Russian Mobile Content Market overview

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					Russian Mobile Content
Market overview

Mobile Monday, 2007
Kirill Petrov, i-Free
                        Key market facts
–   Country population                      145 mln.
–   Mobile penetration                      104,6%
–   Mobile penetration (active subs.)       87,3 mln. (60,1%)
–   Subscriber Growth 2006 (active subs.)   8,4 mln.
–   Volume of mobile market, 2006           $14 bln.
–   Volume of VAS market, 2006              $2 bln.
–   Volume of Mobile Content market, 2006   $0,4 bln.
–   WAP penetration (to active subs.)       17,3%
–   Volume of mobile retail market:         $5,65 bln.
    Market shares of “big 3”
    mobile operators
                  Market share, 2007bgn

                 Others; 15,1%
                                             MTS; 33,7%
Megafon; 19,5%

                            Beeline; 31,7%
                                  Mobile retail market
   –    Top-5 retailers market share (2006,end): 78% (vs. 56% at 2006, bgn)
   –    Average retail price per mobile phone, 2006: $193 (vs. $164 at 2005)
   –    Mobile retail market volume, 2006: $5,65 bln.
   –    Total mobile phones sold, 2006: 29,27 mln.

Volume of mobile phones retail market, bln.$   Shares in sales of mobile phones on 2H, 2006
                       Key differences in Russian
–   End of 2002 - B2C (premium SMS) content downloading in Europe
–   End of 2003 – B2C (premium SMS) content downloading in Russia
–   2002-2004 – development of on-portal models in Europe
–   2006 – main developments in on-portal model in Russia
          –      developed off-portal model, many independent service providers, less market regulation, no market barriers for off-
              portal WAP, developed off-portal WAP
– Europe: operators control phone sales points, close cooperation with vendors on
  phone models customization
– Russia: independent market of mobile phone distribution, no cooperation with
– Europe: subscription model kills demand on off-portal content (Jamba!/Jamster!)
– Russia: no subscription model
– Delays in 3G development in Russia
– Europe: Expansion of service providers: Europe -> Europe -> North America ->
  Eastern Europe, Latin America, China
– Russia: Expansion of service providers: Russia -> CIS -> South-East Asia, South
  Asia, Latin America, Africa
                                            VAS trends and estimations
      Customization   Infotainment     Games   Communities and UGC   Media Interactive    Mobile Marketing   m-Commerce      Rich media content






           2000       2001           2002      2003       2004       2005          2006          2007        2008         2009        2010
    Market dynamics and major milestones

 Aggregation                                      MTS WAP-portal                  Closing of some       New revenue
                        Call-TV launch                                                                 sharing in MTS
launch InCore                                         launch                      call-TV projects
                Voice- и WAP-CPA         “Music project" of Beeline. New       USSD-portal,
                                                                                                     New Tele2 Portal
                 launch in Beeline         price model on MegafonPro              MTS
                                                            “relaunch“ of GOOD'OK (RBT)          BREW-browser
            New aggregation model, MTS                        service by MTS with IMMO.            at Skylink
             VAS structure
                             Revenue sharing

VAS revenues structure

                             Revenue sources

                                  Source: Comnews Research
                      Market structure

2006 ~380-400 mln.$
2007 ~420-460 mln.$
                 How the revenues transfer
                 through the value chain
Revenue estimation, 2007
               Key trends

Operator branded services and portals developments
    MTS portal
    Tele2 portal
    Incore (Megafon’s aggregator)
    Temafon (Beeline’s aggregator)
Specialization among content- and service-providers, defining the strategy
    Specialization (IMMO, SMS Media Solutions, Next-Media)
    Diversification (i-Free, Infon)
    Vertical Intergration (Next-Media, i-Free)
    Aggressive growth (А1)
    Horizontal integration (Solvo, Nikita, Jump)
Market Infrastructure Growth, creation of market institutes
    Content Providers (CSPA)
    Rightholders (Digital Access)
    Game developers (Association of Developers)
    Numerous conferences and forums (2 majors: MoCo and VAS
              Key trends

Mergers and acquisitions
     Investment Companies and strategic investors (Nikita+Solvo+Jump by
     Marshall Capital, Infon by Monstermob (La Netro ZED))
     Small startups by bigger players
Fast WAP-media development
     Specialization of WAP-players
     WAP-advertizing developments
     WAP-resources quality growth
     A lot of Startups
     Fast technology change

3G launch by the end of 2007 by all key players
     New service infrastructure needed
     Review of business-models needed
     New services and rich-media content needed
What if?..
Two ways of growth



          WAP-sharing        WAP-               3G-CPA                 LBS-                 RFID-m-Commerce
                             ID                                        CPA
      WAP-index            Subscription        3G-ODP             On-Device Adv           Video-IVR, Video-RBT

   WAP-advert.      ODP                   3G                 WAP-penetr.           Infosubscription

                 RBT-CPA         m-Commerce             3G-Flat-Rate       Adult
                              Who we are
    i-Free is the leading content & service-provider of information and entertainment
    services in Russia and the former Soviet Union

•   Our core work:
     –   Production and distribution of content and rendering of information services, development
         of community-based services, SMS broadcasts, WAP and voice portals
     –   Interactive media projects
     –   Mobile marketing & mobile business solutions

•   What distinguishes us:
     –   6 years of successful work experience in the mobile telecom market
     –   International success. We currently operate on the territories of Russia, Ukraine,
         Kazakhstan, Moldova, India, China, Brazil, Mexico
     –   High level of technological development. We have covered all of the basic technologies
         available on the market: IVR, SMS, MMS, WEB, WAP, STK, J2ME, BREW
     –   Professional and experienced staff. Our staff are >280 highly qualified professionals
         working in different areas
     –   Active market position and leading role in Russian Mobile Content and Service Providers
 Thank you!

     Kirill Petrov
Managing Director i-Free

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