Upwardly Mobile?The Challenges for Ireland’s Mobile Sector

Solutions for Virtual Mobile Operators

19th May 2003

Virgin Mobile – Why did it happen?

Virgin saw gap in market for consumer champion and youthful brand

– Little perceived difference between networks’ product, brand and user imagery, except Orange

General sense of lack of innovation, high costs, loaded with catches and stings

Opportunity for ‘white knight’ trusted brand

Virgin Mobile UK - Overview

Launched in UK in November 1999

Joint-venture between T-Mobile and Virgin

£100m shareholder investment, £115 debt financing in October 2000

UK’s first MVNO, now world’s largest

First consumer brand move into UK mobile industry

Virgin brand ethos

Innovation

Challenge

Quality

Value for Money

Fun!

… in the way we provide services to customers… in the way we work together… in the way we work with our business partners

Virgin Mobile created a proposition with personality

Consumer focus – targeting 16-34 yr olds

One tariff, no peak rates, more you use the cheaper it gets

Pay any way you like: pre-pay (with non-expiring vouchers) or pay monthly

No contracts to sign – we’re easy-going!

VirginXtras (VAS) on every phone, voice portal

Friendly and easy to access Customer Service

Virgin Mobile Economic Model is Key to Success

MVNO model has low capital intensity

Outsource partner management

Brand marketing efficiency

Low operating cost base – designed for consumer market economics

Prepay proposition highly cash efficient

Economic Model It Works!

• From growing start-up company in 2001 to strong bottom line results in 2003

• EBITDA achieved alongside fast customer growth

QUARTERLY EBITDA

Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03

EB

ITD

A

Strong Customer Growth and Market Share

Market Share Performance

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02

Shar

e of

Net

Add

s

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Mar

ket S

hare

% market share

Virgin Mobile % share of net adds

Best in class ARPU

Operator Date reportedAnnual No Line Rental

ARPU

Virgin Mobile

Orange

mmO2

Vodafone

Dec 31 2002

Sept 30 2002

Dec 31 2002

Sept 30 2002

£136

£124

£117

£121

2002 Performance Highlights

938k net additions, subscriber base up 65% to 2.38m

Revenue increased 65% to £288m

EBITDA of £16m, 37% better than plan

Over 90% of customers woulddefinitely/probably recommend Virgin Mobileto friends

2003 – “The business model comes of age”

Virgin Mobile The Outlook – Making money from higher bandwidth

High potential of our customer base - culturally open to using new services– person-to-person communication (voice, text, chat, picture

messaging, etc)

– Sport, fun, sex, personalisation

A brand that already provides consumers with entertainment, music, travel, and banking

Business model based on what we do best– Exciting service experience – “its show business”

Virgin Mobile The Outlook – UK and Beyond

UK business at the ‘tipping point’– Concept proven

– Growth accelerating despite slowing market

– Financial strength to develop further

Becoming established outside European arena– US

– Australia

Virgin Mobile is the ‘hot property’ in Europe– Courted by numerous players

– Market share opportunity for incumbents

– VM not bound by geography and licenses

Thank You

Damian BlackburnHead of Commercial Development

Damian.Blackburn@Virginmobile.com