The Mobile Internet Report Key Themes*

Mobile Internet Operating Impact on EM Carriers is
Starting to Materialize
In EM, we see mobile broadband as a source of new revenue for the telecom industry while
in DM it is more of a substitution of revenues from fixed to mobile.
To date, 3G subscriber take-up rate has been slow, but we believe technology and price
points are now ready for mass adoption – 3G+ subscribers as percent of total on average
increased ~1-3pps (% points) every year in Emerging Markets from 2005-2009. But,
equipment price points are now significantly more attractive – US$250-300 for a netbook –
and the WCDMA-based networks with HSPA+ are now ready for data speeds that are more
comparable to fixed lines.
Mobile data is already helping to grow revenues in EM – In Saudi Arabia, we have seen
broadband revenue add 8 percentage points to Mobily’s revenue growth in 3Q09; in Kenya,
mobile broadband and mobile banking added 12 percentage points.
Impact on EBITDA margins is a positive – Mobile broadband typically carries a 10-15
percentage points higher EBITDA margin than traditional voice. There are no interconnect
costs at the gross margin level and it can leverage large amounts of opex from the traditional
voice side of the business.
Source: Sean Gardiner, Morgan Stanley Research.
598