration (a larger number of users) and use.

It is necessary to understand that within advanced users, entertainment-related downloadsfocus on free content. Therefore, operators

may find data service pricesmore important than thecontents price.

The contents which users aremore open to are paid games(38% made paid downloads)and ringtones (37% made

paid downloads).

Graphic 19.

Entertainment-relateddownloads in

the last three months


Although the percentage of users who pay for downloads is very low, this sample shows thatthe suggested prices (charged9) amount to $4 per download.

3.2.1. Games (Use and downloads)

88% of respondents have cellphones with preloaded games.However, only 76% of such usersuse them (equivalent to 67% ofthe total number ofrespondents).

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9 It should be noted that users answer based on

the Price charged, that is to say, what they

think they have paid and there is generally a

distortion from actual content prices.

Graphic 20.

Entertainment:Type of download

Music Ringtones Games Video Images

Average Price per download $AR 4 $AR 4 $AR 7 $AR 5 $AR 4


In average, respondents use preloaded games 13 times a month. But it is worth mentioningthat 44% are frequent or active users of preloaded games (they use them on a daily basis andbetween 2 and 3 times a week), while only 23% occasionally use them.

Users who downloaded games (13%) use them more frequently than those who usepreloaded games. In average, they use downloaded games 16 times per month. 38% ofrespondents have paid for downloads; their average price is $AR 7.

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Graphic 22.

Frequency of use ofpreloaded games

in cell phones(Basis: who use preloaded games

in cell phones - 76%)

Graphic 21.

Preloaded games


3.2.2. Music (Use and Downloads)

Almost 64% of the respondents’ cell phones feature the possibility toeither use the radio or use the MP3. Generally, almost 100% ofrespondents having a device that allow them to listen to music throughtheir cell phones actually use this feature.

50% of respondents listening to music through their cell phone do so on a daily basis.Should we add those who listen to music 2 to 3 times a week, we can assert that cell phonesare the favorite devices for such purpose. This habit is an active habit among mobile users.

14% of users downloaded music in the last three months. 78% of downloads were for free.Respondents download music 9 times per month in average.

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Graphic 24.

Frequency of use ofmusic in cell phones

Basis: Those having cell phones

with radio or MP3 and

answered they listen to music.

(64% of users)

Graphic 23.

Cell phones with radioand/or MP3


3.2.3. Ringtones (Downloads)

9% of respondents downloaded ringtones in the last three months.Generally, downloads are rarely made (monthly, occasionally in 69%of cases). In average, ringtones are downloaded 5 times per month,and 63% of downloads are free.

3.2.4. Images (Downloads)

21% of respondents have downloaded images in the last threemonths. However, those who frequently download images (on a dailyor weekly basis or several days per week) only represent 5% ofrespondents. 88% of downloads are for free. Those who have paid todownload images spend $AR 4 in average per downloaded image.

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Graphic 25.

Frequency of musicdownloads

Basis: 14% of the sample.

The frequency of downloads is divided between those who rarely make downloads (40%)and those who actively do it (daily, weekly or several times a week) and they represent 44%of respondents who have downloaded music in the last three months.


3.2.5. Video (Downloads) and Mobile TV

(watching)

In average, 6% of respondents have downloaded images in the last three months.Frequency of downloads is high (on a daily or weekly basis or several days per week).90% of downloads are for free.

The number of respondents who have watched mobile TV is significantly low (lessthan 1%).

3.3. Mobile Internet

Within this sample, 59% of respondents have a cell phone whereby they can accessthe Internet, regardless of their actual use or not. They were asked which network

they used. 78% of respondents use the mobile operator´s network, 7% of themonly use Wi-Fi and 15% both.

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Graphic 26.

Mobile Internet Access


Although users know the different connection methods that can be used to access theInternet through a cell phone, only 19% of respondents have used their cell phone forInternet. This percentage (19%) is too high to consider it valid for more than 52million

existing lines in Argentina. However it is a good mobile Internet adoption levelgauge for advanced users (use fixed internet and have mobile phones).

19% of respondents having access to the Internet through their cell phones thinkthat a browser (78%) and Wireless Application Protocol (WAP) (33%) are mostcommonly used.

If we only consider those who access the Internet on a daily basis or severaltimes a week, we can conclude that 14% of respondents are mobile Internet

active users.

This survey, carried out among Internet users having cell phones, is importantdue to the fact that it shows that the use of mobile services is affected by the useof Internet through a computer. Use of Internet requires a higher level ofknowledge in relation to other services, such as SMS. That is to say, there is a

chance to increase the use of mobile Internet and in general, this will bring benefits if theuse of fixed internet is also increased.

59% of mobile internet users in the last three months asserted they have hired a data plan.

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Graphic 27.

Mobile Internet: devices and use


3.3.1. Social Networking

15% de of respondents accessed a social network in the last three months. The mostlyused social networks include Facebook (98%) and Twitter (31%).

In average, for this sample, respondents access social networks 19 times per month. Asregards both Facebook and Twitter, 74% of users access those networks on a daily basis.

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Graphic 28.

Cell phone socialnetwork accessAnswer: multiple choice.

Basis: 15% of the respondents

having access to social networks


3.3.2. Mobile Money and Mobile banking

The number of existing cell phones and the low levels of banking services in regions suchas Latin America are interesting for the development of mobile banking and/or mobileservices as monetary distribution channels.

In this MAVAM´s edition we focused on two aspects: mobile banking only accessed bybanked population and the use of cell phones to transfer credit to subscribers.

The results show that 5% of respondents accessed a bank through their cell phones andmade payments, while 15% thereof, transferred credit from one cell phone to another.

It should be noted that onlinebanking (bank web sites that canbe accessed by cell phone) iswidespread in Argentina. Manymarket studies show that inquiriesare made by cell phones ratherthan by the banks´ web sites.

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Graphic 29.

Use of money andmobile banking

S


However, the use of cell phones as a means of payment has not been widely developed inArgentina. To sum up, there is a chance to develop mobile banking and mobile moneybusiness lines.

3.3.3. GPS and Maps

7.1% of respondents have used GPS and/or maps through their cell phones inthe last three months. The figure is too high to consider it valid for all mobileusers in Argentina. Therefore, this information is taken as a reference and isapplicable to those users who have cell phones but who also use Internet

through desktop computers.

3.3.4. Mobile Marketing and advertising

Mobile marketing and advertising comprise a broad and wide cross group of practices thatranges from banners in the operator´s web site, to advertising SMS and most sophisticatedoptions involving users´ interaction.

To organize this group, MAVAM classifies practices in two large groups: Mobilemarketing, referring to advertisements made by operators, and Mobile Advertising,referring to advertisements made by companies other than operators.

This MAVAM edition assesses the practices related to the use of messaging for advertisingor promotion.

89% of respondents declared that they have received an SMS or MMS with promotionsor advertising in the last three months.

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Generally, for this sample, usershighly receive advertisements orpromotions in their cell phones.33% receives advertisements andpromotions in their cell phonesbetween 2 and 3 times a week. Inaverage, respondents receive 13advertising messages per month.

14% of respondents do notremember the advertising issuingparty, while 74% state that theyreceive messages from their operator(mobile marketing). 12% havereceived messages from companiesother than their operators (mobile

advertising).

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Graphic 30.

Received advertisingor promotion in their

cell phones in the lastthree months

Graphic31.

Frequency of advertising SMS/MMS in cell phones


62% of users declared they carefully readthe messages received in their cell phones,while 38% do not. We consider that thesepercentages can be enhanced byaccurately focusing on the users segment,the sending of messages and their consentto receiving advertising messages.

For your information, MAVAM Brazil´sseventh edition deeply analyzed mobilemarketing and advertising in the country.Segmentation based on preferences andthe users’ consent were consideredsignificant to enhance message receptivity.Although conduct is affected by culturalaspects, MAVAM Brazil data can be usedas a reference as to the significance ofsegmentation and the users’ consent to

extend mobile marketingand advertising business.

Among those who havecarefully readadvertisements, many

declare that the messages belong tothe operator and consist of discounts in

services and/ or recharges mostly related toSMS or data packages. Themostly mentioned second itemrefers to contests to win moneyor prize draws of vehicles.Finally, messages may includediscounts at stores and

operator´s loyalty programs.

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Graphic 33.

Were advertisingmessages carefullyread?

Graphic 32.

Mobile advertising issuing party

MAVAM | 4. Conclusions

Argentina is the Latin American country with the highest percentage in VAS contributionto the operators’ total sales. In 2010, they represented 36.88% of mobile phonecompanies’ annual sales.

Value added services increased 40% in 2010 in relation to the previous year and salesamounted to almost $AR 9,445 million, while voice mail services only increased 13%.The increase rates show the importance of VAS in the operator’s current business.

SMS represent the highest VAS earnings (72% of the total VAS). However, data services’segment is the one that mostly increased in 2010, almost 50%, mainly

encouraged by Smartphones.

In Argentina, in average, 126 SMS are sent per month. Thefigure exceeds the world average (101 SMS per month).97% of respondents to Acison MAVAM´s survey usedSMS in the last three months. Respondents send 270

SMS per month in average. These users are familiarwith technology, which has a positive impact onservice consumption.

In Argentina, the high penetration of post-paid services (27% against 17% in LatinAmerica), SMS mass adoption andSmartphones proliferation have given placeto a more sophisticated offering and ahigher mobile service packaging asopposed to what happens in other LatinAmerican countries.

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Conclusions4

MAVAM | 5. Technical Data Sheet

Universe Cell phone users with Internet access

Technique CAWI (Computer Assisted Web Interviewing)

Instrumento Pre designed survey 15 minutes

Sample 800 respondents

Country Argentina

Date of survey February 28 through March, 2011

Gender Sample

Men 389 48.63%

Women 411 51.38%

Age Muestra

14 - 24 156 19.50%

25 - 34 284 35.50%

35 - 44 188 23.50%

45 - 54 129 16.13%

55 + 43 5..38%

Place of residence Sample

MABA 392 49.00%

Provinces 408 51.00%

SEL Sample

D1 230 28.75%

C3 306 38.25%

C2 188 23.50%

ABC1 76 9.50%

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Technical Data Sheet5

MAVAM | 6. Glossary

The description of the services presented in this report is presented in the following sections.

Messages The services in this category can be defined as:SMS (Short Message Services): sends short text messages.

MMS (Multimedia Message Service): sends short text messages with image, photo,or video.

E-mail: receives or sends emails via cell phone. Receiving or sending can be done manually,in other words by user’s initiative, or can be activated through the push mechanism, whichperiodically and automatically receives and sends mail.

Instant Messages: service which permits access to instant messaging systems like MSNor Yahoo.

Answering Machine or Voice Messaging: gives access to the automatic messagesrecording service offered by the carrier, in case of receiving calls that can’t be answered.

Entertainment The services in this category can be defined as:Music: service which provides the download of songs to be played in the cell phone. Thehandset must be able to play several music formats such as MP3, AAC, MP4, WAV,among others.

Ringtones: service which provides the download of ringtones to be used in the handset.The cell phone must be able to play multiple formats of ringtones, such as MIDI, AAC,MP3, MP4, WAV, among others.

Images: service which provides the download of images and photos to be displayed on thecell phone. The handset must be able to display several formats of pictures and images suchas JPEG, GIF, among others.

Games: service which provides the download of games to be played on the cell phone,individually, or through internet or Bluetooth connections, in groups. The cell phonemust be able to run the games available in the device and also the downloaded ones, andadditionally provide Bluetooth or data connectivity for internet access (eg.: EDGE,EVDO, or 3G).

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Glossary 6

MAVAM | 6. Glosario

Video: service which provides the download of videos or video streaming to be played on cellphone. The handset must be able to play downloaded videos or received video streaming. Thecell phone must be able to play videos in 3GP, MP4, WMV, AVI, among others.

Open TV: This feature is present in some cell phones and permits user to watch free TVprograms with the handset acting as an analogue or digital TV receptor and capturingcontents through the same signals (frequencies) received by traditional TV’s at home.

Internet and Location The services in this category can be defined as:Internet Access: service which provides broadband access to the Internet via cell phoneor modem. In both cases users must have a data plan contract with the mobile operator.This service has the following characteristics:

Cell phone: the internet access from cell phone can be done in the following ways:• Using a browser to access the same websites accessed by fixed internet through a

computer. Examples of browsers: the ones offered by the cell phone orsmartphone (Internet Explorer Mobile, for Windows Mobile), or alternative

browsers such as Skyfire or Opera.

• Accessing the WAP websites inside the Carrier network through WAP browser.

• Through specific programs installed in the handset (Widget, Web-App)provided by companies like Yahoo Mobile.

Modem: devices which can be connected to desktop computers or notebooks.Provides Internet broadband connection using a computer browser (InternetExplorer, Firefox, and others).

Social Networks: service which includes all the necessary elements to provide accessto social networks such as Orkut, Twitter, Facebook, and others. This access can bedone through browser and internet access, both present on cell phones, or through aspecific application provided by mobile operators or other companies.

Payments and Banking: usually offered by banks or other credit institutions, whichallows the access to users accounts in these institutions. These services can range fromsimple balance consults to the payment of bills or conclusion of investment transactions.

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MAVAM | 6. Glosario

Location Based Services: service which provides users’ geographic location. Theseservices have the following characteristics:

Location can be provided as the following:• Through a process of triangulation using information from cell sites and

application systems provided by the operator for this purpose;• Through the GPS installed in the cell phone.

Offered Services:

Location: service usually offered by the mobile operator which allows informing thegeographic location of a particular subscriber. Eg.: service hired by parents to monitortheir children’s habits, or with the purpose of promoting safety.

Maps: service offered by other companies providing maps on cell phones, usually tolocate addresses, and also permits to locate users in the map if their handsets have abuilt-in GPS.

Contextual Filter: permits the mobile operator, or other service providers, to offeraddresses or other types of promotions at stores, restaurants, movies, among others,based on the instant location of users.

Mobile Marketing The services in this category can be defined as:Mobile Marketing: these services are implemented by mobile operators, to advertise theoperator itself or other companies for the subscriber base. Usually these ads are sent via SMS.The advertisements can also be sent directly by competitor carriers or other companies, againusing SMS messages.

Mobile Advertising: similar to Mobile Marketing, Mobile Advertising is also an advertisingservice implemented by mobile operators or other companies. If the subscribers agree to receiveit they can participate of promotions such as free minutes, free SMS packages, and others, as areward for receiving advertisements.

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MAVAM | 7. Team

Rafael Steinhauser | President Latin America

Jorge Leonel | VP Marketing and Business Development

Edson Melo | Marketing Manager Latam

Mariana Rodriguez Zani | Diretor

Inés Leopoldo | External International Advisor

Matías Guardiola | Research Manager

Lina Rivero | Analyst

Andrea Catalano | Analyst

Mónica Perez Serantes | Designer

Cristian Marchiaro | Account Manager

Dolores Lezama | Account Excecutive

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Team7