Mobiletelephony contribution

Mobile Telephony Contribution to Latin America and the Caribbean Economies

This study was developed by Convergencia Research, from GSM Latin America Inc.’s request.

Neither GSM Latin America nor GSM Association nor their Members or Associate Members, are responsible for any use that might be made of this publication.

The views expressed in this publication are the sole responsibility of the author(s) and do not necessarily re ect the views of GSM Latin America, GSM Association, their Members or Associate Members.

Contents FIRST PART: “OBJECTIVES AND METHODOLOGICAL APPROACHES” I. Introduction II. Objetives III. Scope IV. Theoretical Frame IV.I. Model “A”. Macroeconomical Impact.

IV.II. Model “B”. Productive Structure and Value Chain.

IV.III. Model “C”. Contribution to connectivity.

SECOND PART: “GLOBAL CONTRIBUTION OF MOBILE TELEPHONY TO LATIN AMERICA AND THE CARIBBEAN ECONOMIES” 1. Mobile Telephony Contribution to Gross Domestic Product 2. Mobile Telephony Contribution to National investment 3. Mobile Telephony Contribution to combat In ation 4. Mobile Telephony Contribution to Employment 5. Mobile Telephony Contribution to Connectivity

THIRD PART: “MOBILE TELEPHONY CONTRIBUTION TO LATIN AMERICA AND THE CARIBBEAN ECONOMIES BY COUNTRY” 1. Argentina 2. Brazil 3. Chile 4. Colombia 5. Ecuador 6. Peru 7. Uruguay 8. Venezuela 9. Costa Rica 10. El Salvador 11. Guatemala 12. Panama 13. Mexico 14. Jamaica 15. Puerto Rico 16. Dominican Republic 17. Trinidad & Tobago ANNEXES: I. Consulting and Data sources II. Working Group

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GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Objectives and Methodological Aproaches

First Part: I. Introduction The Mobile Telephony industry has grown considerably during the last years. Its in uence on all orders, both social and economic has become more important each day.

Latin America and the Caribbean are not unaware to this phenomenon in which Mobile Telephony has even exceeded Fixed Telephony in number of lines in service, covering geographical areas and economic segments until now excluded.

Beyond the social service provided by Mobile Telephony, governments have implanted in some cases tributary policies and speci c regulations that partly limit mobile development. In other cases, governments have not considered the direct and indirect total bene cial impact on GDP, on employment, on investments and on wealth given by this industry in each one of the nations to design policies that allow reaching all its growth potential.

II. Objetives As mentioned earlier in the introduction, it is extremely important to be aware of Mobile Telephony contribution to Latin America and the Caribbean economies in order to de ne policies tending to generate conditions that motivate the bene cial impact of the industry.

Therefore, GSM Association Latin America has commissioned to an independent consultant a study on direct and indirect economic contribution of Mobile Telephony in 17 countries of Latin America and the Caribbean.

General objectives: • • • •

To estimate direct, concrete contribution from mobile services to each country’s GDP and to show their relative importance comparing it with the economic sectors’ contribution of those same countries.

To estimate the direct generation of employment from mobile services.

To estimate direct, concrete contribution from mobile services to each country’s wealth and investment.

To show the indirect contribution generated in each country by mobile business value chain through its direct suppliers on employment, on beginning new businesses and on taxes collection.

The results in all the cases are presented by: • • •

Country Zones (South America, Central America & Mexico and the Caribbean).

Region (Total: 17 countries of Latin America and the Caribbean).

III. Scope The study covers 17 countries from Latin America and the Caribbean; divided into eight from South America, ve from Central America & Mexico and four countries from the Caribbean.

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South America

Central America and Mexico

The Caribbean

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela

Costa Rica El Salvador Guatemala Panama Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Objectives and Methodological Aproaches The 17 selected countries, as a whole, represent 96. 5% of GDP and the 90.0% of Latin America’s and the Caribbean population.

The eight Latin America’s selected countries represent 98. 7% of GDP and sum 95. 8% of the inhabitants. The ve selected countries from Central America & Mexico represent 98. 4% of GDP and sum 91. 2% of the inhabitants. Finally, the four selected countries from the Caribbean represent 73. 5 % of GDP and the 44. 6 % of the region’s inhabitants excluding Cuba.

IV. Theoretical Frame In order to ful ll with the objective stated, two models have been designed to measure the economic contribution of Mobile Telephony; a third model has also been designed to measure contribution to connectivity.

IV.I. Model “A”. Macroeconomic Impact.

At the macroeconomic level the most representative variables have been studied in Model “A” to measure the Mobile Telephony contribution to the economies of each one of the countries covered by this study.

Model “A”: Macroeconomic Impact of Mobile Telephony

Mobile Telephony

Employment

Direct Employment

Indirect Employment

Investment (wealth)

Gross Fixed Capital Formation

Gross Domestic Product

Sales

Demand for Goods and Services to other Industries

Total Employment

Inflation

National Economy

Zone Economy

Regional Economy: 17 countries of Latin America and the Caribbean

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 7

First Part: IV.I.I. Gross Domestic Product (GDP) Why GDP? GDP represents the total value of all nal goods and services produced within a country over a speci ed period of time. It is the most important macro - economic magnitude for estimating an economy’s productive capacity.

What are our objectives?

• To understand the six-year period 2001 – 2006 of GDP behavior .

• To know GDP conformation and identify the industries that contribute most in each country.

• To estimate the Mobile Telephony contribution to GDP. • To compare the mobile industry contribution with other industries contribution to each country’s GDP. What methodologies were used and what sources were consulted?

• An economic analysis was carried out through the collection of each country’s Of cial Statistics and Measurement.

• Economic and nancial information of the Industry’s main companies were collected.

• The information was complemented with surveys and interviews to experts.

• To assure comparisons and conclusions consistency among industries and countries, homogeneous currencies were employed and data was normalized.

IV.I.II. National Investment Why Gross Fixed Capital Formation?

A good measurement of a country wealth is the Gross Fixed Capital Formation. This represents the acquisition of capital assets of an economy; understanding that these are the production means to produce other goods.

Fixed capital assets are: machinery and equipment, transport equipment, dwelling and non - residential buildings and its enlargements and/or improvements, infrastructure works, cultivated assets and intangible produced assets (software, patents, etc.).

What are our objectives?

• To know Gross Fixed Capital Formation of each country in the six -year period 2001 – 2006.

• To estimate the capital assets that the Mobile Telephony industry uses and comparing it with the national investment generated by the rest of the economy.

• To reason regarding Mobile Telephony contribution to national investment.

What methodologies were used and what sources were consulted?

• An economic analysis was carried out through the collection of each country’s Of cial Statistics and Measurement.

• Economic and nancial information of the Industry’s main companies were collected.

• To assure comparisons and conclusions consistency among industries and countries, homogeneous currencies were employed and data was normalized.

IV.I.III. In ation Why In ation?

The in ation is a rise in the general level of prices of goods and services in an economy. To measure this increment, different indexes that measure the average growth of a basket of goods have been created. The Consumer Price Index (CPI) is the most worldwide used and disclosed measure which indicates the variation expressed in percentage in the average price of goods and services that a typical consumer acquires.

Most countries from Latin America and the Caribbean have suffered important periods of in ation to the detriment of their economies.

Meanwhile, the strong competition among the mobile sector operators over the last years has resulted in a constant prices reduction of the service and its average revenue per user (ARPU) in those countries where general economy stability has existed; and much lower increases than those from the rest of the general basket of prices where in ation has existed. Mobile prices and

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GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Objectives and Methodological Aproaches ARPU of Mobile Telephony have remained sFigure or even decreased in countries that have experienced relatively low in ation rates.

On the other hand, in countries with signi cant levels of in ation the traf c termination tariff from xed to mobile has not followed the increment level that other goods and services observed. This has generated complications to companies that have experienced, as a consequence of in ation, increments in their productive structures (incorporations of goods, expenses and wages) without the corresponding adjustment in their levels of revenues.

What are our objectives?

• To detail the CPI evolution of each country in the six- year period from 2001 - 2006.

• To observe the CPI main components evolution in the same period.

• To know the average prices evolution of prepaid minute and postpaid minute of mobile telephone service.

• To know the ARPU evolution (Average Revenue per User). The monthly average revenue per user that a Mobile Telephony company obtains. Revenues are composed by the number of billed minutes multiplied by its price. Then, the increase in ARPU may be generated by an increase in the number of minutes used by user or by the price modi cation of those minutes. ARPU is a metric used worldwide and it uni es concepts in order to make comparisons that involve Prices.

• To make comparisons between the increase in the average revenues per user (ARPU) and the rest of the economy prices.

• To conclude about the cost behavior of mobile telephones with respect to In ation.

What methodologies were used and what sources were applied?

A progressive economic analysis was carried out through the collection of statistical data generated by Governments of cial organisms and by private studies.

Regarding prices evolution of the mobile telephone service, as it was possible, the analysis was divided in prepaid and postpaid.

Weighted averages were estimated for both prices based on the information provided by the companies and/or regulatory entities.

Indexes and prices were homogenized to compare them among different industries and countries.

IV.I.IV. Employment Why employment?

Latin America and the Caribbean are world regions where unemployment levels still remain very high. The Mobile Telephony invation has generated employment to millions of people worldwide. It is essential to estimate how the industry contributes to unemployment mitigation through workforce demand.

What are our objectives?

• To estimate the number of people directly employed by Mobile Telephone companies.

• To estimate the number of people undirectly employed by Mobile Telephone companie.

What methodologies were used and what sources were consulted?

Information provided by the Mobile Telephony main companies and representative companies of other industries, Mobile Telephony providers, was collected. The information was complemented with surveys and interviews to experts.

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First Part: IV.II. Model “B”. Productive Structure and Value Chain Model “B”: Productive Structure and Value Chain End Users

Sales to End Users

Mobile Operators

Productive Goods

Operating Expenses

Acces Hardware

Access and Interconnection

Sites

Network Rental

Troncal Network

Dealers

Systems

Advertising

Terminal Equipments

Maintenance and Repairs

Buildings

Other Expenses

Other Goods

Demand for Goods and Services to Providers Suppliers

First Link of Value Chain

Taxes

Productive Goods

Operating Expenses

Employment

Why Productive Structure and Value Chain?

Mobile Operators “Productive Structure” is de ned as: • Investment in Productive Goods.

• Operating Expenses (services) to develop their activity.

• Their Human Resources (employment).

The Value Chain of a Mobile Operator is de ned as the interrelation that produces economic effects among: • End users of mobile telephone service.

• Mobile Operator.

• Productive Goods and Services Providers that facilitate the development of the Mobile Telephony activity.

• Employees.

• Government.

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GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Objectives and Methodological Aproaches Mobile Telephony demands goods and services to other sectors of the economy based on its Productive Structure. At the same time, these sectors demand goods and services to others, and so forth generating Value Chains that embrace the whole economy activity.

The Value Chain link contribution generated specially by an industry is not directly observable by any macro - economic magnitude.

What are our objectives?

Model“B”shows the Mobile Telephony contribution generated on other industries and economy sectors based on its Productive Structure and its Value Chain composition.

Speci cally: • What contribution does mobile telephony generate in the development of other industries from an economic perspective? (Goods and Services Demand - OPEX and CAPEX).

• To quantify contribution to GDP from the Demand for goods and services perspective (OPEX and CAPEX).

• What contribution does mobile telephony generate in the work force demand in other industries.

What methodologies were used and what sources were consulted?

An economic and nancial study will be carried out regarding the application of analysis techniques of counFigure states.

Regarding the work process: • The present study scope is limited to the analysis of the said rst chain link. This is: - Productive Goods Providers: Network, Sites, Troncal Network, Systems, Telephones Equipment, Buildings, etc.

- Services Providers that generate Operating Expenses: Interconnection and Access, Dealers, Advertising, Maintenance and Repairs, etc.

- Employees: This point is described and analyzed in Model“A”context - Macroeconomic Impact of Mobile Telephony.

However, the indirect employment generated by purchasing Goods and Services from its Suppliers is analyzed.

• The Mobile Telephony companies that operate in each country are identi ed.

• Considering the market share of these companies; in the analysis were included all those companies, that added, explain more than 70% of each country’s Mobile Telephony market.

• The Productive Structure of each company was evaluated one by one.

• Main Goods and Services Providers were detected and related with their respective industries.

• From the Productive Structure the Value Chain generated by these companies is drawn and quanti ed. This allows understanding the interrelation among industries that Mobile Telephony proposes.

• Results were added at country level to standardize a Value Chain that represents all the companies.

Regarding the data bases in which our study is sustained, these are the economic and nancial information of the main Mobile Telephony companies and their Goods and Services Providers. Closed surveys were also carried out and reinforced through interviews to the companies’ responsibles.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 11

First Part: IV.III. Model “C”. Contribution to Connectivity

Fixed Telephony Mobile Telephony USERS

Internet

Why Contribution to Connectivity?

Today Mobile Telephony is giving services to population’s sectors and geographical areas of Latin America and the Caribbean where Fixed Telephony companies have not arrived. Therefore, it contributes to reduce the communication divide regarding facilities that today exists.

What are our objectives?

The idea is to estimate the contribution to connectivity that today Mobile Telephony carries out and to compare it with other ways of communication used, as Fixed Telephony and Internet.

Speci cally: • To know the number of lines of Fixed Telephony users and the number of Mobile Telephony lines.

• To know the number of Internet Connections.

What methodologies were used and what sources were consulted?

A quantitative economic study was carried out through statistics and of cial data.

Information provided by the companies and regulatory organisms of Mobile, Fixed Telephony and Internet were also used.

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GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution to Latin America and the Caribbean Economies

Second Part: 1. Mobile Telephony Contribution to Gross Domestic Product 1.1. Regional GDP Evolution Figure 1.1.1. Region: Average Variation Rate Gross Domestic Product (Constant ) 2001-2006 Annual Variation %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico Jamaica Puerto Rico Dominic an Republic Trinidad & Tobago The Caribbean Average Region

2002

2003

2004

2005

2006

'06 vs. '01

-10,9%

8,8%

9,0%

9,2%

8,5%

25,2%

2,7% 2,2% 1,9%

1,1% 3,9% 3,9%

5,7% 6,0% 4,9%

2,9% 5,7% 4,7%

3,7% 4,0% 6,8%

17,1% 23,7% 24,2%

4,2% 5,2%

3,6% 3,9%

7,9% 5,2%

4,7% 6,4%

4,3% 8,0%

27,3% 32,2%

-11,0% -8,9% -1,8%

2,2% -7,8% 2,5%

11,8% 18,3% 8,6%

6,6% 10,3% 6,3%

7,0% 10,3% 6,6%

16,0% 21,1% 23,3%

2,9% 2,3%

6,4% 2,3%

4,3% 1,8%

5,9% 2,8%

7,9% 4,2%

30,5% 14,1%

3,9% 2,2% 0,8%

2,5% 4,2% 1,4%

3,2% 7,5% 4,2%

3,5% 6,9% 2,8%

4,9% 8,1% 4,8%

19,2% 32,4% 14,6%

2,4% 1,1%

3,4% 2,3%

4,2% 0,9%

4,4% 1,4%

6,0% 2,6%

22,2% 8,6%

0,9% 5,0% 7,9%

0,1% -0,4% 14,4%

3,1% 2,7% 8,8%

0,3% 9,2% 8,0%

0,7% 10,7% 12,0%

5,1% 29,9% 62,5%

3,7% 0,7%

4,1% 3,1%

3,9% 6,2%

4,7% 5,4%

6,5% 6,4%

26,5% 23,7%

S ource : Economic Commission for Latin America and the Caribbean Statistical (CE PAL- ECLAC) Organism and National Central Banks

As a whole, the region’s 17 countries under study represent 96.5% of all Latin America and the Caribbean Gross Domestic Product (GDP); In 2006 GDP growth averaged 6.4% in the region. Although, these are preliminary gures presented by the Economic Commission for Latin America and the Caribbean (CEPAL), Central Banks and Of cial Statistical Organisms of each one of the countries; the rate is considered to be very close to the real one.

The good news for the region is that it has experienced a growth rate for the third consecutive year higher than 5% and has considerable overcome the uncertainty and crisis years of this decade beginning. This happened in all Latin America, but Argentina, Venezuela and Uruguay were more deeply impacted.

The region simple average growth has generated an accumulated rate of 23.7% in the ve-year period 2001-2006. Subtotals per zone show similar evolution indicators: Latin America increased 23. 3%, Central America and Mexico 22. 2% and the Caribbean 26. 5%.

This evolution in the region economies is not an isolated fact; on the contrary, it is produced in a worldwide generalized growth context. Although, the region growth rates are high as for their own historical development it is important to point out that are lower to those observed in other developing regions like the case of some Asian countries .

Beyond the region’s good evolution, it can not be ignored the low growth rates registered by the two main economies of the area, Brazil and Mexico that, as a whole, represent approximately 63% of the Total Gross Product; situation that generates a smaller increment in the region.

14 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 1.1.2. Region: Average Variation Rate Constant Gross Domestic Product 2001-2006

Accumulated Variation % ’06 vs. ‘01

70,0% 60,0% 50,0% 40,0%

23,7%

30,0% 20,0% 10,0%

Puerto Rico

Jamaica

El Salvador

Mexico

Uruguay

Brazil

Guatemala

Venezuela

Chile

Region Average

Colombia

Argentina

Ecuador

Dominican Rep.

Costa Rica

Peru

Panama

Trinidad & Tobago

0,0%

Source : CEPAL (ECLA C) Statistical Organism and National Central Banks

The growth observed in some Latin American countries is outstanding. Argentina and Venezuela have generated very important growths after the crisis period. Growth rates higher than 8% in the case of Argentina were observed in the last four years of study. In 2004 Venezuela grew 18.3% to sustain increases higher than 10% in the years to come. It is also important to mention the sustained and sFigure growth of other countries with better accumulated evolution, although at lower annual rates, as the cases of Colombia, Ecuador and Peru.

The evolution of Panama and Costa Rica in Central America is outstanding. Both countries accumulated in six years growth rates higher than 30%. On the other hand, in the Caribbean; Trinidad & Tobago showed the most important growth of the zone (62. 5%) while Dominican Republic generated a rate close to 30%.

1.2. Regional GDP Composition by Activity Sector Figure 1.2.1. Region: GDP Composition by Activity Sector 2001-2006 % Participation

Agriculture, Forestry, fishing and Hunting Mining and Quarrying Manufacturing Industry Electricity, Gas and Water Construction Trade, Restaurant and Hotels Transport and Communications Financial and Business Services Personal Services and others

2001

2002

2003

2004

2005

2006

8,4%

8,0%

8,1%

7,9%

7,9%

8,0%

4,8% 17,7% 2,6%

6,3% 17,0% 2,7%

6,7% 16,9% 2,6%

6,9% 17,1% 2,6%

6,7% 17,1% 2,6%

7,1% 17,1% 2,5%

5,2% 16,0%

5,3% 15,6%

5,2% 15,5%

5,3% 15,7%

5,4% 15,9%

5,4% 15,4%

9,3% 15,8% 20,2%

9,5% 15,9% 19,8%

9,7% 15,6% 19,6%

9,9% 15,4% 19,2%

10,3% 15,4% 18,9%

10,5% 15,6% 18,4%

S ource : CEPA L (ECLAC) Statistical Organism and National Central B anks

The regional GDP composition by Activity Sector remained sFigure with no major changes in the six year period under analysis.

The manufacturing industry is still the most important economic sector. It contributed with 17.1% of the regional GDP in 2006; followed in the second place by Financial, Real State and Business Services (15.6%), and in the third place by Trade, Restaurants and Hotels (15.4%). More than 48% of regional Product is grouped among these three sectors. The category“Personal Services sector and others” considers the activity of national governments; its analysis has been excluded from this study.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 15

Second Part:

Mining and Quarrying are standed out among the sectors that have improved their participation in the Gross Regional Product; it has increased by 1.5 its activity participating with 4.8% in 2001 to 7.1% in 2006. On the other hand, Transport and Communication Services sector that includes the Mobile Telephony activity has grown 1.1 times participating with 10.5% of Regional Gross Product in 2006; it is the second sector that has increased most its contribution to GDP in Latin America over the last ve years, behind mining and oil sectors. The Mobile Telephony taking off is the base of this phenomenon.

Figure 1.2.2. Region: Average Variation Rate of GDP by Activity Sector 2001-2006 Annual Variation %

2002

Agriculture, Forestry, Fishing and Hunting Mining and Quarrying Manufacturing Industry Electricity, Gas and Water Construction Trade, Restaurant and Hotels Transport and Communications Financial and Business Services Personal Services and others

2003

2004

2005

2006

'06 vs. '01

0,3%

4,6%

2,0%

3,4%

3,1%

20,9%

-1,0% -0,2% 3,6%

9,1% 2,9% 2,1%

5,1% 6,2% 2,7%

2,7% 5,4% 3,8%

6,9% 7,7% 4,3%

26,6% 21,9% 19,6%

-1,5% -1,8%

3,9% 2,6%

6,1% 7,4%

8,8% 6,6%

13,8% 6,8%

35,1% 22,8%

3,0% 1,6% 1,2%

4,9% 2,2% 2,2%

8,4% 5,1% 3,1%

8,8% 5,4% 3,3%

8,9% 6,3% 3,6%

37,5% 23,3% 14,9%

S ource : CEPA L (ECLAC) Statistical Organism and National Central B anks

As it was mentioned, the simple accumulated average growth of the region has been of 23.7% in the six-year period, 2001-2006.

The analysis per Activity Sector shows that Transport and Communications have generated the most signi cant growth with an accumulated rate of 37.5%, even higher than the real state boom. The importance of this result lies in that the Mobile Telephony activity is included by this sector and it has grown more than 200% in this period like it is observed in the next chapters; it is the major engine of this industry’s added growth rate. The countries that have observed the highest accumulated growth in Transport and Communications are: Costa Rica Panama

71,4% 63,2%

Guatemala Argentina Venezuela

49,6% 47,2% 45,6%

Construction has been the second largest development sector registering a growth of 35.1%; although, the accumulated variation of the countries where this activity has grown most is much higher causing a true real estate impact and economic development.

The following countries have registered the highest growth: Trinidad & Tobago Colombia Panama

83,8% 83,6% 66,8%

Argentina Peru

65,9% 46,5%

16 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies

1.3. Mobile Telephony Contribution to Regional GDP The Mobile Telephony contribution to Gross Regional Product is analyzed in this chapter from a supply and demand perspective for goods and services to national economies.

Supply of goods and services includes the Total Sales that Mobile Telephony operators carried out (voice transmission, data, and added value services and handsets sale).

Demand for goods and services includes the Total Expenses incurred by the operators in order to carry out their operation (OPEX, the acronym in English for Operating Expenditure) and investment in xed assets (CAPEX, the acronym in English for Capital Expenditures); it does not include amortization or depreciation, nancial expenses (interest, expenses and commissions), neither taxes except for the Value Added Tax. The analysis includes the operator companies that offered services between 2001 and 2006. The amounts of Sales (Supply) as OPEX and CAPEX (Demand) contain the Value Added Tax, that is to say, amounts at nal consumer’s price in order to facilitate comparisons with gures of GDP and Investment of each country.

Figure 1.3.1. Region: Evolution of Mobile Telephony Supply and Demand for Goods and Services 2001-2006 70.000

Accumulated Supply ’01 to ‘06

60.000

206.225

51.286

Accumulated Demand ‘01 to ‘06

50.000 US $ Millions

59.008

46.570 43.139

181.656

40.000

34.372 30.334

30.000

25.239 20.640

20.397 20.000

17.860

21.515 17.522

10.000

0 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The Mobile Telephony contribution to Gross Regional Product was of approximately US $206.225 million from 2001 to 2006 through the provision of goods and services (Sales).

Total approximated sales in 2006 were US $59. 008 million versus US $20. 397 million in 2001. Therefore, in only six years the annual sales were multiplied 2.9 times; an increase of US $38.612 million.

The Mobile Telephony contribution to Gross Regional Product growth was of approximately US $181.656 million from goods and services Demand perspective (OPEX + CAPEX) from 2001 to 2006.

The total Demand in 2006 was US $51.286 million while in 2001 were US $17.860 million. The annual demand was multiplied 2.9 times reaching US $33.427 million in only six years similar to that of mobile telephony services Supply (total sales).

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 17

Second Part:

Figure 1.3.2. Region: Supply for Goods and Services (Sales) of Mobile Telephony 2001-2006 US $ Millions

2001

2002

2003

2004

2005

2006

Acum .

Argentina

3.531

1.139

1.422

2.573

4.112

5.720

18.496

Brazil

5.085 998 541

6.222 1.260 734

7.613 1.441 935

10.592 1.732 1.626

15.135 1.908 2.776

18.304 2.813 3.672

62.952 10.152 10.285

181 533

235 625

418 786

649 909

1.056 1.012

1.211 1.303

3.750 5.169

s.d.

1.747 12.616

202 1.097 11.514

132 1.094 13.841

152 1.517 19.752

185 2.704 28.888

344 3.849 37.217

1.016 12.008 123.828

395 194

425 212

482 247

508 362

565 515

735 760

3.109 2.291

s.d.

181 5.777

s.d.

192 6.982

327 217 8.437

620 330 10.900

1.089 400 12.993

1.325 447 15.931

3.360 1.767 61.020

6.547 s.d.

7.810 s.d.

9.710 242

12.720 257

15.562 266

19.198 299

71.547 1.065

880 309 44

896 350 70

941 414 91

1.032 486 125

1.141 550 163

1.232 859 203

6.121 2.968 696

1.234 20.397

1.317 20.640

1.687 25.239

1.900 34.372

2.120 46.570

2.593 59.008

10.850 206.225

Chile Colombia Ecuador Peru Uruguay Venezuela South America Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Total

S ource : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

From the total regional accumulated sales of US $206.225 million in the 2001-2006 period South America reported sales of US $123.828 million; Central America and Mexico of US $71.547 million and the Caribbean of US $10.850 million.

Figure 1.3.3. Region: Mobile Telephony Sales Ranking by country 2001-2006 US $ Million

Accum.

%

Brazil

62.952

30,5%

Mexico

61.020 18.496 12.008

29,6% 9,0% 5,8%

6 Countries Subtotal

10.285 10.152 174.912

5,0% 4,9% 84,8%

Region total

206.225

100,0%

Argentina Venezuela Colombia Chile

S ource : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Six countries; Brazil, Mexico, Argentina,Venezuela, Colombia and Chile accumulate 84.8% of the total Mobile Telephony Sales in the region, while 60.1% of total sales were contributed by Brazil and Mexico together.

18 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies

Figure 1.3.4. Region: Demand for Goods and Services (OPEX + CAPEX) of Mobile Telephony 2001-2006 US $ Million

2001

2002

2003

2004

2005

2006

Accum.

Argentina

2.789

911

1.046

2.221

3.073

5.048

15.088

Brazil

4.221 982 606

5.053 1.042 627

6.185 1.082 872

9.988 1.376 1.486

16.039 1.675 2.866

18.760 2.487 3.508

60.246 8.643 9.965

187 534

194 554

342 680

558 806

1.018 907

1.063 1.148

3.363 4.628

s.d.

1.480 10.800

190 899 9.469

123 747 11.076

151 1.247 17.833

184 2.429 28.192

331 3.555 35.899

978 10.357 113.268

498 204

555 207

816 200

709 311

661 431

713 663

3.952 2.016

s.d.

127 5.124

s.d.

129 6.003

271 149 7.411

548 223 8.915

921 302 10.626

1.003 335 10.358

2.743 1.265 48.436

5.952 s.d.

6.894 s.d.

8.847 347

10.706 344

12.941 346

13.072 278

58.412 1.315

807 263 38

802 298 60

815 352 77

933 413 106

1.055 467 138

1.134 730 173

5.546 2.523 592

1.107 17.860

1.159 17.522

1.592 21.515

1.796 30.334

2.006 43.139

2.315 51.286

9.976 181.656

Chile Colombia Ecuador Peru Uruguay Venezuela South America Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico Jamaica Puerto Rico Dominic an Republic Trinidad & Tobago Caribe Total

S ource : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

From the US $181.656 million total Demand carried out by Mobile Telephony in the region under the period of analysis; South America mobile sector consumed US $113. 268 million, Central America and Mexico US $58.412 million, and the Caribbean US $9.976 million.

Figure 1.3.5. Region: Accumulated Variation Ranking OPEX + CAPEX of Mobile Telephony by country 2001-2006 US $ Million

Accum.

%

Brazil

60.246

33,2%

Mexico

48.436 15.088 10.357

26,7% 8,3% 5,7%

6 Countries Subtotal

9.965 8.643 152.735

5,5% 4,8% 84,1%

Region total

181.656

100,0%

Argentina Venezuela Colombia Chile

S ource : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Brazil and Mexico together, just like Sales Ranking, concentrate the highest participation of the regional Demand for goods and services with 59.8%. Also, the same six countries; Argentina, Venezuela, Colombia and Chile, together with Brazil and Mexico concentrate 84.1% of the region’s Mobile Telephony Demand.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 19

Second Part:

Figure 1.3.6. Region: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 45,0%

42,7% 37,4%

Annual Variation %

40,0% 35,0%

Demand: Var. ’06 vs ‘01

30,0%

189,3%

34,4% Supply: Var. ’06 vs ‘01

25,0%

15,0%

10,3%

26,9%

211,4%

18,3%

20,0%

32,2%

37,2%

Region GDP : Var. ’06 vs ‘01

17,2%

23,7%

10,0% 5,0% 0,0%

2,4% 0,7% 2002

6,2%

5,4%

2004

2005

3,1% 2003

6,4% 2006

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks, Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The simple average growth rate of Mobile Telephony supply for goods and services (Sales) in the region was 211.4% in the 2001-2006 period.

A growth rate of 189.3% was registered by the Demand for goods and services (OPEX + CAPEX) of Mobile Telephony to other sectors of the national economies.

In the same period, the whole region registered a growth rate of 23.7%. Compared to the region’s economy the growth of Mobile Telephony has been 9 times higher from the Supply perspective and 8 times from the Demand perspective.

20 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 1.3.7. Region: Accumulated Average Variation Rate of Mobile Telephony, GDP and Sectors 250,0%

200,0%

150,0%

26,6%

23,7%

23,3%

22,8%

21,9%

2 0,9%

19,6%

Manufacturing

Agriculture, Hunting, etc

Public Services

35,1%

Trade

37,5%

Financial & Business Servs.

50,0%

Region GDP

100,0%

Mining

Accumulated Variation % '06 vs. '01

211,4%

Construction

Transport & Communications

Mobile Telephony

0,0%

Source : CEPAL (ECLA C) Statistical Organism and National Central Banks, Reports and Bal ances of Companies, Regulatory Organisms and Convergencia Research estimations

In the Figure above the variation rate of Mobile Telephony Supply is compared with the rates generated by the activity sectors, component of Gross Regional Product. It is observed that Mobile Telephony occupies by far the rst place registering a rate of 211.4%.

Transport and Communications sector is located in second place registering a 37.5% rate. It is necessary to point out that Mobile Telephony activity is concentrated within this sector what explains its growth.

The explosive growth of Mobile Telephony does not have any comparison with that happened in the rest of the region’s activity sectors turning the mobile industry into a great generating source of social and economic development for the region in the present and in the next years.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 21

Second Part: Figure 1.3.8. Region: Average Annual Variation Rate of Mobile Telephony Sales and GDP 2001-2006 Variación Anual %

2002

2003

2004

2005

2006

'06 vs. '01

Argentina Brazil Chile Colombia Ecuador Peru

-67,7% 22,4% 26,3% 35,8% 29,8% 17,2%

24,9% 22,4% 14,4% 27,4% 77,6% 25,8%

80,9% 39,1% 20,2% 74,0% 55,3% 15,7%

59,8% 42,9% 10,2% 70,7% 62,6% 11,3%

39,1% 20,9% 47,4% 32,3% 14,7% 28,7%

62,0% 260,0% 182,0% 579,2% 567,6% 144,3%

1

s.d.

-37,2% 3,8% 7,6% 9,1% s.d.

5,8% 20,9% 10,8% s.d.

1,8% 13,3% 59,4% 24,8%

-34,5% -0,3% 19,7% 13,4% 16,7% s.d.

13,3% 20,8% 16,1% s.d.

5,0% 18,3% 28,7% 17,3%

15,0% 38,8% 42,4% 5,5% 46,3% 89,7% 51,9% 29,2% 44,5% 6,5% 9,7% 17,3% 37,9% 17,8%

21,4% 78,2% 44,6% 11,2% 42,3% 75,7% 21,3% 19,2% 33,9% 3,6% 10,6% 13,1% 30,2% 14,4%

86,5% 42,4% 39,0% 30,1% 47,6% 21,7% 11,8% 22,6% 26,8% 12,3% 7,9% 56,3% 25,0% 25,4%

70,5% 120,3% 248,2% 86,1% 291,1% 305,6% 147,0% 175,8% 201,1% 23,9% 40,0% 177,6% 360,5% 150,5%

10,3%

18,3%

37,2%

34,4%

32,2%

211,4%

Uruguay Venezuela South America

Costa Rica El Salvador 2 Guatemala Panama Mexico Central America & Mexico 2

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean

Average Region

(1) Uruguay’s accumulated variation corresponds to '06 vs. '02 period (2) Guatemala’s and Jamaica’s accumulated variation correspond to '06 vs. '03 period Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Although, the simple average growth rate of the region was 211.4%, important variations are observed among the different areas and even among countries; South America showed an increment rate of 248.2%, Central America and Mexico of 201.1% and the Caribbean of 150.5%.

Figure 1.3.9. Region: Accumulated Variation Ranking of Mobile Telephony Sales by country 2001-2006 Accumulated Variation %

Colombia Ecuador Trinidad & Tobago 1

Guatemala El Salvador Brazil

6 Countries Average Region Average

'06 vs. '01

579,2% 567,6% 360,5% 305,6% 291,1% 260,0% 394,0% 211,4%

(1)Guatemala’s accumulated variation correspond to '06 vs. '03 period Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The Mobile Telephony growth in the region is amazing. However, in some countries it is even higher. In the cases of Colombia and Ecuador, the growth almost triplicated the average region with rates of 579.2% and 567.6% accumulated in ve years.

It is important to point out the 260% growth observed in Brazil, since this country is the region main economy regarding GDP, Population and even the country that contributes most to the regional Mobile Telephony Sales.

Although Argentina is not listed in the ranking it is an interesting case, since in the ve-year period 2002-2006 after the devaluation crisis it has registered a growth of 402.2%; it is the third country with higher Mobile Telephony Sales in the region.

22 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 1.3.10. Region: Average Annual Variation Rate OPEX + CAPEX of Mobile Telephony and GDP 2001-2006 Annual Variation %

Argentina Brazil Chile Colombia Ecuador Peru 1 Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico

2

Central America & Mexico 2

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean

Region Average

2002

2003

-67,3% 19,7% 6,1% 3,4% 3,6% 3,7% s.d.

-39,3% -10,0% 11,5% 1,3% s.d.

1,7% 17,2% 7,9% s.d.

-0,6% 13,3% 59,4% 24,0% 2,4%

14,9% 22,4% 3,9% 39,1% 76,4% 22,7% -35,4% -17,0% 15,9% 47,0% -3,1% s.d.

15,7% 23,5% 20,8% s.d.

1,7% 18,3% 28,7% 16,2% 17,2%

2004

112,2% 61,5% 27,2% 70,5% 63,0% 18,6% 23,5% 67,0% 55,4% -13,2% 55,3% 102,0% 49,8% 20,3% 42,9% -1,1% 14,5% 17,3% 37,9% 17,2% 42,7%

2005

38,4% 60,6% 21,8% 92,8% 82,4% 12,6% 21,4% 94,8% 53,1% -6,7% 38,4% 68,2% 35,2% 19,2% 30,9% 0,7% 13,1% 13,1% 30,2% 14,3% 37,4%

2006

64,2% 17,0% 48,5% 22,4% 4,4% 26,5% 80,4% 46,3% 38,7% 7,8% 53,8% 8,9% 11,1% -2,5% 15,8% -19,7% 7,6% 56,3% 25,0% 17,3% 26,9%

'06 vs. '01

81,0% 344,5% 153,3% 478,7% 467,4% 114,9% 74,6% 140,1% 231,8% 43,2% 224,4% 270,1% 164,9% 102,2% 160,9% -20,0% 40,6% 177,6% 360,5% 139,7% 189,3%

(1) Uruguay’s accumulated variation corresponds to '06 vs. '02 period (2) Guatemala’s and Jamaica’s accumulated variation correspond to '06 vs. '03 period Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

From the Demand perspective signi cant variations by area and by country are also observed regarding the growth average of 189.3%: South America generated an accumulated rate of 231.8%, Central America and Mexico of 160.9% and the Caribbean of 139.7%.

Figure 1.3.11. Region: Accumulated Variation Ranking of Mobile Telephony OPEX + CAPEX by country 2001-2006 Accumulated Variation %

Colombia Ecuador Trinidad & Tobago Brazil Guatemala El Salvador

1

6 Countries Average Region Average

'06 vs. '01

478,7% 467,4% 360,5% 344,5% 270,1% 224,4% 357,6% 189,3%

1) Guatemala’s accumulated variation corresponds to '06 vs. '03 period Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The conclusion is similar to what happened in the Sales analysis. The average rates in the continent were high, but these were thoroughly exceeded by some countries. Colombia and Ecuador almost triplicated the region’s growth average with rates of 478.7% and 467.4% accumulated in ve years.

In Brazil, the region’s main economy, Mobile Telephony increased its Demand levels for goods and services in 344.5%.

Argentina, the third country regarding Supply and Demand of Mobile Telephony registered a growth of 454.1% in the veyear period after the devaluation crisis (2002-2006).

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 23

Second Part: Figure 1.3.12. Region: Mobile Telephony as percentage of GDP 2001-2006 3,0%

2,4% 2,5%

% Participation of GDP

2,1% 1,9%

2,0%

1,6% 1,3%

1,5%

1,2% 1,0%

0,5%

0,0% 2001

2002

2003

2004

2005

2006

Source : CEPAL (ECLA C) Statistical Organism and National Central Banks Repo rts and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

In 2001, the Mobile Telephony activity in the region was 1.2% of Gross Domestic Product. In 2006, it was duplicated to 2,4%.

Figure 1.3.13. Region: Mobile Telephony as porcentage of GDP 2001-2006 Participation %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2001

1,3% 0,9% 1,4% 0,7% 0,9% 1,0% s.d.

1,4% 1,1% 2,4% 1,4% s.d.

1,5% 0,9% 1,6% s.d.

1,3% 1,3% 0,5% 1,0% 1,2%

2002

1,1% 1,2% 1,9% 0,9% 0,9% 1,1% 1,6% 1,2% 1,2% 2,5% 1,5% s.d.

1,6% 1,1% 1,7% s.d.

1,3% 1,4% 0,8% 1,1% 1,3%

2003

1,1% 1,4% 1,9% 1,2% 1,5% 1,3% 1,2% 1,3% 1,4% 2,8% 1,6% 1,5% 1,7% 1,3% 1,8% 2,9% 1,3% 2,1% 0,8% 1,8% 1,6%

2004

1,7% 1,6% 1,8% 1,7% 2,0% 1,3% 1,2% 1,3% 1,6% 2,7% 2,3% 2,6% 2,3% 1,6% 2,3% 2,9% 1,3% 2,2% 1,0% 1,9% 1,9%

2005

2,2% 1,7% 1,6% 2,3% 2,9% 1,3% 1,1% 1,9% 1,9% 2,8% 3,0% 4,0% 2,6% 1,7% 2,8% 2,7% 1,4% 1,6% 1,1% 1,7% 2,1%

2006

2,7% 1,9% 1,9% 2,7% 3,0% 1,4% 1,8% 2,1% 2,2% 3,3% 4,2% 4,3% 2,6% 1,9% 3,2% 2,9% 1,4% 2,2% 1,1% 1,9% 2,4%

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The Figure shows that the participation average is 2.4% by region, but in some countries this ratio exceeds the 3.0% like Guatemala, El Salvador, Costa Rica and Ecuador cases.

Among the countries that produce 86.0% of the region Gross Product (Brazil, Mexico, Argentina,Venezuela, Chile and Colombia), the Mobile Telephony participation rate is: 2.7% for Argentina and Colombia; 2.1% for Venezuela; and 1.9% for Brazil, Mexico and Chile.

24 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies 2. Mobile Telephony Contribution to National Investment 2.1. Regional Investment Evolution Figure 2.1.1. Region: Average Investment Percentage of GDP 2001-2006 Investment % / GDP

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2001

14,2% 17,0% 20,7% 13,6% 21,4% 18,6% 12,5% 24,1% 17,8% 18,3% 16,4% 18,3% 15,2% 20,0% 17,6% 29,1% 16,9% 18,9% 19,4% 21,1% 18,6%

2002

12,0% 16,4% 20,3% 14,5% 23,3% 17,5% 10,1% 21,9% 17,0% 18,9% 16,6% 19,3% 13,6% 19,3% 17,5% 31,6% 15,9% 19,4% 19,2% 21,5% 18,4%

2003

15,1% 15,3% 20,1% 16,5% 21,3% 17,8% 9,4% 15,5% 16,4% 19,2% 16,7% 18,7% 17,1% 18,9% 18,1% 29,7% 15,2% 15,5% 18,6% 19,7% 17,8%

2004

19,2% 16,1% 19,1% 18,4% 21,6% 17,9% 11,3% 18,3% 17,7% 18,6% 15,6% 18,3% 16,6% 19,6% 17,8% 31,4% 15,1% 16,1% 17,4% 20,0% 18,4%

2005

21,5% 16,3% 20,6% 20,8% 21,9% 18,8% 13,1% 20,2% 19,2% 19,0% 15,4% 18,3% 16,8% 19,3% 17,8% 29,8% 14,4% 13,1% 16,5% 18,5% 18,6%

2006

20,3% 16,2% 20,2% 18,5% 21,9% 18,1% 13,1% 20,0% 18,5% 18,8% 16,1% 18,6% 15,8% 19,4% 17,8% 30,3% 14,1% 14,9% 18,2% 19,4% 18,6%

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks Reports

The relationship between national Investment and Gross Domestic Product (GDP) is analyzed in this chapter; that is what percentage of GDP is destined by each one of the countries to invest in Capital expenditures (Productive Assets).

Practically, the relationship between Investment and GDP has not varied from 2001 to 2006; average levels of 18.6% have been maintained for the whole region.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 25

Second Part: 2.2. Mobile Telephony Investment Evolution (CAPEX) Figure 2.2.1. Region: Mobile Telephony Investment Evolution (CAPEX) 2001-2006 12.000

8.962

US$ 35.833

8.000

US $ Millions

9.868

CAPEX : Accum. '01 to '06.

10.000

5.628

6.000 4.423 3.706

4.000

3.245

2.000

0 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Figure 2.2.2. Region: Mobile Telephony Investment (CAPEX) 2001-2006 US $ Millions

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean

Total

2001

424 870 315 217 27 115 s.d.

430 2.398 264 54 s.d.

24 743 1.085 s.d.

171 46 7 224 3.706

2002

114 989 200 83 40 168 59 238 1.893 298 27 s.d.

19 759 1.104 s.d.

185 53 11 249 3.245

2003

48 1.219 171 262 78 154 33 85 2.050 521 20 51 21 1.341 1.955 178 165 62 14 418 4.423

2004

366 1.926 269 323 130 150 47 196 3.406 375 54 133 36 1.205 1.803 146 182 73 19 419 5.628

2005

439 3.380 398 840 231 207 43 469 6.006 352 70 198 49 1.791 2.460 142 248 82 24 497 8.962

2006

533 3.983 655 905 232 276 64 795 7.443 270 123 283 45 1.224 1.944 66 256 129 30 481 9.868

Accum.

1.923 12.366 2.009 2.630 738 1.069 247 2.213 23.195 2.081 348 665 193 7.063 10.351 531 1.207 445 104 2.288 35.833

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The Mobile Telephony operators have invested US $35.833 million in Capital Expenditure (CAPEX) in the region over the last six years (2001-2006).

In 2006, approximated total Investments amounted to US $9.868 million while in 2001 were US $3.706 million. In only six years Annual investments were multiplied 2.7 times increasing US $6.162 million.

From the region’s total Investments in Mobile Telephony, investment in South America totalled US $23.195 million; in Central America and Mexico US $10.351 million; and in the Caribbean US $2.288 million.

26 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 2.2.3. Region: Investment/Mobile Telephony Sales vs. Investment/GDP Comparison relationship 2001-2006 25,0% 24,0%

23,7%

24,0% 23,1% 22,6%

23,0%

Investment %

22,0% 21,0%

20,2%

20,0%

19,0%

19,0% 18,0%

18,6%

18,4%

18,4%

18,6%

18,6%

17,8%

17,0%

Investment / GDP % CAPEX / Sales

16,0% 15,0% 2001

2002

2003

2004

2005

2006

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

In the gure above it is observed the relationship between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relationship of Investment as percentage of Gross Regional Product for 2001-2006 period.

On average, the Mobile Telephony industry has invested 22.1% of its Sales, while the region total has paid 18.4% of its Gross Product. The conclusion is that the Mobile Telephony investments are higher, in proportion, than those carried out by the rest of the national economies. This tendency is even more remarkable in the years 2001, 2003, 2004 and 2005.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 27

Second Part: Figure 2.2.4. Region: Average Investment Percentage over Mobile Telephony Sales 2001-2006 CAPEX % / Sales

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2001

12,0% 17,1% 31,6% 40,1% 15,0% 21,5% s.d.

24,6% 23,1% 67,0% 27,8% s.d.

13,0% 12,9% 30,2% s.d.

19,4% 15,0% 15,0% 16,5% 23,7%

2002

10,0% 15,9% 15,9% 11,4% 17,1% 26,9% 29,3% 21,7% 18,5% 70,2% 12,8% s.d.

10,1% 10,9% 26,0% s.d.

20,7% 15,0% 15,0% 16,9% 20,2%

2003

3,4% 16,0% 11,9% 28,0% 18,7% 19,6% 25,0% 7,8% 16,3% 108,2% 8,0% 15,8% 9,7% 15,9% 31,5% 73,5% 17,6% 15,0% 15,0% 30,3% 24,0%

2004

14,2% 18,2% 15,5% 19,8% 20,0% 16,5% 31,1% 12,9% 18,5% 73,8% 15,0% 21,5% 10,8% 11,1% 26,5% 56,6% 17,6% 15,0% 15,0% 26,1% 22,6%

2005

10,7% 22,3% 20,8% 30,2% 21,9% 20,4% 23,5% 17,4% 20,9% 62,3% 13,6% 18,2% 12,3% 13,8% 24,0% 53,3% 21,7% 15,0% 15,0% 26,2% 23,1%

2006

9,3% 21,8% 23,3% 24,6% 19,2% 21,1% 18,6% 20,6% 19,8% 36,7% 16,2% 21,3% 10,0% 7,7% 18,4% 21,9% 20,8% 15,0% 15,0% 18,2% 19,0%

Average

9,9% 18,5% 19,8% 25,7% 18,6% 21,0% 25,5% 17,5% 19,5% 69,7% 15,6% 19,2% 11,0% 12,0% 26,1% 51,3% 19,6% 15,0% 15,0% 22,4% 22,1%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The regional average of Investment in relation with Sales in the 2001-2006 period is about 22.1%, but variations exist among zones: South America applied 19.5% of its Sales; Central America and Mexico destined 26.1%; and the Caribbean dedicated 22.4%.

The countries level analysis is quite attractive, since an important dispersion exists regarding the ratio. This is explained depending on the industry’s development moment in each country, as well as geographic and social factors, as size and population density.

Costa Rica is the leader in this industry; only one Mobile Telephony company of state property exists. This country has dedicated 69.7% of its last six years Sales to carry out investments.

Costa Rica is followed by Jamaica in level of investment; 51.3% of its sales have been destined to investment contrary to Costa Rica case, since the government deregulated the industry incorporating new players.

28 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies 3. In ation vs. Mobile Telephony ARPU Evolution 3.1. Evolution of CPI Figure 3.1.1. Region: Average Variation Rate of Consumer Price Index 2001-2006 Annual Variation %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2002

25,9% 9,9% 2,8% 7,0% 9,4% 1,5% 14,0% 31,2% 12,7% 9,7% 2,8% 6,3% s.d.

5,7% 6,1% 7,3% 6,1% 5,2% 4,2% 5,7% 9,3%

2003

13,4% 8,2% 1,1% 6,5% 6,1% 2,5% 19,4% 27,1% 10,5% 9,9% 2,5% 5,9% 0,1% 4,0% 4,5% 14,1% 7,9% 27,4% 3,8% 13,3% 9,4%

2004

4,4% 6,6% 2,4% 5,5% 1,9% 3,5% 9,2% 19,2% 6,6% 13,1% 5,4% 9,2% 0,4% 5,2% 6,7% 13,7% 11,9% 51,5% 3,7% 20,2% 9,8%

2005

9,7% 5,1% 3,7% 4,9% 3,5% 1,5% 4,7% 14,4% 5,9% 14,1% 4,3% 8,6% 2,9% 3,3% 6,6% 12,9% 13,8% 4,2% 6,8% 9,4% 6,9%

2006

10,9% 2,8% 2,6% 4,5% 2,9% 1,1% 6,4% 17,0% 6,0% 6,3% 4,9% 5,8% 3,5% 4,1% 4,9% 5,8% 14,7% 7,6% 8,3% 9,1% 6,4%

'06 vs. '01

81,3% 36,8% 13,2% 31,7% 25,9% 10,5% 65,4% 165,8% 53,8% 65,3% 21,4% 41,2% 7,0% 24,3% 31,8% 66,2% 67,2% 127,7% 20,0% 70,3% 51,2%

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks

The simple accumulated average In ation for the region in the period 2001-2006 has been of 51.2%. In the rst three years under analysis, annual rates higher than 9% are observed while in the last two years these rates decreased locating between 6% and 7%.

The South America average of In ation is very similar to the regional average, with a rate of 53.8%. Central America and Mexico collaborate with a rate much lower than the average (31.8%), but the Caribbean observes a higher rate (70.3%).

Regarding analysis by country, Venezuela confronted the most severe in ationary process in the region with an accumulated rate of 165.8% in the ve considered years. In the Caribbean, the Dominican Republic experienced a 127.7% accumulated variation of its prices. In the third place is Argentina that as consequence of the strong devaluation of its currency at the beginning of 2002 it carried out a prices readjustment that takes it to a general increment of 81.3%.

Panama is among the countries that less in ation registered showing an accumulated rate of only 7%. Then, Peru and Chile cases are observed maintaining very moderate price increases of 10.5% and 13.2% respectively in the ve years total.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 29

Second Part: 3.2. Mobile Telephony ARPU Evolution Figure 3.2.1. Region: Average Variation Rate of Mobile Telephony ARPU 2001-2006 Variación Anual %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica 1

El Salvador 2 Guatemala 3 Panama 3 Mexico

Central America & Mexico 4

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

5

2002

2003

2004

2005

2006

-67,8% -25,2% -11,7% -7,4% -10,2% 1,5% -11,3% -23,6% -19,5% -4,4% s.d. s.d. s.d. s.d.

-4,4% -4,4% -0,7% s.d.

-6,3% -3,8% -14,3%

18,8% 0,2% -4,4% -21,4% -7,2% 2,5% 10,7% -16,0% -2,1% -28,1% s.d. s.d.

-6,9% 2,0% -11,0% 18,6% 0,9% s.d.

-12,1% 2,5% -3,0%

13,0% -4,6% -4,8% -7,4% -8,0% 3,5% 8,9% 30,2% 3,9% -23,1% -25,7% s.d.

-5,2% 1,6% -13,1% -14,3% 2,6% s.d.

0,0% -3,9% -2,2%

-4,7% 1,0% 3,8% -1,4% -5,1% 1,5% -7,1% -7,5% -2,4% 0,8% 2,0% -6,6% -21,3% 0,4% -4,9% 0,0% 1,7% s.d.

-19,7% -6,0% -3,9%

-13,3% 7,6% 16,7% -1,9% -18,6% 1,1% 0,0% -20,2% -3,6% 0,0% -1,0% 3,2% -14,3% 0,4% -2,3% s.d.

0,4% s.d.

-12,6% -6,1% -3,5%

Accum.Var.

-64,3% -22,3% -2,7% -34,8% -40,8% 10,5% -0,7% -38,3% -24,2% -46,7% -25,0% -3,7% -40,4% 4,4% -22,3% -2,8% 4,8% s.d.

-42,2% -13,4% -21,6%

(1) El Salvador’s accumulated variation corresponds to '06 vs. '03 period (2) Guatemala’s accumulated variation corresponds to '06 vs. '04 period (3) Panama’s and Mexico’s accumulated variation correspond to '06 vs. '02 period (4) Jamaica’s accumulated variation corresponds to '05 vs.'01 period (5) There is no prices information from Dominican Republic The accumulated variation from the rest of the countries corresponds to '06 vs.'01 period.

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The accumulated variation rate of Mobile Telephony average revenues per user (ARPU) for the region in the 2001-2006 period has been negative, 21.6%. The higher decrease is observed at the beginning of the period with a de ationary rate of 14.3%, but it remains negative under the whole period of analysis.

The Latin America decrease average is even higher than the regional rate registering 24.2%. On the other hand, Central America and Mexico show a negative rate of 22.3%, while the Caribbean also observes a negative rate of 13.4%.

Regarding analysis by country, the most striking case was Argentina whose devaluation in 2002 caused a price decrease of 67.8%, tendency that could not be reverted in the following years, despite the currency partial revaluation and growth closing the period with an average decrease rate of 64.3%. Then, Trinidad & Tobago, Ecuador, Costa Rica, Panama and Venezuela show negative rates close to 40%.

Puerto Rico and Mexico are among the countries that were able to maintain their prices average revenues per user that even showed an increment over the 4%. While, Uruguay, Jamaica and Chile observed very slightly decreases.

30 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 3.2.2. Region: Accumulated Average Variation Rate of Mobile Telephony ARPU and CPI 2001-2006

CPI Var.: + 51,2%

80,0%

30,0%

Peru

Chile

Mexico

Guatemala

El Salvador

Panama

Brazil

Trinidad & Tobago

Puerto Rico

Uruguay

Colombia

Ecuador

Jamaica

Region Average

-120,0%

Costa Rica

-70,0%

Argentina

-20,0%

Venezuela

Accumulated Variation % '06 vs. '01

130,0%

Mobile Telephony Var.: - 21,6% -170,0% Note: El Salvador’s accumulated variation of Mobile Telephony Price corresponds to '06 vs. '03 period Guatemala’s corresponds to '06 vs. '04 period; Panama’s and Mexico’s corresponds to '06 vs. '02 period Jamaica’s corresponds to '05 vs. '01 period. the rest of the countries corresponds to '06 vs. '01 period.

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks, Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

As it was previously observed, most of the region’s countries have tolerated signi cant in ation levels in their deteriorated economies. Meanwhile, the strong competition that the Mobile Telephony industry has shown among operators in the last years has resulted in a constant decrease of average revenues per user.

From the combination between the variation rate of CPI (in ationary) and the variation rate of the Mobile Telephony ARPU (de ationary in most of the countries) the countries that worst combination has observed are those in the gure above: Mobile Telephony in Venezuela faced an accumulated in ation of 165.8%, while its Prices decreased to 38.3%. On the other hand, Argentina observed an in ation of 81.3% in the same period in which Mobile Telephony decreased to 64.3%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 31

Second Part: Figure 3.2.3. Region: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 15,0%

9,3%

9,8%

9,4%

Annual Variation %

10,0%

PCI Accum. Var. :

5,0%

6,9%

6,4%

2005

2006

-3,9%

-3,5%

+ 51,2%

0,0% 2002

2003

2004

-3,0%

-2,2%

-5,0%

Mobile Telephony Accumulated.

-10,0%

Var.:

- 21,6%

-14,3%

-15,0%

Source : CEPAL (ECLAC) Statistical Organism and National Central Banks, Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The comparison shows the simple average annual evolution of CPI in the region and the simple average Prices variation of Mobile Telephony. The major gap is observed in 2002, when the CPI registered 9.3% while Mobile Telephony registered a de ation of 14.3%. Although, this situation declined, it did not revert in the later years.

4. Mobile Telephony Contribution to Employment 4.1. Direct employment in the Mobile Telephony Industry Figure 4.1.1. Region: Direct employment generated by Mobile Telephony 2006 35.000

31.849

# of People Direct Employed

30.075 30.000 25.000

Total Staff Directly

20.000

Employed: 107.274

15.000 9.518 8.131

10.000

5.466

4.956 4.779

5.000

2.135 3.371

1.473 2.130

1.032

746 710 435 278 190

Trinidad & Tobago

Panama

Jamaica

Puerto Rico

Uruguay

Dominican Republic

El Salvador

Guatemala

Ecuador

Peru

Chile

Costa Rica

Colombia

Venezuela

Argentina

Mexico

Brazil

0

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

At the end of 2006, approximately 107,274 people were Directly employed by the Mobile Telephony companies of the region under analysis.

32 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Brazil and Mexico, as a whole, generated 61,924 job positions representing 57.7% of direct employment in mobile services of the region. These two countries plus Argentina, Venezuela, Colombia, Costa Rica and Chile conformed 88.3% of the total.

4.2. Indirect Employment generated by the Mobile Telephony Industry Figure 4.2.1. Region: Indirect Employment generated by Mobile Telephony 2006 160.000

# of People Indirect Employed

137.900 140.000

100.000

Total Employment generated in the 1st. link of the Mobile Telephony Value Chain Indirectly Employed:

80.000

370.007

120.000

57.406

60.000

41.290 21.360 27.760 9.255 21.630 4.800 16.548 2.718 3.978 836 10.430 4.800 4.405 1.561 3.330

40.000 20.000

Trinidad & Tobago

Jamaica

Panama

Puerto Rico

El Salvador

Uruguay

Dominican Republic

Ecuador

Peru

Chile

Costa Rica

Guatemala

Venezuela

Argentina

Colombia

Mexico

Brazil

0

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

According to that exposed in the rst part of the study, where the theoretical sustenance is presented, the main goods and services demanded by the Mobile Telephony industry have been identi ed. A thorough assessment will be carrying out to estimate the Employment generated by the industry in the rst link of its Value Chain (Indirect Employment).

It has been concluded that the region’s Mobile Telephony has generated Indirect Employment for approximately 370,007 job positions in 2006.

The country where more employment has been generated is Brazil through the rst link of its Value Chain, contributing approximately 137,900 job positions which represent 37.3% of the region’s total. Brazil, together with Mexico, Colombia, Argentina, Venezuela and Guatemala generated 83.1% of the region’s Indirect Employment.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 33

Second Part: Figure 4.2.2. Region: Indirect Employment generated by Mobile Telephony in the rst link of its Value Chain 2006 Providers of

#

Sales Team (Sales Agents)

%

231.798 37.200 27.963 23.030 19.315 9.775 7.070 6.198 4.102 2.800 756 370.007

Sites Installers Terminal Equipments Maintenance and Repairs Radiobase Network + Troncal Network + Equipments Mobile Contents (SVA) Terminals Logistic IT Systems Others Towers Electrical Feeding Indirect Employment Total

62,6% 10,1% 7,6% 6,2% 5,2% 2,6% 1,9% 1,7% 1,1% 0,8% 0,2% 100,0%

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and and its providers

From the employment total generated by Mobile Telephony through the rst link of its Value Chain, 62.6% is destined to an outsourcing Sales Team, that is to say, the sale agents. It is also important the employment level generated among the Site Installers, Maintenance and Repairs and the production of Terminal Equipments; that as a whole represent 24% of the total.

It is important to point out that Brazil and Mexico are the only producers and exporters of Terminal Equipments in Latin America and the Caribbean. This industry possesses a great value added and a rich Value Chain that arises as consequence of the same one.

4.3. Total Employment generated by the Mobile Telephony Industry Figure 4.3.1. Region: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

# of Direct and Indirect Personnel

180.000 160.000 140.000

100.000

Total Employment generated by Mobile Telephony

80.000

477.281

120.000

60.000 40.000 20.000 Trinidad & Tobago

Jamaica

Panama

Puerto Rico

Uruguay

El Salvador

Dominican Republic

Ecuador

Peru

Chile

Costa Rica

Guatemala

Venezuela

Argentina

Colombia

Mexico

Brazil

0

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations and Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and and its providers

Mobile Telephony has generated Employment to approximately 477,281 people in the region; 22.5% Directly employed

by Mobile Operators under a dependency relationship, while the 77.5 % remaining works in companies that provide goods and services in the rst link of the Value Chain.

34 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies An interesting metric unit arises from comparing how much employment the Mobile Telephony generates in its Value Chain for each person that is directly employed by the Operators. It is conclude that for each employee directly employed by Mobile Telephony, 3.5 people are indirectly demanded through the rst link of its Value Chain.

5. Mobile Telephony Contribution to Connectivity 5.1. Telecommunications Evolution (Mobile, Fixed and Internet) Figure 5.1.1. Region: Number of Mobile, Fixed Lines and Internet Connections Evolution 2001-2006 350.000

293.551

Thousands of Internet Connections

300.000

250.000

231.501

200.000

167.796 150.000

100.000

121.174

81.718

97.596

50.000

0 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research

At the end of 2006, the region possessed a total of 293.6 million of mobile lines while only 81.8 million existed by the end of 2001. In only ve years, Mobile Telephony multiplied by 3.6 times the number of connections. This means that 211.8 million people have been incorporated as mobile telephony users.

On the other hand, xed lines total was 38.8 million in 2006. In the period under analysis, signi cant growth variations are not observed.

Lastly, Internet Connections total was 18.1 million in 2006. An important growth is veri ed in the period under study, since in 2001 only 5.8 million connections existed.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 35

Second Part: Figure 5.1.2. Region: Average Annual Variation Rate Number of Mobile, Fixed Lines and Internet Connections 2001-2006 50,0%

Mobile Var. '06 vs. '01

45,0% 40,0%

369,2%

Annual Variation %

35,0% 30,0% 25,0% 20,0%

Internet Var. '06 vs. '01

15,0%

278,1%

Fixed Var. '06 vs. '01

24,0%

10,0% 5,0% 0,0% 2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research

The growth rate of Mobile Telephony users in 2001 - 2006 period has been 369.2%. Much higher than Fixed Telephony growth of 24.0%. Internet has also shown a very important growth registering a rate of 278. 1%.

Figure 5.1.3. Region: Number of Mobile, Fixed Lines and Internet Connections Average Penetration 2001-2006 70,0%

Mobile Lines 60,0%

61,0%

Fixed Lines

46,5%

Internet Connections

Penetration %

50,0%

40,0%

34,3% 26,1%

30,0%

17,2% 21,6% 20,0%

17,8% 10,0%

0,0% 2001

4,0% 2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research

The Mobile Telephony is the communication service that most contributes to National Connectivity in Latin America’s countries. By the end of 2006 it reached penetration levels of 61% considering the whole region.

In only ve years, the Mobile Telephony varied its penetration level from 17.2% in 2001 to 61.0% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a penetration of 17.8 %, while in 2001 it was of 16.2%.

Although Internet Connections have been increased, there still a long way to go. Closing 2006 its penetration level was of 4.0%.

36 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies 5.2. Number of Mobile Lines Evolution Figure 5.2.1. Region: Number of Mobile Lines Evolution 2001-2006 350.000

293.551

300.000

Thousands of Lines

250.000

231.501

200.000 167.796 150.000 121.174 97.596

100.000

81.718

50.000

0 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research

Figure 5.2.2. Region: Number of Mobile Lines 2001-2006 Thousands #

2001

2002

2003

The Caribbean

6.742 28.746 5.101 3.265 859 1.793 520 6.473 53.499 311 858 1.146 475 21.758 24.549 680 1.561 1.270 160 3.671

6.567 34.881 6.244 4.597 1.561 2.307 514 6.542 63.213 460 889 1.577 526 25.928 29.380 1.400 1.620 1.701 284 5.004

7.842 46.373 7.268 6.186 2.394 2.930 498 7.015 80.507 756 1.150 2.035 692 30.098 34.732 1.800 1.646 2.123 366 5.935

13.512 65.605 9.261 10.401 3.437 4.093 600 8.421 115.330 912 1.833 3.168 1.260 38.451 45.623 2.006 1.772 2.534 530 6.843

22.156 86.210 10.570 21.893 6.246 5.583 1.155 12.496 166.309 927 2.412 4.510 1.749 47.129 56.727 2.084 1.833 3.623 924 8.465

31.510 99.919 12.451 29.763 8.485 8.772 2.330 18.789 212.020 1.465 3.852 7.179 2.174 57.016 71.686 2.147 1.938 4.606 1.155 9.846

Total Region

81.718

97.596

121.174

167.796

231.501

293.551

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research

From the 293.5 million total of mobile lines in the region, South America contributed with 212 million, Central America and Mexico with 71.7 million and the Caribbean with 9.8 million.

Regarding analysis by country, Brazil was the one that possessed more lines, 99.9 million, 34.0% of the total at the end of 2006.

Mexico represented 19.4% of the total with its 57 million lines. Argentina, counted 31.5 million subscribers representing 10.7%.

Colombia, 29.8 million representing 10.1%.Venezuela, 18.9 million lines representing 6.4%. In the sixth place is Chile, that registered 12.4 million of active mobiles that represented 4.2% of the total. The 85% of the total region’s lines is concentrated among the six countries mentioned.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 37

Second Part: Figure 5.2.3. Region: Accumulated Average Variation Rate Number of Mobile Lines 2001-2006

Accumulated Variation % '06 vs. '01

1000,0%

887,6% 811,6%

900,0% 800,0% 700,0%

622,0%

600,0%

526,2%

500,0%

369,2%

400,0% 300,0% 200,0%

144,1%

100,0%

24,2% Puerto Rico

Chile

Mexico

Venezuela

Jamaica

Brazil

Dominican Republic

Uruguay

El Salvador

Panama

Argentina

Region Average

Costa Rica

Peru

Guatemala

Trinidad & Tobago

Colombia

Ecuador

0,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Figure 5.2.4. Region: Average Annual Variation Rate Number of Mobile Lines 2001-2006 Annual Variation %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2002

-2,6% 21,3% 22,4% 40,8% 81,7% 28,6% -1,2% 1,1% 24,0% 47,7% 3,6% 37,6% 10,7% 19,2% 23,7% 105,9% 3,8% 33,9% 77,4% 55,2% 31,3%

2003

19,4% 32,9% 16,4% 34,6% 53,4% 27,0% -3,1% 7,2% 23,5% 64,5% 29,4% 29,0% 31,7% 16,1% 34,1% 28,6% 1,6% 24,8% 28,9% 21,0% 26,0%

2004

72,3% 41,5% 27,4% 68,1% 43,5% 39,7% 20,5% 20,0% 41,6% 20,5% 59,3% 55,7% 82,0% 27,8% 49,1% 11,4% 7,6% 19,4% 44,9% 20,8% 38,9%

2005

64,0% 31,4% 14,1% 110,5% 81,7% 36,4% 92,5% 48,4% 59,9% 1,7% 31,6% 42,4% 38,8% 22,6% 27,4% 3,9% 3,4% 43,0% 74,2% 31,1% 43,6%

2006

42,2% 15,9% 17,8% 35,9% 35,8% 57,1% 101,7% 50,4% 44,6% 58,0% 59,7% 59,2% 24,3% 21,0% 44,4% 3,0% 5,7% 27,1% 25,0% 15,2% 37,6%

'06 vs. '01

367,4% 247,6% 144,1% 811,6% 887,6% 389,2% 348,1% 190,3% 423,2% 370,6% 349,0% 526,2% 357,6% 162,0% 353,1% 215,7% 24,2% 262,6% 622,0% 281,1% 369,2%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The simple average of accumulated growth of Mobile Telephony number of lines in the region in the 2001-2006 period has been outstanding, registering a rate of 369.2%.

Important variations are observed regarding the growth among the different areas and even countries: South America generated the highest region’s increment rate with a 423.2% registration; while Central America and Mexico increased 353.1% and the Caribbean 281.1%.

38 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 5.2.5. Region: Accumulated Variation Ranking of Mobile Lines Number 2001-2006 Accumulated Variation %

'06 vs. '01

Ecuador Colombia Trinidad & Tobago Guatemala Peru Costa Rica

887,6% 811,6% 622,0% 526,2% 389,2% 370,6% 601,2% 369,2%

6 Countries average Region Average

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Some countries have generated even more amazing growths. For example Ecuador and Colombia very above the average with rates of 887.6% and 811.6% respectively; rates that duplicate the region’s average.

Chile is found among the countries that less growth presented with a 144.1% rate. Anyways, it is important to consider that in 2001 this country possessed a very important Mobile Telephony development presenting the second highest penetration rate of the region (32.8%) in that time. Puerto Rico’s case has been different presenting a growth of only 24.2%. In 2001 this country presented a penetration of 40.7% and by the end of 2006 it was increased to 49.3% only.

Figure 5.2.6. Region: Mobile Lines Penetration 2006 100,0% 90,0%

80,9% 75,8%

% Penetration 2006

80,0%

69,6%

65,4%

70,0%

61,0%

54,2% 52,6%

60,0% 50,0% 40,0% 30,0% 20,0% 10,0%

Peru

Costa Rica

Dominican Republic

Puerto Rico

Brazil

Mexico

El Salvador

Guatemala

Region Average

Ecuador

Colombia

Panama

Venezuela

Uruguay

Chile

Jamaica

Argentina

Trinidad & Tobago

0,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 39

Second Part: Figure 5.2.7. Region: Mobile Lines Penetration Evolution 2001-2006 Penetration %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Puerto Rico Dominican Republic Trinidad & Tobago The Caribbean Region Average

2001

18,1% 16,2% 32,8% 7,7% 6,9% 6,9% 15,7% 26,2% 16,3% 7,8% 13,4% 10,0% 15,8% 21,6% 13,7% 26,1% 40,7% 14,3% 12,3% 23,3% 17,2%

2002

17,5% 19,4% 39,7% 10,7% 12,3% 8,8% 15,5% 26,0% 18,7% 11,2% 13,6% 13,4% 17,2% 25,5% 16,2% 53,3% 42,0% 18,8% 21,7% 33,9% 21,6%

2003

20,7% 25,4% 45,7% 14,2% 18,6% 11,0% 15,0% 27,3% 22,2% 18,1% 17,3% 16,8% 22,2% 29,4% 20,8% 68,0% 42,4% 23,1% 27,8% 40,4% 26,1%

2004

35,3% 35,5% 57,5% 23,5% 26,4% 15,2% 18,1% 32,3% 30,5% 21,5% 27,1% 25,6% 39,7% 37,2% 30,2% 75,3% 45,5% 27,2% 40,2% 47,0% 34,3%

2005

57,4% 46,0% 65,0% 48,8% 47,3% 20,5% 34,8% 47,1% 45,8% 21,5% 35,1% 35,5% 54,2% 45,2% 38,3% 77,7% 46,9% 38,3% 69,8% 58,2% 46,5%

2006

80,9% 52,6% 75,8% 65,4% 63,3% 31,8% 70,1% 69,6% 63,7% 33,3% 55,1% 55,1% 66,2% 54,2% 52,8% 79,5% 49,3% 47,9% 87,0% 65,9% 61,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The average penetration of Mobile Telephony in the region is 61.0%.

South America closed 2006 with a simple average penetration level of 63.7%. Central America and Mexico with 52.8% and the Caribbean with 65. 9%.

Among the region’s countries with higher number of mobile lines, Argentina possesses the highest penetration percentage with a rate of 80.9% (20.9 percentage points over the regional average); on the other hand, Chile counts with 75.8%, Venezuela with 69.6% and Colombia with 65.4%. That is to say, among the main six countries with higher lines’ number, four of these overcome the regional average. Brazil and Mexico that on the whole represent 53.4% of the region’s lines have penetration levels of 52.6% and 54.2% respectively, ratios below the regional average.

The Mobile Telephony growth has been amazing and explosive, incorporating connectivity to population’s sectors before excluded. But, still a regional average penetration rate is observed which is below other world regions, as Asia and Europe; therefore, important growth possibilities still exist.

40 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies 5.3. Number of Fixed Lines Evolution Figure 5.3.1. Region: Number of Fixed Lines Evolution 2001-2006

94.578

96.000 93.602

94.000 92.000

90.646

Thousands of Lines

90.000 87.085

88.000 86.000

84.523

84.000 81.890 82.000 80.000 78.000 76.000 74.000 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Figure 5.3.2. Region: Number of Fixed Lines 2001-2006 Thousands #

2001

2002

2003

2004

2005

The Caribbean

8.870 37.431 3.478 7.372 1.336 1.571 951 2.705 63.715 820 650 756 382 13.774 16.382 530 955 308 1.793

8.402 38.800 3.467 7.517 1.426 1.657 947 2.842 65.058 872 668 846 387 14.975 17.748 490 909 319 1.718

8.448 39.200 3.252 7.850 1.549 1.839 938 2.956 66.032 917 753 944 382 16.330 19.325 500 909 319 1.728

8.775 39.600 3.318 7.767 1.612 2.050 962 3.346 67.430 944 888 1.132 410 18.073 21.447 510 936 322 1.768

9.207 39.800 3.436 7.664 1.701 2.251 1.006 3.651 68.716 985 971 1.248 460 19.512 23.177 490 896 324 1.710

9.540 38.800 3.436 7.961 1.775 2.401 987 4.217 69.117 1.047 1.036 1.355 433 19.861 23.732 490 897 343 1.730

Region Total

81.890

84.523

87.085

90.646

93.602

94.578

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Dominican Republic Trinidad & Tobago

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The number of xed lines has also regionally evolved, although in a smaller number than Mobile Telephony. In 2001, the region had 81.9 million lines, while in 2006, this number had increased to 94.6 million lines. In ve years, 12.7 million of new lines were incorporated.

Closing 2006, from the total of 94.6 million lines, South America contributed with 69.2 million, while Central America and Mexico with 23.7 million and the Caribbean with 1.7 million xed phone connections.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 41

Second Part: The countries that had most number of lines at the end of 2006 were Brazil, with approximately 38.8 million and Mexico with 19.9 million. Together, both have 62% of the region’s xed lines total. The third country with higher number of xed lines is Argentina that had 9.5 million at the end of 2006. Colombia, Venezuela and Chile close the group of six countries that together sum 88.6% of the region’s Fixed Telephony.

Figure 5.3.3. Region: Accumulated Average Variation Rate Number of Fixed Lines 2001-2006 90,0%

70,0% 59,4% 55,9%

60,0%

52,8%

50,0%

44,2%

40,0%

32,9% 27,6%

30,0%

24,0%

20,0%

13,4%

11,3%

10,0%

8,0% 7,5% 3,8% 3,7%

Jamaica

Brazil

Uruguay

Argentina

Colombia

Trinidad & Tobago

Panama

Average Region

Costa Rica

Ecuador

Mexico

Peru

Venezuela

El Salvador

Guatemala

-10,0%

Dominican Republic

-1,2% -6,1% -7,5%

0,0%

Chile

Accumulated Variation % '06 vs. '01

79,2%

80,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

Figure 5.3.4. Region: Annual Average Variation Rate Number of Fixed Lines 2001-2006 Variación Anual %

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Dominican Republic Trinidad & Tobago The Caribbean Average Region

2002

-5,3% 3,7% -0,3% 2,0% 6,8% 5,5% -0,4% 5,1% 2,1% 6,3% 2,7% 11,9% 1,3% 8,7% 6,2% -7,5% -4,8% 3,4% -3,0% 2,4%

2003

0,5% 1,0% -6,2% 4,4% 8,6% 11,0% -1,0% 4,0% 2,8% 5,2% 12,7% 11,6% -1,4% 9,0% 7,4% 2,0% 0,0% 0,0% 0,7% 3,9%

2004

3,9% 1,0% 2,0% -1,1% 4,1% 11,5% 2,6% 13,2% 4,6% 2,9% 18,0% 19,9% 7,5% 10,7% 11,8% 2,0% 3,0% 1,1% 2,0% 6,4%

2005

4,9% 0,5% 3,5% -1,3% 5,5% 9,8% 4,6% 9,1% 4,6% 4,4% 9,4% 10,2% 12,2% 8,0% 8,8% -3,9% -4,3% 0,4% -2,6% 4,6%

2006

3,6% -2,5% 0,0% 3,9% 4,3% 6,6% -1,9% 15,5% 3,7% 6,3% 6,6% 8,6% -5,9% 1,8% 3,5% 0,0% 0,1% 6,1% 2,0% 3,3%

'06 vs. '01

7,5% 3,7% -1,2% 8,0% 32,9% 52,8% 3,8% 55,9% 20,4% 27,6% 59,4% 79,2% 13,4% 44,2% 44,8% -7,5% -6,1% 11,3% -0,8% 24,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

On simple average, the region increased to 24% its number of xed lines. The con rmed growth is signi cant, but clearly very below regarding the Mobile Telephony evolution.

42 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies From the analysis by zone it is followed that dispersion regarding regional average is very important. South America presented a 20.4% growth, while Central America and Mexico had a 44.8% growth. Lastly, the Caribbean registered a rate of accumulated variation practically neutral.

With countries like Guatemala, El Salvador, Venezuela and Peru, interesting situations have been given; these countries have grown more than 50% in ve years. Mexico, the second region’s country regarding xed lines (as likewise mobile) has registered a very signi cant growth of 44.2%.

Other countries that already had interesting development levels in 2001, as Argentina, Uruguay, Colombia and Chile have grown at rates very below the average. Chile, even moved back 1.2 percentage points.

Figure 5.3.5. Region: Fixed Lines Penetration 2006 35,0% 30,0%

29,7%

Penetration % 2006

25,8% 24,5% 23,8%

25,0%

20,9% 20,4% 18,9% 18,2%

20,0%

17,8% 17,5% 15,6%

14,8%

15,0%

13,2% 13,2% 10,4%

10,0%

9,3% 8,7%

5,0%

Peru

Dominican Republic

Guatemala

Panama

Ecuador

El Salvador

Venezuela

Colombia

Average Region

Jamaica

Mexico

Brazil

Chile

Costa Rica

Argentina

Trinidad & Tobago

Uruguay

0,0%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 43

Second Part: Figure 5.3.6. Region: Fixed Lines Penetration 2001-2006 Penetration %

2001

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela

2002

23,9% 21,1% 22,3% 17,4% 10,7% 6,0% 28,6% 10,9% 17,6% 20,5% 10,2% 6,6% 12,7% 13,7% 12,7% 20,3% 10,7% 23,6% 18,2% 16,2%

South America

Costa Rica El Salvador Guatemala Panama Mexico Central America & Mexico

Jamaica Dominican Republic Trinidad & Tobago The Caribbean Average Region

22,4% 21,6% 22,0% 17,5% 11,3% 6,3% 28,5% 11,3% 17,6% 21,3% 10,2% 7,2% 12,6% 14,7% 13,2% 18,6% 10,1% 24,3% 17,7% 16,3%

2003

22,3% 21,5% 20,4% 18,0% 12,1% 6,9% 28,3% 11,5% 17,6% 22,0% 11,3% 7,8% 12,2% 15,9% 13,9% 18,9% 9,9% 24,3% 17,7% 16,5%

2004

23,0% 21,4% 20,6% 17,5% 12,4% 7,6% 29,0% 12,8% 18,0% 22,2% 13,1% 9,1% 12,9% 17,5% 15,0% 19,1% 10,0% 24,4% 17,9% 17,1%

2005

2006

23,9% 21,2% 21,1% 17,1% 12,9% 8,3% 30,3% 13,7% 18,6% 22,8% 14,1% 9,8% 14,3% 18,7% 15,9% 18,3% 9,5% 24,4% 17,4% 17,5%

24,5% 20,4% 20,9% 17,5% 13,2% 8,7% 29,7% 15,6% 18,8% 23,8% 14,8% 10,4% 13,2% 18,9% 16,2% 18,2% 9,3% 25,8% 17,8% 17,8%

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The simple average penetration of the region’s Fixed Telephony was of 17.8% closing 2006. Only six countries in the region; Uruguay, Trinidad & Tobago, Argentina, Costa Rica, Chile and Brazil have penetration levels higher to 20%.

On the other hand, only two countries, the Dominican Republic and Peru, have penetration levels lower than 10%.

5.4. Internet Connections Number Evolution Figure 5.4.1. Region: Internet Connections Number Evolution 2001-2006 20.000

18.085

Thousands of Internet Connections

18.000 16.000 14.126 14.000 12.000

10.483

10.000 7.930 8.000 6.000

5.797

6.453

4.000 2.000 0 2001

2002

2003

2004

2005

2006

Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

44 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 5.4.2. Region: Internet Connections Number 2001-2006 Thousands #

2001

Argentina 1

Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico

2002

1.545 569 698 262 86 202 s.d.

305 3.666 29 71 s.d.

49 1.884 2.032 64 35 99 5.797

1

Central America & Mexico

Dominican Republic Trinidad & Tobago The Caribbean

Region Total

2003

1.468 654 758 351 101 385 s.d.

316 4.032 42 95 s.d.

58 2.096 2.291 83 48 130 6.453

1.629 1.119 836 461 159 556 s.d.

323 5.082 64 113 s.d.

69 2.444 2.691 96 61 157 7.930

2004

2005

1.876 2.280 805 501 192 673 s.d.

459 6.787 82 117 46 79 3.191 3.516 106 74 181 10.483

2.223 3.923 906 688 207 833 187 637 9.604 90 127 62 82 3.934 4.295 135 92 226 14.126

2006

2.505 5.656 944 888 823 1.029 210 761 12.816 s.d.

185 75 87 4.641 4.988 184 98 282 18.085

(1) It is only correspond to Broadband Internet Connections Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The number of Internet Connections has signi cantly evolved in the region. In 2001, the region had 5.8 million connections while in 2006 this number had increased to 18.1 million lines. In only ve years, 12.3 million of new clients were incorporated.

Closing 2006, from the total of 18.1 million connections, South America contributed with 12.8 million, while Central America and Mexico with 4.9 million and the Caribbean with 282 thousand lines.

The same as in Mobile and Fixed Telephony, the highest number of Internet Connections is concentrated between Brazil and Mexico.

Figure 5.4.3. Region: Accumulated Average Variation Rate Number of Internet Connections 2001-2006 1000,0% 894,0%

Accumulated Variation % '06 vs. '01

900,0%

861,7%

800,0% 700,0% 600,0% 500,0% 408,9%

400,0%

278,1%

300,0%

238,8%

212,5%

200,0%

185,6% 180,7%

161,3% 149,6% 146,4% 78,1% 62,2%

100,0%

35,3%

Chile

Argentina

Panama

Mexico

Venezuela

El Salvador

Trinidad & Tobago

Dominican Republic

Costa Rica 1

Colombia

Promedio Región

Peru

Ecuador

Brazil

0,0%

(1) Costa Rica’s accumulated variation corresponds to the period '05 vs. '01 Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 45

Second Part: Figure 5.4.4. Region: Average Annual Variation Rate Number of Internet Connections 2001-2006 Annual Variation %

2002

Argentina Brazil Chile Colombia Ecuador Peru Uruguay Venezuela

2003

-5,0% 14,9% 8,5% 34,0% 17,6% 90,3% s.d.

3,5% 23,4% 46,4% 33,9% s.d.

19,4% 11,3% 27,7% 28,2% 37,2% 32,7% 26,2%

South Americsa 1

Costa Rica El Salvador Guatemala Panama Mexico

Central America & Mexico

Dominican Republic Trinidad & Tobago The Caribbean

Region Average

2004

11,0% 71,1% 10,3% 31,3% 57,5% 44,6% s.d.

2,2% 32,6% 53,3% 18,9% s.d.

19,4% 16,6% 27,0% 16,8% 27,1% 22,0% 29,2%

2005

15,2% 103,8% -3,7% 8,7% 21,0% 21,0% s.d.

42,5% 29,8% 27,5% 4,4% s.d.

13,6% 30,6% 19,0% 10,3% 22,1% 16,2% 24,4%

2006

18,5% 72,1% 12,5% 37,2% 8,0% 23,9% s.d.

38,6% 30,1% 9,2% 8,4% 33,9% 4,9% 23,3% 16,0% 26,6% 23,6% 25,1% 24,3%

'06 vs. '01

12,7% 44,2% 4,2% 29,1% 297,3% 23,5% 12,3% 19,5% 55,3% s.d.

45,0% 21,5% 4,9% 18,0% 22,3% 36,7% 6,6% 21,6% 41,1%

62,2% 894,0% 35,3% 238,8% 861,7% 408,9% s.d.

149,6% 378,6% 212,5% 161,3% s.d.

78,1% 146,4% 149,6% 185,6% 180,7% 183,1% 278,1%

(1) Costa Rica’s accumulated variation corresponds to the period '05 vs. '01 Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

On simple average, the region has increased its number from Internet Connections to 278.1%. The con rmed growth is very signi cant, but the industry still has a long way to go.

From the analysis by zone it is followed that variation’s dispersion is very signi cant. South America presented a 378.6% growth, while Central America and Mexico had a 149.6% growth. Lastly, the Caribbean registered a rate of accumulated variation of 183.1%.

Figure 5.4.5. Region: Internet Connections Penetration 2006 8,0%

6,4%

7,0%

5,7%

Penetration % 2006

6,0%

4,4%

5,0%

4,0%

4,0%

3,0% 2,8%

3,0%

2,0% 2,0% 1,0%

(1) It corresponds to the penetration % 2005 (2) It only corresponds to Broadband Internet Connections Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

46 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Guatemala 2

Dominican Republic

Colombia

Costa Rica 1

Panama

El Salvador

Venezuela

Brazil 2

Peru

Promedio Región

Mexico

Chile

Ecuador

Uruguay

Argentina

Trinidad & Tobago

0,0%

Mobile Telephony Global Contribution ntributiion to Latin America and the Caribbean Economies Figure 5.4.6. Region: Internet Connections Penetration 2001-2006 Penetration %

Argentina 1

Brazil Chile Colombia Ecuador Peru Uruguay Venezuela South America

Costa Rica El Salvador Guatemala Panama Mexico

1

Central America & Mexico

Dominican Republic Trinidad & Tobago The Caribbean

Region Average

2001

4,2% 0,3% 4,5% 0,6% 0,7% 0,8% s.d.

1,2% 1,8% 0,7% 1,1% s.d.

1,6% 1,9% 1,3% 0,7% 2,7% 1,7% 1,6%

2002

3,9% 0,4% 4,8% 0,8% 0,8% 1,5% s.d.

1,3% 1,9% 1,0% 1,5% s.d.

1,9% 2,1% 1,6% 0,9% 3,7% 2,3% 1,9%

2003

4,3% 0,6% 5,3% 1,1% 1,2% 2,1% s.d.

1,3% 2,3% 1,5% 1,7% s.d.

2,2% 2,4% 2,0% 1,1% 4,6% 2,8% 2,3%

2004

4,9% 1,2% 5,0% 1,1% 1,5% 2,5% s.d.

1,8% 2,6% 1,9% 1,7% 0,4% 2,5% 3,1% 1,9% 1,1% 5,6% 3,4% 2,5%

2005

5,8% 2,1% 5,6% 1,5% 1,6% 3,1% 5,6% 2,4% 3,5% 2,1% 1,9% 0,5% 2,6% 3,8% 2,1% 1,4% 6,9% 4,2% 3,1%

2006

6,4% 3,0% 5,7% 2,0% 6,1% 3,7% 6,3% 2,8% 4,5% s.d.

2,6% 0,6% 2,6% 4,4% 2,6% 1,9% 7,4% 4,6% 4,0%

(1) It only corresponds to Broadband Internet Connections Source : Reports and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

The region’s penetration of Internet Connections was 4% closing 2006. However, in 2001, it was 1.6% only. This demonstrates that there still a long way to go for the industry.

Regarding analysis by zone, South America presented a penetration level of 4.5% closing 2006 while in 2001 it was 1.8% only.

Central America and Mexico closed 2006 with levels of 2.6% (although Mexico had 4.4%). Lastly, the Caribbean registered a penetration level of 4.6%.

Regarding analysis by country, the highest penetration of the region is observed in Trinidad & Tobago with 7.4%. Then Argentina, Uruguay and Ecuador are found with rates of 6.4%, 6.3% and 6.1% respectively.

The countries that present lower penetration are the Dominican Republic with 1.9%, Colombia with 2%, Panama and El Salvador with 2.6% and Venezuela with 2.8%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 47

48

z

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution to Latin America and the Caribbean Economies by Country

Third Part: 1. Argentina 1.1. Mobile Telephony Contribution to Gross Domestic Producto Figure 1.1.1. Argentina: Supply and Demand Evolution of Mobile Telephony 2001-2006

Figure 1.1.3. Argentina: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006

Supply: Accum. ‘01 to ’06

18.946

4.112

15.088 3.531

3.073 2.789

3.000

2.573 2.221

2.000 1.422

1.139

47,2%

50,0% 40,0%

35,3%

30,0%

25,2%

23,3%

21,9% 17,9%

20,0%

15,6%

10,0%

5,7%

1.046

911

1.000

62,0%

60,0%

2006

GDP

Trade

Finnan.& Business Servs.

2005

Other Services

2004

Agriculture, Hunting, etc.

2003

Public Services

2002

Manufac.

Industry

2001

Mobile Telephony

0

Transport & Communication

0,0%

Construction

Millions of US $

5.048

Demand: Accum. ‘01 to ’06

5.000

4.000

5.720

Accumulated Variation % ’06 vs. ‘01

6.000

65,9%

70,0%

7.000

Source : Researches and Balances of Companies and Convergencia Research estimations Source : ECLAC, INDEC, Researches and Balances of Companies and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to Argentina’s GDP supplying goods and services for approximately US $18.946 million.

Regarding Demand, Mobile Telephony contributed to GDP approximately US $15.088 million in purchasing of goods and services from 2001 to 2006.

Regarding comparison of Mobile Telephony growth rates accumulated in the period 2001-2006 with respect to other sectors of the economy; it is observed that this industry is in the second place with a rate of 62% behind the Constructions sector that has grown 65.9% generating a true real state boom in the country. On average, the national economy grew 25.2%.

Figure 1.1.2. Argentina: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

Figure 1.1.4. Argentina: Mobile Telephony as percentage of GDP 2001-2006

140,0% 112,2%

100,0%

Demand: Var. ’06 vs. ‘01

80,0%

81,0%

Supply: Var. ’06 vs. ‘01

2,7% 2,5%

80,9%

59,8%

14,9%

0,0% -20,0%

38,4%

39,1%

9,2%

8,5%

24,9%

20,0%

9,0%

8,8% -10,9% 2002

2004

2005

2006

GDP: Var. ’06 vs. ‘01

-40,0% -60,0%

2003

-67,3%

2,2%

64,2%

60,0% 40,0%

3,0%

62,0% Participation % in GDP

Annual Variation %

120,0%

2,0%

1,7% 1,5%

1,3%

1,1%

1,1%

2002

2003

1,0%

0,5%

25,2%

-80,0% -67,7% Source : The National Institute of Statistics and Census (INDEC), Economic Commission for Latin America and the Caribbean Statistical (ECLAC)-Published Balances of Companies and Convergencia Research estimations

0,0% 2001

2004

2005

2006

Source : ECLAC, INDEC, Researches and Balances of Companies and Convergencia Research estimations

In the period 2001-2006, the total increase of Mobile Telephony was 62% for the Supply and 81% for the Demand. In the same period, as a whole, the Argentinean economy registered a 25.2% growth rate.

The Mobile Telephony activity was 1.3% as a participation percentage of ordinary GDP in 2001. In 2006 the proportion had changed signi cantly, duplicating the pre-crisis participation levels observing a relation of 2.7%.

During 2001 and 2002 Argentina faced one of the most severe economic crises in its history. However, it demonstrated a power of surprising recovery in very short time, generating very signi cant growth rates after the devaluation crisis. In the case of Mobile Telephony, the increase registered during the period 2002-2006 was 402.2% for the Supply and 454% for the Demand. Regarding the economy, as a whole, the rate of the period was 14%.

1. Argentina 50 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 1.2. Mobile Telephony Contribution to National Investment Figure 1.2.1. Argentina: Mobile Telephony Investment Evolution (CAPEX) 2001-2006

1.3. In ation vs. Mobile Telephony ARPU Evolution Figure 1.3.1. Argentina: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 50,0%

600

500

30,0%

US$ 1.923

+ 81,3%

25,9%

18,8%

439

13,0%

366

Annual Variation %

Millions of US $

424 400

Accum. Var. CPI:

533

CAPEX : Accum. ‘01 to ’06

300

10,0%

4,4%

-10,0%

200

10,9%

9,7%

13,4% 2002

2003

2004

2005

2006

-4,7% -13,3%

-30,0%

114 100

48

Accum. Var. Mobile Telephony:

-50,0%

- 64,3% 0 2001

2002

2003

2004

2005

2006

Source : Researches and Balances of Companies, Regulatory Organisms and Convergencia Research estimations

In Argentina the Mobile Telephony operators have accumulated investments in Capital Expenditure (CAPEX) for approximately US $1.923 million among 2001-2006.

Figure 1.2.2. Argentina: Investment/ Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006

-67,8%

-70,0%

Source : INDEC, Researches and Balances of Companies and Convergencia Research estimations

At the beginning of 2002 Argentina faced an abrupt exit of “convertibility”, (US $1 = AR $1) and as consequence during that year it registered an in ation rate of 25.9%. In the following years in ation remained sFigure according to an emerging country growth levels. In the 2001-2006 period, the accumulated in ation was 81.3%.

25,0% 21,5% 20,3% 19,2%

20,0%

Investment %

15,1% 15,0%

14,2% 12,0%

14,2% 10,0%

12,0% 10,7%

10,0%

9,3%

5,0%

Investment % / GDP CAPEX % / Sales

3,4% 0,0% 2001

2002

2003

2004

2005

2006

Regarding Mobile Telephony, the average revenues per user (ARPU) evolution was unequal. In 2003 an important increase of 18.8% was observed as a consequence of the partial currency revaluation and the consumption increase by user. From 2004 onward, the average revenue variation of Mobile Telephony has registered negative rates, in spite of being operating in an in ationary environment. This is mainly due to users’ incorporation of lower monthly average consumption.

Source : ECLAC, INDEC, Researches and Balances of Companies and Convergencia Research estimations

126,0% 109,5% 84,1%

81,3% 62,8%

52,9%

49,8%

49,7%

Housing and basic services

84,7%

Education

97,7%

80,0%

Transp. & Communications

130,0%

-120,0%

Mobile Telephony Var.:

Mobile Teleph.

CPI

Health expenses

Housing Maintenance

Other goods and services

-70,0%

Recreation

-20,0%

Clothing

30,0%

Foods and Beverages

The conclusion is that on average, the Mobile Telephony industry has invested approximately 10% of its Sales, while the country total has invested approximately 17.7% of its GDP. The result is in uenced by the important fall of the investment in 2002 and 2003 as a consequence of the uncertainty and crisis of those years.

Figure 1.3.2. Argentina: Accumulated Average Variation Rate of CPI, Mobile Telephony ARPU and GDP 2001-2006

Accumulated Variation % ’06 vs. ‘01

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

- 64,3%

-170,0% Source : INDEC, Researches and Balances of Companies and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the de ationary character of the industry’s average revenues that accumulated a 64.3% decrease, although all the sectors included in CPI have shown average rates of 81.4% that in clothing case reached levels of 126%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 51

Third Part: 1.4. Mobile Telephony Contribution to Employment

1.5. Mobile Telephony Contribution to Connectivity

Figure 1.4.1. Argentina: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 1.5.1. Argentina: Number of Mobile - Fixed Lines and Internet Connections Evolution 2001-2006 35.000

31.510

Indirect: # 27.760 74,5%

Thousands of Lines

30.000

Direct: # 9.518 25,5%

Mobile Lines Fixed Lines Internet Connections

25.000

22.156

20.000 13.512

15.000 10.000

6.742

7.842

6.567

5.000 0 2001

Total employment generated by Mobile Telephony: 37.278

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

In 2006, approximately 37.278 people have been employed by the Mobile Telephony Industry in Argentina.

Approximately 9.518 people are kept directly employed by Mobile Telephony operators. Meanwhile, the industry has indirectly generated 27.760 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile Telephony industry, 2.9 employees are indirectly demanded.

Figure 1.4.2. Argentina: Indirect Employment generated by Mobile Telephony in the 1st. Link of its Value Chain 2006 Outsourcing Sales Team (Sales Agent) Mobile Contents (SV A) S ites Installing Maintenn ance and Repairs Network: Radiobase + Troncal Network + Equipments Terminals Logistic IT Systems Terminal Equipments Others E lectrical Feed ing Towers Indirect Total Employment

#

2003

2004

2005

2006

Mobile telephony: In 2006, Argentina had a total of 31.5 million users, while at the end of 2001 only 6.7 million users existed.

The amazing growth reached during the period, is one of the highest observed in Latin America and the Caribbean, in spite of the severe economic crisis suffered by the country in the rst years under analysis.

Fixed Telephony: The xed lines total was 9.5 million in 2006; signi cant growth variations were not observed in the period under analysis.

Internet: The total internet connections were 2.5 million in 2006. This includes all the Dial Up accesses and Broadband. A moderated growth is observed in the period under analysis.

Figure 1.5.2. Argentina: Annual Variation Rate in Number of Mobile - Fixed Lines and Internet Connections 2001-2006 80,0% 70,0%

%

22.000 1.350

79,3% 4,9%

1.200 1.100

4,3% 4,0%

900 400

3,2% 1,4%

350 200 120

1,3% 0,7% 0,4%

80 60 27.760

0,3% 0,2% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its Providers

It is observed that of the total employment generated by Mobile Telephony through the rst link of its Value Chain, 79.3% is destined to carry out commercial actions.

Mobiles: ’06 vs. ‘01 Var.

60,0%

Annual Variation %

Providers of :

2002

Source : National Communications Commission (CNC)

367,4%

50,0% 40,0%

Internet: ’06 vs. ‘01 Var.

30,0%

62,2%

20,0% 10,0% 0,0% 2002

2003

-10,0%

2004

2005

Fixed: ’06 vs. ‘01 Var.

2006 7,5%

Source: CNC

The growth rate of mobile users in the 2001-2006 period was 367.4%; much higher than 7.5 % growth of Fixed Telephony and 62.2 % of Internet.

Only, in 2006 Mobile Telephony grew 42.2%. Due to the high penetration levels of Mobile Telephony it is foreseen that the number of mobile lines will be increased in the following years, but in a moderated rhythm.

52 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 1.5.3. Argentina: Mobiles-Fixed Lines and Internet Connections Penetration 2001-2006 90,0%

80,9%

Mobile Lines 80,0% 70,0%

Fixed Lines Internet Connections

57,4%

Penetration %

60,0% 50,0%

35,3% 40,0%

20,7% 30,0% 18,1%

17,5%

20,0%

24,5%

10,0% 0,0% 2001

6,4% 2002

2003

2004

2005

2006

Source : ECLAC and CNC

Mobile Telephony is the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 it had reached penetration levels of 80.9%; positioning it as the highest penetration of Latin America and registering similar levels to some countries of the First World.

In only 5 years, Mobile telephony modi ed its penetration level from 18.1% in 2001 to 80.9% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 24.5 % penetration.

Although Internet connections have increased, at the end of the analyzed period there is still a long way to go; closing 2006 its penetration level was 6.4%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 53

Third Part: 2. Brazil 2.1. Mobile Telephony Contribution to Gross Domestic Product Figure 2.1.1. Brazil: Mobile Telephony Supply and Demand Evolution 2001-2006

300,0%

12.000

10.592

9.988

10.000 7.613

8.000 6.000

6.222 5.085

260,0%

6.185 5.053

4.221

250,0%

200,0%

150,0%

100,0%

50,0%

42,1%

32,4%

26,2%

23,2%

19,8%

17,1%

4.000

16,4%

16,3%

Other Services

60.246

14.000 Millions of US $

16.039 15.135

Manufac.

Industry

Demand: Accum. ‘01 to ’06

18.760

Finnan.& Business Servs.

62.952

16.000

18.304

Agriculture, Hunting, etc.

Supply: Accum. ‘01 to ’06

Public Services

18.000

Accumulated Variation % ’06 vs. ‘01

20.000

Figure 2.1.3. Brazil: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006

16,0%

0 2001

2002

2003

2004

2005

2006

Trade

GDP

Minning & Quarry

2.000

Transport & Communication

Mobile Telephony

0,0%

Source : Balances Published by Companies and Convergencia Research estimations Source : ECLAC, Statistical Organism and National Central Banks, Researches, Regulatory Organisms and Convergencia Research estimations

From 2001 to 2006, the Mobile Telephony contributed to national GDP, supplying goods and services for approximately US $62.952 million.

With respect to Demand, the Mobile Telephony contributed US $60.246 million to GDP purchasing goods and services from 2001 to 2006.

If growth rates accumulated in the 2001-2006 period are compared to the different economy sectors, it is conclude that Mobile Telephony occupies by far the rst place registering a rate of 260%, while Minnning and Quarrying was the second sector with highest increase registering a 42. 1% rate. On average, the national economy grew 17.1%.

Figure 2.1.2. Brazil: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

Figure 2.1.4. Brazil: Mobile Telephony as porcentage of GDP 2001-2006

70,0% 61,5%

60,6%

60,0%

40,0%

260,0%

39,1%

30,0% 22,4% 20,0%

1,6%

22,4%

GDP: Var. ’06 vs. ‘01

22,4%

19,7%

17,1%

10,0%

5,7%

20,9% 17,0%

1,6% Participation % in GDP

Annual Variation %

42,9%

Supply: Var. ’06 vs. ‘01

1,7%

1,8%

344,5%

50,0%

1,9%

2,0%

Demand: Var. ’06 vs. ‘01

1,4%

1,4%

1,2%

1,2%

0,9% 1,0% 0,8% 0,6% 0,4%

2,9%

3,7%

2005

2006

0,2%

2,7% 0,0%

1,1% 2002

2003

2004

Source : ECLAC, Balances Published by Companies and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 260% for the Supply and 344.5% for the Demand. In the same period Brazil’s economy, as a whole, registered a growth rate of 17.1%.

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, Statistics and Geography Brazilian Institue (IBGE), Balances Published by Companies and Convergencia Research estimations

In 2001, the Mobile Telephony activity as participation percentage regarding nominal GDP was 0.9%. In 2006, the proportion had signi cantly changed duplicating the participation levels, elevating the proportion to 1.9%.

54 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 2.2. Mobile Telephony Contribution to National Investment Figure 2.2.1. Brazil: Investment Evolution of Mobile Telephony (CAPEX) 2001-2006

2.3. In ation vs. Mobile Telephony ARPU Evolution Figure 2.3.1. Brazil: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 30,0%

4.500

12.366

9,9%

3.000 2.500

1.926

2.000

1.219 989

-20,0%

2005

2006

Figure 2.2.2. Brazil: Investment / Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006 26,0%

22,3%

21,8%

Investment %

22,0% 20,0%

16,0%

In the 2001-2006 period, the accumulated in ation was 36.8%.

Regarding Mobile Telephony, its average revenues per user evolution (ARPU) was negative. A signi cant decrease of 25.2% was observed in 2002 as a consequence of the currency devaluation. Between 2005 and 2006 a light increase was produced but it did not match the 2002 decrease.

Figure 2.3.2. Brazil: Average Accumulated Variation Rate of CPI, Mobile Telephony Average Revenues and GDP 2001-2006

18,2% 17,1% 16,4%

- 22,3% -25,2%

Source : IBGE, Balances Published by Companies and Convergencia Research estimations

The Mobile telephony operators in Brazil have invested approximately US $12.366 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Investment % / GDP CAPEX % / Sales

-30,0%

16,0%

Mobile Telehony

60,0%

17,0%

15,9% 14,0%

16,1%

16,3%

52,5%

16,2%

15,3%

46,8%

50,0%

2003

2004

2005

2006

Source : ECLAC, IBGE, Balances Published by Companies and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 18.5% of its Sales, while the country total has invested approximately 16.2% of its GDP. The conclusion is that the Mobile Telephony investments were higher, in proportion, than those carried out by the rest of the national economy. This tendency was even more remarkable during the last 3 years of the analyzed period.

34,1%

33,8% 28,2%

20,0% 10,0% 0,0% -10,0% -20,0% -30,0%

Health expenses

2002

36,8%

30,0%

Education

2001

42,4%

40,0%

Transport

10,0%

Accumulated Variation % ’06 vs. ‘01

43,0% 12,0%

Mobile Teleph.

2004

Source : Balances Published by Companies and Convergencia Research estimations

24,0%

2006

Clothing

2003

Food and Beverages

2002

2,8%

2005

-4,6%

-10,0%

0 2001

2004

Accum. Var. Mobile Telephony:

500

18,0%

2003

CPI

870

5,1%

1,0%

0,0% 2002

7,6%

6,6%

0,2%

Personal expenses

1.000

8,2%

10,0%

Housing Maintenance

1.500

+36,8%

20,0%

3.380 Annual Variation %

Millions of US $

3.500

Accum. Var. CPI:

3.983

CAPEX : Accum. ‘01 to. ’06

4.000

-22,3% Mobile Telephony Var.: - 22,3%

Source : IBGE, Balances Published by Companies and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation in the years of study, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 22.3% decrease from 2001 to 2006, although all the components have shown variation in in ation. The highest increase was registered by the Transports sector reaching 52.5%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 55

Third Part: 2.4. Mobile Telephony Contribution to Employment Figure 2.4.1. Brazil: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Brazil produces and exports Terminal Equipments, industry that generates 15,000 jobs. Brazil together with Mexico are the only countries of Latin America and the Caribbean that have a terminal production industry; besides of contributing to employment it generates revenues for export

2.5. Mobile Telephony Contribution to Connectivity

Direct: # 31.849 18,8%

Figure 2.5.1. Brazil: Number of Mobile, Fixed Lines and Internet Connections Evolution 2001-2006

Indirect: # 137.900 81,2%

120.000

Thousands of Lines

Total employment generated by Mobile Telephony: 169.749

99.919

Mobile Lines Fixed Lines Internet Connections

100.000

86.210

80.000 65.605 60.000

46.373

40.000 28.746

34.881

20.000

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

0 2001

Approximately 31,849 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 137,900 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 4.3 employees are indirectly demanded.

Figure 2.4.2. Brazil: Indirect Employment generated by Mobile Telephony in the 1st link of its Value Chain 2006 Providers of : Outsourcing Sales Team (Sales Agent) S ites Installing Maintenn ance and Repairs Terminal Equipments Network: Radiobase + Troncal Network + Equipments Mobile Contents (SV A) Terminals Logistic IT Systems Others Indirect Total Employment

#

%

58.000 27.000

42,1% 19,6%

17.700 15.000

12,8% 10,9%

9.300 4.400

6,7% 3,2%

2.800 2.300 1.400 137.900

2,0% 1,7% 1,0% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its Providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 42.1% is destined to an outsourcing Sales team. It is also important the employment level generated among the Site Installers, Maintenance and Repairs and the production of Terminal Equipments.

2003

2004

2005

2006

Source : IBGE and The Brazilian National Telecommunications Agency (ANATEL)

Mobile telephony: In 2006 Brazil had a total of 99.9 million users, while at the end of 2001 only 28.7 million users existed.

Brazil is the country with the highest number of mobile users of the Region.

Fixed telephony: The xed lines total was 38.8 million in 2006; signi cant growth variations were not observed in the period under analysis.

Internet: The total broadband connections were of 5.7 million in 2006. An interesting growth is observed in the period under analysis, since only 569 thousand connections existed in 2001.

Figure 2.5.2. Brazil: Annual Variation Rate Mobile, Fixed Lines and Internet Connections Number 2001-2006 110,0%

Internet: ’06 vs. ‘01 Var.

90,0%

Annual Variation %

The Mobile Telephony industry in Brazil has employed approximately 169,749 people in 2006.

2002

Note: Internet Connections only refers to Broadband Connections

894,0% Mobiles: ’06 vs. ‘01 Var.

70,0%

247,6%

50,0%

30,0%

Fixed: ’06 vs. ‘01 Var.

10,0%

-10,0%

2002

2003

2004

3,7% 2005

2006

Note: Internet Connections only refers to Broadband Connections Source : IBGE and ANATEL

The growth rate of Mobile Telephony users in the 2001-2006 period has been 247.6%; much higher than Fixed Telephony growth of 3.7%. The Broadband Internet growth was even higher to that of Mobile Telephony, registering a rate of 894%.

56 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 2.5.3. Brazil: Mobile, Fixed Lines and Internet Connections Penetration 2001-2006 60,0%

Mobile Lines

52,6%

Fixed Lines

50,0%

46,0%

Internet Connections

Penetration %

40,0%

35,5% 30,0%

25,4% 16,2%

19,4%

20,0%

20,4% 10,0%

0,0% 2001

3,0% 2002

2003

2004

2005

2006

Note: Internet Connections only refers to Broadband Connections Source : IBGE and ANATEL

At the end of 2006, Mobile Telephony had reached 52.6% penetration levels, representing the most important telecommunications service regarding its contribution to national connectivity.

In only 5 years, mobile telephony modi ed its penetration level from 16.2% in 2001 to 52.6% in 2006.

Regarding Fixed Telephony its contribution to connectivity remained sFigure during the whole period, closing 2006 with a penetration of 20.4 %.

Although, Broadband Internet connections were increased, the penetration levels at the end of the period studied remained in minimum values; closing 2006 its penetration level was 3%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 57

Third Part: 3. Chile 3.1. Mobile Telephony Contribution to Gross Domestic Product Figure 3.1.1. Chile: Mobile Telehony Supply and Demand Evolution 2001-2006

Figure 3.1.3. Chile: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006

3.500

2.487

10.152

2.000

1.908 1.732

1.500

1.441

1.260 998

1.376 1.082

1.042

982

1.675

1.000

Accumulated Variation % ’06 vs. ‘01

2.813

8.643

Supply: Accum. ‘01 to ’06

2.500

180,0% 160,0% 140,0% 120,0% 100,0% 80,0% 60,0% 40,0%

32,9%

32,0%

28,4%

27,1%

26,3%

25,8%

23,7%

23,0%

20,0% 500

15,2%

2005

2006

Convergencia Research estimations

GDP

Trade

Source : Telecommunications Subsecretary of Chile (SUBTEL), Balances Published by Companies and

Manufac.

Industry

2004

Finnan.& Business Servs.

2003

Public Services

2002

Construction

2001

Agriculture, Hunting, etc.

0

Transp. & Communication

Mobile Telephony

0,0% Other Services

Millions of US $

182,0%

200,0%

Demand: Accum. ‘01 to ’06

3.000

Source : ECLAC, SUBTEL Balances Published by Companies and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $10.152 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $8.643 million of goods and services from 2001 to 2006.

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile telephony occupies by far the rst place registering a rate of 182%, while Transport and Communications has been the second sector of highest growth registering a rate of 32.9%. On average, the national economy grew 23.7%.

Figure 3.1.2. Chile: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

Figure 3.1.4. Chile: Mobile Telephony as porcentage of GDP 2001-2006

60,0%

2,5% 48,5%

2,0%

Annual Variation %

153,5% 40,0%

Supply: Var. ’06 vs. ‘01

30,0%

182,0%

27,2% 21,8%

26,3% 20,0%

14,4%

GDP: Var. ’06 vs. ‘01

20,2% 10,2%

10,0% 6,1% 2,2%

2002

23,7%

1,9%

1,9%

1,8% 1,6%

1,4% 1,5%

1,0%

0,5%

3,9% 3,9%

0,0%

1,9%

47,4%

Participation % in GDP

Demand: Var. ’06 vs. ‘01

50,0%

2003

6,0%

5,7%

4,0%

2004

2005

2006

Source : ECLAC, SUBTEL Balances Published by Companies and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 182% for the Supply and 153.5% for the Demand. In the same period Chile’s economy, as a whole, registered a growth rate of 23.7%.

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, SUBTEL Balances Published by Companies and Convergencia Research estimations

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.4% in 2001. In 2006, the proportion had improved reaching participation levels of 1.9%.

58 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 3.2. Mobile Telephony Contribution to National Investment Figure 3.2.1. Chile: Mobile Telephony Investment Evolution (CAPEX) 2001-2006

Figure 3.3.1. Chile: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 30,0%

700

655 Accum. Var. CPI:

CAPEX : Accum. ‘01 to ’06

600

+ 13,2%

20,0%

16,7%

Annual Variation %

2.009

500

Millions of US $

3.3. In ation vs. Mobile Telephony ARPU Evolution

398 400

315 269

300

200 200

171

10,0% 2,8%

2,6%

3,7% 2002

-10,0%

2003

2004

-4,4%

-4,8%

2005

2006

Accum. Var. Mobile Telephony:

-11,7% 100

3,8%

2,4%

1,1% 0,0%

-20,0%

- 2,7%

0 2001

2002

2003

2004

2005

2006

-30,0% Source : National Statistics Intitute of Chile (INE), SUBTEL Balances Published by Companies and Convergencia

Source : SUBTEL Balances Published by Companies and Convergencia Research estimations

Research estimations

The Mobile telephony operators in Chile have invested approximately US $2.009 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 3.2.2. Chile: Investment / Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006 35,0%

Investment % / GDP CAPEX % / Sales

31,6%

25,0%

23,3%

Figure 3.3.2. Chile: Average Accumulated Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

20,8%

40,0%

15,5%

30,0%

2003

2004

2005

2006

Source : ECLAC, SUBTEL Balances Published by Companies and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation, of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 19.8% of its Sales, while the country total has invested approximately 20.2% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion similar to those carried out by the rest of the national economy.

25,9% 19,3%

20,0%

18,0%

15,3%

13,2% 9,6%

10,0%

0,0%

-10,0%

-20,0%

Mobile Telephony Var.: - 2,7%

Clothing

2002

Equipment

2001

Mobile Teleph.

10,0%

Foods and Beverages

11,9%

20,2%

19,1%

CPI

15,9%

20,1%

Health expenses

20,3%

Culture

15,0%

20,6%

Housing

20,7%

Transport

20,0%

Regarding Mobile Telephony, its average revenues per user (ARPU) evolution was negative. A signi cant decrease of 11.7% was observed in 2002. From 2005 a slight increase was produced, but at the end of 2006 it did not match the decreases of previous years.

Accumulated Variation % ’06 vs. ‘01

Investment %

30,0%

In the 2001-2006 period, the accumulated in ation was 13.2% remaining the annual variation rate sFigure.

-11,0% -5,1%

-30,0% Source : INE, SUBTEL, Balances Published by Companies and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 2.7%, decrease, although all the components have shown variation in in ation. The highest increase was registered by the Transports sector reaching 25.9%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 59

Third Part: 3.4. Mobile Telephony Contribution to Employment

3.5. Mobile Telephony Contribution to Connectivity

Figure 3.4.1. Chile: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 3.5.1. Chile: Number of Mobile, Fixed Lines and Internet Connections Evolution 2001-2006 14.000

Thousands of Lines

Indirect: # 10.430 68,6%

Direct: # 4.779 31,4%

12.451

Mobile Lines Fixed Lines Internet Connections

12.000

10.570

10.000

9.261 7.268

8.000 6.000

6.244 5.101

4.000 2.000 0 2001

Total employment generated by Mobile Telephony: 15.209

2002

2003

2004

2005

2006

Source : SUBTEL

Source : Study carried out by Convergencia Research according to data given by Mobile

Mobile telephony: In 2006, Chile had a total of 12.5 million users, while at the end of 2001 only 5.1 million users existed.

Telephony Companies and its providers

In 2006, approximately 15,209 people have been employed by the Mobile Telephony Industry in Chile.

Fixed telephony: The xed lines total was 3.4 million in 2006, signi cant growth variations were not observed in the period under analysis.

Approximately 4,779 people are kept directly employed by Mobile Telephony operators. Meanwhile, the industry has indirectly generated 10,430 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 944 thousand in 2006 until 2006. This includes all Dial Up and Broadband accesses. An interesting growth is observed in the period under analysis, since only 698 thousand connections existed in 2001.

It can be concluded that for each employee directly employed by the Mobile Telephony industry, 2,2 employees are indirectly demanded.

Figure 3.5.2. Chile: Annual Variation Rate Number of Mobile, Fixed Lines and Internet Connections 2001-2006 30,0%

Mobiles: ’06 vs. ‘01 Var.

25,0%

P roviders of : Outsourcing Sales Team (Sales Agent) S ites Installing Network: Radiobase + Troncal Network + Equipments Maintenn ance and Repairs IT Systems Terminals Logistic Mobile Contents (SV A) Terminal Equipments Towers E lectrical Feed ing Indirect Total Employment

#

%

7.000 1.000

67,1% 9,6%

700 530

6,7% 5,1%

380 280

3,6% 2,7%

250 180 80

2,4% 1,7% 0,8%

30 10.430

0,3% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that of the total employment generated by Mobile Telephony through the rst link of its Value Chain, 67.1% is destined to an outsourcing Sales Team. It is also important the employment level generated among the Site Installers that reaches 9.6%.

144,1%

20,0%

Annual Variation %

Figure 3.4.2. Chile: Indirect Employment generated by Mobile Telephony in the 1st. Link of its Value Chain 2006

15,0%

Internet: ’06 vs. ‘01 Var.

10,0%

35,3%

5,0%

0,0% 2002

2003

2004

2005

2006

-5,0%

Fixed: ’06 vs. ‘01 Var.

- 1,2%

-10,0% Source : SUBTEL

The growth rate of Mobile Telephony users in the 2001-2006 period has been 144.1%; much higher than the evolution of Fixed Telephony that has decreased to 1.2%. Regarding Internet growth it has been signi cant registering a rate of 35.3%.

60 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 3.5.3. Chile: Mobile-Fixed Lines and Internet Connections Penetration 2001-2006 75,8%

80,0%

Mobile Lines Fixed Lines

70,0%

65,0%

Internet Connections

57,5%

Penetration %

60,0%

45,7%

50,0%

39,7% 40,0%

32,8% 30,0% 20,0%

20,9%

10,0% 0,0% 2001

5,7% 2002

2003

2004

2005

2006

Source : ECLAC and SUBTEL

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. A level of 75.8% penetration positioned Chile as one of the highest of Latin America.

In only 5 years, Mobile telephony modi ed its penetration level from 32.8% in 2001 to 75.8% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period, closing 2006 with a 20.9 % penetration.

Although Internet connections have increased, there is still a long way to go. Closing 2006 its penetration level was 5.7%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 61

Third Part: 4. Colombia 4.1. Mobile Telephony Contribution to Gross Domestic Product Figure 4.1.1. Colombia: Supply and Demand Evolution of Mobile Telephony 2001-2006

Figure 4.1.3. Colombia: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 700,0%

1.626

1.486

1.500 935

734

1.000

200,0% 83,6%

100,0%

38,6%

31,2%

28,2%

627

606

541

872

300,0%

24,2%

19,3%

19,1%

14,5%

10,2% Agriculture, Hunting, etc.

10.285

Public Services

2.000

400,0%

Finnan.& Business Servs.

2.866

500,0%

Minning & Quarry

2.776

Supply: Accum. ‘01 to ’06

2.500

579,2%

600,0%

Transp. & Communication

9.965

3.000

Mobile Telephony

0 2001

2002

2003

2004

2005

2006

Source : Superintendence of Public Utilities (SSPD), Regulatory Commission for Telecommunications (CRT), Balances Published by Companies and Convergencia Research estimations

GDP

0,0%

500

Construction

Millions of US $

3.508

Trade

3.500

3.672

Manufac.

Industry

Demand: Accum. ‘01 to ’06

4.000

Accumulated Variation % ’06 vs. ‘01

4.500

Source : ECLAC, SSPD, CRT, Companies Balances and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $10.285 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $9.965 million of goods and services from 2001 to 2006.

Figure 4.1.2. Colombia: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place registering a rate of 579.2%, while Constructions has been the second sector of highest growth registering a rate of 83.6%.

On average, the national economy grew 24.2%.

Figure 4.1.4. Colombia: Mobile Telephony as porcentage of GDP 2001-2006 3,0%

2,7%

100,0%

92,8%

2,5%

2,3%

80,0%

Supply: Var. ’06 vs. ‘01

70,0%

579,2%

74,0%

70,7%

Demand: Var. ’06 vs. ‘01

478,7%

70,5%

60,0% 50,0% 39,1% 40,0% 30,0%

35,8%

0,0%

24,2%

27,4%

20,0% 10,0%

GDP: Var. ’06 vs. ‘01

3,4%

2,0%

1,7% 1,5%

1,2%

3,9%

4,9%

4,7%

6,8%

2003

2004

2005

2006

0,9%

1,0%

0,7%

32,3% 22,4%

0,5%

0,0% 2001

1,9% 2002

Participation % in GDP

Annual Variation %

90,0%

2002

2003

2004

2005

2006

Source : ECLAC, SSPD, CRT, Companies Balances and Convergencia Research estimations

Source : ECLAC, SSPD, CRT, Companies Balances and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 579.2% for the Supply and 478.7% for the Demand; establishing it as the country with the highest growth in the region. In the same period Colombia’s economy, as a whole, registered a growth rate of 24.2%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 0.7% in 2001. In 2006, the proportion has been quadruplicated reaching participation levels of 2.7%.

62 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 4.2. Mobile Telephony Contribution to National Investment Figure 4.2.1. Colombia: Mobile Telephony Investment Evolution (CAPEX) 2001-2006

4.3. In ation vs. Mobile Telephony ARPU Evolution Figure 4.3.1. Colombia: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 30,0%

1.000

Accum. Var. CPI:

905 900

840

+ 31,7%

20,0%

800

600

CAPEX : Accum. ‘01 to ’06

500

2.630

400

323 262 217

10,0%

7,0%

6,5%

5,5%

4,9%

4,5%

2004

2005 -1,4%

2006 -1,9%

0,0% 2002 -10,0%

2003

-7,4%

-7,4%

Accum. Var. Mobile Telephony:

200

83

100

-20,0%

0 2001

2002

2003

2004

2005

2006

Source : ECLAC, SSPD, CRT, Companies Balances and Convergencia Research estimations

Figure 4.2.2. Figure 4.2.2. Colombia: Investment / Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006 45,0% 40,1% 40,0% 35,0% 30,2%

In the period 2001-2006, the accumulated in ation was 31.7% remaining the annual variation rate sFigure.

Regarding Mobile Telephony, its average revenues per user (ARPU) evolution was negative. A signi cant decrease of 21.4% was observed in 2003. From 2004 an increase that has not totally matched the decreases of previous years has been produced.

28,0%

50,0% 40,9%

2004

2005

2006

Source : ECLAC, SSPD, CRT, Companies Balances and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 25.7% of its Sales, while the country total has invested approximately 17.1% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, higher than those carried out by the rest of the national economy.

29,9% 25,8% 19,0%

10,0%

4,5%

0,0% -10,0%

Mobile Telephony

2003

30,4%

20,0%

Health

2002

31,7%

Transport

0,0%

38,7%

30,0% Accumulated Variation % ’06 vs. ‘01

5,0%

2001

40,5%

40,0%

Investment % / GDP CAPEX % / Sales

11,4%

Culture

18,5%

18,4% 16,5% 13,6%

Clothing

14,5% 15,0%

Figure 4.3.2. Colombia: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

20,8%

Education

20,0%

CPI

19,8%

Several Expenses

24,6% 25,0%

Food

30,0% Investment %

-30,0% Source : National Administrative Department of Statistics (DANE) and CRT

The Mobile telephony operators in Colombia have invested approximately US $2.630 million in Capital Expenditures (CAPEX) between 2001 and 2006.

10,0%

- 34,8%

-21,4%

Housing

300

Annual Variation %

Millions of US $

700

-20,0% -30,0% -40,0%

Mobile Telephony Var.: - 34,8%

-50,0% Source: DANE and CRT

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 34.8% decrease, although all the components have shown variation in in ation. The highest increase was registered by the Transports and Communications sector that has reached a 40.9% rate.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 63

Third Part: 4.4. Mobile Telephony Contribution to Employment

4.5. Mobile Telephony Contribution to Connectivity

Figure 4.4.1. Colombia: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 4.5.1. Colombia: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 35.000

Direct: # 5.466 11,7%

29.763

Mobile Lines Fixed Lines Internet Connections

30.000

Thousands of Lines

25.000

Indirect: # 41.290 88,3%

21.893 20.000

15.000

10.401 10.000

3.265

4.597

6.186

5.000

0 2001

Total employment generated by Mobile Telephony: 46.756

2002

2003

2004

2005

2006

Source : CRT

Mobile telephony: In 2006, Colombia had a total of 29.8 million users, while at the end of 2001 only 3.3 million users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

The Mobile Telephony industry in Colombia has employed approximately 46,756 people in 2006.

Fixed telephony: The xed lines total was 8.0 million in 2006, signi cant growth variations were not observed in the period under analysis.

Approximately 5,466 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 41,290 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 888 thousand in 2006. This includes all Dial Up and Broadband connections.

A signi cant growth is observed in the period under analysis, since only 262 thousand connections existed in 2001.

Figure 4.4.2. Colombia: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 Providers of : Outsourcing Sales Team (Sales Agent) S ites Installing Towers Mobile Contents (SV A) Maintenn ance and Repairs Terminals Logistic Network: Radiobase + Troncal Network + Equipments IT Systems Terminal Equipments E lectrical Feed ing Indirect Total Employment

#

%

35.000 1.000

84,8% 2,4%

1.000 850

2,4% 2,1%

800 800

1,9% 1,9%

750 600 400

1,8% 1,5% 1,0%

90 41.290

0,2% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 84.8% is destined to an outsourcing Sales Team.

Figure 4.5.2. Colombia: Annual Variation Rate Mobile, Fixed Lines Number and Internet Connections 2001-2006 130,0% 30,0%

Annual Variation %

It can be concluded that for each employee directly employed by the Mobile telephony, 7,6 employees are indirectly demanded.

110,0% 25,0%

Mobiles: ’06 vs. ‘01 Var.

90,0% 20,0%

811,6%

Móviles: Var. '06 vs. '01 144,1% Internet: ’06 vs. ‘01 Var.

Internet: Var. '06 vs. '01 35,3%

70,0% 15,0%

238,8%

50,0% 10,0% 30,0% 5,0% 10,0% 0,0%

2002 -10,0% -5,0%

2002

2003 2003

2004 2004

2005

2006

2005

2006

Fijas: Var. '06 vs. '01 - 1,2% -10,0% -30,0%

Fixed: ’06 vs. ‘01 Var.

8,0%

Source : CRT

The growth rate of Mobile Telephony users in the 2001-2006 period has been 811.6%; representing together with Ecuador the highest growth registrations in the region. The increase was much higher than the evolution of Fixed Telephony that increased to 8%. Regarding Internet growth it has been signi cant registering a rate of 238.8%.

64 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 4.5.3. Colombia: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 70,0%

65,4%

60,0%

Mobile Lines

Penetration %

50,0%

48,8%

Fixed Lines Internet Connections

40,0%

30,0%

23,5% 20,0%

10,7%

10,0%

14,2%

17,5%

7,7% 0,0% 2001

2,0% 2002

2003

2004

2005

2006

Source : ECLAC and CRT

The Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Colombia’s penetration levels reached 65. 4%.

In only 5 years, Mobile telephony modi ed its penetration level from 7.7% in 2001 to 75.8% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 17.5 % penetration.

Internet connections were increased, but still its penetration levels remain low regarding other services studied. Closing 2006 its penetration level was 2%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 65

Third Part: 5. Ecuador 5.1. Mobile Telephony Contribution to Gross Domestic Product Figure 5.1.3. Ecuador: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006

558 500

418 342

300,0%

200,0%

100,0%

235 181

194

187

35,8%

32,1%

28,7%

27,3% 24,0%

23,0%

22,5%

21,4% Trade

649

Manufac.

Industry

3.363

700

400,0%

Agriculture, Hunting, etc.

1.063

1.018

Construction

1.056

Demand: Accum. ‘01 to ’06

900

500,0%

Minning & Quarry

3.750

1.100

Millions of US $

1.211

Accumulated Variation % ’06 vs. ‘01

Supply: Accum. ‘01 to ’06

1.300

300

567,6%

600,0%

1.500

Finnan.& Business Servs.

Figure 5.1.1. Ecuador: Supply and Demand Evolution of Mobile Telephony 2001-2006

10,0%

2001

2002

2003

2004

2005

2006

GDP

Other Services

-100

Transp. y Comunic.

Mobile Telephony

0,0% 100

Source : Companies Balances and Convergencia Research estimations Source : ECLAC, Companies Balances and Convergencia Research estimation

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $3.750 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $3.363 million of goods and services from 2001 to 2006.

Figure 5.1.2. Ecuador: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place registering a rate of 567.6%, while Finnancial services, Real States and Companies has been the second sector of highest growth registering a rate of 35.8%. On average, the national economy grew 27.3%.

Figure 5.1.4. Ecuador: Mobile Telephony as percentage of GDP 2001-2006

90,0% 82,4%

Annual Variation %

60,0%

Supply: Var. ’06 vs. ‘01

50,0%

567,6%

40,0%

Demand: Var. ’06 vs. ‘01

63,0% 62,6% 55,3%

30,0%

GDP: Var. ’06 vs. ‘01

20,0%

27,3%

29,8%

467,4%

14,7% 4,2% 3,6%

7,9% 3,6%

4,7%

4,4% 4,3%

2,9%

3,0%

Participation % in GDP

76,4%

70,0%

10,0%

3,5%

77,6%

80,0%

3,0%

2,5%

2,0%

2,0%

1,5%

1,5%

1,0%

0,9%

0,9%

0,5%

0,0% 2002

2003

2004

2005

2006

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, Companies Balances and Convergencia Research estimation

Source : ECLAC, Companies Balances and Convergencia Research estimation

In the 2001-2006 period, the total growth of Mobile Telephony was 567.6% for the Supply and 467.4% for the Demand representing together with Colombia one of the countries with highest growth in the region. In the same period Ecuador’s economy, as a whole, registered a growth rate of 27.3%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 0.9% in 2001. In 2006, the proportion it had been multiplied 3.5 times reaching participation levels of 3%.

66 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 5.2. Mobile Telephony Contribution to National Investment Figure 5.2.1. Ecuador: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

5.3. In ation vs. Mobile Telephony ARPU Evolution Figure 5.3.1. Ecuador: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 30,0%

250

231

Accum. Var. CPI:

232

+ 25,9%

20,0%

CAPEX : Accum. ‘01 to. ’06

200

9,4% Annual Variation %

Millions of US $

738 150

130

100

78

10,0%

6,1% 1,9%

3,5%

2,9%

2005

2006

0,0% 2002

2003

2004

-7,2%

-8,0%

-5,1% -10,0% -10,2%

40

50

Accum. Var. Mobile Telephony:

-20,0%

27

-18,6%

- 40,8% 0

-30,0% 2001

2002

2003

2004

2005

2006 Source : BCE, Companies Balances and Convergencia Research estimation

Source : Companies Balances and Convergencia Research estimation

The Mobile telephony operators in Ecuador have invested approximately US $738 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 5.2.2. Ecuador: Investment / Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006 30,0% 28,0% 26,0%

24,5% 22,4% 21,5%

20,9%

22,0% 21,4%

21,3%

21,6%

21,9%

21,9%

Figure 5.3.2. Ecuador: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 120,0% 114,2%

Investment % / GDP CAPEX % / Sales

101,5% 100,0%

Source : ECLAC, Central Bank of Ecuador(BCE) Companies Balances and Convergencia Research estimation

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 20.6% of its Sales, while the country total has invested approximately 21.9% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion similar to those carried out by the rest of the national economy.

60,0%

25,9%

40,0%

26,2%

23,8% 17,3% 17,3%

20,0%

-0,4% 0,0% -20,0% -40,0% -60,0%

Others

2006

-12,3% -16,6% -19,9%

Mobile Teleph.

2005

Culture

2004

Clothing

2003

Food

2002

Housing

2001

80,0%

Health

10,0%

CPI

12,0%

Hotels & Restaurant

14,0%

Transport

19,2% 15,0%

Education

16,0%

Public Services

18,0%

Accumulated Variation % ’06 vs. ‘01

Investment %

Regarding Mobile Telephony, the evolution of its revenues average per user (ARPU) was negative. A signi cant decrease of 18.6% was observed in 2006. In the period under analysis, Mobile Telephony has suffered an accumulated decrease of 40.8% in its prices.

23,3%

24,0%

20,0%

In the period 2001-2006, the accumulated in ation was 25.9%, remaining the annual variation rate sFigure.

Mobile Telephony Var.: - 40,8%

Source : BCE, Companies Balances and Convergencia Research estimation

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 40.8% decrease, although all the components have shown variation in in ation. The highest increase was registered by the Transports and Communications sector that has reached a 114.2% rate, followed by Public Services registering a 101.5% increase.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 67

Third Part: 5.4. Mobile Telephony Contribution to Employment

5.5. Mobile Telephony Contribution to Connectivity

Figure 5.4.1. Ecuador: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 5.5.1. Ecuador: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 8.485

9.000

Mobile Lines Fixed Lines Internet Connections

8.000

Thousands of Lines

7.000

Direct: # 2.135 30,8% Indirect: # 4.800 69,2%

6.246

6.000 5.000 4.000

3.437 2.394

3.000 2.000

1.561 859

1.000 0 2001

Total employment generated by Mobile Telephony: 6.935

The Mobile Telephony industry in Ecuador has employed approximately 6,935 people in 2006.

Approximately 2,135 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 4,800 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 2,3 employees are indirectly demanded.

Figure 5.4.2. Ecuador: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 Outsourcing Sales Team (Sales Agent)

#

%

3.000 300

62,5% 6,3%

300 250

6,3% 5,2%

250 230

5,2% 4,8%

200 150 90

4,2% 3,1% 1,9%

30 4.800

0,6% 100,0%

Terminals Logistic S ites Installing Towers Network: Radiobase + Troncal Network + Equipments Terminal Equipments IT Systems Mobile Contents (SV A) E lectrical Feed ing Indirect Total Employment

2004

2005

2006

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and i ts providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 62.5% is destined to an outsourcing Sales Team.

Fixed telephony: The xed lines total was 1.8 million in 2006; a signi cant growth was observed due the country counted with 1.3 million lines in 2001.

Internet: The total internet connections were of 823 thousand in 2006. This includes all Dial Up and Broadband connections.

A great growth is observed in the period under analysis, since only 86 thousand connections existed in 2001.

Figure 5.5.2. Ecuador: Annual Variation Rate Number of Mobile, Fixed Lines and Internet Connections 2001-2006 320,0% 30,0%

Internet: Móviles: Var. '06 vs. '01 ’06 vs. ‘01 Var. 144,1%

280,0% 25,0% 240,0%

Mobiles: ’06 vs. ‘01 Var.

200,0%

887,6%

20,0%

Annual Variation %

Mobile Telephony Companies and its providers

Maintenn ance and Repairs

2003

Mobile telephony: In 2006, Ecuador had a total of 8. 5 million users, while at the end of 2001 only 859 thousand users existed.

Source : Study carried out by Convergencia Research according to data given by

Providers of :

2002

Source : Superintendence of Telecommunications (SUPTEL)

15,0%

160,0%

10,0%

861,7%

Internet: Var. '06 vs. '01 35,3% Fixed: ’06 vs. ‘01 Var.

120,0%

32,9%

5,0%

80,0%

0,0% 40,0%

2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : SUPTEL

The growth rate of Mobile Telephony users in the 2001-2006 period has been 887.6% the highest registered in the region.

Though, mobile growth is much higher than the evolution of Fixed Telephony it has also increased registering a signi cant rate of 32.9%. Regarding Internet growth it has been, as Mobile Telephony, the highest of the region registering a rate of 861.7%.

68 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 5.5.3. Ecuador: Mobile, Fixed Lines and Internet Connections Penetration 2001-2006 70,0%

63,3%

60,0%

Mobile Lines

Penetration %

50,0%

Fixed Lines

47,3%

Internet Connections 40,0%

30,0%

26,4% 20,0%

18,6% 12,3%

13,2% 6,1%

10,0%

6,9% 0,0% 2001

2002

2003

2004

2005

2006

Source: SUPTEL

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Ecuador’s penetration levels had reached 63. 3%.

In only 5 years, Mobile telephony modi ed its penetration level from 6.9% in 2001 to 63.3% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity had reached penetration levels of 13.2% at the end of 2006.

Internet connections were increased generating a penetration level of 6.1% closing 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 69

Third Part: 6. Peru 6.1. Mobile Telephony Contribution to Gross Domestic Product Figure 6.1.1. Peru: Supply and Demand Evolution of Mobile Telephony 2001-2006

Figure 6.1.3. Peru: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 Public Services

Demand: Accum. ‘01 to ’06

1.100

4.628

Millions of US $

160,0%

Supply: Accum. ‘01 to ’06

1.300

5.169

1.148 1.012

806

786 680

625 533

907

909

900

700

144,3%

1.303

554

534

500

Accumulated Variation % ’06 vs. ‘01

1.500

300

140,0% 120,0% 100,0% 80,0% 60,0% 46,5% 35,6%

40,0%

33,3%

33,2%

32,2%

30,9%

29,4%

23,9%

20,0%

2006

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $5.169 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $4.628 million of goods and services from 2001 to 2006.

Figure 6.1.2. Peru: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 35,0%

Supply: Var. ’06 vs. ‘01

30,0%

144,3%

Annual Variation %

20,0%

22,7%

15,0%

18,6%

15,7%

26,5%

114,9% 12,6%

GDP

Figure 6.1.4. Peru: Mobile Telephony as percentage of GDP 2001-2006 1,6%

1,4% 1,3%

1,2% 1,0%

1,0%

1,3%

1,3%

1,1%

0,8% 0,6% 0,4%

11,3%

10,0%

Trade

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to rates of the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 114.3% while Constructions has been the second sector of highest growth registering a rate of 46.5%. On average, the national economy grew 32.2%.

1,4%

Demand: Var. ’06 vs. ‘01 17,2%

Source : ECLAC, BCRP, OSIPTEL, Companies Balances and Convergencia Research estimations

28,7%

25,8% 25,0%

Agriculture, Hunting, etc.

2005

Public Services

2004

Other Services

2003

Manufac.

Industry

2002

Participation % in GDP

2001

Source : Supervisor Organism of Private Investment in Telecommunications (OSIPTEL), Companies Balances and Convergencia Research estimations

Minning & Quarry

100

-100

Construction

Mobile Telephony

0,0%

8,0% 6,4%

5,2% 3,9%

5,0%

GDP: Var. ’06 vs. ‘01

3,7%

0,2%

5,2%

32,2%

0,0% 2002

2003

2004

2005

2006

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, BCRP, OSIPTEL, Companies Balances and Convergencia Research estimations

Source : ECLAC, Central Reserve Bank of Peru (BCRP), OSIPTEL, Companies Balances and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 144.3% for the Supply and 114.9% for the Demand. In the same period Peru’s economy, as a whole, registered a growth rate of 32.2%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1% in 2001. In 2006, the proportion had reached participation levels of 1.4%.

70 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 6.2. Mobile Telephony Contribution to National Investment Figure 6.2.1. Peru: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

Figure 6.3.1. Peru: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 20,0%

300

276

Accum. Var. CPI:

CAPEX : Accum. ‘01 to. ’06

250

15,0%

1.069 200

168 154

+ 10,5%

10,0%

207 Annual Variation %

Millions of US $

6.3. In ation vs. Mobile Telephony ARPU Evolution

150

150

115 100

5,0%

3,5%

2,5%

1,5%

1,5%

1,1%

2005

2006

0,0% 2002

2003 -1,5%

2004

Accum. Var. Mobile Telephony:

-5,0%

- 46,7%

-10,0%

50

-10,5% -15,0%

-13,2%

-13,7%

0 2001

2002

2003

2004

2005

2006

Source : OSIPTEL, Companies Balances and Convergencia Research estimations

-20,0%

-19,2%

Source : National Institute of Statistics and Informatics (INEI), OSIPTEL, Companies Balances and Convergencia Research estimations

The Mobile telephony operators in Peru have invested approximately US $1.069 million in Capital Expenditures (CAPEX) during the 2001–2006 period.

Figure 6.2.2. Peru: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2001-2006 40,0%

Investment % / GDP CAPEX % / Sales

35,0% 32,1%

Investment %

30,0% 24,3%

25,2%

In the period 2001-2006, the accumulated in ation was 10.5%, remaining the annual variation rate sFigure.

Regarding Mobile Telephony, the evolution of its average revenues per user (ARPU) was negative. Signi cant decreases are observed year to year. The variation in the period under analysis shows an accumulated decrease of 46.7%.

Figure 6.3.2. Peru: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

23,3%

25,0%

40,0%

21,5% 19,6%

30,0%

20,0%

21,3%

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 24.3% of its Sales, while the country total has invested approximately 18.1% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, higher than those carried out by the rest of the national economy.

6,6%

-20,0%

Others

-10,0%

-1,5%

Mobile Telephony

2006

6,8%

Clothing

2005

9,0%

Furniture

2004

9,6%

0,0% Food

2003

10,5%

Culture

2002

Source : ECLAC, BCRP, OSIPTEL, Companies Balances and Convergencia Research estimations

11,7% 10,0%

CPI

10,0% 2001

17,6%

20,0% 18,1%

Health

18,8%

Housing

17,9%

Transp.& Comunicac.

17,5%

15,0%

17,8%

Accumulated Variation % ’06 vs. ‘01

18,6%

-30,0% -40,0% -50,0%

Mobile Telephony Var.: - 46,7% -60,0% Source : INEI, OSIPTEL, Companies Balances and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 46.7%, decrease, although all the components have shown variation in in ation. The highest increase was registered by the Constructions sector that has reached a 21.3% rate.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 71

Third Part: 6.4. Mobile Telephony Contribution to Employment

6.5. Mobile Telephony Contribution to Connectivity

Figure 6.4.1. Peru: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 6.5.1. Peru: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 10.000

Thousands of Lines

8.000

Direct: # 3.371 26,7% Indirect: # 9.255 73,3%

8.772

Mobile Lines Fixed Lines Internet Connections

9.000

7.000

5.583

6.000 5.000

4.093 4.000 3.000

2.930 2.307

1.793

2.000 1.000 0 2001

Total employment generated by Mobile Telephony: 12.626

2002

2003

2004

2005

2006

Source : OSIPTEL

Mobile telephony: In 2006, Peru had a total of 8.8 million users while at the end of 2001 only 1.8 million users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

In 2006, approximately 12,626 people were employed by the Mobile Telephony Industry in Peru.

Approximately 3,371 people were directly employed by Mobile Telephony operators. Meanwhile, the industry indirectly generated 9,255 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile Telephony industry, 2,7 employees are indirectly demanded.

Fixed telephony: The xed lines total was 2.4 million in 2006 while in 2001 the total number was 1.6 million.

Internet: The total internet connections were of 1 million in 2006. This includes all Dial Up and Broadband connections.

A signi cant growth is observed in the period under analysis, since only 202 thousand connections existed in 2001.

Figure 6.5.2. Peru: Annual Variation Rate Number of Mobile-Fixed Lines and Internet Connections 2001-2006 100,0% 30,0%

Móviles: Mobiles: Var. '06 vs. '01 ’06 vs. ‘01 Var. 144,1%

Internet: ’06 vs. ‘01 Var.

90,0%

25,0% 80,0%

408,9%

20,0%

389,2%

Mobile Telephony in the 1st. link of its Value Chain 2006 Providers of :

#

%

Annual Variation %

70,0%

Figure 6.4.2. Peru: Indirect Employment generated by

Internet: Fixed: Var. ’06 '06 vs. vs. '01 ‘01 Var. 35,3%

60,0% 15,0%

52,8%

50,0%

10,0% 40,0%

5,0% 30,0%

Outsourcing Sales Team (Sales Agent) Network: Radiobase + Troncal Network + Equipments S ites Installing Towers Maintenn ance and Repairs Terminals Logistic IT Systems Terminal Equipments Mobile Contents (SV A) E lectrical Feed ing Indirect Total Employment

5.500 1.000

59,4% 10,8%

800 500

8,6% 5,4%

400 300

4,3% 3,2%

280 200 180

3,0% 2,2% 1,9%

95 9.255

1,0% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and and its providers

0,0% 20,0% 2002

2003

2004

2005

2006

10,0%

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : OSIPTEL

The growth rate of Mobile Telephony users in the 2001-2006 period has been 389.2%. Fixed Telephony has also shown an interesting growth, though lower reaching a 52.8% rate.

Regarding Internet it has signi cantly varied registering a growth rate of 408.9%.

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 59.4% is destined to an outsourcing Sales Team.

72 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 6.5.3. Peru: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 35,0%

31,8%

30,0%

Mobile Lines

Penetration %

25,0%

Fixed Lines Internet Connections

20,5%

20,0%

15,2%

15,0%

11,0% 10,0%

6,9%

8,8%

8,7%

5,0%

0,0% 2001

3,7% 2002

2003

2004

2005

2006

Source: CEPAL and OSIPTEL

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 it had reached penetration levels of 31.8%.

In only 5 years, Mobile telephony modi ed its penetration level from 6.9% in 2001 to 31.8% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 8.7 % penetration.

Although Internet connections were increased, there is still a long way to go. Closing 2006 its penetration level was 3.7%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 73

Third Part: 7. Uruguay 7.1. Mobile Telephony Contribution to Gross Domestic Product Figure 7.1.1. Uruguay: Supply and Demand Evolution of Mobile Telephony 2002 - 2006

Figure 7.1.3. Uruguay: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2002 - 2006 80,0%

400

70,5%

Accumulated Variation % ’06 vs. ‘01

1.016

250 202

190

200

185

184

151

152

132

150

70,0%

331

Supply: Accum. ‘01 to ’06

978

300

123

100 50

60,0% 50,9% 46,8%

50,0%

43,5%

43,0% 38,6%

40,0%

30,3%

30,0% 18,6%

20,0%

6,9%

10,0%

-1,7%

From 2002 to 2006, Mobile Telephony contributed to national GDP providing approximately US $1.016 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $978 million of goods and services from 2002 to 2006.

Figure 7.1.2. Uruguay: Average Annual Variation Rate of Mobile Telephony and GDP 2002 - 2006

If growth rates of Mobile Telephony accumulated in 2002-2006 period are compared to rates of the other economy sectors, it is observed that mobile services occupy the rst place registering a rate of 70.5%, while Manufacturing has been the second sector of highest growth registering a rate of 50.9%.

On average, the national economy grew 30.3%.

Figure 7.1.4. Uruguay: Mobile Telephony as percentage of GDP 2002 - 2006 2,0%

1,8%

1,8% 1,6% 80,4%

Demand: Var. ’06 vs. ‘01

74,6% 40,0% 23,5% 20,0%

21,4% 21,4% 15,0%

2,2%

6,6%

7,0%

2005

2006

Participation % in GDP

70,5% 60,0%

1,6%

86,5%

Supply: Var. ’06 vs. ‘01

Finnan.& Business Servs.

Other Services

Source : ECLAC, INE and Balances Published by Companies and Convergencia Research estimations

100,0%

Annual Variation %

GDP

Trade

-20,0% Source : National Telecommunications Commission (CONATEL), Balances Published by Companies and Convergencia Research estimations

Public Services

2006

Construction

2005

Agriculture, Hunting, etc.

2004

Transp. y Comunic.

2003

Manufac.

Industry

2002

Minning & Quarry

-10,0%

0

80,0%

-8,5%

0,0% Mobile Telephony

Millions of US $

344

Demand: Accum. ‘01 to ’06

350

1,4%

1,2% 1,2%

1,2%

1,1%

1,0% 0,8% 0,6% 0,4%

11,8% 0,0%

0,2% 2003

2004

-20,0% -34,5% -40,0%

GDP: Var. ’06 vs. ‘01

30,3%

0,0% 2002

2003

2004

2005

2006

Source : ECLAC, INE and Balances Published by Companies and Convergencia Research estimations

-35,4%

Source : ECLAC, National Institute of Statistics (INE) and Balances Published by Companies and Convergencia Research estimations

In the 2002-2006 period, the total growth of Mobile Telephony was 70.5% for the Supply and 74.6% for the Demand. In the same period Uruguay’s economy, as a whole, registered a growth rate of 30.3%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.6% in 2002. In 2006, the proportion had reached participation levels of 1.8%.

. A2.

74 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 7.2. Mobile Telephony Contribution to National Investment Figure 7.2.1. Uruguay: Mobile Telephony Investment (CAPEX) Evolution 2002 – 2006 64 CAPEX : Accum. ‘01 to. ’06

247 47

15,0% Annual Variation %

43 40

33 30

9,2%

10,0%

10,7%

0,0% 2003

-5,0%

Source : Balances Published by Companies and Convergencia Research estimations

2005

2006

0,0% 2002

2003

2004

Source : ECLAC, INE and Balances Published by Companies and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for the 2002-2006 period.

On average, the Mobile Telephony industry has invested approximately 25.5% of its Sales, while the country total has invested approximately 11.4% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, much higher than those carried out by the rest of the national economy.

Figure 7.3.2. Uruguay: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2002 - 2006 110,0%

90,0%

83,3% 76,6% 70,8%

69,2%

65,4%

70,0% 61,0% 53,7%

50,9%

48,7%

50,0%

41,7%

30,0%

10,0%

-10,0%

Mobile Telephony Var.: - 0,7%

13,1%

-0,7% Mobile Telephony

13,1% 11,3% 9,4%

Clothing

10,1% 5,0%

Education

10,0%

Health

15,0%

Recreation

18,6%

CPI

23,5%

20,0%

Food

Investment %

25,0%

Housing

30,0%

Regarding Mobile Telephony, the evolution of its average revenues per user (ARPU) was negative. A signi cant decrease was observed in 2002 produced by the local currency devaluation. Eventhough, an increase of 10.7% was produced in 2003 as a consequence of a partial currency revaluation and improvements in consumption; it was not enough to reach a positive accumulated variation rate, therefore the total decrease of the period was 0.7%.

Furniture

Investment % / GDP CAPEX % / Sales

29,3%

In the ve years period 2002-2006, the accumulated in ation was 65.4%. The years of highest in ation were 2002 and 2003; signi cant prices readjustment were produced in these years as a consequence of the currency devaluation and the exit of the crisis ocurred in 2002.

Transp.& Comunicac.

40,0%

25,0%

-7,1%

-15,0%

Accumulated Variation % ’06 vs. ‘01

Figure 7.2.2. Uruguay: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2002 - 2006

31,1%

2006

Source : INE and Balances Published by Companies and Convergencia Research estimations

The Mobile telephony operators in Uruguay have invested approximately US $247 million in Capital Expenditures (CAPEX) between 2002 and 2006.

35,0%

2005

- 0,7%

-11,3% 2006

2004

Accum. Var. Mobile Telephony:

-10,0% 0 2005

4,7%

0,0%

10

2004

6,4%

8,9% 5,0%

2002

2003

+ 65,4%

14,0%

20

2002

Accum. Var. CPI:

19,4%

20,0%

Others

59

50 Millions of US $

Figure 7.3.1. Uruguay: Annual Average Variation Rate of CPI and Mobile Telephony ARPU 2002 - 2006 25,0%

70

60

7.3. In ation vs. Mobile Telephony ARPU Evolution

Source : INE and Balances Published by Companies and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation in 5 years, between the different components of Consumer Price Index and Mobile Telephony; it is observed the industry’s de ationary character that accumulated a 0.7% decrease in the period, although all the components have shown variation in in ation. The highest increase was registered by the Real State sector that has reached a rate of 83.3%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 75

Third Part: 7.4. Mobile Telephony Contribution to Employment

7.5. Mobile Telephony Contribution to Connectivity

Figure 7.4.1. Uruguay: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 7.5.1. Uruguay: Number of Mobile- Fixed Lines and Internet Connections Evolution 2001-2006 2.330

2.500

Direct: # 746 14,5%

Mobile Lines Fixed Lines Internet Connections

Thousands of Lines

2.000

Indirect: # 4.405 85,5%

1.500

1.155 1.000

520

514

600

498

500

0 2001

Total employment generated by Mobile Telephony: 5.151

2002

2003

2004

2005

2006

Source : Telecommunications Services Regulatory Unit (URSEC)

Mobile telephony: In 2006, Uruguay had a total of 2.3 million users while at the end of 2001 only 520 thousand users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

In 2006, approximately 5,151 people were employed by the Mobile Telephony Industry in Uruguay.

Fixed telephony: The xed lines total was 987 thousand in 2006 remaining this number sFigure during all the period.

Approximately 746 people were directly employed by Mobile Telephony operators. Meanwhile, the industry indirectly generated 4,405 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 210 thousand in 2006. This includes all Dial Up and Broadband connections.

Figure 7.5.2. Uruguay: Annual Variation Rate Mobile- Fixed Lines and Internet Connections Number 2001-2006 110,0% 30,0%

Figure 7.4.2. Uruguay: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 Providers of : Outsourcing Sales Team (Sales Agent) S ites Installing Network: Radiobase + Troncal Network + Equipments IT Systems E lectrical Feed ing Maintenn ance and Repairs Terminals Logistic Terminal Equipments Mobile Contents (SV A) Towers Indirect Total Employment

#

%

3.500 250

79,5% 5,7%

200 110

4,5% 2,5%

95 80

2,2% 1,8%

80 50 20

1,8% 1,1% 0,5%

20 4.405

0,5% 100,0%

100,0%

25,0%

Mobiles: ’06 vs. ‘01 Var.

80,0% 20,0%

348,1%

90,0%

Annual Variation %

It can be concluded that for each employee directly employed by the Mobile Telephony industry in 2006, 5,9 employees are indirectly demanded.

70,0%

Móviles: Var. '06 vs. '01 144,1%

Internet: Var. '06 vs. '01 35,3%

15,0%

60,0%

50,0% 10,0%

Fixed: ’06 vs. ‘01 Var.

40,0%

3,8%

5,0% 30,0% 20,0% 0,0% 10,0%

2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0% -10,0%

2002

2003

2004

2005

2006

Source: URSEC

The growth rate of Mobile Telephony users in the 2001-2006 period has been 348.1%. Fixed Telephony has practically not varied. Regarding Internet it only registers the 12.3% variation rate of 2005-2006.

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 79.5% is destined to an outsourcing Sales Team.

76 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 7.5.3. Uruguay: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 80,0%

70,1%

70,0%

Mobile Lines

60,0%

Penetration %

Fixed Lines Internet Connections

50,0% 40,0%

34,8% 30,0%

29,7% 20,0%

15,7%

15,5%

15,0%

18,1%

10,0% 0,0% 2001

6,3% 2002

2003

2004

2005

2006

Source: ECLAC and URSEC

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 it had reached penetration levels of 70.1%.

In only 5 years, Mobile telephony modi ed its penetration level from 15.7% in 2001 to 70.1% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 29.7 % penetration.

Internet connections were increased; closing 2006 its penetration level was 6.3%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 77

Third Part: 8. Venezuela 8.1. Mobile Telephony Contribution to Gross Domestic Product Figure 8.1.1. Venezuela: Supply and Demand Evolution of Mobile Telephony 2001-2006

Figure 8.1.3. Venezuela: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 140,0%

4.500

2.500

10.357

2.429

1.747 1.517

1.480 1.500

1.247

1.097

1.094 899

1.000

747

100,0% 80,0% 60,0% 45,6%

42,8% 34,3%

40,0%

32,3%

27,2%

21,1%

20,0%

18,9%

16,2%

12,8%

2004

2005

2006

Source : National Telecommunications Commission (CONATEL), Balances Published by Companies and

Oil

GDP

Construction

2003

Public Services

2002

Other Services

-20,0% 2001

Agriculture and Trade

0

Transp. y Comunic.

500

Finnan.& Business Servs.

0,0% Mobile Telephony

2.000

2.704

Minning & Quarry

Demand: Accum. ‘01 to ’06

Accumulated Variation % ’06 vs. ‘01

3.000

120,3%

120,0% 3.555

12.008

3.500

Millions of US $

3.849

Manufac.

Industry

Supply: Accum. ‘01 to ’06

4.000

-3,6%

Source : ECLAC, BCV, CONATEL, Balances Published by Companies and Convergencia Research estimations

Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $12.008 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $10.357 million of goods and services from 2001 to 2006.

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 120.3% while Transports and Communications has been the second sector of highest growth registering a rate of 45.6%. Meanwhile, the Oil sector, the main activity in Venezuela decreased to 3.6%. On average, the national economy grew 21.1%.

Figure 8.1.2. Venezuela: Average Annual Variation Rate of Mobile Figure 8.1.4. Venezuela: Mobile Telephony as percentage of GDP 001-2006

Supply: Var. ’06 vs. ‘01

120,0% 100,0%

94,8%

120,3%

2,5%

Demand: Var. ’06 vs. ‘01

60,0%

140,1%

40,0%

67,0%

2,1%

78,2% 46,3% 42,4%

20,0% -0,3%

18,3%

0,0% -20,0%

-8,9% 2002 -37,2%

-40,0% -39,3%

10,3%

10,3%

-7,8% 2003 -17,0%

2004

2005 GDP: Var. ’06 vs. ‘01

2006

21,1%

1,9%

2,0%

38,8%

Participation % in GDP

Annual Variation %

80,0%

1,5%

1,4% 1,2%

1,3%

1,3%

1,0%

0,5%

-60,0% Source : ECLAC, Central Bank of Venezuela (BCV), CONATEL Balances Published by Companies and Convergencia Research estimations

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, BCV, CONATEL, Balances Published by Companies and Convergencia Research estimations

In the 2001-2006 period, the total /growth of Mobile Telephony was 120.3% for the Supply and 140.1% for the Demand. In the same period Venezuela’s economy, as a whole, registered a growth rate of 21.1%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.4% in 2001. In 2006, the proportion had reached participation levels of 2.1%.

78 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 8.2. Mobile Telephony Contribution to National Investment Figure 8.2.1. Venezuela: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

8.3. In ation vs. Mobile Telephony ARPU Evolution Figure 8.3.1. Venezuela: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 40,0%

900

31,2%

30,2%

795 800

27,1%

30,0%

19,2%

600

CAPEX : Accum. ‘01 to. ’06

500

2.213

430

20,0% Annual Variation %

469

400 300

238 196

14,4%

+ 165,8% 10,0%

0,0% 2002

2003

2004

-20,0%

0

Accum. Var. Mobile Telephony:

-16,0%

2002

2003

2004

2005

2006

The Mobile telephony operators in Venezuela have invested approximately US $2.213 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 8.2.2. Venezuela: Investment /Mobile Telephony Sales vs. Investment / GDP Ratios Comparison 2001-2006 30,0% 24,6% 25,0% 21,9% 20,0%

20,2%

20,6%

18,3%

21,7%

-30,0% Source : BCV, CONATEL, Balances Published by Companies and Convergencia Research estimations

Source : CONATEL, Balances Published by Companies and Convergencia Research estimations

24,1%

-20,2%

- 38,3%

-23,6% 2001

2006

-7,5%

85

100

2005

-10,0%

200

In the period 2001-2006, Venezuela’s accumulated in ation was 165.8%, the highest of the region.

Eventhough, the country’s economy was inmerse in a in ationary process the Mobile Telephony showed a de ationary evolution regarding its revenues average per user (ARPU). Signi cant decreases were observed year to year, except 2004. The variation in the period under analysis shows an accumulated decrease of 38.3%.

20,0%

15,5% 17,4%

15,0%

Figure 8.3.2. Venezuela: Average Annual Variation Rate of 12,9%

CPI and Mobile Telephony ARPU 2001-2006

10,0%

Investment % / GDP CAPEX % / Sales

100,0% 50,0%

- 38,3%

Mobile Telephony Var.:

165,8%

150,0%

Renting

Mobile Teleph.

Communications

Clothing

0,0% -50,0%

Housing Services

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

200,0%

Health

Source : ECLAC, BCV, CONATEL, Balances Published by Companies and Convergencia Research estimations

250,0%

Education

2006

Personal Services

2005

CPI

2004

Recreation

2003

Housing Equipent

2002

Food

2001

Accumulated Variation % ’06 vs. ‘01

0,0%

300,0%

Transport

7,8% 5,0%

Brevages, Alcohol & Tabc.

Investment %

17,0%

Accum. Var. CPI:

Restaurant & Hotels

Millions of US $

700

Source : BCV, CONATEL, Balances Published by Companies and Convergencia Research estimations

On average, the Mobile Telephony industry has invested approximately 17.5% of its Sales, while the country total has invested approximately 20% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, slightly lower to those carried out by the rest of the national economy.

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 38.3% decrease, although all the components have shown a very signi cant variation in in ation. The highest increase was registered by the Food and Beverages sector that has reached a 268.7% rate.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 79

Third Part: 8.4. Mobile Telephony Contribution to Employment

8.5. Mobile Telephony Contribution to Connectivity

Figure 8.4.1. Venezuela: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 8.5.1. Venezuela: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 18.789

20.000

Mobile Lines Fixed Lines Internet Connections

18.000 16.000 Thousands of Lines

Indirect: # 21.610 72,7%

Direct: # 8.131 27,3%

14.000

12.496

12.000 10.000 8.000

6.473

8.421

7.015

6.542

6.000 4.000 2.000 0 2001

Total employment generated by Mobile Telephony: 29.741

2002

2003

2004

2005

2006

Source : CONATEL

Mobile telephony: In 2006, Venezuela had a total of 18.8 million users, while at the end of 2001 only 6.5 million users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

The Mobile Telephony industry in Venezuela has employed approximately 29,741 people in 2006.

Fixed telephony: The xed lines total was 4.2 million in 2006, while in 2001 the total number was 2.7 million lines.

Approximately 8,131 people were directly employed by Mobile Telephony operators in 2006. While, the industry has indirectly generated 21,610 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 761 thousand in 2006. This includes all Dial Up and Broadband connections.

A signi cant growth is observed in the period under analysis, since only 305 thousand connections existed in 2001.

It can be concluded that for each employee directly employed by the Mobile telephony, 2,7 employees are indirectly demanded.

Figure 8.5.2. Venezuela: Annual Variation Rate Mobile-Fixed Lines and Internet Connections Number 2001-2006 60,0% 30,0%

Mobiles: ’06 vs. ‘01 Var.

25,0%

Providers of : Outsourcing Sales Team (Sales Agent) Network: Radiobase + Troncal Network + Equipments S ites Installing Maintenn ance and Repairs Mobile Contents (SV A) Towers Terminals Logistic IT Systems Terminal Equipments E lectrical Feed ing Indirect Total Employment

#

%

18.000 700

83,3% 3,2%

600 520

2,8% 2,4%

490 400

2,3% 1,9%

350 300 180

1,6% 1,4% 0,8%

70 21.610

0,3% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

20,0% Annual Variation %

Figure 8.4.2. Venezuela: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006

Móviles: Var. '06 vs. '01 144,1%

190,3%

50,0%

40,0%

15,0% Internet: ’06 vs. ‘01 Var.

30,0%

10,0%

Internet: Var. '06 vs. '01 35,3%

149,6% 5,0% 20,0% 0,0% 10,0%

2002

2003

2004

2005

-5,0% -10,0%

Fixed: 2006 ’06 vs. ‘01 Var.

55,9%

Fijas: Var. '06 vs. '01 - 1,2%

0,0% 2002

2003

2004

2005

2006

Source : CONATEL

The growth rate of Mobile Telephony users in the 2001-2006 period was 190.3%. Fixed Telephony has also shown an interesting growth, though lower registering a 55.9% rate.

Regarding Internet service it has signi cantly varied registering a growth rate of 149.6%.

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 83.3% is destined to an outsourcing Sales Team.

80 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 8.5.3. Venezuela: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 80,0%

69,6% 70,0%

Mobile Lines

60,0%

Penetration %

Fixed Lines 47,1%

Internet Connections

50,0% 40,0%

32,3% 30,0%

26,2%

26,0%

27,3%

20,0%

15,6%

10,0% 0,0% 2001

2,8% 2002

2003

2004

2005

2006

Source : ECLAC and CONATEL

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Venezuela’s penetration levels had reached 69.6%.

In only 5 years, Mobile telephony modi ed its penetration level from 26.2% in 2001 to 69.9% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during all the period closing 2006 with a 15.6% penetration.

Internet connections were increased generating a penetration level of 2.8% closing 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 81

Third Part: 9. Costa Rica 9.1. Mobile Telephony Contribution to Gross Domestic Product Figure 9.1.1. Costa Rica: Supply and Demand Evolution of Mobile Telephony 2001-2006 Demand: Accum. ‘01 to ’06

Supply: Accum. ‘01 to ’06

800

3.109

735

709

713

661

700

Millions of US $

100,0%

3.952

816

600

565

555 498

500

482

508

425 395

400 300

Accumulated Variation % ’06 vs. ‘01

1.000 900

Figure 9.1.3. Costa Rica: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 86,1%

90,0% 80,0%

71,4%

70,0% 60,0%

51,2% 45,6%

50,0%

39,4% 40,0%

33,1%

30,5%

30,0% 20,3% 18,7%

20,0%

16,2%

14,4%

10,0%

200

2006

Trade

GDP

Manufac.

Industry

Other Services

2005

Public Services

2004

Agriculture, Hunting, etc.

2003

Construction

2002

Finnan.& Business Servs.

2001

Minning & Quarry

0

Transport & Communication

Mobile Telephony

0,0% 100

Source : Convergencia Research estimations based on ICE Telecommunications Research Source : ECLAC, BCCR and Convergencia Research estimations based on ICE Telecommunications Research

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $3.109 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $3.952 million of goods and services from 2001 to 2006.

Figure 9.1.2. Costa Rica: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 60,0%

30,1%

43,2% 20,0% 11,5%

13,4%

7,9% 5,5%

7,6% 2,9%

6,4%

0,0% 2002

-20,0%

11,2%

2003

GDP: Var. ’06 vs. ‘01

30,5%

4,3%

5,9%

7,8%

2004

2005

2006

-6,7% -13,2%

Source : ECLAC, Central Bank of Costa Rica (BCCR) and Convergencia Research estimations based on ICE Telecommunications Research

In the 2001-2006 period, the total growth of Mobile Telephony was 86.1% for the Supply and 43.2% for the Demand. In the same period Costa Rica’s economy, as a whole, registered a growth rate of 30.5%.

3,3%

3,0%

Participation % in GDP

Annual Variation %

Demand: Var. ’06 vs. ‘01

30,0%

-10,0%

3,5%

86,1%

40,0%

10,0%

Figure 9.1.4. Costa Rica: Mobile Telephony as percentage of GDP 2001-2006

Supply: Var. ’06 vs. ‘01

47,0%

50,0%

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupied the rst place, registering a rate of 86.1% while Transport and Communications has been the second sector of highest growth registering a rate of 71.4%. On average, the national economy grew 30.5%.

2,5%

2,8% 2,4%

2,5%

2,7%

2,8%

2,0%

1,5%

1,0%

0,5%

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, BCCR and Convergencia Research estimations based on ICE Telecommunications Research.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 3.3% in 2001. In 2006, the proportion reached participation levels of 2.4%.

82 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 9.2. Mobile Telephony Contribution to National Investment Figure 9.2.1. Costa Rica: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

9.3. In ation vs. Mobile Telephony ARPU Evolution Figure 9.3.1. Costa Rica: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 30,0%

600

+ 65,3% 20,0%

2.081 375 298

300

270

264

14,1%

13,1% 9,9%

9,7%

352

200

Annual Variation %

Millions of US $

500

400

Accum. Var. CPI:

CAPEX : Accum. ‘01 to ’06

521

10,0%

0,0%

6,3%

-4,4% 2002

2003

2004

0,8%

0,0%

2005

2006

-10,0%

Accum. Var. Mobile Telephony:

100 -20,0%

-23,1%

- 46,7%

-28,1%

0 2001

2002

2003

2004

2005

2006

Source : Convergencia Research estimations based on ICE Telecommunications Research.

-30,0% Note: The CPI, June of 2006 Source : National Intitute of Statistics and Census (INEC) and Regulatory Authority for the Public Services (ARESEP)

The Mobile telephony operators in Costa Rica have invested approximately US $2.081 million in Capital Expenditures (CAPEX) during 2001 and 2006.

In the period 2001-2006, the accumulated in ation in Costa Rica was 65.3%.

Figure 9.2.2. Costa Rica: Investment / Mobile Telephony Sales vs.

Investment / GDP Relation Comparison B 2001-2006

Eventhough, the in ationary process that Costa Rica’s economy was inmersed, the Mobile Telephony showed a 46.7% negative evolution of its revenues average per user (ARPU).

120,0% 108,2%

Investment % / GDP CAPEX % / Sales

Figure 9.3.2. Costa Rica: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 120,0% 100,0%

98,5%

36,7%

18,8%

2001

2002

2003

2004

2005

2006

0,0%

Source : ECLAC, BCCR and Convergencia Research estimations based on Research of ICE Telecommunications

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 69.7% of its Sales, while the country total has invested approximately 18.8% of its GDP. The investment effort of Mobile Telephony in Costa Rica is in proportion, much higher to those carried out by the rest of the national economy, even to that observed by Mobile Industry in the other region’s countries.

61,8% 61,5% 57,9% 57,8% 56,4%

60,0% 40,0%

25,3% 20,0% 0,0% -20,0% -40,0% -60,0%

Clothing

19,0%

Mobile Teleph.

18,6%

Health

19,2%

Recreation & Education

18,9%

Housing

18,3%

68,5%

Food & Brevages

20,0%

65,3%

80,0%

Transport

40,0%

Other goods & services

62,3% 60,0%

CPI

67,0%

73,8%

70,2%

Accumulated Variation % ’06 vs. ‘01

Investment %

80,0%

Furniture & Accesories

100,0%

-46,7% Mobile Telephony Var.: - 46,7%

Nota: The CPI, June of 2006 Source : INEC and ARESEP

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is observed that Transports and Communications sector registered the highest increase reaching a rate of 98.5%. Mobile Telephony showed a negative variation of 46.7% in the period.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 83

Third Part: 9.4. Mobile Telephony Contribution to Employment Figure 9.4.1. Costa Rica: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

9.5. Mobile Telephony Contribution to Connectivity Figure 9.5.1. Costa Rica: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 1.600

1.465 Mobile Lines Fixed Lines Internet Connections

1.400 1.200 Thousands of Lines

Indirect: # 16.548 77,0%

Direct: # 4.956 23,0%

1.000

912

927

756 800 600 400

460 311

200 0 2001

Total employment generated by Mobile Telephony: 21.504

2002

2003

2004

2005

2006

Source : ARESEP and RACSA

Mobile telephony: In 2006, Costa Rica had a total of 1.5 million users, while at the end of 2001 only 311 thousand users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

The Mobile Telephony industry in Costa Rica employed approximately 21,504 people in 2006.

Fixed telephony: The total xed lines were 1.0 million in 2006; while the country counted with 820 thousand lines in 2001.

Approximately 4,956 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 16,548 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 90 thousand in 2005 (last of cial data). This includes all Dial Up and Broadband connections. A signi cant growth is observed in the period under analysis, since only 29 thousand connections existed in 2001.

It can be concluded that for each employee directly employed by the Mobile telephony, 3,3 employees are indirectly demanded.

Figure 9.5.2. Costa Rica: Annual Variation Rate Mobile-Fixed Lines and Internet Connections Number 2001-2006

Providers of : Outsourcing Sales Team (Sales Agent) Terminal Equipments Maintennance and Repairs Sites Installing Terminals Logistic Network: Radiobase + Troncal Network + Equipm IT Systems Towers Electrical Feeding Indirect Total Employment

#

15.000 800 250 200 150 90 38 15 5 16.548

%

90,6% 4,8% 1,5% 1,2% 0,9% 0,5% 0,2% 0,1% 0,0% 100,0%

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its Providers

Mobiles: ’06 vs. ‘01 Var.

25,0% 60,0%

370,6%

Móviles: Var. '06 vs. '01 144,1%

20,0% 50,0% Variation % % Annual Variación Anual

Figure 9.4.2. Costa Rica: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006

70,0% 30,0%

Internet: Internet: ’06 vs. ‘01 Var. Var. '06 vs. '01 35,3%

15,0%

40,0%

212,5%

10,0% 30,0%

Fixed: ’06 vs. ‘01 Var

5,0% 20,0%

27,6%

0,0% 10,0%

2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : ARESEP and RACSA

The growth rate of Mobile Telephony users in the 2001-2006 period was 370.6%. Fixed Telephony has also shown an interesting increase, a 27.6% rate. Regarding Internet service it has signi cantly varied, registering a rate of 212.5%.

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 90.6% is destined to an outsourcing Sales Team.

84 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 9.5.3. Costa Rica: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 33,3%

35,0%

Mobile Lines 30,0%

Fixed Lines Internet Connections

Penetration %

25,0%

21,5%

21,5%

20,0%

18,1% 15,0%

23,8%

11,2% 10,0%

7,8% 5,0%

0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, ARESEP and RACSA

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Costa Rica’s penetration levels had reached 33.3%. Anyway, this percentage is low compares to the regional average.

In only 5 years, Mobile telephony modi ed its penetration level from 7.8% in 2001 to 33.3% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with 23.8% penetration.

Internet connections were increased; although, closing 2005 a penetration level of 2.1% was registered.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 85

Third Part: 10. El Salvador 10.1. Mobile Telephony Contribution to Gross Domestic Product

Figure 10.1.3. El Salvador: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006

Figure 10.1.1. El Salvador: Supply and Demand Evolution of Mobile Telephony 2001-2006

350,0%

291,1%

362 311 247

212

207

50,0% 25,3%

24,1%

200 -50,0% 100 0 2001

2002

18,1%

14,7%

14,1% 13,6%

13,1%

6,4%

6,1%

-2,1%

0,0%

200

2003

2004

2005

2006

Minning & Quarry

204

194

100,0%

Manufac.

Industry

300

150,0%

GDP

400

431

Construction

2.016

200,0%

Trade

500

515

Other Services

Demand: Accum. ‘01 to ’06

Finnan.& Business Servs.

2.291

250,0%

Agriculture, Hunting, etc.

600

663

Transp. y Comunic.

Supply: Accum. ‘01 to ’06

Public Services

700

Mobile Telephony

Millions of US $

760

Accumulated Variation % ’06 vs. ‘01

300,0% 800

Source : ECLAC, BCR, SIGET and Convergencia Research estimations

Source : The General Superintendency of Electricity and Telecommunications (SIGET), and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $2.291 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $2.016 million of goods and services from 2001 to 2006.

Figure 10.1.2. El Salvador: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 291.1% while Transport and Communications has been the second sector of highest growth registering a 25.3% increase. On average, the national economy grew 14.1%.

Figure 10.1.4. El Salvador: Mobile Telephony as percentage of GDP 2001-2006 4,5%

4,2%

4,0% 55,3%

Supply: Var. ’06 vs. ‘01

50,0%

Annual Variation %

46,3%

291,1%

40,0%

53,8%

42,3%

47,6%

38,4%

Demand: Var. ’06 vs. ‘01

30,0%

16,7%

20,0%

GDP: Var. ’06 vs. ‘01

224,4%

14,1%

9,1%

3,5%

Participation % in GDP

60,0%

3,0%

3,0%

2,3%

2,5% 2,0% 1,5%

1,4%

1,5%

1,6%

1,0% 0,5%

10,0%

0,0%

2,3%

2,3%

2002

2003

1,8%

2,8%

4,2%

1,3% 2004

2005

0,0% 2001

2002

2003

2004

2005

2006

2006

-3,1%

Source : ECLAC, BCR, SIGET and Convergencia Research estimations

-10,0% Source : ECLAC, Central Reserve Bank of El Salvador (BCR), SIGET and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 291.1% for the Supply and 224.4% for the Demand. In the same period El Salvador’s economy, as a whole, registered a growth rate of 14.1%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.4% in 2001. In 2006, the proportion had been triplicated reaching participation levels of 4.2%.

. A2. Bras 86 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 10.2. Mobile Telephony Contribution to National Investment Figure 10.2.1. El Salvador: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

10.3. In ation vs. Mobile Telephony ARPU Evolution Figure 10.3.1. El Salvador: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2004 - 2006 10,0%

140

5,4%

Annual Variation %

Millions of US $

2,0%

70 54

54

-1,0%

0,0%

80

60

5,0%

348

100

4,9%

4,3%

123

CAPEX : Accum. ‘01 to ’06

120

2004

2005

2006

-5,0%

-10,0%

Accum. Var. Mobile Telephony:

-15,0%

- 25,0%

40

27

Accum. Var. CPI:

-20,0%

20

+ 15,2%

20 -25,0% -25,7%

0 2001

2002

2003

2004

2005

2006

Source : SIGET and Convergencia Research estimations

The Mobile telephony operators in El Salvador have invested approximately US $348 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 10.2.2. El Salvador: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2001-2006 30,0%

-30,0% Source : General Direction for Census and Statistics (DIGESTYC) and SIGET

27,8%

In the period 2004-2006, the accumulated in ation in El Salvador was 15.2%.

Mobile Telephony has showed a de ationary evolution regarding its revenues average per user (ARPU). A signi cant decrease of 25.7% was observed in 2004. The variation in the period under analysis shows an accumulated decrease of 25%.

25,0%

Investment %

20,0% 16,4%

16,6%

16,7%

15,6%

15,4%

15,0%

16,2%

Figure 10.3.2. El Salvador: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2004 - 2006 30,0%

16,1%

15,0% 13,6% 12,8%

On average, the Mobile Telephony industry has invested approximately 15.6% of its Sales, while the country total has invested approximately 16.1% of its GDP. It can be concluded that the Mobile Telephony investments were in proportion similar to those carried out by the rest of the national economy. .

Mobile Teleph.

Others

Clothing

Education

-10,0%

Communications

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

0,0%

Recreation & Culture

2006

Health

2005

Public Services

2004

CPI

2003

Food & Beverages

2002

Housing Equipment

2001

Alcohol & Tabacco

0,0%

Source : ECLAC, BCR, SIGET and Convergencia Research estimations

15,2%

10,0%

Transport

Investment % / GDP CAPEX % / Sales

Accumulated Variation % ’06 vs. ‘01

20,0% 8,0%

5,0%

Restaurant & Hotels

10,0%

-20,0%

-30,0%

Mobile Telephony Var.: - 25,0%

Source : DIGESTYC and SIGET

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 25% decrease in 3 years, eventhough all the components have showed variation in in ations. The Transport sector was the highest increased component reaching an increase rate of 29.6%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 87

Third Part: 10.4. Mobile Telephony Contribution to Employment Figure 10.4.1. El Salvador: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

10.5. Mobile Telephony Contribution to Connectivity Figure 10.5.1. El Salvador: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 4.500

Indirect: # 3.978 73,0%

Thousands of Lines

3.500

Direct: # 1.473 27,0%

3.852

Mobile Lines Fixed Lines Internet Connections

4.000

3.000 2.412

2.500 1.833

2.000 1.500

1.150 858

889

1.000 500 0 2001

2002

2003

2004

2005

2006

Source : SIGET

Total employment generated by Mobile Telephony: 5.451

Mobile telephony: In 2006, El Salvador had a total of 3. 9 million users, while at the end of 2001 only 858 thousand users existed.

Telephony Companies and its providers

The Mobile Telephony industry in El Salvador employed approximately 5,451 people in 2006.

Approximately 1,473 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 3,978 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 2,7 employees are indirectly demanded.

Figure 10.4.2. El Salvador: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 Providers of : Outsourcing Sales Team (Sales Agent) S ites Installing Terminals Logistic Maintenn ance and Repairs Terminal Equipments Network: Radiobase + Troncal Network + Equipments IT Systems Towers Mobile Contents (SV A) Others E lectrical Feed ing Indirect Total Employment

#

%

3.200 400

80,4% 10,1%

120 70

3,0% 1,8%

50 40

1,3% 1,0%

40 25 15

1,0% 0,6% 0,4%

15 3 3.978

0,4% 0,1% 100,0%

Fixed telephony: The xed lines total was 1.0 million at the end of 2006; while the total number were only 650 thousand lines in 2001.

Internet: The total internet connections were of 185 thousand in 2006. This includes all Dial Up and Broadband connections.

A signi cant growth was observed in the period under analysis, since only 71 thousand connections existed in 2001.

Figure 10.5.2. El Salvador: Annual Variation Rate Number of Mobile-Fixed Lines and Internet Connections 2001-2006 Mobiles: ’06 vs. ‘01 Var. Móviles: Var. '06 vs. '01 144,1%

70,0% 30,0%

25,0% 60,0% 20,0% 50,0% Variation % % Annual Variación Anual

Source : Study carried out by Convergencia Research according to data given by

349,0%

Internet: Var. '06 vs. '01

161,3%

Internet: Var. '06 vs. '01 35,3% Fixed: ’06 vs. ‘01 Var.

15,0%

40,0%

10,0% 30,0%

59,4%

5,0% 20,0%

0,0% 10,0%

2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : SIGET

The growth rate of Mobile Telephony users in the 2001-2006 period has been 349%. Fixed Telephony has also shown a signi cant increase reaching a 59.4% rate. Regarding Internet service it registered a signi cant variation of 161.3% growth.

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 80.4% is destined to an outsourcing Sales Team.

88 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 10.5.3. El Salvador: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 60,0%

55,1%

50,0%

Mobile Lines Fixed Lines Penetration %

40,0%

35,1%

Internet Connections

30,0%

27,1% 17,3%

20,0%

13,4%

13,6%

14,8%

10,0%

0,0% 2001

2,6% 2002

2003

2004

2005

2006

Source : ECLAC and SIGET

Mobile Telephony represented the most important telecommunications service due its contribution to National Connectivity. At the end of 2006, El Salvador’s penetration levels had reached 55.1%.

In only 5 years, Mobile telephony modi ed its penetration level from 13.4% in 2001 to 55.1% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 14.8% penetration.

Internet connections were increased during the period reaching a penetration level close to 2.6% ending 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 89

Third Part: 11. Guatemala 11.1. Mobile Telephony Contribution to Gross Domestic Product Figure 11.1.1. Guatemala: Supply and Demand Evolution of Mobile Telephony 2003 - 2006

620 548

600 327 271 200

150,00% 100,00%

11,9%

50,00%

35,1%

23,0%

11,3%

10,4%

8,8%

8,8%

8,2%

3,1%

-0,9%

2004

2005

-50,00%

2006

Source : Companies Balances and Convergencia Research estimations

Minning & Quarry

2003

GDP

0

Transp. y Communic.

0,00%

Construction

400

200,00%

Other Services

800

250,00%

Trade

1.003 921

Agriculture, Hunting, etc.

1.089

Manufac.

Industry

2.743

Public Services

1.000

305,58%

300,00%

3.360

Finnan.& Business Servs.

1.200

Demand: Accum. ‘03 to ’06

1.325

Mobile Telephony

Millions of US $

350,00%

Supply: Accum. ‘03 to ’06

1.400

Accumulated Variation % ’06 vs. ‘03

1.600

Figure 11.1.3. Guatemala: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2003 - 2006

Source : ECLAC, BANGUAT Balances Published by Companies and Convergencia Research estimations

From 2003 to 2006, the Mobile Telephony contributed to national GDP providing approximately US $3.360 million of goods and services.

With respect to Demand, the Mobile Telephony contributed to GDP purchasing approximately US $2.743 million of goods and services from 2003 to 2006.

Figure 11.1.2. Guatemala: Average Annual Variation Rate of Mobile Telephony and GDP 2003 - 2006

If growth rates of Mobile Telephony accumulated in 2003-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 305.6% while Transports and Communications has been the second sector of highest growth registering a rate of 35.1%. On average, the national economy grew 11.9%.

Figure 11.1.4. Guatemala: Mobile Telephony as percentage of GDP 2003-2006 5,0%

120,0%

75,7%

Demand: Var. ’06 vs. ‘03

Supply: Var. ’06 vs. ‘03

305,6% 68,2%

270,1% GDP: Var. ’06 vs. ‘03

40,0%

11,9%

20,0% 3,2%

3,5%

2004

2005

3,5% 3,0%

2,6% 2,5% 2,0%

1,5%

1,5% 1,0%

21,7% 0,5% 8,9% 4,9%

0,0%

Participation % in GDP

Annual Variation %

89,7% 80,0%

4,0%

4,0%

100,0%

60,0%

4,3%

4,5% 102,0%

0,0% 2003

2004

2005

2006

2006 Source : ECLAC, BANGUAT, Balances Published by Companies and Convergencia Research estimations

Source : ECLAC, Guatemala Bank (BANGUAT) Balances Published by Companies and Convergencia Research estimations

In 2003-2006 period, the total growth of Mobile Telephony was 305.6% for the Supply and 270.1% for the Demand. In the same period Guatemala’s economy, as a whole, registered a growth rate of 11.9%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.5% in 2003. In 2006, the proportion had been triplicated reaching 4.3% in participation levels.

. A2. Brasil 90 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 11.2. Mobile Telephony Contribution to National Investment Figure 11.2.1. Guatemala: Mobile Telephony Investment (CAPEX) Evolution 2003 – 2006

11.3. In ation vs. Mobile Telephony ARPU Evolution Figure 11.3.1. Guatemala: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2004 - 2006 9,2%

10,0% 300

CAPEX : Accum. ‘03 to ’06

665

5,9%

5,8%

Accum. Var. CPI '04 to '06:

4,0%

198

133

100

0,0% 2002

-2,0% -4,0%

51

2003

2004

2005

- 3,7% -6,6%

-8,0% 0 2003

2004

2005

Source : Guatemala’s National Intitute of Statistics (INE), and Guatemala’s Superintendence of Telecommunications (SIT)

The Mobile telephony operators in Guatemala have invested approximately US $665 million in Capital Expenditures (CAPEX) between 2003 and 2006.

Figure 11.2.2. Guatemala: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2003 - 2006 24,0%

In the period 2004-2006, Guatemala’s accumulated in ation was 14.9%.

Mobile Telephony has shown a de ationary evolution regarding its revenues average per user (ARPU). A signi cant decrease of 6.6% was observed in 2005. The variation in the period under analysis shows an accumulated decrease of 3.7.

21,3%

Figure 11.3.2. Guatemala: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2004 - 2006 18,6%

On average, the Mobile Telephony industry has invested approximately 19.2% of its Sales, while the country total has invested approximately 18.5% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion similar to those carried out by the rest of the national economy.

9,8% 9,7% 6,1%

5,0%

-3,7%

-10,0%

Mobile Teleph.

0,0% -5,0%

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2003-2006 period.

11,9% 11,1% 11,0%

Clothing & Shoes

Source : ECLAC, BANGUAT Balances Published by Companies and Convergencia Research estimations

13,0%

urniture & Housing equipment

2006

14,9%

10,0%

Education

2005

16,3%

Recreation & Culture

2004

19,7%

15,0%

Housing Expenses

14,0%

20,0%

CPI

Investment % / GDP CAPEX % / Sales

Health

15,8%

Mobile Telephony Var.: - 3,7%

25,0%

18,2%

2003

30,0%

18,3%

Food & Beverages

18,3%

Transp.& communications

18,7% 18,0%

Accumulated Variation % ’06 vs. ‘04

Investment %

21,5%

20,0%

16,0%

-10,0%

2006

Source : Companies Balances and Convergencia Research estimations

22,0%

2006

Accum. Var. '04 to '06 Mobile Telephony:

-6,0%

50

3,2%

+ 14,9%

2,0%

Others

Millions of US $

6,3%

6,0%

200

150

8,6%

8,0%

Annual Variation %

250

283

Source : INE and SIT

Based on the comparison of the accumulated variation rate of in ation in the period, between the different components of Consumer Price Index and Mobile Telephony; it is observed the industry’s de ationary character that accumulated a 3.7% decrease in 3 years, although all the components have shown variation in in ations. The highest increase was registered by the Food and Beverages sector that reached a 19.7% rate.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 91

Third Part: 11.4. Mobile Telephony Contribution to Employment Figure 11.4.1. Guatemala: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

11.5. Mobile Telephony Contribution to Connectivity Figure 11.5.1. Guatemala: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2001-2006 8.000

Direct: # 2.130 9,1%

Thousands of Lines

6.000

Indirect: # 21.360 90,9%

7.179

Mobile Lines Fixed Lines Internet Connections

7.000

5.000

4.510

4.000 3.168 3.000 2.000

2.035 1.577

1.146

1.000 0 2001

Total employment generated by Mobile Telephony: 23.490

2002

2003

2004

2005

2006

Note: Internet connections only refers to Broadband connections Source : SIT and Convergencia Research estimations

Source : Study carried out by Convergencia Research according to data given by Mobile

Mobile telephony: In 2006 Guatemala had a total of 7.2 million users, while at the end of 2001 only 1.1 million users existed.

Telephony Companies and its providers

Mobile Telephony industry in Guatemala has employed approximately 23,490 people in 2006.

Approximately 2,130 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 21,360 additional job positions through the rst link of its Value Chain.

Fixed telephony: The xed lines total was 1.4 million in 2006; while the total number only increased to 756 thousand lines in 2001.

Internet: The total Broadband internet connections were of 75 thousand in 2006.

Figure 11.5.2. Guatemala: Annual Variation Rate Number of Mobile-Fixed Lines 2001-2006

It can be concluded that for each employee directly employed

by Mobile telephony, 10 employees are indirectly demanded.

60,0% 30,0%

25,0%

50,0%

Mobiles: ’06 vs. ‘01 Var.

Providers of : Outsourcing Sales Team (Sales Agent) S ites Installing Maintenn ance and Repairs IT Systems Towers Network: Radiobase + Troncal Network + Equipments Terminal Equipments Mobile Contents (SV A) E lectrical Feed ing Indirect Total Employment

#

%

20.250 300

94,8% 1,4%

200 200

0,9% 0,9%

200 100

0,9% 0,5%

90 15 5 21.360

0,4% 0,1% 0,0% 100,0%

S ource : Study carried out by Convergencia Research according to data given by

Variation % % Annual Variación Anual

20,0%

Figure 11.4.2. Guatemala: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006

Móviles: Var. '06 vs. '01 144,1%

526,2%

40,0%

Internet: Var. '06’06 vs.vs.

'01‘01 Fixed: 35,3% Var.

15,0% 30,0%

10,0%

62,7%

5,0% 20,0% 0,0% 10,0%

2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : SIT

The growth rate of Mobile Telephony users in the 2001-2006 period was 526.2%. Fixed Telephony has also shown an interesting growth, though lower registering a rate 62.7%.

Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 94.8% is destined to an outsourcing Sales Team.

92 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 11.5.3. Guatemala: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 60,0%

55,1%

50,0%

Mobile Lines Fixed Lines

40,0%

Internet Connections

Penetration %

35,5%

30,0%

25,6%

20,0%

16,8% 13,4% 10,0%

10,0%

0,0% 2001

10,4% 0,6% 2002

2003

2004

2005

2006

Note: Internet connections only refers to Broadband connections Source : ECLAC, SIT and Convergencia Research estimations

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006, Guatemala’s penetration levels had reached 55.1%.

In only 5 years, Mobile telephony modi ed its penetration level from 10% in 2001 to 55.1% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during all the period closing 2006 with a 10.4% penetration.

Broadband Internet connections presented a moderate growth generating a penetration level of 0.6% closing 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 93

Third Part: 12. Panama 12.1. Mobile Telephony Contribution to Gross Domestic Product Figure 12.1.1. Panama: Supply and Demand Evolution of Mobile Telephony 2001-2006

160,0%

Supply: Accum. ‘01 to ’06

450

400

1.767

400

Demand: Accum. ‘01 to ’06

350

Millions of US $

447

300

335

330 302

1.265

250

223

217

192

181

149 150

129

127

Accumulated Variation % ’06 vs. ‘01

500

200

Figure 12.1.3. Panama: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 147,0%

140,0% 120,0%

110,0%

100,0% 80,0%

66,8%

63,2%

60,0% 37,9%

40,0%

32,4% 25,1%

22,7% 21,6%

19,3%

20,0% 3,9%

100

2005

2006

Manufac.

Industry

GDP

Trade

Other Services

2004

Agriculture, Hunting, etc.

2003

Finnan.& Business Servs.

2002

Public Services

2001

Transp. y Communic.

0

Construction

50

Minning & Quarry

Mobile Telephony

0,0%

Source : Companies Balances and Convergencia Research estimations Source : ECLAC, MEF, Companies Researches and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $1.767 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $1.265 million of goods and services from 2001 to 2006.

Figure 12.1.2. Panama: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 147.6% while Minning and Quarrying has been the second sector of highest growth registering a rate of 110%. On average, the national economy grew 32.4%.

Figure 12.1.4. Panama: Mobile Telephony as percentage of GDP 2001-2006 3,0%

60,0%

2,6%

Annual Variation %

50,0%

Demand: Var. ’06 vs. ‘01

40,0%

49,8%

164,9%

147,0% 35,2%

30,0%

20,0%

15,7%

GDP: Var. ’06 vs. ‘01

5,8% 2,2%

0,0%

1,7% 2002

11,8%

13,3%

2,0%

1,5%

1,7% 1,6%

1,5%

1,0%

0,5%

11,1% 7,5%

6,9%

2004

2005

8,1%

4,2% 2003

2,3%

21,3%

32,4% 10,0%

2,6%

2,5%

Supply: Var. ’06 vs. ‘01 Participation % in GDP

51,9%

0,0% 2001

2002

2003

2004

2005

2006

2006 Source : ECLAC, MEF, Companies Researches and Convergencia Research estimations

Source : ECLAC, Ministry of Economy and Finance (MEF), Balances Published by Companies and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 147% for the Supply and 164.9% for the Demand. In the same period Panama’s economy, as a whole, registered a growth rate of 32.4%.

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.5% in 2001. In 2006, the proportion has multiplied 1.7 times reaching 2.6% participation levels.

94 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 12.2. Mobile Telephony Contribution to National Investment Figure 12.2.1. Panama: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

12.3. In ation vs. Mobile Telephony ARPU Evolution Figure 12.3.1. Panama: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2002 - 2006 10,0%

60

CAPEX : Accum. ‘01 to ’06

193

40

0,1%

45 36

30

24 19

20

21

2,9%

3,5%

2005

2006

0,4%

0,0%

Annual Variation %

Millions of US $

50

5,0%

49

2003

2004

-5,0%

Accum. Var. CPI :

-5,2%

+ 7,0%

-6,9%

-10,0%

-15,0%

-14,3%

Accum. Var. Mobile Telephony:

-20,0% 10

-21,3%

- 40,4%

-25,0% 0 2001

2002

2003

2004

2005

Source : General Auditor of the Republic and Division of Statistics and Census (Auditor), Companies Researches and Convergencia Research estimations

The Mobile telephony operators in Panama have invested approximately US $193 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 12.2.2. Panama: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2001-2006 20,0% 17,1%

18,0% 16,0%

16,6%

16,8% 15,8%

15,2% 13,6%

Investment %

14,0% 12,0%

13,0%

12,3%

10,0%

10,8% 10,1%

-30,0%

2006

Source : Companies Balances and Convergencia Research estimations

10,0%

9,7%

8,0%

In the ve years period 2001-2006, Panama’s accumulated in ation was 7% with sFigure considered annual variation rates.

Regarding Mobile Telephony its revenues average per user evolution (ARPU) was negative. A signi cant decrease of 21.3% was observed in 2005; accumulated a fall of 40.4% in all the period.

Figure 12.3.2. Panama: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2002 - 2006 20,0%

6,0%

17,3%

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

3,4%

2,1%

-0,2%

-7,0%

Recreation

-10,0%

-20,0%

Health

Mobile Teleph.

Source : ECLAC, MEF, Companies Researches and Convergencia Research estimations

4,0%

Others

2006

Education

2005

5,5%

Housing Mantenience

2004

CPI

2003

Food & Beverages

2002

Transport

2001

7,0%

0,0%

Housing & Public Servs.

0,0%

9,6% 10,0%

Accumulated Variation % ’06 vs. ‘01

2,0%

Clothing & Shoes

12,9%

Investment % / GDP CAPEX % / Sales

4,0%

-30,0%

-40,0% -40,4%

Mobile Telephony Var.: - 40,4% -50,0% Source : General Auditor of the Republic, Companies Researches and Convergencia Research estimations

On average, the Mobile Telephony industry has invested approximately 11% of its Sales, while the country total has invested approximately 15.8% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, slightly lower to those carried out by the rest of the national economy.

Based on the comparison of the accumulated variation rate of in ation in 5 years, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed the industry’s de ationary character that accumulated a 40.4% decrease in the period, although all the components have shown variation in in ations. The highest increase was registered by the Transport sector reaching a 17.3% rate.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 95

Third Part: 12.4. Mobile Telephony Contribution to Employment

12.5. Mobile Telephony Contribution to Connectivity

Figure 12.4.1. Panama: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 12.5.1. Panama: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 2.500

Direct: # 278 9,3%

Thousands of Lines

Indirect: # 2.718 90,7%

2.174

Mobile Lines Fixed Lines Internet Connections

2.000

1.749

1.500 1.260 1.000

692 526

475 500

0 2001

Total employment generated by Mobile Telephony: 2.996

2002

2003

2004

2005

2006

Source : National Authority of Public Services (ANSEP)

Mobile telephony: In 2006 Panama had a total of 2.2 million users, while at the end of 2001 only 475 thousand users existed.

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

The Mobile Telephony industry in Panama employed approximately 2,996 people in 2006.

Fixed telephony: The xed lines total was 433 thousand in 2006; signi cant growth variations in the period under analysis were not observed.

Approximately 278 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 2,718 additional job positions through the rst link of its Value Chain.

Internet: The total internet connections were of 87 thousand in 2006. This includes all Dial Up and Broadband connections.

A signi cant growth is observed in the period under analysis, since only 49 thousand connections existed in 2001.

It can be concluded that for each employee directly employed by the Mobile telephony, 9,8 employees are indirectly demanded.

Figure 12.5.2. Panama: Annual Variation Rate Number of Mobile-Fixed Lines and Internet Connections 2001-2006 90,0% 30,0%

Móviles: Var. '06 vs. '01 144,1%

80,0%

25,0%

Figure 12.4.2. Panama: Indirect Employment generated by Mobile Telephony in the 1st. Link of its Value Chain 2006 Outsourcing Sales Team (Sales Agent) S ites Installing Maintenn ance and Repairs Network: Radiobase + Troncal Network + Equipments Terminals Logistic IT Systems Terminal Equipments Mobile Contents (SV A) E lectrical Feed ing Indirect Total Employment

20,0%

#

%

2.200 200

80,9% 7,4%

80 75

2,9% 2,8%

60 50

2,2% 1,8%

35 15 3 2.718

1,3% 0,6% 0,1% 100,0%

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 80.9% is destined to an outsourcing Sales Team. It is also important the 7.4% employment level generated among the Sites Installers.

Variation % %Annual Variación Anual

Providers of :

70,0% 60,0%

Mobiles: ’06 vs. ‘01 Var.

357,6%

Internet: Var. '06 vs. '01 35,3% Internet: Var. '06 vs. '01

15,0%

50,0%

40,0% 10,0% 30,0%

Fixed: ’06 vs. ‘01 Var.

13,4%

78,1%

5,0%

20,0%

0,0% 10,0%

2002

2003

2004

2005

2006

-5,0% 0,0%

Fijas: Var. '06 vs. '01 - 1,2% 2002

2003

2004

2005

2006

-10,0% -10,0% Source : ANSEP

The growth rate of Mobile Telephony users in the 2001-2006 period has been 357.6%; much higher than the evolution of Fixed Telephony that has been increaseed in 13.4%. Regarding Internet growth it has been signi cant registering a 78.1% rate.

96 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 12.5.3. Panama: Mobile, Fixed Lines and Internet Connections Penetration 2001-2006 66,2%

70,0%

60,0%

Mobile Lines

Penetration %

50,0%

54,2%

Fixed Lines Internet Connections

40,0%

39,7%

30,0%

22,2% 20,0%

15,8%

17,2%

10,0%

0,0% 2001

13,2% 2,6% 2002

2003

2004

2005

2006

Source : ECLAC and ANSEP

The Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Panama’s penetration levels had reached 66.2%.

In only 5 years, Mobile telephony modi ed its penetration level from 15.8% in 2001 to 66.2% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during all the period closing 2006 with a penetration of 13.2%.

The Internet connections growth increased penetration level to 2.6% closing 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 97

Third Part: 13. Mexico 13.1. Mobile Telephony Contribution to Gross Domestic Product Figure 13.1.3. Mexico: Accumulated Average Variation Rate of Mobile Telephony, GDP and Economic Sectors 2001-2006 200,0%

12.993

10.900

10.626

10.000

8.915

8.437

6.003

5.777 5.124

140,0% 120,0% 100,0% 80,0% 60,0% 36,3%

40,0%

14,6% 25,5%

23,6% 14,1%

20,0%

4.000

12,5%

12,4%

8,7%

8,3%

5,7%

2002

2003

2004

2005

2006

GDP

Other Services

2001

Trade

Mobile Telephony

0

Construction

0,0%

2.000

Finnan.& Business Servs.

6.000

7.411

6.982

8.000

10.358

Manufac.

Industry

61.020

48.436

160,0%

Transp. y Communic.

Millions of US $

12.000

175,8%

180,0%

Accumulated Variation % ’06 vs. ‘01

Demand: Accum. ‘01 to ’06

14.000

15.931

Minning & Quarry

Supply: Accum. ‘01 to ’06

16.000

Agriculture, Hunting, etc.

18.000

Public Services

Figure 13.1.1. Mexico: Supply and Demand Evolution of Mobile Telephony 2001-2006

Source : Companies Balances and Convergencia Research estimations Source : ECLAC, INEGI, Balances and Researches of Companies and Convergencia Research estimations

From 2001 to 2006, Mobile Telephony contributed to national GDP providing approximately US $61.020 million of goods and services.

With respect to Demand, Mobile Telephony contributed to GDP purchasing approximately US $48.436 million of goods and services from 2001 to 2006.

Figure 13.1.2. Mexico: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 35,0% 29,2%

20,9%

Annual Variation %

2,0%

175,8%

1,8%

23,5%

25,0%

20,0%

22,6% 20,3%

1,4%

19,2%

20,8% 17,2%

10,0%

GDP: Var. ’06 vs. ‘01

Demand: Var. ’06 vs. ‘01

14,6%

102,2%

5,0% 0,8%

1,4%

4,2%

0,0%

4,8%

2002

2003

2004

1,3%

1,2% 1,0%

1,7%

0,9%

1,1%

0,8% 0,6% 0,4%

2,8% -2,5%

-5,0%

1,9% 1,6%

1,6%

19,2% 15,0%

Figure 13.1.4. Mexico: Mobile Telephony as percentage of GDP 2001-2006

Supply: Var. ’06 vs. ‘01

Participation % in GDP

30,0%

If growth rates of Mobile Telephony accumulated in the 2001-2006 period are compared to the other economy sectors, it is observed that mobile services occupy by far the rst place, registering a rate of 36.3% while Transports and Communications has been the second sector of highest growth registering a rate of 45.6%. On average, the national economy grew 14.6%.

2005

2006

Source : ECLAC, The National Institute of Statistics, Geography and Informatics (INEGI) Balances and Researches of Companies and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 175.8% for the Supply and 102.2% for the Demand. In the same period Mexico’s economy, as a whole, registered a growth rate of 14.6%.

0,2% 0,0% 2001

2002

2003

2004

2005

2006

Source : ECLAC, INEGI, Balances and Researches of Companies and Convergencia Research estimations

The Mobile Telephony activity as participation percentage regarding nominal GDP was 0.9% in 2001. In 2006, the proportion has been duplicated reaching levels of 1.9% participation.

98 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 13.2. Mobile Telephony Contribution to National Investment Figure 13.2.1. Mexico: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

13.3. In ation vs. Mobile Telephony ARPU Evolution Figure 13.3.1. Mexico: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 8,0%

2.000

Accum. Var. CPI :

1.791 7,0%

1.800

Millions of US $

1.400

CAPEX : Accum. ‘01 to ’06

6,0%

7.063

1.200

1.224

1.205

1.000 800

743

+ 24,3% 5,2%

1.341

759

Annual Variation %

1.600

5,7%

600

5,0% 4,0%

4,1%

4,0%

3,3%

3,0%

Accum. Var. Mobile Telephony:

1,6%

2,0% 2,0%

400

4,4%

1,0% 200 0,4%

0,0%

0 2001

2002

2003

2004

2005

2006

Source : Companies Balances and Convergencia Research estimations

2002

2003

2004

0,4%

2005

2006

Source : Bank of Mexico (Banxico), Federal Comission of Telecommunications (COFETEL), Balances and Researches of Companies and Convergencia Research estimations

The Mobile telephony operators in Mexico have invested approximately US $7.063 million in Capital Expenditures (CAPEX) between 2001 and 2006.

Figure 13.2.2. Mexico: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2001-2006 25,0% 23,0% 20,0%

19,3%

19,6% 18,9%

19,3%

19,4%

19,0%

Figure 13.3.2. Mexico: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

17,0% 15,0%

15,9%

Mobile Telephony Var.:4,4%

40,0% 13,0%

13,8% 35,0%

Source : ECLAC, INEGI, Balances and Researches of Companies and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales, compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 12% of its Sales, while the country total has invested approximately 19.4% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, lower to those carried out by the rest of the national economy.

20,3% 19,6%

15,0% 10,0%

6,3% 3,0%

5,0%

4,4%

0,0%

Furniture & Domestic Accesories

2006

Clothing & Shoes

2005

Health & Personal care

2004

Housing

2003

Other services

2002

24,3%

20,0%

Food & Beverages

7,7%

5,0% 2001

29,3% 28,5% 28,3%

25,0%

Accumulated Variation % ’06 vs. ‘01

7,0%

31,1%

30,0%

Investment % / GDP CAPEX % / Sales

CPI

11,1%

10,9%

9,0%

Transportation

12,9% 11,0%

Education & Recreation

Investment %

The evolution shown by Mobile Telephony regarding its revenues average per user (ARPU) was very below the CPI. The variation in the period under analysis shows an accumulated growth of only 4.4%.

Mobile Telephony

21,0%

In the period 2001-2006, Mexico’s accumulated in ation was 24.3%.

Source : Banxico, COFETEL, Balances and Researches of Companies and Convergencia Research estimations

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is clearly observed that Mobile Telephony has increased its revenues average very slightly accumulating a positive variation of 4.4%, although all the components of CPI have shown signi cant variation in in ations. The highest increase was registered by the Education and Recreation sector reaching a rate of 31.1%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 99

Third Part: 13.4. Mobile Telephony Contribution to Employment Figure 13.4.1. Mexico: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Mexico together with Brazil are the only producer countries of Terminal Equipments in Latin America and the Caribbean; these are the only countries that have this kind of Industry.

Approximately, 10.399 people were employed by this activity in 2006.

13.5. Mobile Telephony Contribution to Connectivity Indirect: # 57.406 65,6%

Figure 13.5.1. Mexico: Mobile-Fixed Lines and Internet Connections Number Evolution 2001-2006

Direct: # 30.075 34,4%

57.016

60.000 Mobile Lines Fixed Lines Internet Connections

Total employment generated by Mobile Telephony: 87.481

Thousands of Lines

50.000

47.129 38.451

40.000 30.098 30.000

25.928 21.758

20.000

10.000

0 2001

Mobile Telephony Companies and its providers

The Mobile Telephony industry in Mexico employed approximately 87.481 people in 2006.

Approximately 30.075 people were directly employed by Mobile Telephony operators in 2006. While, the industry has indirectly generated 57.406 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 1.9 employees are indirectly demanded.

Figure 13.4.2. Mexico: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 P roviders of : Outsourcing Sales Team (Sales Agent) Terminal Equipments Network: Radiobase + Troncal Network + Equipments S ites Installing Mobile Contents (SV A) Terminals Logistic IT Systems E lectrical Feed ing Towers Others Indirect Total Employment

#

%

33.448 10.308

58,3% 18,0%

4.600 4.000

8,0% 7,0%

2.100 1.200

3,7% 2,1%

1.150 250 250

2,0% 0,4% 0,4%

100 57.406

0,2% 100,0%

2002

2003

2004

2005

2006

Mobile telephony: In 2006 Mexico had a total of 57.1 million users, while at the end of 2001 only 21.8 million users existed.

Mexico is the second country with the higher number of mobile users in the region behind Brazil.

Fixed telephony: The xed lines total was 19.9 million in 2006; while in 2001 the total number raised to 13.8 million lines.

Internet: The total internet connections was 4.6 million closing 2006; all Dial-up and Broadband connections are included.

An important growth is observed in the period under analysis, since in 2001 1.9 million connections only existed.

Figure 13.5.2. Mexico: Annual Variation Rate of Mobile-Fixed Lines and Internet Connections Number 2001-2006 35,0% 30,0%

% Variación Anual Annual Variation %

Source : Study carried out by Convergencia Research according to data given by

Source : COFETEL and INEGI

25,0% 30,0%

Internet: Var. '06 vs. '01

20,0% 25,0%

146,4%

Móviles: Var. '06 vs. '01 144,1%

Internet: Var. '06 vs. '01 35,3% Mobiles: ’06 vs. ‘01 Var.

15,0%

20,0%

10,0% 15,0%

162,0%

5,0% 10,0%

0,0% 5,0%

2002

2003

-5,0%

44,2% Fijas: Var.

0,0%

-10,0%

Fixed: ’06 vs. ‘01 Var. 2004

2002

2003

2004

2005

2006

'06 vs. '01 - 1,2% 2005

2006

S ource : Study carried out by Convergencia Research according to data given by Mobiles Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 58.3% is destined to an outsourcing Sales Team. It is also important the employment level generated among network providers (radio bases, troncal network and equipments) and Sites Installers.

Source : COFETEL and INEGI

The growth rate of Mobile Telephony users in the 2001-2006 period has been 162%. Fixed Telephony has also shown an interesting growth reaching a 44.2% rate. Regarding Internet service has signi cantly varied registering a growth rate of 146.4%.

100 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country Figure 13.5.3. Mexico: Mobile- Fixed Lines and Internet Connections Penetration 2001-2006 60,0%

54,2% Mobile Lines

50,0%

Fixed Lines 45,2%

Internet Connections Penetration %

40,0%

37,2% 29,4%

30,0%

25,5% 21,6%

20,0%

18,9%

10,0%

0,0% 2001

4,4% 2002

2003

2004

2005

2006

Source : ECLAC, COFETEL and INEGI

Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Mexico’s penetration levels had reached 54.2%.

In only 5 years, Mobile telephony modi ed its penetration level from 21.6% in 2001 to 54.2% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during all the period closing 2006 with an 18.9% penetration.

Internet connections were increased closing 2006 with a penetration level of 4.4%.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 101

Third Part: 14. Jamaica 14.1. Mobile Telephony Contribution to Gross Domestic Product Figure 14.1.1. Jamaica: Supply and Demand Evolution of Mobile Telephony 2003 - 2006 Supply:

Demand: Accum. ‘03 to ’06

500 450

Figure 14.1.3. Jamaica: Mobile Telephony as percentage of GDP 2003 - 2006 5,0%

Accum. ‘03 to ’06

1.065

1.315

4,0%

347

Millions of US $

346

344

350

299 300 250

257

278

266

242

200 150

Participation % in GDP

400

2,9%

2,9%

3,0%

2,9%

2,7%

2,0%

1,0%

100 50

0,0% 2003

0 2003

2004

2005

2006

Source: Companies Reports and Balances and Convergencia Research estimations

From 2003 to 2006, the Mobile Telephony contributed to national GDP providing approximately US $1.065 million of goods and services.

With respect to Demand, the Mobile Telephony contributed to GDP purchasing approximately US $1.315 million of goods and services from 2003 to 2006.

Supply: Var. ’06 vs. ‘03

23,9%

Figure 14.2.1. Jamaica: Mobile Telephony Investment (CAPEX) Evolution 2003 – 2006

Annual Variation %

-5,0%

3,6% 1,4% 2,6%

0,7% -1,1% 2004

2005

-10,0%

GDP: Var. ’06 vs. ‘03

-15,0%

5,0%

-20,0%

12,3%

178

531

160

146

142

140

0,9% 0,0%

CAPEX : Accum. ‘03 to ’06

200

2006

Millions of US $

6,5% 5,0%

2006

14.2. Mobile Telephony Contribution to National Invesitment

180

10,0%

2005

The Mobile Telephony activity as participation percentage regarding nominal GDP remained in 2.9% from 2003 to 2006.

Figure 14.1.2. Jamaica: Average Annual Variation Rate of Mobile Telephony and GDP 2003 - 2006 15,0%

2004

Source : ECLAC, BOJ, The Economist, Balances and Researches of Companies and Convergencia Research estimations

120 100 80

66

60 40 20

Demand: Var. ’06 vs. ‘03

-20,0%

0 -19,7%

2003

2004

2005

2006

Source : Companies reports and balances and Convergencia Research estimations -25,0% Source : ECLAC, Bank of Jamaica (BOJ), The Economist, Balances and Researches of Companies and Convergencia Research estimations

In the 2003-2006 period, the total increase of Mobile Telephony was 23.9% for the Supply and -20% for the Demand. In the same period Jamaica’s economy, as a whole, registered a growth rate of 5%.

The Mobile telephony operators in Jamaica have invested approximately US $531 million in Capital Expenditures (CAPEX) between 2003 and 2006 period.

During the years 2003, 2004 and 2005, the Mobile Telephony industry carried out an important investment effort as consequence of the market opening (see gure 14.2.2.) what produced a signi cant increase in goods and services demand.

In 2006, the OPEX and CAPEX levels represented standard levels of the industry.

. A2. Brasil 102 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country

140 120 100 80

66

60 40

79,4% 80,0%

74,7%

70,0%

66,2% 65,4%

64,8%

60,0% 50,5% 46,4%

50,0% 40,0%

29,1%

30,0% 20,0% 10,0%

2 8%

142

Mobile Telephony Var.: -

531 146

98,5%

90,0%

Accumulated Variation % ’06 vs. ‘01

178

160

Millions of US $

100,0%

CAPEX : Accum. ‘03 to ’06

200 180

Figure 14.3.2. Jamaica: Accumulated Average Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 Var. Telefonía Celular: -2,8%

Figure 14.2.2. Jamaica: Investment / Mobile Telephony Sales vs.

Investment / GDP Relation Comparison 2003 - 2006

Mobile Telephony

Clothing & Shoes

CPI

Goods & Services

Fuel

2006

Furniture

2005

Source : Companies reports and balances and Convergencia Research estimations

Health & Personal servs.

2004

Food & Beverages

2003

Transportation

-10,0% 0

Housing

0,0% 20

Source : STATINJA and OUR

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales compared to the relation of Investment as percentage of Gross Domestic Product at national level for 2001-2006 period.

On average, the Mobile Telephony industry has invested approximately 51.3% of its Sales, while the country total has invested approximately 30.3% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion higher than those carried out by the rest of the national economy and even higher than those carried out by the industry in the rest of the region’s countries, except Costa Rica.

14.3. In ation vs. Mobile Telephony ARPU Evolution

Based on the comparison of the accumulated variation rate of in ation, between the different components of Consumer Price Index and Mobile Telephony; it is observed that Mobile Telephony has accumulated a 2.8% negative variation, although all the CPI components have shown signi cant variation in in ations. The highest increase was registered by Housing sector that has reached a 98.5% rate.

14.4. Mobile Telephony Contribution to Employment Figure 14.4.1. Jamaica: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Figure 14.3.1. Jamaica: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006 18,6%

20,0%

13,7%

15,0%

Indirect: # 1.561 78,2%

12,9%

14,1%

Annual Variation %

10,0%

7,3%

Accum. Var. CPI :

0,0% 2002

-10,0%

-15,0%

5,8%

+ 66,2%

5,0%

-5,0%

Direct: # 435 21,8%

2003

2004

0,0% 2005

2006

-4,4%

Total employment generated by Mobile Telephony: 1.996

Accum. Var. Mobile Telephony:

-2,8%

-14,3%

-20,0%

Source : Study carried out by Convergencia Research according to data given by

Source : Statistical Institute of Jamaica (STATINJA) and Office of Utilities Regulation (OUR)

Mobile Telephony Companies and its providers

In the 5 years period 2001-2006, Jamaica’s accumulated in ation was 66.2%.

The Mobile Telephony industry approximately 1.996 people in 2006.

in

Jamaica

employed

In spite of the in ationary process in which the Mobile Telephony was developed it showed a de ationary evolution regarding its revenues average per user (ARPU). The variation in the period under analysis shows an accumulated decrease of 2.8%.

Approximately 435 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 1.561 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 3.6 employees were indirectly demanded.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 103

Third Part: 14.5. Mobile Telephony Contribution to Connectivity Figure 14.5.1. Jamaica: Mobile-Fixed Lines Number Evolution 2001-2006 2.500 Mobile Lines Fixed Lines

2.006

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 18.2% penetration.

2.147

1.800

2.000 Thousands of Lines

2.084

In only 5 years, Mobile telephony modi ed its penetration level from 26.1% in 2001 to 79.5% in 2006.

1.400 1.500

1.000

680

500

0 2001

2002

2003

2004

2005

2006

Source : OUR, International Telecommunications Union (ITU), Convergencia Research estimations

Mobile telephony: In 2006 Jamaica had a total of 2.1 million users, while at the end of 2001 only 680 thousand users existed.

Fixed telephony: The xed lines total was 490 thousand closing 2006; while in 2001 the total number was 530 thousand lines.

Figure 14.5.2. Jamaica: Annual Variation Rate of Mobile-Fixed Lines Number 2001-2006 110,0% 30,0%

Móviles: Var. '06 vs. '01 144,1%

25,0% 90,0%

Mobiles: ’06 vs.

‘01 Var. Internet:

Variation % %Annual Variación Anual

20,0% 70,0%

15,0%

Var. '06 vs. '01 215,7% 35,3%

50,0% 10,0%

5,0%

Fixed: ’06 vs. ‘01 Var.

30,0%

0,0% 10,0%

2002

2003

- 7,5% 2006

2004

2005

-5,0% Fijas: Var. '06 vs. '01 - 1,2% -10,0% -10,0%

2002

2003

2004

2005

2006

Source : OUR, ITU and Convergencia Research estimations

The growth rate of Mobile Telephony users in the 2001-2006 period has been 215.7%; while Fixed Telephony has observed a 7.5% decrease.

Figure 14.5.3. Jamaica: Mobile- Fixed Lines Penetration 2001-2006 90,0%

79,5%

80,0%

75,3%

77,7%

68,0%

70,0% 60,0%

Penetration %

53,3%

50,0%

Mobile Lines

40,0%

Fixed Lines

30,0%

26,1% 20,0%

18,2%

10,0% 0,0% 2001

2002

2003

2004

2005

2006

Source : OUR, ITU and Convergencia Research estimations

The Mobile Telephony represented in 2006 the most important telecommunications service regarding its contribution to National Connectivity. At the end of 2006 Jamaica’s penetration levels had reached 79.5%; one of the region’s higher levels.

104 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 15. Puerto Rico 15.1. Mobile Telephony Contribution to Gross Domestic Product Figure 15.1.1. Puerto Rico: Supply and Demand Evolution of Mobile Telephony 2001-2006 1.400

Demand: Accum. ‘01 to ’06

Millions of US $

807

1,5% 933

815

802

1,4%

1.134 1.055

1.032 941

896

880

1.232 1.141

6.121

5.546 1.000

2,0%

Supply: Accum. ‘01 to ’06

Participation % in GDP

1.200

Figure 15.1.3. Puerto Rico: Mobile Telephony as percentage of GDP 2001-2006

800

600

400

1,3%

1,3%

1,3%

1,3%

1,4%

1,0%

0,5%

200

0,0% 2001

0 2001

2002

2003

2004

2005

2006

Source: Companies Reports and Balances and Convergencia Research estimations

From 2001 to 2006, the Mobile Telephony contributed to national GDP providing approximately US $6.121 million of goods and services.

With respect to Demand, the Mobile Telephony contributed to GDP purchasing approximately US $5.546 million of goods and services from 2001 to 2006.

Figure 15.1.2. Puerto Rico: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 Supply: Var. ’06 vs. ‘01

16,0% 14,0%

2002

Figure 15.2.1. Puerto Rico: Mobile Telephony Investment (CAPEX) Evolution 2001-2006 CAPEX : Accum. ‘01 to ’06

300

13,1%

9,7%

7,9% 7,6%

GDP: Var. ’06 vs. ‘01

6,0% 5,0%

4,0% 1,8% 2,0%

1,7%

248

1.207

256

10,6%

5,1%

Millions of US $

Annual Variation %

40,6%

2006

15.2. Mobile Telephony Contribution to National Investment

250

8,0%

2005

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.3% in 2001. In 2006, the proportion had not signi cantly varied reaching 1.4% levels of participation.

12,0%

Demand: Var. ’06 vs. ‘01

2004

14,5%

40,0%

10,0%

2003

Source : JPPPES, Balances and Researches of Companies and Convergencia Research estimations

185

200

171

182 165

150

100

3,1%

0,9% 0,0% -2,0%

-0,6% 2002

0,1% 2003

0,3% 2004

2005

0,7%

50

2006 0

Source : Puerto Rico's Planning Board, Program of Economic and Social Planning (JPPPES), Balances and Researches of Companies and Convergencia Research estimations

2001

2002

2003

2004

2005

2006

Source : Companies Reports and Balances and Convergencia Research estimations

In the 2001-2006 period, the total increase of Mobile Telephony was 40% for the Supply and 40.6% for the Demand. In the same period Puerto Rico’s economy, as a whole, registered a growth rate of 5.1%.

The Mobile telephony operators in Puerto Rico have invested approximately US $1.207 million in Capital Expenditures (CAPEX) between 2001 and 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 105

Third Part: Figure 15.2.2. Puerto Rico: Investment / Mobile Telephony Sales vs.

Investment / GDP Ratios Comparison 2001-2006 26,0%

Investment % / GDP CAPEX % / Sales

24,0%

21,7%

22,0%

20,8%

Investment %

20,7% 20,0%

Figure 15.4.1. Puerto Rico: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

19,4%

18,0% 16,0%

15.4. Mobile Telephony Contribution to Employment

17,6%

17,6%

15,2%

15,1%

16,9% 15,9%

14,0%

Direct: # 710 17,6%

15,5% 14,4%

12,0%

Indirect: # 3.330 82,4%

10,0% 2001

2002

2003

2004

2005

2006

Source: JPPPES, Balances and Researches of Companies and Convergencia Research estimations

In the gure above it is observed the relation between the Investment (CAPEX) as percentage of Mobile Telephony Total Sales compared to the relation of Investment as percentage of Gross Domestic Product at national level for the 2001-2006 period.

Total employment generated by Mobile Telephony: 4.040

Source : Study carried out by Convergencia Research according to data given by

On average, the Mobile Telephony industry has invested approximately 19.6% of its Sales, while the country total has invested approximately 15.5% of its GDP. The conclusion is that the Mobile Telephony investments were in proportion, higher than those carried out by the rest of the national economy.

15.3. In ation vs. Mobile Telephony ARPU Evolution Figure 15.3.1. Puerto Rico: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

Mobile Telephony Companies and its providers

The Mobile Telephony industry in Puerto Rico employed approximately 4.040 people in 2006.

Approximately 710 people were directly employed by Mobile Telephony operators in 2006. While, the industry has indirectly generated 3.330 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by the Mobile telephony, 4.7 employees are indirectly demanded.

20,0%

Accum. Var. CPI :

+ 67,2%

15,0%

13,8%

14,7%

Annual Variation %

10,0%

Accum. Var. Mobile Telephony:

7,9% 6,1%

+ 4,8% 2,6%

Network: Radiobase + Troncal Network + Equipments

1,7%

0,9%

0,4%

Terminals Logistic

-0,7% 2002

Providers of : Outsourcing Sales Team (Sales Agent) Maintennance and Repairs

5,0%

0,0%

Figure 15.4.2. Puerto Rico: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006

11,9%

2003

2004

2005

2006

-5,0% Source : JPPPES, Balances and Reasearches of Companies and Convergencia Research estimations

Terminal Equipments IT Systems Others Indirect Total Employment

In the period 2001-2006, Puerto Rico’s accumulated in ation was 67.2%.

The evolution that Mobile Telephony has shown regarding its revenues average per user (ARPU) is very below the CPI. The variation in the period under analysis shows an accumulated growth of only 4.8%.

#

2.200 500 280 130 120 50 50 3.330

%

66,1% 15,0% 8,4% 3,9% 3,6% 1,5% 1,5% 100,0%

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 66.1% is destined to an outsourcing Sales Team. It is also important the employment level generated among network providers (radio bases, troncal network and equipments) and Repairment and Maintenance.

106 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 15.5. Mobile Telephony Contribution to Connectivity Figure 15.5.1. Puerto Rico: Mobiles Lines Evolution Number 2001-2006 2.400

1.938

Thousands of Lines

2.000

1.561

1.620

1.646

2001

2002

2003

1.833

1.772

1.600

1.200

800

400

0 2004

2005

2006

Source : Companies Reports and Balances and Convergencia Research estimations

In 2006 Puerto Rico had a total of 1.9 million users, while at the end of 2001 1.6 million users existed.

Figure 15.5.2. Puerto Rico: Annual Variation Rate of Mobile Lines Number 2001-2006 10,0% 30,0%

Móviles: Var. '06 vs. '01

25,0%

Mobiles: 144,1% ’06 vs. ‘01 Var.

8,0%

Variation % % Annual Variación Anual

20,0% Internet: Var. '06 vs. '01 35,3%

6,0% 15,0%

24,2%

10,0% 4,0%

5,0% 0,0% 2,0% 2002

2003

2004

2005

2006

-5,0% Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

2002

2003

2004

2005

2006

Source : Companies Reports and Balances and Convergencia Research estimations

The growth rate of Mobile Telephony users has been 24.2% in the 2001-2006 period.

Figure 15.5.3. Puerto Rico: Mobile Lines Penetration 2001-2006 60,0%

50,0%

45,5% 40,7%

42,0%

46,9%

49,3%

42,4%

Penetration %

40,0%

30,0%

20,0%

10,0%

0,0% 2001

2002

2003

2004

2005

2006

Source: JPPPES, Balances and Researches of Companies and Convergencia Research estimations

Mobile Telephony contribution to National Connectivity was a 49.3% penetration level at the end of 2006.

In 5 years, Mobile telephony modi ed its penetration level from 40.7% in 2001 to 49.3% in 2006.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 107

Third Part: 16. Dominican Republic 16.1. Mobile Telephony Contribution to Gross Domestic Product Figure 16.1.1. Dominican Republic: Supply and Demand Evolution of Mobile Telephony 2001-2006 1.000

Supply: Accum. ‘01 to ’06

900 800

Demand: Accum. ‘01 to ’06

Millions of US $

700

859

2.968

730

2.523

600

550 486

500

309

352 298

263

300

16.2. Mobile Telephony Contribution to National Investment

467 413

414 350

400

The Mobile Telephony activity as participation percentage regarding nominal GDP was 1.3% in 2001. In 2006, the proportion has been increased 1.8 times reaching participation levels of 2.2%.

200

Figure 16.2.1. Dominican Republic: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

100 0 2001

2002

2003

2004

2005

2006 140

129

Source : Convergencia Research estimations in base of company's information 120

100 Millions of US $

From 2001 to 2006, the Mobile Telephony contributed to national GDP providing approximately US $2.968 million of goods and services.

CAPEX : Accum. ‘01 to ’06

445

82 73

80

62 60

46

53

40

With respect to Demand, the Mobile Telephony contributed to GDP purchasing approximately US $2.523 million of goods and services from 2001 to 2006.

20

0 2001

2002

2003

2004

2005

2006

Source : Convergencia Research estimations in base of company's information

Figure 16.1.2. Dominican Republic: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 60,0%

56,3%

Supply: Var. ’06 vs. ‘01

Annual Variation %

50,0%

40,0%

GDP: Var. ’06 vs. ‘01

30,0%

29,9%

177,6%

18,3%

20,0%

16.3. Mobile Telephony Contribution to Employment

17,3%

13,3%

13,1%

10,0%

0,0%

5,0%

-0,4%

2002

2003

2,7%

9,2%

2004

2005

The Mobile telephony operators in Dominican Republic have invested approximately US $445 million in Capital Expenditures (CAPEX) during the 2001 – 2006 period.

10,7%

Figure 16.3.1. Dominican Republic: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

2006

-10,0% Source : ECLAC, Dominican Republic's Central Bank (BCRD), Balances and Researches of Companies and Convergencia Research estimations

In the 2001-2006 period, the total growth of Mobile Telephony was 177.6%. In the same period Dominican Republic’s economy, as a whole, registered a growth rate of 29.9%.

Figure 16.1.3. Dominican Republic: Mobile Telephony as percentage of GDP 2001-2006

Direct: # 1.032 17,7% Indirect: # 4.800 82,3%

3,0%

2,5%

Participation % in GDP

2,1% 2,0%

1,5%

2,2%

2,2%

Total employment generated by Mobile Telephony: 5.832

1,6% 1,4% 1,3% Source : Study carried out by Convergencia Research according to data given by

1,0%

Mobile Telephony Companies and its providers 0,5%

0,0% 2001

2002

2003

2004

2005

2006

The Mobile Telephony industry in Dominican Republic employed approximately 5.832 people in 2006.

Source: ECLAC, BCRD and Convergencia Research estimations

108 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country

It can be concluded that for each employee directly employed by the Mobile telephony, 4.6 employees are indirectly demanded.

Figure 16.4.2. Dominican Republic: Annual Variation Rate of Mobile-Fixed Lines and Internet Connections Number 2001-2006 50,0% 30,0%

25,0%

Mobiles: ’06 vs. ‘01 Var.

35,0% 20,0%

262,6%

40,0%

30,0%

#

%

3.500 500

72,9% 10,4%

350 100

7,3% 2,1%

200 150 4.800

4,2% 3,1% 100,0%

Outsourcing Sales Team (Sales Agent) Maintenn ance and Repairs Network: Radiobase + Troncal Network + Equipments Terminals Logistic IT Systems Terminal Equipments Indirect Total Employment

Internet: Var. '06 vs. '01 35,3%

15,0% 25,0% 20,0% 10,0% 15,0%

5,0% 10,0% 5,0% 0,0%

Figure 16.3.2. Dominican Republic: Indirect Employment generated by Mobile Telephony in the 1st. link of its Value Chain 2006 Providers of :

Móviles: Var. '06 vs. '01 144,1%

45,0%

Variation % %Annual Variación Anual

Approximately 1.032 people were directly employed by Mobile Telephony operators. While, the industry has indirectly generated 4.800 additional job positions through the rst link of its Value Chain.

Fixed: ’06 vs. ‘01 Var.

Internet: Var. '06 vs. '01

- 6,1%

185,6%

2002

0,0%

-5,0% -5,0%

2002

2003 2003

2004

2005

2006

2004

2005

2006

Fijas: Var. '06 vs. '01 - 1,2%

-10,0% -10,0% Source : INDOTEL

The growth rate of Mobile Telephony users in the 2001-2006 period has been 262.6%. Fixed Telephony has also shown a 6.1% decrease. Regarding Internet service has signi cantly varied registering a growth rate of 185.6%.

S ource : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and i ts providers

Figure 16.4.3. Dominican Republic: Mobile-Fixed Lines and Internet Connections Penetration 2001-2006 60,0%

Mobile Lines 50,0%

47,9%

Fixed Lines Internet Connections 38,3%

40,0% Penetration %

It is observed that from the total employment generated by Mobile Telephony through the rst link of its Value Chain, 72.9% is destined to an outsourcing Sales Team. It is also important the employment level generated among network providers (radio bases, troncal network and equipments) and Sites Installers.

27,2%

30,0%

23,1% 18,8%

20,0%

14,3%

16.4. Mobile Telephony Contribution to Connectivity Figure 16.4.1. Dominican Republic: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006 4.606

5.000

Mobile Lines Fixed Lines Internet Connections

4.500

Thousands of Lines

4.000

3.623

3.500

10,0%

0,0% 2001

9,3% 1,9% 2002

2003

2004

2005

2006

Source : INDOTEL

The Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity in 2006; at the end of this year penetration levels had reached 47.9%.

3.000

2.534

In only 5 years, Mobile telephony modi ed its penetration level from 14.3% in 2001 to 47.9% in 2006.

2.123

2.500

1.701

2.000

1.270 1.500 1.000 500 0 2001

2002

2003

2004

2005

2006

Source: Dominican Institute of Telecommunications (INDOTEL)

Mobile telephony: In 2006 Dominican Republic had a total of 4.6 million users, while at the end of 2001 only 1.3 million users existed.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with an 9.3% penetration.

Internet connections have increased until 2006 closing with a penetration level of 1.9%.

Fixed telephony: The xed lines total was 897 thousand in 2006; while in 2001 the total number raised 955 thousand lines.

Internet: The total internet connections were 184 thousand in 2006; all Dial-up and Broadband connections are included.

An important growth is observed in the period under analysis, since in 2001 64 thousand connections only existed.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 109

Third Part: 17. Trinidad & Tobago 17.1. Mobile Telephony Contribution to Gross Domestic Product Figure 17.1.1. Trinidad & Tobago: Supply and Demand Evolution of Mobile Telephony 2001-2006 220

160

Demand: Accum. ‘01 to ’06

140

592

696

0,8% 138

125 106 91 77

70

80

60 44

1,0%

163

120 100

1,1%

1,1%

1,0%

173

Participation % in GDP

180

Millions of US $

1,2%

203

Supply: Accum. ‘01 to ’06

200

60

Figure 17.1.3. Trinidad & Tobago: Mobile Telephony as percentage of GDP 2001-2006

0,8%

0,8%

0,6%

0,4%

0,5%

38

40

0,2%

20 0 2001

2002

2003

2004

2005

Source : Telecommunications Authority of Trinidad & Tobago (TATT) and Convergencia Research estimations.

From 2001 to 2006, the Mobile Telephony contributed to national GDP providing approximately US $696 million of goods and services.

With respect to Demand, the Mobile Telephony contributed to GDP purchasing approximately US $592 million of goods and services from 2001 to 2006.

Figure 17.1.2. Trinidad & Tobago: Average Annual Variation Rate of Mobile Telephony and GDP 2001-2006 70,0%

60,0%

GDP: Var. ’06 vs. ‘01

50,0%

62,5%

10,0%

2005

2006

17.2. Mobile Telephony Contribution to National Investment Figure 17.2.1. Trinidad & Tobago: Mobile Telephony Investment (CAPEX) Evolution 2001-2006

Supply: Var. ’06 vs. ‘01

35

360,5%

30

25 30,2% 25,0%

20,0%

2004

30

28,7%

30,0%

2003

uto The Mobile Telephony activity as participation percentage regarding nominal GDP was 0.5% in 2001. In 2006, the proportion has been duplicated reaching participation levels of 1.1%.

37,9%

40,0%

2002

Source : ECLAC, CSO, TATT and Convergencia Research estimations.

14,4% 8,8%

7,9%

8,0%

4,2%

Millions of US $

Annual Variation %

59,4%

0,0% 2001

2006

CAPEX : Accum. ‘01 to ’06

24

104 19

20

14

15

11 10

7

0,0%

5 2002

2003

2004

2005

2006

Source : ECLAC, Central Statistics Office (CSO), TATT and Convergencia Research estimations

0 2001

2002

2003

2004

2005

2006

Source: TATT and Convergencia Research estimations

In the 2001-2006 period, the total increase of Mobile Telephony was 360.5%. In the same period Trinidad & Tobago’s economy, as a whole, registered a growth rate of 62.5%.

Mobile telephony operators in Trinidad & Tobago have invested approximately US $104 million in Capital Expenditures (CAPEX) between 2001 and 2006.

110 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Mobile Telephony Contribution ntributiion to Latin America and the Caribbean Economies by Country 17.3. In ation vs. Mobile Telephony ARPU Evolution

17.5. Mobile Telephony Contribution to Connectivity

Figure 17.3.1. Trinidad & Tobago: Average Annual Variation Rate of CPI and Mobile Telephony ARPU 2001-2006

Figure 17.5.1. Trinidad & Tobago: Number of Mobile-Fixed Lines and Internet Connections Evolution 2001-2006

20,0%

1.400

Accum. Var. CPI :

+ 20,0%

15,0%

Mobile Lines Fixed Lines Internet Connections

1.200 8,3% 6,8% 4,2% 5,0%

3,8%

3,7% 0,0%

0,0% 2002

2003

2004

2005

2006

-5,0% -6,3%

- 42,2%

-12,1%

1.155

1.000

924

800 530

600 366 284

400

Accum. Var. Mobile Telephony:

-10,0%

-15,0%

Thousands of Lines

Annual Variation %

10,0%

160 200

-12,6%

0

-20,0%

2001

-19,7%

Source: CSO, TATT and Convergencia Research estimations

2002

2003

2004

2005

2006

Source: TATT and Convergencia Research estimations

In the period 2001-2006, Trinidad and Tobago’s accumulated in ation was 20%.

Mobile Telephony has shown a de ationary evolution regarding its revenues average per user (ARPU). The variation in the period under analysis shows an accumulated decrease of only 42.2%.

17.4. Mobile Telephony Contribution to Employment Figure 17.4.1. Trinidad & Tobago: Total Employment (Direct + Indirect) generated by Mobile Telephony 2006

Mobile telephony: In 2006 Trinidad & Tobago had a total of 1 Million 155 thousand users, while at the end of 2001 only 160 thousand users existed.

Fixed telephony: The xed lines total was 343 thousand in 2006; while in 2001 the total number raised to 308 thousand lines.

Internet: The total internet connections were 98 thousand in 2006; all Dial-up and Broadband connections are included.

An important growth is observed in the period under analysis, since in 2001 35 thousand connections only existed.

Figure 17.5.2. Trinidad & Tobago: Annual Variation Rate of MobileFixed Lines and Internet Connections Number 2001-2006 100,0% 30,0%

Direct: # 190 18,5%

80,0%

Total employment generated by Mobile Telephony: 1.026

Internet: Var. '06 vs. '01 35,3%

60,0% 15,0%

Internet: Var. '06 vs. '01

10,0% 40,0%

5,0% 0,0% 20,0% -5,0%

Fixed: ’06 vs. ‘01 Var. 2002

11,3%

180,7% 2003

2004

2005

2006

Fijas: Var. '06 vs. '01 - 1,2%

0,0%

-10,0%

Móviles: Var. '06 vs. '01 144,1%

622,0%

20,0% Variation % % Annual Variación Anual

Indirect: # 836 81,5%

Mobiles: Var. ’06 vs. ‘01

25,0%

2002

2003

2004

2005

2006

Source: TATT and Convergencia Research estimations

Source : Study carried out by Convergencia Research according to data given by Mobile Telephony Companies and its providers

The Mobile Telephony industry in Trinidad & Tobago employed approximately 1.026 people in 2006.

The growth rate of Mobile Telephony users in the 2001-2006 period has been 622%. Fixed Telephony has also shown a moderated growth of 11.3%. Regarding Internet service has signi cantly varied registering a growth rate of 180.7%.

Approximately 190 people are directly employed by Mobile Telephony operators. While, the industry has indirectly generated 836 additional job positions through the rst link of its Value Chain.

It can be concluded that for each employee directly employed by Mobile telephony, 4.4 employees are indirectly demanded.

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 111

Third Part: Figure 17.5.3. Trinidad & Tobago: Mobile-Fixed Lines and Internet Connections Penetration 2001-2006 100,0% 90,0%

Mobile Lines

80,0%

Fixed Lines

87,0%

Internet Connections

69,8%

Penetration %

70,0% 60,0% 50,0%

40,2%

40,0%

27,8%

30,0%

21,7%

20,0%

25,8%

12,3% 10,0% 0,0% 2001

7,4% 2002

2003

2004

2005

2006

Source: ECLAC, TATT and Convergencia Research estimations

The Mobile Telephony represented the most important telecommunications service regarding its contribution to National Connectivity; at the end of 2006 it has reached penetration levels of 87%, registering the region’s highest index.

In only 5 years, Mobile telephony modi ed its penetration level from 12.3% in 2001 to 87% in 2006.

Regarding Fixed Telephony, its contribution to Connectivity remained sFigure during the whole period closing 2006 with a 25.8% penetration.

Internet connections were increased closing 2006 with a 7.4% penetration.

112 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

Annexes

Annexes: Data and Consulting Sources 1. Argentina

2. Brazil

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: National Institute of Statistical and Censuses (INDEC) INDEC - Consumer Defence Ministry of Labour, Employment and Social Security (MTEySS) National Commission Communications (CNC) Secretary of Communications (SECOM)

National Organisms: Statistics and Geography Brazilian Institue (IBGE) and CEPAL National Telecommunications Agency (ANATEL)

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - CTI - Movistar - Personal - Nextel

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Amazonia - Brasil Telecom Celular - Claro - Oi - Telemig - TIM - Vivo

Interviews:

Interviews:

Company Avanzit BGH Brighstar Cicomra Comercializador CTI Eiffel Emerson Emerson Emerson Ericsson Gemalto Gemplus Guzman-Nacich Leadcom Leadcom LG Machain Motorola Motorola Nokia Siemens Nortel Personal Personal Qualcomm Relacom Samsung TESUR Otros Inmobiliaria

Executive Sergio Daniel Yáñez Alejandro Casabianca Alfredo Balarino Gustavo Alcain José Fernández Anabella Lombardi Hugo Fernández Sonia Castellanos Cecilia Amuchastegui Federico Giannattasio Mathias Bouzereau

Company ANATEL Abeprest Aberimest Abinee BenQ BGH Brasil Brighstar Direknet G&D Gemalto Leadcom Siemens Visa Vivo

Sr. Bufacci Eduardo Maradei Diego Barbero Alberto Iglesias Gustavo Wrobel Alejo Zagalski Juan Carlos Perelli Sabrina Romero Mario Farina Guillermo Fornaresio Jorge Caruso Javier Otero Vicente Cardone Rodrigo Ladeira Cesar Iraola

114 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

3. Chile

4. Colombia

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: Central Bank of Chile Telecommunications Sub secretary of Chile (SUBTEL) National Statistics Institute of Chile (INE) National Chamber of Commerce, Services and Tourism Ministry of Planning Direction of Labour Economic Ministry

National Organisms: National Administrative Department of Statistics (DANE) Superintendence of House Utilities (SSPD), Regulatory Commission for Telecommunications (CRT) Ministry of Communications

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Claro - ENTEL PCS - Movistar

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Avantel - Comcel - Movistar - Tigo

Interviews: Interviews: Company Agencia Prensa A-Novo A-Novo Banco Central de Chile Brightstar Centennial Claro Claro Colegio Ingenieros Entel PCS Entel PCS Entel PCS Entel PCS Entel PCS Entel PCS Entel PCS GSM LA INE Interexport Leadcom Leadcom Motorola Telecom Telecom Telefónica CTC Telefónica Móviles

Executive Carlos Zavala Enrique Vidal Marcela Lizana Antonio Escandón Vicente Camus Cristián Canelo Paul Gálvez Marco López Pedro Torres Ojeda Andrés Cristi Claudia Bizarro Jimmy Flores Jorge Bascur Patricia Astorga Francisco Ochoa Gustavo Nicolini Alexis Arancibia Cristina Silva Carrasco Jennifer Alarcón Angelo Abagliano Cristin Fischer Eduardo De Luca Alejandro Martínez Miguel Angel Cruz Jeannette Luna

Company Executive COPNIA - Consejo Profesional Nacional de Luz Sofía Aguirre Ingenieros DANE Estadistica José Iglesias ACIEM Asoc. Colombiana de Ingenieros TYCO UT Starcom UT Starcom ZTE Agencia Prensa OLA TIGO TIGO Comcel Ericsson Nokia (region) Telefonica Moviles Telefonica Moviles CMA (Compania Metalicas Asoc.)

Leadcom

Fernando Camargo Ing. David Bedoya Carlos Moreno Nathaly García María Valencia Rojas Jairo Muñoz Carlos Arango Natalia Cuellar Rolando Martínez Claudia Hochman Andrés Gómez Henao Gerardo González Alejandro Coronado Ing. Hernán Zabarain

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 115

Annexes: 5. Ecuador

6. Peru

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC) International Labour Organization (ILO)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: Central Bank of Ecuador (BCE) National Institute of Statistics and Census (INEC) Superintendence of Telecommunications (SUPTEL) National Telecommunications Commission (CONATEL)

National Organisms: Central Reserve Bank of Peru (BCRP) Supervisor Organism of Private Investment in Telecommunications (OSIPTEL) National Institute of Statistics and Informatics (INEI) Statistics and Labour Studies Program (PEEL)

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Alegro - Movistar - Porta

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Claro - Movistar - Nextel

Interviews:

Interviews:

Company Executive CONATEL Siemens Juan Carlos Molano Siemens Marcelo Romo Porta Sara Gómez Leadcom Daniel Navas Andinatel Vicente Merchan Movistar Juan Flores AIME Asociación Ingenieros de Minas SIDEN Soc.Ingenieros de Helena de Armas Ecuador SUPTEL Superintendencia de Mario Jardin Telecomunicaciones Ditelpro Patricio Jacome HTM (servicio técnico Wilson Avila terminales) Brightstar Oswaldo Ponce Telefonica Móviles Juan Flores Telefonica Móviles Julien Lereboullet Telefonica Móviles Carlos Meythaler

Company Movistar Movistar Leadcom Técnicas Metálicas America Movil ZTE CIP Colegio Ingenieros OSIPTEL Brightstar A-Novo

Executive J.C. Stoll Carlos Zamora Julio Bonifaz Sr. Torres Adriana Alban Alan Cupis Luisa Ulloa Reyna Marcia Perrigo Marjorie Gutti Cristián Aguirre

116 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

7. Uruguay

8. Venezuela

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: National Institute of Statistics (INE) Telecommunications Services Regulatory Unit (URSEC) Secretary of Communications (SECOM) National Direction of Labour (DINATRA - MTSS)

National Organisms: Central Bank of Venezuela (BCV) National Telecommunications Commission (CONATEL) National Institute of Statistics (INE)

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Ancel (Antel) - CTI - Movistar

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Digitel - Infonet - Movilnet - Movistar

Interviews:

Interviews:

Company Ancel Ancel Ancel Ancel Ancel Movistar Movistar Movistar Distribuidor Movistar Pranasys Karma Brightstar Teyma Ultima Milla

Executive Marcelo Erlich Jorge Suárez Rosana Betbeder Jose Carlos López Marcelo Evia Virginia Sosa Daniel de Lisante Diego Roel Oscar Ferras Rafael García Sigueto Kuboto Juan Pose Pablo Morelli Arnaldo Castro

Company Brightstar Colegio de Ingenieros Digitel Digitel INE Movistar Movistar Movistar Movistar Nokia Relacom

Executive Ricardo De Sousa Arq. María Quintero Regulatoria Luis Herrero José Lusardo Ing.José de Brito Lic.Gabriela Kebor Angel Bentancourt Johann Durre Humberto Salinas Milangelo Galea

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 117

Annexes: 9. Costa Rica

10. El Salvador

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: Central Bank of Costa Rica (BCCR) National Institute of Statistics and Census (INEC) Regulatory Authority for the Public Services (ARESEP)

National Organisms: Central Reserve Bank of El Salvador (BCR) The General Superintendence of Electricity and Telecommunications (SIGET) General Direction for Census and Statistics (DIGESTYC)

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - ICE Telecommunications Interviews: Company Autoridad Reguladora de los Servicios Públicos Banco Central de Costa Rica Banco Central de Costa Rica Colegio Federado de Ingenieros y Arquitectos Colegio Federado de Ingenieros y Arquitectos D-Link D-Link Ericsson Grupo Akar ICE ICE ICE ICE INEC RACSA RACSA Siemens STG Zyxel

Executive Carlos Matos Ana Georgina Azofeifa Manfred Vízquez Alcázar Jeffrey Zúñiga Arias Ingeniera Silvia Ruiz Erick Murillo Rubén Muñoz Luis Obando Aron Cadenas Gabriela Varela Fernando Murillo Manuel Córdoba Morales Marco Vinicio Fernández Montalto Gabriela Salas René Medina Mario José Zaragoza Borrasé Norberto Izurieta Viviana Lutmer Estela M. Goldberg

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Claro - Digicel - Movistar - Telemovil Interviews: Company FESIARA (Federación Salvadoreña de Ingenieros, Arquitectos y Ramas Afines) Autoconsa Banco Central de Reserva de El Salvador Banco Central de Reserva de El Salvador Banco Cuscatlan Claro - Telecom Claro - Telecom Claro - Telecom Claro - Telecom Claro - Telecom Claro - Telecom Claro - Telecom Claro - Telecom Digicel Digicel Dirección General de Estadística y Censos Ericsson FESIARA Intelfon SIGET Telecom El Salvador Telefónica Telefónica Telemovil Telemóvil

Executive Nancy Tecortes Fernando Resinos Benjamín Garay Selso Coto Marisela Alvarenga Jaime Castro Sergio Vázquez Javier Oliva Eric Benet Alberto Davidson Silvia Rodríguez Elsa de Zaravia Rodrigo López Sonia Villalta Luis La Rocca Luis Paz Eduardo Santos Sr.Cardoza Benítez Paola Rodríguez Noel Maldonado Mónica Ricardez Mercedes Beunza Xenia Zepeda Ramiro Avendaño Mario Méndez Carmen Argueta

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11. Guatemala

12. Panama

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

National Organisms: Guatemala Bank (BANGUAT) Guatemala’s National Institute of Statistics (INE) Guatemala’s Superintendence of Telecommunications (SIT) Guatemala’s Social Security Institute (IGSS)

National Organisms: Ministry of Economy and Finance (MEF) Panama Authority National Authority of Public Services (ANSEP) Panamanian Association of Company Executives

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Claro - Movistar - Tigo

Mobile Telephony Companies: Balances and Reports (annual and quarterly published)) Cable & Wireless Panamá Movistar Interviews:

Interviews: Company BANGUAT BANGUAT BANGUAT Brightstar Claro Claro Claro Comcel Grupo Mena SIT Telefonica Móviles Telefonica Móviles Telgua Telgua Telgua Tigo Tigo

Executive Luis Echeverry Ismael Valenzuela Mario Alfredo Salguero Marta Noriega Enio Guzmán Ing. Marvin Par Alejandro Salguero Marco Chávez Roaldo Vázquez Rodrigo Robles Jorge Estevez Flor de María Mencos Caludia Massis Litza Escobar Regina Leal Marlin Oliva Osmar Coronel

Company ANSEP C&W Panamá C&W Panamá C&W Panamá C&W Panamá C&W Panamá Leadcom LG LG LG Electronics Panama LG Electronics Panama Sociedad Panameña de Ingenieros y Arquitectos Starcom

Executive Edmundo Eduardo Roberto Mendoza Indira Doyen Carlos Ungo Abdiel Antonio Gutiérrez Carlos Ferrer Eric de Sedas Dennis Teresa López Abdiel Julio Fabrega Dennis Teresa López Martín Isa Isabel Ruilobo

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Annexes: 13. Mexico

14. Jamaica

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC) International Telecommunications Union (ITU)

National Organisms: The National Institute of Statistics, Geography and Informatics (INEGI) Bank of Mexico (Banxico) Federal Commission of Telecommunications (COFETEL)

National Organisms: Bank of Jamaica (BOJ) Statistical Institute of Jamaica (STATINJA) Of ce of Utilities Regulation (OUR)

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Iusacell - Movistar - Nextel - Telcel (América Móvil) - Unefon

Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Cable & Wireless Jamaica - Digicel - Oceanic

Interviews:

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

Company Alcatel Lucent Alcatel Lucent Brightstar Colegio de Ingenieros Direccion General de Profesiones Gemalto Gemalto Gemalto Iusacell Leadcom Motorola Movistar Movistar Movistar Movistar Movistar Telcel Telcel Telcel

Executive Gerardo García Ing.Alejandro Martínez Braulio Hernández Dra. Cecilia Martín Del Campo Eberardo Beltrán Corona Mauricio Malpica Natalia Da Silva Benjamin Binet Carlos Hirsch Juan Carlos Calva Lic.Alonso Alonso Omar Calvo Susana Torres Victor Manuel Prieto Mariana García Mena Veronica Gómez Ferro Francisco Marin Garibaldi Jorge González Ing. Ricardo Medina

15. Puerto Rico

National Organisms: Puerto Rico’s Planning Board, Program of Economic and Social Planning (JPPPES) Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Centenal - Cingular - Movistar - Sprint - Suncom Wireless - Verizon (PRTC) Interviews: Company Brightstar Centennial Centennial Cingular Cingular Cingular Cingular Colegio Ingenieros Crown Castle Movistar Movistar Puerto Rico Telephone Puerto Rico Telephone Puerto Rico Telephone Puerto Rico Telephone Puerto Rico Telephone Sprint Suncom

Executive Julio Vega Alexis Hernández Miguel Garcia Rechani Jennifer Bowcock Clay Owen Mark Siegel Belinda Burgos Ing. Hernández Ruth Rodríguez Wandy Borrero Miguel Pérez Ing.Manuel Hernández Ing. Ivelis Quiñonez Gustavo Cañas Jorge Samalot Edwin Avila Nanci Schwartz Rose B. Cummings

120 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

16. Dominican Republic

18. Regional

International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC)

Interviews:

National Organisms: Dominican Republic’s Central Bank (BCRD) Dominican Institute of Telecommunications (INDOTEL) Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - Centenal - Claro (ex Verizon) - Orange - Tricom Interviews: Company Centennial Centennial Centennial Centennial Centennial Verizon CODETEL Colegio de Ingenieros Brightstar Sabre Claro Claro Claro

Executive Guillermo Peña Mite Nishio Tomas Hernández Richard Delgado Eduardo Mártinez Antonio Musa Martín Montas Domenech Ing.Adolfo Cedeño de las Rosas Humberto De Jesús Manuel De La Rocha Isabel Morillo Rubén Guzmán Bartolomé Soriano

Company 3Com Alcatel D-Link Ericsson Ericsson Leadcom Leadcom Motorola Nokia Nokia Nortel Nortel Nortel Nortel Palm Palm Panasonic Latin America Siemens Siemens Centroamérica Siemens Centroamérica Sony Ericsson Centroamérica

Executive Román Baudrit Johnny Vega Jorge Guillén Gilberto Mata Alexander Tellez Juan Manuel Gómez Yamile Franco Juan Carlos Perdomo Manuel González Arce Jorge Aguilera José Porto Pierre Bissonette Fabiana Coelo Ivan Goridco Zorena Albarran Erika García Venegas Karen A. Turner M. Eric Nuñez Erwin Eller Otto Zúñiga Judith Fraguela

17. Trinidad & Tobago International Organisms: Economic Commission for Latin America and the Caribbean (ECLAC) International Monetary Fund (IMF) National Organisms: Telecommunications Authority of Trinindad & Tobago (TATT) Central Statistical Of ce (CSO) Mobile Telephony Companies: Balances and Reports (annual and quarterly published) - TSTT

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Annexes: II. Working Group

Mariana Rodriguez Zani General Director of Convergencialatina Project Coordinator • Bachelor of Communication (ULZ – Argentina) and MBA (UTDT – Argentina and St. Gallen – Suiza).

• Founding member of Grupo Convergencia. She was responsible of product development.

• Since 2000 she manages Convergencialatina and since 2003 she participates of the area research development.

Susana Landeira Responsible of Project Research • Bachelor of Social Communication (UNQ - Argentina).

• She has carried out researches on journalism means, graphic, radio and television means.

Gustavo Jorge Project Director • Public Accountant (UBA - Argentina), He holds an MBA (UTDT - Argentina and WHU - Germany).

• He worked in leading banks of Argentina (BST, Bansud, Quilmes), in commercial areas (Special Projects & Structuring) and staff (Strategic Planning & Management Control) • He has carried out Consulting and Reaseach for Convergencia Research (Argentina), ING (Uruguay) and Cemex (Germany).

122 z GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies

GSM Latin America Mobile Telephony Contribution to Latin America and The Caribbean Economies z 123