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Infobalt 2002

Darius Masionis,Chief Executive Officer

UAB Bite GSM

Global role of mobile companies in the world

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About Bitė GSM

Slowdown on the global market

European telecommunication sector development

What can we expect in the future of telecoms?

Conclusions

Outline

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Bitė GSM in brief

• Bite GSM was established in 1995 • Full scale provider of mobile and internet services • GSM 900 and 1800 mobile network • Data and Internet license

• Roaming with 155 operators in 74 countries • 427 employees • TDC is 100% shareholder

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Bite is 100% owned by TDC Mobile International, the member

of TDC group

TDC Tele Danmark

TDC Tele Danmark

TDC Mobile International

TDC Mobile International

TDCSwitzerland

TDCSwitzerland

TDCInternet

TDCInternet

TDCDirectories

TDCDirectories

TDCCable TV

TDCCable TV

TDCServices

TDCServices

100% 100% 78.7% 100% 100% 100% 100%

TDC group consists of 20 companies, operating in 12 Europe countries

In first half of 2001 Bitė GSM has been listed by independent international experts as one of the most effectively operating companies in TDC group

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TDC Mobile International

Bité (100%)

Talkline (100%)

Polkomtel (19.6%)

UMC (16.3%)

Connect Austria (15.0%)

TDC Mobil (100%)

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A capital markets’ perspective on the recent evolution

Early 2000

Number of customers

Increased penetration

Third generation, m.data

Optimistic growth prognosis

Long term growth, UMTS

Hype over new economy

Consolidation

Early 2002

Increase ARPU, reduce customer acquisition costs

Penetration peak

Mobile data disappointment

Heavy debts, growth slowdown

Cash, short term return

Back to balance sheet approach

Consolidation

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30

40

50

60

70

80

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nokia

CreditSuisse

2002perspective

Data as the ARPU driverEstimations seen in 2000 and 2002

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Slowdown ahead in the absence ofa new killer application

Source:WEFA-WMM; Dataquest; ITU

Annual revenue and GDP growth for telecoms operating in EU15Annual revenue and GDP growth for telecoms operating in EU15

-10%

0%

10%

20%

30%

40%

50%

60%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Telecom RevenuesTelecom Revenues

MobileMobile

GDPGDP

FixedFixed

DataData

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In wireless:concentration around six large groups

European market share (subscribers), percent 1997-2000

0%

5%

10%

15%

20%

25%

30%

1997 1998 1999 2000

Telefonica, SpainTelefonica, Spain

Deutsche TelecomDeutsche Telecom

Telecom ItaliaTelecom Italia

France Telecom/ OrangeFrance Telecom/ OrangeBritish TelecomBritish Telecom

VodafoneVodafone

SourceEMC Database; Company websites; Eurotel Analysis

Aggregate share of six largest operators is over 70% of European Market

Aggregate share of six largest operators is over 70% of European Market

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In wireline: incumbents will face challenges along three horizons

Level of uncertainty

Magnitude of opportunities

Characteristics • Challenges clearly identified• Incumbents have a chance

to achieve positive outcome through excellent execution

• Challenges identified, but still unclear dimensions

• Incumbents have to set-up enhanced capabilities to face challenges

• Challenges/opportunities unclear

• Broadbandaccess

• Infrastructure competition• SME battle• Price decline• Wireless substitution• Attacker consolidation

• Broadband content/ services

• New attackers (new business models)

• Technologyinnovation

• Technology substitution

Magnitude of threats

Horizon 1

Horizon 2

Horizon 3

• Regulatory issues(e.g., rebalancing, separation of network)

Potential real threat

+

+

- +

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Search of growth opportunities

Development within current businesses

Development within current businesses

Expansion within the value chainExpansion within the value chain

Deployment of intangibles into other industries

Deployment of intangibles into other industries

+ +

+

+

• Continues to be top priority– Current markets– New markets

• Option to explore– Content provider– Content owner/

developer– Device design, offering

and installation– Service outsourcing for

clients– Redeploying intangibles

into adjacent industries

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The landscape of the European Telecom Industry will evolve towards larger and more focused

players via restructuring at BU level rather than at group level

Future European landscapeEuropean landscape today

SmallIntegrated Large Integrated Focused

WirelineWireline

WirelessWireless

DataData

WirelineWireline

WirelessWireless

DataData

SmallIntegrated Large Integrated Focused

• Incumbents maintain local positions

• Possibly some turnaround plays

• Incumbents maintain local positions

• Possibly some turnaround plays

• Some small players will shred data assets

• Some large players will grow internationally

• Increased focus

• Some small players will shred data assets

• Some large players will grow internationally

• Increased focus

• Some small players will shred wireless assets

• Possible moves to complete/develop pan-European coverage and regional plays

• Increased focus

• Some small players will shred wireless assets

• Possible moves to complete/develop pan-European coverage and regional plays

• Increased focus

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Integrated players should opt to become multifocused operators with a value-added

corporate role

Financialholding

Operationally integrated company

Integrated multi-focused player with value adding corporate center

Operational

Strategic• Group

configuration• Development of

synergies and shared skills

• Management of critical resources

Financial

Ro

le o

f co

rpo

rate

cen

ter

Degree of Business Unit Integration

Unrelated, autonomous businesses

Same business systems and dynamics

For telecom players that will remain integrated, this is the configuration to adopt

For telecom players that will remain integrated, this is the configuration to adopt

Current situation for many Telco's, leading to significant discounts in many cases

Not suited for value adding, integrated model

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Consequences and implications

Balance sheet restructuring and focus on earnings

Focus or multi-focus strategy in the context of sector restructuring

Search of growth opportunities

• Balance sheet restructuring is a first priority for players with high debt levels

• Performance improvement needed to address the turnaround play• Responding to changed priorities from the capital markets

perspective: from growth to ROI, EBITDA. Cash is king: efforts to reduce Capex and Opex

• Corporate strategy: decide on core areas to strengthen, businesses on which control will be maintained, revise value of options developed

• Have an M&A roadmap in place to strengthen core-areas and, potentially, to divest non-core areas

• Organizational model for the corporation and role of the corporate center

• Cope with the growth challenge; organic, inorganic, business building

• Explore activities to grow new business and leverage skills and intangibles

• Develop and cultivate networks of partners. Critical for new businesses

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Bitė – communication for everyone