3Q.2011 United States Mobile Operator ForecastUSA to have 468 million mobile subscriber connections in 2015 with Verizon Wireless taking 31.3% market share

October 2011

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

INDUSTRY AVERAGE SUBSCRIBER GROWTH IN THE U.S. WIRELESS MARKET IS ABOUT 10%

The operator-wide average subscriber growth (YoY) was 10.6% in 2Q.2011, up from 7.2% in 2Q.2010.

The largest operator, Verizon Wireless, saw its subscriber growth (YoY) increase from 5.0% in 2Q.2010 to 15.5% in 2Q.2011.

Subscriber growth rate (YoY) at Sprint Nextel increased from -1.7% in 2Q.2010 to 8.0% in 2Q.2011.

MetroPCS posted a subscriber growth of 18.9% in 2Q.2011, down from 22.0% in 2Q. 2010.

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Verizon Wireless AT&T Mobility Sprint NextelT-Mobile USA Leap Wireless MetroPCS U.S. Cellular Cincinnati Bell Industry Total

Chart 1: Subscriber Growth (4Q08 – 2Q11), %

Stable subscriber growth continues in the US10.6% industry average subscriber growth in 2Q.2011

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

INDUSTRY AVERAGE ARPU IN THE UNITED STATES IS DECLINING SLIGHTLY

The industry average monthly ARPU was US$ 49.08 in 2Q.2010, down -10.4% YoY.

The major wireless carriers in the U.S. posted a mix of growth and decline in their ARPUs.

Verizon Wireless enjoyed growth of 4.1% in 2Q.2011, a jump from a decline of -1.3% in 2Q.2010.

T-Mobile USA's monthly ARPU growth was -2.1% in 2Q.2011, which is the same as in 2Q.2010.

Sprint Nextel saw the largest fall in ARPU numbers with a -11.6% decline in 2Q.2011.

Chart 2: ARPU Growth (4Q08 – 2Q11), %

ARPU growth remains negative-10.4% industry average ARPU growth in 2Q.2011

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Verizon Wireless AT&T Mobility Sprint NextelT-Mobile USA Leap Wireless MetroPCS U.S. Cellular Cincinnati Bell Industry Total

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

The operator-wide average Minute of Use (MOU) per subscriber was 794 minutes per month in 2Q.2011, down -2.3% YoY.

MOU/Sub at Verizon Wireless has been stable at 739 minutes per month over the past four quarters.

T-Mobile’s MOU per subscriber stood at 1,094 minutes in 2Q.2011 – much higher than at Verizon and AT&T Mobility.

MOU/Sub growth at AT&T Mobility was lower than that of the other operators at -3.1% in 2Q.2011.

Chart 3: MOU/Sub Growth (4Q08 – 2Q11), %

Minutes of Use per Subscriber is decliningIndustry average MOU/Sub is 794 minutes per month

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Verizon Wireless AT&T Mobility Sprint Nextel

T-Mobile USA Industry Total

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

-0.9% INDUSTRY-AVERAGE EBITDA DECLINE IN 2Q.2011

• The industry average EBITDA growth rate (YoY) in 2Q.2011 was -0.9%, down from 9.0% in 2Q.2010.

• EBITDA growth rate (YoY) at Verizon Wireless was 0% in 2Q.2011, down from 7.8% in 2Q.2010.

• Sprint Nextel’s EBITDA growth was negative at -10.0% in 2Q.2011, up from -13.4% in 2Q.2010.

• T-Mobile USA also suffered from negative EBITDA growth at -10% in 2Q.2011 (up from -11.4% in 2Q.2010).

Chart 4: EBITDA Growth (4Q08 – 2Q11), %

Negative EBITDA growth at both Sprint Nextel and T-Mobile in 2Q.2011

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4Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 2Q11

Verizon Wireless AT&T Mobility Sprint NextelT-Mobile USA Leap Wireless MetroPCS Cincinnati Bell Industry Total

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

THE NUMBER OF MOBILE SUBSCRIBER CONNECTIONS WILL CONTINUE TO INCREASE IN THE U.S.

We forecast that the number of total wireless subscribers in the U.S. will increase from 323 million in the end of 2010 to 467.8 million in the end of 2015.

In March 2011, AT&T announced the deal to buy T-Mobile. With the merger, AT&T will be replacing Verizon Wireless as the largest mobile operator in the U.S. We expect that AT&T Mobility’s subscriber base will increase to approximately 173 million connections by the end of 2015.

On the other hand, we forecast that Verizon Wireless will have 146 million wireless subscriber connections in 2015 (31.3% market share).

Chart 5: Subscribers by operator (CY09 – CY15F)

So what is IEMR’s Forecast? Total mobile subscriber connections in the U.S. to reach 467.8 million in 2015

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Verizon Wireless AT&T Mobility Sprint Nextel

T-Mobile USA Leap Wireless MetroPCS U.S. Cellular Cincinnati Bell

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

WE EXPECT THE OPERATOR-WIDE AVERAGE ARPU LEVEL TO REMAIN CLOSE TO THE $50 MARK OVER THE NEXT TWO YEARS

Our forecasting model does not predict major changes in the industry average ARPU for the next two years

The industry average ARPU will be US $49 per month in 2013, according to our model.

Although it has a declining trend, we believe that U.S. Verizon Wireless’s ARPU level will continue to be the highest in the United States over the next two years.

Chart 6: Average Revenue per User (ARPU) per month (CY09 – CY13F), US$

So what is IEMR’s Forecast?ARPU levels in the United States to remain stable

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Verizon Wireless AT&T Mobility Sprint Nextel

T-Mobile USA Leap Wireless MetroPCS

U.S. Cellular Cincinnati Bell Average

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

Verizon Wireless will be enjoying the highest level of profitability in the US wireless market during the forecast period.

Our model is predicting that Verizon Wireless’s EBITDA margins will decline to about 39% in 2012 and 2013.

We expect that EBITDA margins at AT&T Mobility will decline to 34% in 2013 (down from 42% in 2010).

Our long-range model predicts that Sprint Nextel's EBITDA margin (calculated as EBITDA/service revenue) will decline from 17.5% in 2010 to 14.4% in 2013.

Chart 7: EBITDA margins (CY09 – CY13F), %

So what is IEMR’s Forecast? Verizon Wireless to enjoy the highest profitability

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Verizon Wireless AT&T Mobility Sprint NextelT-Mobile USA Leap Wireless MetroPCS U.S. Cellular Cincinnati Bell Average

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