Global cellular market trends and insight q3 2012

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Wireless Intelligence

Global cellular market trends and insightQ3 2012

September 2012

wirelessintelligence.com • [email protected] • twitter.com/wi

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57+65+72+78+84+88+92+94GlobalHSPA and LTE increase their share of global connections• WorldcellularconnectionsinQ22012reached6.3billion;inQ32012we

estimatethequarterclosedat6.4billion• GlobalHSPAconnectionspassed900millionandweexpectthemtoreach

1billionduringQ3,therebyaccountingformorethan15%oftotal• ThenumberofLTEconnectionsworldwidepassed25millionduringQ2

Mobile broadband networks make up 100% of launches in Q3 • Therewere36networklaunchesduringQ32012,ofwhich15wereLTE

(includingthreeTD-LTE),18HSPA,twoEV-DORev.BandoneWiMAX• Therearenow97liveLTEnetworksworldwide(includingeightTD-LTEand

oneAXGP),notincludingMTSUzbekistan’sservicewhichwasshutdownduringQ3

iPhone 5 heats up smartphone battle; Apple and Google almost level on apps• Googleannouncedthatitnowactivatesmorethan1millionAndroid

devicesperday,andhasreachedatotalof400millionactivatedworldwide• Applesoldmorethan5millionofitslatestsmartphone,theiPhone5,

withinthefirstthreedaysofthedevicegoingonsale• Meanwhile,Samsungsoldmorethan20millionofitssignature

smartphone,theGalaxyS3,inthe100daysafteritsreleaseinMay2012;thecompanyistargetingatotalof30millionsalesbytheendof2012

• NokialaunchedtwosmartphonesusingthenewWindowsPhone8operatingsystem,althoughthephoneswillnotgoonsaleuntilQ42012

• AppleannouncedinitsQ32012earningscallthattherewerenow650,000appsintheAppStore(including250,000specificallydesignedfortheiPad),upfrom600,000inApril

• Meanwhile,GooglereportedinJunethatitwasnotfarbehindwith600,000AndroidappsnowavailablethroughGooglePlay

Quarterly forecast accuracy • Ourestimatesarereplacedduringthequarterbytheactualresults

reportedbytheoperatorandregulatorycommunity• Thedeltabetweenourestimatesatthebeginningofthequarterandthe

actualresultsforQ22012stoodatjust-0.37%

47+54+60+67+72+77+81+849 120%

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38+44+51+58+63+67+70+73Africa

Q2 2011 Q1 2012 Q2 2012

Connections(million)

Total 584.4 664.4 688.3

Contract 23.5 25.7 26.9

Prepaid 560.9 614.1 633.8

CDMA(Family) 17.1 16.6 15.6

GSM 531.5 594.2 612.1

WCDMA(Family) 35.8 53.6 60.5

Netadditions(million)

Total 16.8 23.4 23.9

Contract 0.9 0.5 1.2

Prepaid 15.9 11.9 19.7

Growthrate,quarterly

Total 3.0% 3.7% 3.6%

Contract 4.1% 2.0% 4.8%

Prepaid 2.9% 2.0% 3.2%

Growthrate,annual

Total 18.4% 17.1% 17.8%

Contract 17.6% 13.7% 14.4%

Prepaid 18.4% 12.7% 13.0%

Marketpenetration 56.0% 62.5% 64.4%

ARPU $8.50 $7.96 $7.95

31+37+43+50+56+61+65+691,250

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wirelessintelligence.comAfricaInvestment in mobile broadband beginning to pay dividends

Data growth showing promise thanks to modern network deployments• 60%oftrafficonVodacom’sSouthAfricannetworkisduetomobile

broadband;smartphonetrafficisgrowing10timesfasterthananyotherdevice,nowaveraging92MB/smartphoneuser/month

• Vodacomhas16millionactivedatausersacrossAfricaasofQ22012(from50millionconnectionsintotal),up45%year-on-year;theoperator’spriceperMBhasdecreasedby18%overthesameperiod

• MTCNamibiareportedsignificantusageofitsrecentlylaunchedLTEnetwork;byAugustithadsignedupjust1,000users,howevertheywereconsuming23%ofalltrafficatanaverageof1.6GB/device/day

• TheCEOofTelecel(Orascom)ZimbabwenotedthatsinceAprildatarevenuehasexceededSMS/messagingrevenue

3G and LTE upgrade investment remains strong• SafaricomKenyanotedthat400,000smartphoneswereinuseonits

networkasofQ1;inQ275%ofthemarketusesSafaricomdevicestoaccesstheinternetfollowinga42.2Mb/supgradeinhightrafficareas

• EtisalatEgyptplanstoinvest$500milliontolaunchLTE;MTNSouthAfricamaylaunchLTEbyend-2012followinga200basestationtrial

• VodacomDRCcommencedits$25million3GrolloutinSeptember,whichwillsee350basestationsinstalledbeforetheendoftheyearinamarketwithjust25%penetrationandnoother3Gnetworks

Piecemeal M&A offers an alternative to regional deals• EssarGroupappointedBNPParibastosellits72%controllingstakeinyu

(EssarTelecom)inKenya,andlaterconfirmedthatthemobilearmrequiresupto$250millionovertwoyearstogrowthebusiness

• TheTunisiangovernmentannounceditsintentiontoselloffits25%stakeinTunisiana(Wataniya)

• TheAlgeriangovernmentconfirmedtalksconcerningthefutureofDjezzyarestillcontinuingasitlookstore-nationalisea51%stake.Earlierthisyear,VimpelComagreedtoasale,buthasbeenunabletoagreeonavaluation

Insight: Services, affordable devices the key to unlocking Eastern Africa

Thelonger-termprospectsforEasternandMiddleAfrica–whichwillaccountforthemajorityofAfrica’sgrowthoverthenextfiveyears–arestartingtoimprovethanks to continued investment and targeted services. In Tanzania, market-leaderVodacomannouncedplanstoenhanceitsruralcoverage,onwhichitwillspendTZS120billion($77million)in2012alone.ThecompanyalsosawgrowthinitsM-Pesamobilemoneyservice,up121%annuallyto3.6millioncustomers,representingabout40%ofitstotalconnections.M-Pesanowaccountsfor71%ofVodacomTanzania’sdatarevenue.

Tigo (Millicom) revealed a $100 million network expansion plan in August,spreadingacrossall26regionsofTanzania,giving it the largest2Gcoveragefootprint in the country to date. Fourth-placed Zantel (Etisalat) is rolling out3G and mobile broadband services. Zantel’s aim to achieve 20% marketshare by 2014, up from7%currently, comes despite currentQ2 losses dueto unsustainable competition. Vodacomhowever noted an ‘improved pricingenvironment’andinSeptemberslashedoff-netvoicecostsby50%onanew‘Bonga’tariff-suggestingthesmalleroperatorsarestillfindingtheirfootinginapreviouslyprice-unstablemarket.

InKenya,Safaricom’swell-placedbetonsubsidisedlow-costAndroiddeviceshaspaidoff.AtKES8,000($100),theHuaweiIDEOSsmartphonesold210,000units intheyearprior (amajorityshareoftotalon-networksmartphones)andusage accounted for 20% of all customer data volumes. The company iscapitalisingonthewaveofenthusiasmfordataservices–withdatacustomersgrowing31%year-on-yearto4.6million(of19.1millionconnectionsintotal)–byinvestingincapacity,IPbackhaulandareal-timebillingbackendtoincreaseitsagilityinthemarket.Ugandaexhibitsasimilarpattern–an$80millionnetworkinvestmentpromisedbyyear-endfromMTNtoimprovequalityanddriveruralcoverage.Meanwhile,Airtel(Bharti)willfocusonits21Mb/sHSPA+services,availablein30Ugandantowns.Interestingly,despitejust42%penetration,theregulatorUCCnotedthatsecond-SIMpurchasesdominatednewadditionsinthefirsthalfoftheyearwithonlyamarginalnumberofnewsubscribers.


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59+64+70+76+80+83+86+87Americas

Q2 2011 Q1 2012 Q2 2012


Total 950.0 1,019.6 1,033.7

Contract 393.2 415.6 419.9

Prepaid 556.8 594.7 604.3

CDMA(Family) 205.4 204.6 202.4

GSM 564.9 563.4 560.3

WCDMA(Family) 150.3 212.1 228.2


Total 21.2 19.3 14.1


Prepaid 12.3 10.6 9.6


Total 2.3% 1.9% 1.4%

Contract 2.3% 1.4% 1.0%

Prepaid 2.3% 1.8% 1.6%

Growthrate,annual

Total 11.0% 9.8% 8.8%

Contract 12.1% 8.2% 6.8%

Prepaid 10.3% 9.2% 8.5%


ARPU $27.62 $27.19 $27.09

*Note:datatableincludesNorthernAmerica,butthisisdiscussedseparatelyonslides11–12

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wirelessintelligence.comAmericasSmartphone penetration ramping up across Latin America

A mixed picture as slowing growth for Chile and Mexico weigh on the region• LatinAmericamaintaineditspositionasthethird-fastestgrowingregionin

Q22012,behindAfricaandAsia• Connectionsgrowthintheregionslowedto11%year-on-yearinQ22012,

down1.7ppcomparedtoQ22011;atcurrentrates,weforecastthatannualgrowthwilldropbelow10%inQ42012

• RegionalpowerhouseBrazilmaintainedstrongconnectionsgrowth,postinganannualincreaseof18%year-on-yearinQ22012–itsgrowthratehasshownlittlevariationoverthelastfourquarters;ArgentinaandPerubothexperiencedanincreaseinannualgrowthratesyear-on-year

• Anumberofcountriessawstrongslowdownsinyear-on-yeargrowth;Chilewasdownby10.6pp,Mexicoby8.0pp,Colombiaby4.4pp,andEcuadorby6.9pp,partlyduetoachangeinreportingdefinitionsbyAmericaMovilwhichexcludedanumberofinactiveprepaidsubscribers

Smartphone penetration increasing rapidly• TelefonicaGroupsawsmartphonepenetrationintheregionreach10%of

connectionsinQ22012,upfrom4%ayearearlier• BrazilianmarketleaderVivosawsalesofsmartphones(includingdata

plans)tripleduringtheyearendingQ22012• Meanwhile,rivalTIMachievedsmartphonepenetrationof35.2%byQ2

2012,up20ppyear-on-year

Governments step in to avoid market failures• InApril,Haitel’sCDMAnetworkwasshutdown,andthecompanyofficially

wentintoreceivership(undercontroloftheHaitianGovernment)withdebtsofaround$80million

• InJuly,theGovernmentofHondurasintervenedtotakecontrolofthecountry’sailingstate-ownedHondutel,replacingitsCEOwithaspecialcommitteeafterdesignatingtheoperatortobein“financialcrisis”

• InSeptember,havingcancelledanauctionforthe25%of3Gspectrumthatitstillcontrols,Argentina’sGovernmentnowplanstogointobusinessitself,utilisingthe3Gspectrumthroughstate-ownedcompanyArsat

Insight: Anatel plays hardball in Brazil

TheBrazilianregulatorAnatelhasitseyesetongearingupthenationaltelecomsinfrastructure for a series of sporting events over the coming years that willshowcasethecountrytotheworld, includingtheConfederationsCup(2013),FIFAWorldCup(2014),andtheOlympics(2016).InJune,itstartedallocatingspectrumforLTEvia theauctionofspectrum in the2,500MHzband,and inAugust itannounced its intention toauctionoffblocksof700MHzspectrum(currentlyusedby televisionbroadcasters)byDecember2013.However, thisspectrumwillnotbeavailableforuseuntil thedigitalTVswitchover,which isplannedforJune2016.

InJuly,Anateltookaggressiveactionovertheoperators,suspendingTIM,OiandClarofromofferingnewcontractsinanumberofstatesduetoconcernsoveragrowingnumberofcomplaints related toservicequality.TheBrazilianmarketcontinues toexperiencestrongconnectionsgrowth;annualgrowth inQ22012pickedupanadditional0.2percentagepointscomparedtoQ22011.However,whencoupledwithfast-growingsmartphoneandmobilebroadbanduserbasesthistrendisleadingtonetworkcapacitychallengesthattheregulatoraimstomitigate.TIM,whichwassingledoutastheworstoffenderbyAnatel,revealedthatsmartphonesalescomprised79%oftotalhandsetsalesduringQ22012,upfrom54%inQ22011.

Anatel’sbanwasonlyliftedinearlyAugustfollowingitsreceiptof“satisfactoryassurancesthattheirinvestmentplanswillrectifythepoorqualityofserviceandpatchycoverage”.The impending launchofLTEservicesbyall fourBrazilianoperatorswillhavegonesomewaytoplacatingtheregulator,whileWi-Fioffloadalsoappearstobeamethodofchoice.InSeptember,TIMannouncedthatithadsignedanagreementwithWi-FicarrierLinktelCorporate,withwhichitaimstobring10,000Wi-Fihotspotsonline“inareaswithknownissueswhereitcomestohightrafficvolumes”bytheendof2012.

TocompoundmattersfurtherforBrazilianoperators,Anatelhasalsoindicateditisconsideringafurthercutinmobileterminationrates,tobeimplementedinJanuary2013.


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48+58+66+73+80+85+88+91Asia

Q2 2011 Q1 2012 Q2 2012


Total 3,162.6 3,449.5 3,539.8

Contract 540.3 587.7 604.0

Prepaid 2,622.3 2,856.5 2,929.2

CDMA(Family) 301.0 319.1 325.2

GSM 2,493.6 2,621.6 2,660.3

WCDMA(Family) 322.5 431.0 463.2


Total 115.9 102.2 90.3

Contract 16.6 16.1 16.3

Prepaid 99.4 80.8 72.6


Total 3.8% 3.1% 2.6%

Contract 3.2% 2.8% 2.8%

Prepaid 3.9% 2.9% 2.5%

Growthrate,annual

Total 19.2% 13.2% 11.9%

Contract 12.2% 12.2% 11.8%

Prepaid 20.7% 13.2% 11.7%


ARPU $9.69 $9.13 $9.22

48+58+67+75+82+88+93+974,000

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CDMA (Family) GSM WCDMA (Family) LTE (Family)TD-SCDMA Other

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wirelessintelligence.comAsiaLTE gains traction in Asia as VoLTE services kick off

LTE makes rapid inroads in South Korea and Japan; India suffers slowdown• LTEconnectionsinSouthKoreapassed7millionduringQ2(reaching15%

marketpenetration)and3.7millioninJapan(3%penetration)• TotalconnectionsgrowthinIndiacontinuedtoslow,hitbyBSNL,MTNL,

LoopMobile,TataDOCOMOandVideoconreportingQ2declines• RegionalsubscribergrowthwasfurtherimpactedinQ32012by

theremovalofover20millioninactiveconnectionsbyRelianceCommunicationsIndiaandthelicencecancellationofMTSUzbekistan

Tower assets on the block as operators look to cut debt• BhartiAirtelisplanninga$1billionIPOofitstowerbusinessBhartiInfratel• RelianceCommunicationsalsoconfirmeditplansanotherattempttofloat

RelianceInfratel;BSNLisalsoconsideringdemergingitstowerassets• Indosat(Qtel)completedthesaleof2,500towersfor$406million

VoLTE arrives in South Korea; 34 live LTE deployments in the region• Voice-over-LTE(VoLTE)serviceswerelaunchedinSouthKoreabySK

TelecomandLGUplus;rivalKTintendstoalsolaunchVoLTEimminently• Theregionreached34commercialLTEnetworksfollowinglaunchesby

Optus(SingTel)Australia,IT&E(PTI)Guam,ChinaMobileHongKong(TD-LTE),SmarToneHongKong,SoftBankMobileJapan(FDD-LTE),au(KDDI)Japan,OmantelOman,Smart(PLDT)PhilippinesandStarHubSingapore

• VodafoneHutchisonlauncheddual-carrier42.2Mb/sHSPA+inAustralia,whileGeocell(TeliaSonera)inGeorgialaunched21.1Mb/sHSPA+

Indian 2G auction postponed yet again; Uzbekistan terminates MTS• India’sSupremeCourtpostponedthere-auctionofcancelled2Glicences

untilJanuary2013-theDoTnowplanstobegintheauctioninNovember• MTSUzbekistan’slicencewascancelledinAugustinadisputebetween

theoperatorandtheUzbekauthorities• Myanmarannounceditwillopenitsmarkettoforeignoperatorswithtwo

additionallicencesexpectedtobeissuedinlate2012/early2013

Insight: Political troubles continue to dog MTS

Most Russian operator groups are adept at managing the frequent politicalinterferenceintheiraffairsthatcanoftencatchoutunsuspectingforeignplayersoperatinginEasternEuropeandpartsofAsia.Forexample,WesternEuropeanbasedoperatorsTelenorandTeliaSonerabothspent thebestpartof the lastdecadeinvariouslegaldisputeswithAsianandEasternEuropeanpartners.ButevenRussiangroupscanfindthemselvescaughtoutbypoliticalmanoeuvrings,such as in late 2010whenMTS found itself on thewrong end of a disputewith theTurkmenistanauthorities that saw its licence indefinitely suspended.However,positivesignsinthedisputebegantoemergeinMay2012andbylateAugusttheoperationshadresumedwithmanyformercustomersreactivatingtheirservices.

However,thesituationinTurkmenistanwasquicklyfollowedbyanevenmoreextraordinaryturnofeventsforMTSinneighbouringUzbekistan.MTSstatedthatithasbeenthetargetofblatantharassmentbytheUzbekauthorities“withthethinly-veiledpurposeofdestroyingthebusinessandexpropriatingitsassets.”MTSclaimedtheauthoritiesaccusedMTSUzbekistan’smanagementof“nearlyeveryfinancialcrimethatexists”andundertaking“unlicensedactivitiesaspartofacriminalgroup.”MTSwentontoaccusetheUzbekauthoritiesofcarryingouthumanrightsviolationsof itsemployees including“interrogationswithoutaccesstolegalcounselandthreatsofphysicalcoercion.”WhetheraresolutionwillbepossibleforMTSinUzbekistanremainstobeseen,thoughinlightoftheaccusationslevelledbyMTSitwouldappearthatareproachwiththeauthoritiesremainsalongwayoff.IthasalreadyprovedtobeacostlydisputeforMTSwiththegrouppostingalossinQ2duetoa$1.1billionwrite-offofitUzbekassets.

WithformerinternationaloutcastMyanmartakingstepstoopenitsmarkettoforeignoperators itservesasa timely reminderof thepotentialpolitical risksinvolved. Perhaps it is therefore unsurprising that another Russian operatorgroup,VimpelCom,hasalreadybeenlinkedwithreportsthatitisinterestedinentering themarket - ashasVietnam’sViettel, anothergroupexperienced inoperatingindifficultpoliticalenvironments.WeexpectmostWesternEuropeanoperatorstosteercleardespitetheopportunitytoenteroneofthelastlargelyuntappedmobilemarketsintheworld.


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86+87+90+92+95+97+99+100Europe

Q2 2011 Q1 2012 Q2 2012


Total 976.4 997.8 1,002.2

Contract 359.5 380.2 385.2

Prepaid 615.1 615.8 615.2

CDMA(Family) 6.4 7.1 7.3

GSM 673.5 640.6 627.7

WCDMA(Family) 295.5 348.7 365.2


Total 7.2 -3.2 4.4


Prepaid 1.8 -7.7 -0.6


Total 0.8% -0.3% 0.4%

Contract 1.5% 1.2% 1.3%

Prepaid 0.3% -1.2% -0.1%

Growthrate,annual

Total 2.6% 3.0% 2.6%

Contract 5.7% 7.4% 7.1%

Prepaid 0.8% 0.4% 0.0%


ARPU $20.16 $19.13 $19.30

64+65+67+69+71+72+74+75150%

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wirelessintelligence.comEuropeMobile broadband accounting for a quarter of European connections

Growth in the East helps region hit 1bn subscribers for the second time• Europeagainpassed1billionconnectionsinQ2afterfallingbackinQ1• Ofthe183activeoperators,143witnessedpositivequarterlynetadditions

representingatotalof8.3millionconnections,while40operatorsrecordedsubscriberlossestotalling4.0million

• ThelargestgainswererecordedbyTele2(Russia)with693,000netadditions,followedbyT-Mobile(536,000)andPlay(525,000)inPoland

• Vodafonesawthebiggestsubscriberlosses;thetransferof1millionconnectionstoanMVNOledtoa655,000declineinGermany,whilethedisconnectionof400,000inactivesubscriberscontributedtoa639,000netdecreaseinSpain

Mobile broadband booms as slower data connections are phased out• InQ22012Europepassed250millionHSPAconnections,withthe

technologynowrepresentingmorethanaquarterofsubscribersinEurope• Therearenowmorethan1.5millionLTEsubscribersinEurope,afigure

whichweexpecttoincreaseto2.5millioninQ32012,bywhichtimeWCDMAwillrepresentlessthan10%ofregionalconnections

Smartphones dominating handset sales• VodafonereportedthatsmartphonepenetrationacrossitsEuropean

operationswas28.7%inQ22012• SmartphoneconnectionsatMovistarinSpaingrew25%year-on-yearto

7.2millioninQ22012,apenetrationlevelof34%• IntheUK,O2’ssmartphonepenetrationwasup8ppto42%inQ22012,

butstilltrailedVodafone,whichreported46.5%• MTSRussiareportedthat17.2%ofthephonesonitsnetworkwere

smartphonesinQ22012,afigureitexpectstobe20%byyear-end

Prepaid growth flat as smartphone adoption drives contract growth• With615millionconnectionsinQ2,year-on-yeargrowthinprepaidwasflat• However,contractconnectionsincreased7%onQ22011to385million

Insight: iPhone 5 shakes up LTE market as UK 4G finally gets green light

ThelaunchoftheiPhone5inSeptemberlookstobeasignificantpointintheshapingoftheLTEmarketinEurope,withApple’sdecisiontosupportthe1800MHz band with its first LTE-enabled device playing into the hands of someoperatorsandcausingconsiderableconsternation forothers.Thedevicewilllikelybecome theworld’sbest-sellingsmartphone in itsfirst fullquarterafterlaunch,anduserswillbekeentotakeadvantageofitsLTEcapabilities.However,withonly13of36liveLTEnetworksinEuropeoperatinginthe1800MHzband,onlyaroundone in threeLTEoperatorsacross the regionwillhavea4GLTEnetworkthatiscompatible.

Thisputspressureonoperatorswith800MHzand2.6GHzLTEservices,themostcommonLTEbandsinEurope,whichcouldnowlosecustomerstorivalsabletoofferiPhone4Gpackagesasanexclusive.Theoperatorssettogainthemostadvantagearethosewhicharethesole1800MHzLTEoperator intheircountry,alistwhichcurrentlyincludesDeutscheTelekominGermany,O2intheCzechRepublicandT-MobileinHungary.Meanwhile,Finland,Poland,CroatiaandDenmarkallhavetwoLTEoperatorsinthe1800MHzband,whichcouldmeanparticularlybadnewsfortheirrivals.Ontheflipside,manycountriesintheregionhaveno1800MHzLTEnetworksatall,soiPhone5userswillhavenochancewhatsoeverofa4GLTEservice–althoughweexpectmore1800MHzlaunchessoon.

This issue has been felt particularly acutely in the UK, where in August theregulatorOfComgrantedpermissiontolargestoperatorEverythingEverywheretolaunchthecountry’sfirstLTEnetworkonitsspare1800MHzspectrumlaterthisyear.ThisdecisionwasmetwithconsiderableprotestfromlocalrivalsO2andVodafone,whichmustwaituntilthenextroundofUKspectrumauctionsarecompletedin2013beforetheycanlaunchLTEservices–andeventhenthespectrumwillbeinthe800MHzand2.6GHzandthusnotcompatiblewiththeiPhone5.WhilstotherLTEsmartphoneswillbeavailableforthesebands,theseoperatorswillonlybeabletosupplyApple’sdeviceontheir3GHSPAnetworks,afactthatEverythingEverywhere–and3,whichalsohas1800MHzspectrumsubjecttoclearance-willbewellplacedtoexploit.


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86+87+90+92+95+97+99+100Northern America

Q2 2011 Q1 2012 Q2 2012


Total 352.2 370.3 372.8

Contract 281.2 291.5 292.4

Prepaid 71.0 78.8 80.5

CDMA(Family) 187.4 190.8 189.8

GSM 58.2 43.1 40.9

WCDMA(Family) 88.4 109.0 111.7


Total 6.4 4.4 2.5


Prepaid 2.0 2.0 1.7


Total 1.9% 1.2% 0.7%

Contract 1.6% 0.8% 0.3%

Prepaid 3.0% 2.6% 2.1%

Growthrate,annual

Total 8.9% 7.1% 5.9%

Contract 9.8% 5.3% 4.0%

Prepaid 5.4% 14.3% 13.4%


ARPU $48.94 $48.56 $48.94

63+68+73+78+81+83+85+87500

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wirelessintelligence.comNorthern America4G LTE adoption is reshaping the US spectrum landscape

Tier 1 operators continue to switch on wider LTE coverage• InQ22012,LTEconnectionsintheUStotalled13.7million,ofwhich

VerizonWirelessholdsthemajorityshare(79%)• 4GLTErepresented4%oftheUSmarketinQ22012andisforecastto

reach6%byyear-end-over20millionLTEconnections• AT&TMobility’sLTEnetworkislivein66marketsandexpectsitsLTE

deploymenttobelargelycompletebyendofnextyear• VerizonWireless’LTEnetworkislivein371markets–covering75%ofthe

USpopulation–andtheoperatoristargeting400marketsbyyear-end• SprintNextelannouncedthatitsLTEnetworkrolloutisunderwayinmore

than100additionalcitieswithinitsexistingnationwide3Gfootprint;bytheendof2013,theoperatorexpectsitsLTEcoveragetolargelymatchitsexistingnationwide3Gfootprint

• T-MobileUSA’splantorolloutLTEin2013looksmorelikelynowthattheFCCandDoThaveapproveditsAWSspectrumpurchasefromVerizon

LTE adoption is accelerating technology migration• AT&Tplanstoshutdownitslegacy2Gnetworkin2017asitrefarms

spectruminthe1900MHzbandfornext-generationservices• SprintNextelintendstoshutdownitsiDENnetworkinQ22013,ceasing

itsfocusonWiMAXatthesametimeandrefarmingits800MHzspectrumforCDMAandLTEservices

• T-MobileUSAaimstorolloutLTEintheAWSspectrumitacquiredfromAT&TandVerizonwhilerefarmingits1900MHzspectrumforHSPA

• MetroPCShopestobeginrefarmingspectrumthatitiscurrentlyusingforCDMAtrafficbythemiddleofnextyear,andisworkingtomoveallitstraffictoitsLTEnetwork

• VerizonWirelessstatedthatitwillmaintainits3GCDMAnetworkfor“avery,verylongtime”inordertosupportnicheproducts,includingmachine-to-machineapplications

Insight: Tier 2 operators ramp-up 4G while supporting LTE roaming solution

Aspartofits‘4GLTEforAll’marketingcampaign,MetroPCSpassedanumberofmilestonesduringthesecondhalfof2012.TheUSoperatorreached700,000LTEconnectionsinQ22012andlaunchedanunlimitedLTEdataplanfor$55permonthinAugust.Thispromotion–albeitbeinglimitedintime–isanefforttoalignitspricingwithlargerrivalssuchasVerizonandcomesalongsidetheintroductionofmoreaffordableLTEsmartphonessuchas theLGMotion4Gpriced at $149. In addition,MetroPCS has commercially deployed its VoLTEnetworkwhichitoffersviatheLGConnect4Guntilmorecompatibledevicesareaddedtotheportfoliobyyear-end.

AsofQ22012,MetroPCShasbuilt-outaround90%of itstotalfootprintwith4G-LTE–up from80% inQ12012 -andexpects to reach97% inOctober.Meanwhile,CricketCommunicationsexpectsitsLTEnetworktocover21millionpeople by year end, aiming to reach two thirds of its total network footprintover thenext twoto threeyears.Similarly,CSpireWireless launched itsLTEnetworkinSeptembercoveringaninitialpopulationof1.2millionpeople.TheMississippitownsofMcComb,Brookhaven,MeridianandGreenvillearethefirstof31marketsthatwillreceiveCSpire’sLTEservicesbetweenSeptemberandtheendofOctober.Anothersixmarketswillbeactivatedbytheendof2012whilefurtherlaunchesareplannedfornextyear.

SpectrumremainsamajorconcernforTier2operators.MetroPCShasdeployedLTE in its1700/2100MHzband (AWS)and its1900MHzband,stressingtheopportunityforroamingagreementswithotheroperatorsinthisAWSspectrumcombination.ThesetypesofLTEdataroamingagreementsstartedmaterialisinginlateAugustoncetheFCCapprovedVerizonWireless’$3.9billionpurchaseof20MHzofnationwideAWSspectrumfromseveralcablefirms,alongwithrelated spectrum deals with T-Mobile USA andCricket Communication. TheAWS spectrum now appears a good candidate for regional and global LTEroaming,withmostUS LTE operators supporting this solutionwhile chasingadditionalspectrumassets.


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Documents

Global cellular market trends and insight q3 2012