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BMI Pakistan Telecom Report Q3, 2013 (Summary)

Note: 1 US$ = 100.305 PKR = 0.165 NOK

Postpaid subscribers as % of total market in Pakistan was 1.6% in 2012 as compared to 33.4% in theAsia Pacific region

59.2 63.967.8 72.2

75.2 77.7 80.282.8

01020304050607080

90

020,00040,00060,00080,000

100,000120,000140,000160,000

180,000

Mobile Subscribers Forecast

Mobile Phone Subscribers ('000)

Mobile Phone Subscribers/100 inhabitants

3.6 3.3 3.3 3.3 3.3 3.2 3 2.9

00.511.522.533.5

4

5,4005,5005,6005,7005,8005,9006,0006,1006,200

6,300

Fixed Lines

Main fixed lines ('000)

Main fixed lines/100 inhabitants

0

50

100

150

200

250

300

2010 2011 2012 2013f2014f2015f2016f2017f

ARPU (PKR)

Mobilink Telenor Average

0.0M

0.5M

1.0M

1.5M

2.0M

2.5M

3.0M

0M

10M

20M

30M

40M

2011 2012 Q1 2013

No. of Subscribers

Telenor MobilinkUfone PTCL Fixed LineWLL Broadband

10.5%

29.6%

24.9%

19.7%

15.3%

Market Share

Warid

Mobilink

Telenor

Ufone

Zong

Company 2011 2012 Q1 2013

AverageRevenue

Telenor US$0.80bn US$0.90bn US$0.20bnMobilink US$1.30bn US$1.10bnPTCL US$0.55bn US$0.60bn

EBITDATelenor US$296.7mn US$362.6mn US$81.9mnMobilink US$462.5mn US$488.3mn

CAPEXTelenor US$87.8mn US$123.6mn US$70.5mnMobilink US$261.2mn US$184.6mn

OperatingProfit

Telenor US$75.0mn (US$39.9mn) US$0.2mnPTCL US$112.2mn US$111.0mn

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By 2017, 162.4mn mobile subscribers have been envisaged, representing 82.8% penetration rate,up from 132.3mn in 2013

By 2017, it is forecasted that the number of broadband subscribers in Pakistan would have risen to5.0mn, a penetration rate of 2.5%

By 2017, the average blended ARPU of Mobilink and Telenor is expected to reach PKR203 By end-2017, 5.69mn fixed lines in service in Pakistan have been forecasted, representing a

penetration rate of 2.9% The increasingly availability of affordable internet access means that the number of individuals

accessing the internet is growing at an increasing rate The broadband segment is showing robust growth, primarily due to the increasing popularity of

mobile technologies WiMAX and EV-DO EV-DO accounted for 35.2% of the broadband market in January 2013, behind DSL's 38.6% market

share No date has been given for the auction of 3G licenses yet The government plans to auction three 3G licenses in the 1,900/2,100MHz band, which are to be

valid for 15 years, at a base price of US$210mn A mobile license for spectrum in the 800MHz band is to be available at a base price of US$155mn

for a duration of about eight years It is believed that Vodafone, NTT DoCoMo, AT&T, Qatar Telecom and Afghanistan's Roshan are

planning to participate in the 3G bidding Mobilink, Ufone and Zong Telecom are keen to bid for the 15-year 1,900/2,100MHz licenses 800MHz mobile license offers wider range (particularly useful in rural regions) and stronger ability

to penetrate buildings (beneficial in urban areas) Strong competition in VAS is emerging as operators look to combat the fall in ARPUs MNOs will need to educate their customers on the availability and access of VAS services Pakistan fell to 15th position in BMI's Asia Pacific Telecoms Risk/Reward Ratings with telecom

rating score of 44.5 Entrance of MVNOs to the market could lead to stronger growth in the mobile sector

PTA has set an initial license fee of US$5mn for MVNOs, valid for a period of 10 years Under-investment by PTCL has led to falling fixed line, and its reduction in employees has hitcustomer care centers

Although voice services account for the bulk of mobile usage at 78.5%, increasingly demand forbasic data services, such as SMS, are on the rise

Mobile telephony and the introduction of WiMAX networks are expected to cause a slowdown ingrowth in the WLL market

The cost of broadband services in Pakistan are roughly double the cost of the same services in India In January 2013, Telenor entered into a joint venture (JV) agreement with UK-based insurance

products provider MicroEnsure to introduce a range of insurance products In February 2013, Telenor Pakistan partnered with the Pakistan Poverty Alleviation Fund and

Tameer Microfinance Bank to provide financial services to poor/un-banked communities In April 2013, Telenor Pakistan and Tameer Bank jointly rolled out a new mobile savings account,dubbed Khushaal Munafa

Ufone was awarded a license to operate a Microfinance Bank by SBP in February 2013 Mobilink and Ufones network sharing agreement will help the two to reduce operating costs At the end of Q113, Telenor reported an MOU of 222 minutes, down from 238 minutes in Q112 but

up from 217 minutes in Q412 Data from Mobilink indicate that its MOU has been trending upwards in the last few years to reach

215 minutes in Q412, up from 209 minutes in Q411

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