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Industry KPIs Study Industry KPIs

Š 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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Industry Industry KPI’s KPI’s -- Telecom Telecom Client • The client is a mobile application provider in the US

Client Ask • The client commissioned SGS to conduct a study to understand the KPIs of telecom market in the US • The client also needed to study the size of the mobile applications market, mobile data market, device sales and churn rates

Sutherland’s Solution • SGS used extensive secondary research using its internal database and to obtain relevant information to achieve the desired outcome of this engagement • SGS used certain third-party databases for telecom sector and thereafter conducted country-wide and cross-country benchmarking of the telecom industry • Generated insights based on complex analysis on the raw and fragmented data available across all the data source

Benefits to the Client • Analysis of the key trends in the KPIs of telecom companies • Detailed understanding of the high growth verticals of the telecom industry • Helped client gauge the market of mobile applications and taking strategic decisions on their product development

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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US Telecom market structure 2005

2012 US Telecom has evolved into a DUO-POLY market during 200512, with AT&T and Verizon currently accounting for 2/3rd of the subscriber market share

Source: Bloomberg

North America – Pre-paid & Post-paid subscribers

Prepaid vs. Postpaid 

North America is largely a postpaid market

For 2011, postpaid accounted ~80% of the total subscriber base

Share of postpaid has gradually declined over time

Postpaid share down from 87% in 2000 to 78% in 2011

Source: Bloomberg, Ovum Consulting, Sutherland Research

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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Data revenues – North America & World Data Revenues – World & North America/Share of NA to World

Data Revenue:

350

30%

300

25%

250

20%

Data revenues in North America have grown at a strong rate compared to World

During 2001-10, data revenues in North America grew at a CAGR of 78% compared to world data revenues which grew at a significantly lower rate of 28%

The rapid adoption of new technology is leading to explosive growth in data revenue in North America

200

s n ilo B

15% 150 10%

100

5%

50 0

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 North America data revenues

Global data revenues

Share (RHS)

Source: Bloomberg, Ovum Consulting, Sutherland Research

North America – Total & Data Revenues

Data Revenue: 

Data Remains the Key Driver of Wireless Services Growth in US

The high propensity of US subscriber towards new telecom technology 3G/4G is driving the data revenue growth

Data revenues have been largely contributing to growth in wireless revenues

Source: Bloomberg, Ovum Consulting, Sutherland Research

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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3G Subscriber base & Smartphone penetration North America – 3G subscribers & penetration

3G subscriber base and penetration 

US has the highest 3G subscriber base globally by quite a margin compared to other markets

Moreover, it also has a significant room for growth, as the latest 3G penetration stands at around 64%

The strong 3G adoption is driven by the fast adoption of smartphones

Smartphones gained rapid adoption among mainstream consumer segments across markets, nearly 42% of all US mobile subscribers now use smartphones

Source: Bloomberg, Ovum Consulting, Sutherland Research

Smartphone penetration – World & North America

Smartphone penetration 

North America has a very high smart-phone penetration rate compared to the world

This is expected to improve at a better rate going forward

This is a critical factor leading to high data revenue growth

Source: Bloomberg, Ovum Consulting, Sutherland Research

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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Device sales & Churn Verizon device sales – Iphone/LTE

Verizon device sales

5.0 4.5

Verizon Iphone sales have been stable over the last five quarters

While LTE device sales have been growing at a strong rate aiding customer acquisition

Verizon’s LTE network provides it with a slight edge, on account of performance and speeds, when compared to HSDPA+ networks

4.0 3.5

s n ilo M

3.0 2.5 2.0 1.5 1.0

Smartphone penetration

0.5 0.0 Q12011

Q22011 Total LTE Device Sales

Q32011

Q42011 iPhone Sales

Source: Bloomberg, Sutherland Research

AT&T Iphone sales

Source: Bloomberg, Sutherland Research

Q12012

AT&T Iphone sales have been stable, despite Iphone being available on more networks now Churn rate – US, Verizon & AT&T

Source: Bloomberg, Sutherland Research

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

www.sutherlandglobal.com January 10, 2013

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telecom_Industry KPIs Study