Wireless Data in Africa â€“ The Next Frontier

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Path to Profit – CDG Cape TownApr-08

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Wireless Data in Africa – The Next FrontierPertti Johansson

President, MEAQualcomm, Incorporated

April 08

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QUALCOMM Incorporated

• Global leader in developing and delivering innovative digital wireless communications solutions based on CDMA and other advanced technologies.

• Partners with wireless operators, device manufacturers, independent software vendors, distribution suppliers and Fortune 1,000-class corporations to drive adoption of mobility solutions based on 3G CDMA and other digital technologies.

• Founded in 1985• FORTUNE 500 Company• Revenue of $8.87B in fiscal 2007• NASDAQ Symbol: QCOM• ~5,700 U.S. patents and patent applications of

CDMA and related technologies including WCDMA• Member of the S&P 500 Index• “100 Best Managed Companies” — Industry Week• “100 Best Companies to Work for in America” — FORTUNE

INNOVATION – EXECUTION – PARTNERSHIP

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Qualcomm Operator

Vendor

Technology RequirementsServices, Applications

Phones RequirementsTechnical Specifications

Business Terms & Conditions

Chipsets and SoftwareTechnical Specifications

Engineering Support

Qualcomm works closely with Operators to integrate

their requirements in its products

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GDP and Data Penetration

0

5

10

15

20

25

30

35

Denmar

kNeth

erlan

dsSwitz

erlan

dKo

rea

Norway

Icelan

dFin

land

Sweden

Canad

aBe

lgium

United

King

dom

Austra

liaFra

nce

Luxe

mbour

g

United

Stat

esJa

pan

German

yAu

stria

Spain

New Z

ealan

d

Italy

Irelan

dPor

tugal

Czech

Rep

ublic

Hunga

ryPola

ndGree

ce

Slovak R

epub

licTur

key

Mexico

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Broadband penetration (subscribers per 100 inhabitants, June 2007)

GDP per capita (USD PPP, 2006)

Simple correlation = 0.58

Broadband penetration, June 2007 GDP per capita, 2006

OECD broadband penetration and GDP per capita

Source : OECD

3 0

7 0

1 1 0

1 5 0

1 9 0

2 3 0

0 5 1 0 1 5 2 0P e n e t r a t i o n r a t e o f b r o a d b a n d ( % )

G D P p e r c a p i t a ( E U 2 5 = 1 0 0 )

L U

IE

E EL TL V

Source : Broadband Internet as a Powerful Catalyst for GrowthProf. Edvins Karnitis, Public Utilities Commission, Latvia

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5Source: “Global Mobile/Wireless Forecast”, The Yankee Group, January 2005

• Pricing pressure on airtime will contribute to declining voice revenue• Data plays a critical role to compensate declining voice revenues

Voice & Data Revenue Share in AfricaAs voice revenue declines, the share of data revenue will increaAs voice revenue declines, the share of data revenue will increasese

Voice RevenueVoice RevenuePercent of Total RevenuePercent of Total Revenue

Data RevenueData RevenuePercent of Total RevenuePercent of Total Revenue

91.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

2004 2005 2006 2007 20080%

1%

2%

3%

4%

5%

6%

7%

8%

Voice Revenue Share Mobile Data Revenue Share

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6Global Cellular Data Market Forecast (2001 - 2011), Strategy Analytics (2007)

Compelling Applications are Driving the Demand for High-Bandwidth Capabilities

Global Data Revenue by Application Type

0

50000

100000

150000

200000

250000

2007 2008 2009 2010 2011

Dat

a R

even

ue ($

Mill

ion)

Video Telephony Messaging Infotainment Personalization

Cellular Data Service Revenue and Share of Total Cellular Service Revenue

125.7144.4

162.9

200.1181.3

24%22%

21%19%18%

0

50

100

150

200

250

2007 2008 2009 2010 2011

Dat

a R

even

ue ($

Bill

ion)

0%

5%

10%

15%

20%

25%

30%

Dat

a Sh

are

of T

otal

Cel

lula

r Rev

enue

Cellular Data Revenue Data Share of Total Cellular Service Revenue

Indicators of the Future: Continuing Growth in Data Demand

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Operators Benefiting From Wireless Data Services

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Wireless Broadband– “Sweet-Spot”

Source: The Yankee Group - EMEA Mobile Market Adoption Monitor and Forecast

8.4%

91.6%

Rev enue Generated by"Medium-Large" Ent. Subs

Rev enue Generated byIndiv idual Cons umer, SOHO,and Small Enterpr is e Subs

Data Market Segments Operator Revenue by Market Segments

“As prices are now, those who require wireless at over 512 Kbps is probably below 5% of total subs and most of these are in the business world.” – Gartner Research

At current pricing levels, most of Operator’s Data Revenue will be generated by subscribers demanding reasonable broadband speeds

(512K or less)

At current pricing levels, most of Operator’s Data Revenue will be generated by subscribers demanding reasonable broadband speeds

(512K or less)

95.1%

4.9%

Individual Consumer, SOHO, andSmall Enterprise Subs

Medium-Large Enterprise (500+empl.) Subs

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EVEV--DOrA*DOrA*

EVEV--DOr0DOr0

WCDMAWCDMA

Data Rate (Mbps)

CDMA is delivering broadband data CDMA is delivering broadband data –– future enhancements are ongoingfuture enhancements are ongoing

1X1X

GPRSGPRS

EDGEEDGE

Wireless Data – How Fast?CDMA Serves the needs of most subscribers with optimum speedCDMA Serves the needs of most subscribers with optimum speed

50-90 kbps (1.25 MHz of BW)

20-40 kbps

70-100 kbps

0 0.25 0.5 0.75 1.0 1.5 1.75 2.0 2.51.25 2.25 2.75 3.0 3.25 3.5

64-250 kbps (5 MHz of BW)

600- 1,300 kbps (1.25 MHz of BW)

300- 700 kbps (1.25 MHz of BW)

400- 1,500 kbps (5 MHz of BW)HSDPA**HSDPA**

Peak Downlink Rate

Typical End-User Downlink Rate (commercial)

Typical End-User Downlink Rate (estimated)

Notes: Peak and average (typical) end-user forward link data rates are shown. CDMA2000 1X, 1xEV-DO and 1xEV-DOrA data rates are achieved in a 1.25 MHz carrier bandwidth, WCDMA (Rel99), and HSDPA (Rel 5, Category 12) data rates are achieved in a 5 MHz carrier bandwidth. * 1xEV-DOrA data rates are achieved with an equalizer and dual-receive antennas.** HSDPA and data rates are device-dependant, with devices supporting up 7.2 Mbps. Peak data rates could increase to 10.2 Mbps and the standard supports 14.4 Mbps.

Average Data Throughput per UserAverage Data Throughput per User

Data Services “Sweet-Spot”

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• Inadequate Wireline Infrastructure• Low penetration rates• Insufficient to cater demand in urban centers• Inexistent in rural area

• Lower-cost and Quicker Deployment than DSL, Fiber or Cable• Truck-roll to consumer premises not required for installs or service-outages

• Reliable • Copper theft and vandalism a huge concern for wireline• Lower/negligible down-time in emergencies/outage situations

• Cutting-Edge• Rapid innovation and improvements

Why Wireless?

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For new deployments, For new deployments, Rev A is a compelling solution for broadband data servicesRev A is a compelling solution for broadband data services

• EV-DO Rev A offers substantial CapEx/OpEx cost savings• 33% lower total cost of ownership versus UMTS/HSUPA

• 27% lower total cost of ownership versus 1X/EV-DO Rel 0

• The price premium for EV-DO Rev A base stations is more than offset by the reduced numberof cell sites required

• EV-DO Rev A (VoIP) may significantly reduce the core network CapEx• EV-DO Rev A (All-IP) Core Network CapEx may be as much as 70% lower than circuit switched

implementations over a ten year period

• CapEx savings also translates into lower OpEx

• EV-DO (All-IP) Transport OpEx is nearly 50% lower than leased lines over a ten year period

Source: CA-CHING OR KER-PLUNK, The Dollars and Sense of 3G, Michael W. Thelander Signals Research Group, LLC

Why CDMA?: Total Cost of Ownership Advantage

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Data Throughput AdvantageData Throughput Advantage - CDMA provides more sector capacity per MHz than WiMAXCDMA provides more sector capacity per MHz than WiMAX

Simulation assumptions:• SIMO full buffer, physical layer performance• 3GPP2 frame work• DV channel model mix• Equalizer gain simulated for DOrA, DOrB and HSPA• 5MHz FDD carrier for HSPA+ , 2 carriers in 2x10MHz. 1.25MHz FDD carrier for DOrA and DOrB, 7 carriers in 2x10MHz* Throughput for 10MHz TDD 2:1 carrier for Mobile WiMAX is 3 Mbps, scaled 1.5 to 10MHz effective FL bandwidth

Mbp

s

Mbps/sector4,5005MHz~4.5 8.96 10.5 10.4

0

2

4

6

8

10

12

Mobile WiMAX* DOrA DOrB HSPA

Effective Physical Layer Throughput per Sector in 10MHz (Mobile Effective Physical Layer Throughput per Sector in 10MHz (Mobile Scenario)Scenario)

Why CDMA?

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CDMA2000 Theoretical CoverageCDMA2000 Theoretical CoverageUsing RF propagation to its best advantage to serve humanityUsing RF propagation to its best advantage to serve humanity

CDMA450 coverage area:3x larger than in 900 MHz12x larger than in 1800 MHz & 2100 MHz

… and with excellent signal-to-noise ratio

12.261814.91800

3.3226926.9950

24.131210.02500

13.655313.31900

2.8271229.4850

1752148.9450

Normalized Cell Count

Cell Area (km2)

Cell Radius (km)

Frequency(MHz)

Source: Lucent Technologies and Antonio Valente, Vice President of ANATEL, Brazil, May 2004.Notes: 1. Flat terrain, tower mounted amplifier, 60 m tower height, maximum power output, and no interference.

2. The above ‘theoretical’ cell sizes may not be able to achieve in certain morphologies and are based on simplistic assumptions. It assumes all parameters are equal: terrain, output power, antenna height, etc.

CDMA450Conventional

CoverageGSM900

GSM1800WCDMA2100

CDMA800

100 m

• Reverse link determines coverage:• The reverse link is used to compare the coverage of different

technologies

• Link budget determines available margin required to achieve a high quality link

• Differences in coverage is affected by a variety of factors, including:

• Morphology• Tower height• Power output• Hardware used, rate set assumptions, etc.

CDMA2000 provides the largest coverage area and thus reduces the number of base stations

CDMA2000 provides the largest coverage area and thus reduces the number of base stations

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Cost = “Greenfield” Network Operations Expenses + Depreciation on Capital

Source: The Economics of Wireless Data, http://www.qualcomm.com/main/whitepapers/WirelessMobileData.pdfAssumptions: On demand Traffic: a) 15% of traffic demand occurs at the busy hour, b) 7,600 kbps / sq km at busy hour, c) 5 MHz

Multicast Traffic: a) 2,000 subscribers / cell, b) 30 live streaming minutes / day at 128 kbps data rate, c) 1.25 MHz

Spectral efficiency affects cost Spectral efficiency affects cost

GPRS$0.42

EDGE0.11

1X$0.06

1xEV-DO$0.02

WCDMA$0.07

CDMA Cost per Megabyte ComparisonCDMA networks support the most affordable delivery of bitsCDMA networks support the most affordable delivery of bits

Affordable and evolutionary mobile broadband technologies areenabling the mass market adoption of mobile multimedia servicesAffordable and evolutionary mobile broadband technologies are

enabling the mass market adoption of mobile multimedia services

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More CDMA Data DevicesPlenty of EVPlenty of EV--DO DO RelRel. 0 and Rev. A Devices Available. 0 and Rev. A Devices Available

Source : http://cdg.org/technology/product_pavilion/subscriber_device.asp

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Movicel (Angola) Example – Movinet Data Offering

Movicel able to generate up to $250/mo ARPU for EV-DO data•Example illustrates ARPU of ~$110, $175 and $250 for 150Kbps, 300Kbps and 1Mbps data rates

Source -http://www.movicel.net/TarMovinet.aspx Note: $1USD = 75Kz (Kwanza)

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Starcomms (Nigeria) Example – Broadband Data Offering

Source -http://www.starcomms.com/bbs_tariff.php 1 US Dollar = 119.099 Nigerian Naira

PCMCIA and USB devices

ARPU > $130/mo. !!

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Conclusion• Data increasingly becoming crucial for both operators and customers

• Wireless Data makes the most sense

• CDMA is the leading wireless technology in balancing the operators needs

• Speed• Return on Investment• Overall Performance • Widespread Availability• Future Proofing

• GSM cannot do meaningful DATA- CDMA has a head start over WCDMA

Thank you !Thank you !

Documents

Wireless Data in Africa â€“ The Next Frontier