Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 2 of 31

IN AN ARBITRATION UNDER THE INTERNATIONAL ARBITRATION RULES OF THE INTERNATIONAL CENTRE FOR DISPUTE RESOLUTION

DIGITELCOM LTD., : Craigmuir Chambers : P.O. BOX 71 : ROAD TOWN, TORTOLA : British Virgin Islands : : Case No. 50 494 T 00309 09 Claimant, : : v. : : SVERIGE AB, : Borgarfjordsgatan, 16 : P.O. Box 62 : Kista, Sweden : Post code: SE-164-94 : : Respondent. :

Update to August 27, 2010 Report and Summary of Damages Suffered by Claimant, Rebuttal of November 15, 2010 Expert Report of Respondent

Scott C Chandler Gregory P. Sadler

Submitted January 28, 2011

Page 1 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 3 of 31

TABLE OF CONTENTS I. Qualifications………………………………………………………………………3

II. Assignment and Material Considered…………………………………………...... 3

III. Update to August 27, 2010 Affirmative Report……………………………………4

IV. Rebuttal of November 15, 2010 Report of Respondent Expert…………………...19

V. Conclusion……………………………………………………………………….. 30

Page 2 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 4 of 31

I. Qualifications

1. I am the founder and currently the Managing Partner of Franklin Court Partners LLC, a Denver-based consultancy to telecommunications (telecom) companies on business strategy, valuation analysis, financing strategy, and litigation support. 2. Prior to founding Franklin Court Partners, LLC in 2002, I served as CFO and Senior Vice President for Rhythms NetConnections (“Rhythms”), a Competitive Local Exchange Carrier (“CLEC”). As part of my responsibilities at Rhythms between 1998 and 2001, I managed strategic relationships that involved the negotiation and implementation of framework agreements between Rhythms and other telecommunications service providers throughout the world. I also led the negotiation of the subsequent commercial agreements described in the framework agreement, and was responsible for many of the implementation tasks related to the framework and subsequent commercial agreements. I performed similar tasks during my work experience at U S WEST (now Qwest). 3. My qualifications are described in my previous report in this matter dated August 27, 2010 (“Affirmative Report”) (CEWS-1).1

II. Assignment and Material Considered

4. I have been asked by counsel for the Claimants to update my Affirmative Report based on information that counsel for the Claimants received from the Respondent as well as additional information that I have received. I was also asked to calculate an amount of damages suffered by the Claimant based upon the appreciated value of the AO St. Petersburg Telecom (“SPT”) and CJC Oblcom (“Oblcom”) stock owned by the Claimant, as well as the value of the Claimant’s right of first refusal (ROFR) to purchase additional equity ownership in SPT which it surrendered when it conveyed this right to the Respondent. In addition, I have been asked to review the report of Respondent’s expert Dominic Wreford served November 15, 2010 (“Wreford Report”) (REWS-1).2 I will refer to this report as my “Updated Report”.

1 CEWS-1 Expert Analysis, Report and Summary of Damages Suffered by Claimant, Scott C. Chandler and Gregory P. Sadler, August 27, 2010 2 REWS-1 Expert analysis of and commentary on the report of Scott C. Chandler and Gregory P. Sadler of 27 August 2020, Report of Dominic Wreford, 15 November 2010

Page 3 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 5 of 31

5. In preparing this Updated Report I was assisted by a number of individuals from Cornerstone Research and others working under my direction, and have relied, in part, on information provided by them. 6. The opinions stated in this Updated Report are based on the information that has been provided to me to date. I reserve the right to supplement my opinions based on additional information that the Claimant’s counsel may receive from the Respondent, any additional factual information that I might consider and the opinions expressed by the expert retained by the Respondent.

III. Update to August 27, 2010 Affirmative Report

7. My August 27, 2010 Affirmative Report included the following discussion:  Summary of Opinions  Opinion regarding non-performance by the Respondent of the Agreement for the operation, use and transfer of the CDMA License held by AO “St. Petersburg Telecom” (“CDMA Framework Agreement”) and calculation of damages suffered  Opinion regarding non-performance by the Respondent of the Preferred Partner Roaming Agreement (“Roaming Framework Agreement”) and calculation of damages suffered  “Opportunity Cost” Analysis of the Value of the Breached Framework Agreements (CDMA and Roaming)

A. Updated Summary of Opinions

8. Based on the materials I have reviewed, my analysis, as well as my experience in the telecommunications industry, it is my opinion, to a reasonable degree of professional certainty, that the Claimant (DigiTelCom) suffered damages by the actions of the Respondent (Tele2) related to these two framework agreements of $42,649,038 million ($36,248,392 - CDMA Framework Agreement, $6,400,646 million - Roaming Framework Agreement). These damages represent the value lost to DigiTelCom due to the actions of the

Page 4 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 6 of 31

Tele2 and its subsidiary (SPT), which prevented DigiTelCom and/or its affiliates from building out a CDMA-based network in St. Petersburg, as well as the failure of Respondent to allow Claimant’s nominees to use the Roaming Framework Agreement as a key part of their telecommunications development. For purposes of my calculations, I assumed the start date for the damages related to the CDMA Framework Agreement was January 1, 2004. The Roaming Framework agreement damage start date was January 1, 2005. This date is approximately 90 days after DigiTelCom notified Tele2 who would be the eligible affiliates to the Roaming Framework Agreement. 9. As mentioned in my Affirmative Report, in my opinion the Respondent breached the CMDA Framework Agreement by not fulfilling its contractual obligations required to implement the agreement.3 My opinion has been bolstered and supported by materials the Claimant has received from the Respondent that show the operational environment of SPT and lack of communication, coordination and cooperation during the Relevant Period of the implementation of the CDMA Framework Agreement. 10. These damages were calculated; consistent with my years of telecommunications industry experience, by assuming the value of each of the Framework Agreements had Tele2 properly performed its contractual obligations. The damages to DigiTelCom for the breach of the Framework Agreements were adjusted at a rate of 9% per year simple interest from the date damages were first incurred, which I understand is the statutory rate for breach of contract claims under New York law.

3 CEWS-1 at ¶ 22.

Page 5 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 7 of 31

11. Below is a comparison of my damage calculations as of August 27, 2010, and the calculations that accompany this Updated Report:

August 27, 2010 January 28, 2010 Difference Report Report Increase (Decrease)

CDMA Framework $34,253,079 $36,248,392 $1,995,313 Agreement

Roaming Framework $5,901,405 $6,400,646 $499,241 Agreement

Total $40,154,484 $42,649,038 $2,494,554

Exhibit C-100 contains the summary of damages as of January 28, 2011. One element of the increase in the calculated damages is the additional statutory interest for the damages as of January 28, 2011. Other changes in the damage calculations are discussed later in this Updated Report. 12. As discussed in my Affirmative Report, prior to selling its interest to Tele2, DigiTelCom owned 25.4 % of SPT and 36.6 % of Oblcom. (CEWS-1 at ¶ 36). DigiTelCom also had a right of first refusal (ROFR) to purchase the shares of SPT owned by the City of St. Petersburg. The value of this ROFR was part of the consideration conveyed to Tele2 when the Claimant sold its ownership interest in SPT/Oblcom. As discussed in Section II (E) of this Updated Report, I have now been provided information (by Tele2) to calculate the current equity value of SPT as well as the date and price that the City of St. Petersburg sold their shares to the Claimant. The damages associated with DigiTelCom’s surrender of its investment in SPT/Oblcom and its ROFR was $317 million to $685 million. In my opinion, these damages represent an alternative method of calculating the value of DigiTelCom’s damages that resulted from Tele2’s breach of contract.

Page 6 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 8 of 31

B. Opinion regarding the non-performance by Respondent of the CDMA Framework Agreement and calculation of damages suffered

13. In the August 27, 2010 Affirmative Report, I stated that successful implementation of a framework agreement in the telecom industry requires significant coordination, resources (human and financial), support and assistance from the local operations of the entity that is transferring the assets and providing the transition services. I have substantial personal experience related to such implementations, and understand very well what is required for such a transition to be successful. Based on my experience I also understand very well the reasons that can render such transition efforts unsuccessful. My experience is that there is usually a limited period of time where many of the tasks required for successful implementation of a telecom framework agreement need to be implemented. 14. Based upon my review of the information provided, and my years of operational experience in implementing telecom framework agreements, I previously identified some of the implementation tasks that invariably needed to be accomplished to implement the CDMA Framework Agreement that existed between DigiTelCom and Tele2/SPT:  Transfer of CDMA equipment owned by SPT to Claimant  Identification of key information regarding the CDMA equipment transferred (maintenance records, software revision levels, etc.)  Transfer of frequency license granted to SPT for wireless local loop services  Secure an agreement for lease of land for existing and new base stations  Secure an agreement for use of the SPT switch for the interconnection of voice calls and data  Secure facilities for the interconnection of voice calls and data (Interconnection Agreement)  Coordination with equipment vendors of the CDMA equipment to be transferred 15. My experience is that these tasks are accomplished by parties’ agreement, and the dedication of significant resources at the local level, particularly by the party that is the “transferor”. This local involvement is critically important, as this entity is the one with the most first hand knowledge of the information required regarding the assets to be transferred,

Page 7 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 9 of 31

as well as tasks to be performed to ensure the agreed upon items and concepts in the framework agreement are successfully implemented. 16. In my opinion, the Relevant Period for successful implementation of the CDMA Framework Agreement was from approximately July 15, 2003 to January 2004. This is based on information contained in the CDMA Framework Agreement and because the Claimant was seeking an early mover advantage in providing voice and data services to the market. From my experience this would have required significant operational resources dedicated or allocated by Tele2/SPT during the Relevant Period. My experience is that success of this transition depended upon significant involvement by the Tele2 corporate personnel to coordinate with SPT regarding the scope and timing of the activities that needed to be accomplished by the local representatives (SPT). Such a coordinated effort ensures that adequate, and timely, resources can be allocated and assigned to ensure the tasks required to implement the successfully the framework agreement can be fulfilled. 17. In my August 27, 2010 Affirmative Report, I identified a number of Tele2’s and SPT’s actions that, in my opinion, contributed to their inability, or failure, to perform their contractual obligations under the CDMA Framework Agreement.4 I will not reiterate those actions here, except to say that based upon additional data that I have seen as a result of the parties’ disclosure, and the supplemental affirmations of DigiTelCom’s witnesses, it remains my opinion that Tele2 breached fundamental obligations of the CDMA Framework Agreement. 18. For example, there appears to have been no direct involvement in the negotiation and execution of the CDMA Framework Agreement outside of Tele2 corporate representatives, and there appears to be no mention of the existence of the CDMA Agreement or its potential strategic impact on the St. Petersburg market at Tele2’s governance, Tele2 Russia or SPT.5 The Chairman of SPT at the time of the execution of the CDMA Framework Agreement, Yuri Dombrovsky, stated in his witness statement on November 12, 2010:

4 CEWS-1 at ¶ 24 5 Tribunal’s Decision regarding Document request #10, Claimants’ Request for Production of Documents: RedFern Schedule, “The Arbitral Tribunal notes the Respondent states there are no documents responsive to the request.”

Page 8 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 10 of 31

I was not directly involved in Tele2’s decision to acquire DigiTelCom’s shares in SPT and CJC Oblcom (“Oblcom”) or in the actual transaction.6

19. Further, SPT’s Director General (CEO) before and during the Relevant Period (from October 2001 to November 2003) was Maxim Zakhariev. Regarding his involvement in the negotiation of the CDMA Framework Agreement, its implementation, and strategic consequences for SPT, Mr. Zakhariev stated:

I was not involved in the negotiations of the transaction and never learned the details of the deal. (CWS-8 at ¶ 11).

20. In fact, Mr. Zakhariev did not learn about the purpose and content of the CDMA Framework Agreement until after it was signed; and he learned about the CDMA Framework Agreement’s “contents” from a DigiTelCom executive (Nina N. Nashnitsina), not a Tele2 or SPT representative:

Beginning in the mid summer of 2003, I was asked by a DigiTelCom representative, Nina N. Nashnitsina, to sign an agreement on behalf of SPT, which agreement was agreed by Tele2 and DigiTelCom. I told Ms. Nashnitsina that I was unaware of any agreement. I had never seen nor heard of any agreement to be signed by SPT. I advised Ms. Nashnitsina that I would inquire into her request within our organization. (CWS-8 at ¶ 12).

In the telecom industry, a Director or a CEO of a local operation has significant responsibility and has responsibilities, including responsibility for profit and loss, capital budget and local resources of the company. He or she is also responsible for directing the prioritization and allocation of resources (human and capital), particularly in a transition such as the one involved in this dispute. My experience is that in a high growth segment of telecom such as wireless, this is a constant and challenging process, which requires that the transferor cooperate with the transferee, the commitment of significant resources by the transferor, and the recognition that time is often the essence with such a transaction.

6 RWS-1 at ¶ 2

Page 9 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 11 of 31

21. As a former telecom service provider senior executive, and prior and current board member of a number of telecom companies, it would be highly unusual if there was no discussion of the CDMA Framework Agreement at or among the different levels of Tele2, especially at the local (SPT) level where the resources required to implement the agreement exist. This consultation is necessary for effective implementation of the CDMA Framework Agreement and its relationship by SPT, Tele2 Russia and Tele 2 corporate. Some of these elements include: (1) this agreement was key consideration to Tele2 being able to consolidate minority ownership in SPT (2) the CDMA Framework Agreement had significant operational and strategic implications for Tele2, Tele2 Russia and SPT. a. The resources required to implement the CDMA Framework Agreement would also be some of the key local resources required by SPT to grow and operate its newly developed GSM network, and the absence of resources dedicated by Tele2/SPT to the implementation of the CDMA Framework Agreement would seriously impair – if not doom to failure – that latter effort; b. In addition, I believe that St. Petersburg is and was Tele2’s largest Russian market, effective implementation of the CDMA Framework Agreement would facilitate another telecom competitor in Tele2’s largest Russian market, a fact that must have been evident to Tele2, and which it apparently attempted to impede.

22. From the information I have reviewed, the CDMA Framework Agreement appears to have been negotiated in a “vacuum” with little knowledge and no involvement at the Tele2 local level (Tele2 Russia or SPT). Such knowledge and participation by Tele2 local representatives was fundamental, and critical, to a successful transfer of the CDMA license and/or network. The absence of participation by Tele2 local representatives explains the delay in getting the SPT local personnel acknowledge even the existence of the CDMA Framework Agreement, and in not signing it until February 27, 2004. This was seven months after the CDMA Framework Agreement was executed and well past the start of the Relevant Period for

Page 10 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 12 of 31

the implementation of the many tasks required for the successful implementation of the transfer. In fact, it appears that one of the reasons that SPT did not acknowledge the existence of the CDMA Framework Agreement was that it may have been directed by Tele2 corporate not to sign the agreement and not focus valuable SPT resources on the required tasks to successfully implement the agreement. Maxim Zakhariev states:

I contacted Carl-Magnus Stenberg, the head of Tele2 (responsible for all operations, including St. Petersburg), to whom I reported directly, about Ms. Nashnitsina’s request that I sign an agreement on behalf of SPT. Mr. Stenberg told me to leave it alone and to stop wasting my time with former and minority shareholders. (CWS-8 at ¶ 13).

Again, it is my opinion, based upon my years of experience in the telecom industry, that this lack of coordination (which may have been intentional) was a breach by Tele2 of a fundamental obligation under the CDMA Agreement.

23. Critical also is an understanding of the SPT operating environment during the Relevant Period of the implementation of the CDMA Framework Agreement. The following information (taken from Tele 2’s publicly available data, including Annual Reports and press releases) reveals the explosive growth of SPT’ GSM network in Russia during this time:.

Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Avg Subs 26,261 38,072 56,308 79,822 93,763 91,449 82,299 70,346 67,020 66,004 Gross Intake 2,221 25,400 14,150 36,202 16,032 12,844 10,614 9,195 7,344 10,938 Disconnect (churn) (2,494) (1,505) (1,573) (1,751) (22,601) (10,903) (30,855) (12,860) (10,330) (9,985) gross intake / avg subs 8.5% 66.7% 25.1% 45.4% 17.1% 14.0% 12.9% 13.1% 11.0% 16.6% churn / avg subs 9.5% 4.0% 2.8% 2.2% 24.1% 11.9% 37.5% 18.3% 15.4% 15.1% Source: SPT Monthly Operational Reports 7

24. The information in this chart reveals extraordinarily high monthly customer growth (gross intake) activity during the entire Relevant Period of the implementation of the CDMA Framework Agreement. Based upon my telecom operational experience, anytime a company adds more than 10% to its customer base during a month it is experiencing dramatic growth. Such growth in a service provider operation such as SPT’s significantly taxes the human and system resources of the operation. This is because demands on the systems for installation,

7 C-95

Page 11 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 13 of 31

activation, deactivation, network planning (base stations, switching, backhaul, etc.) become nearly impossible to meet. Here, during the first three months of the Relevant Period, SPT was not only experiencing dramatic monthly growth, it was experiencing “hypergrowth”. As shown above SPT added over 75,000 new subscribers, an average of 25,000 new subscribers per month. SPT was doubling its installed base of June 2003 every month for the next 3 months, extraordinary growth for a company of SPT’s size. In my experience, telecom service providers experiencing such hypergrowth are operationally constrained. Virtually all of the company’s resources are focused on the build out of its own network (in this case Tele 2’s GSM network) and scaling the network in an attempt to meet the demands of this unprecedented growth. In such a case, resources for strategic initiatives such as new services, hiring more resources, network planning, etc. usually are deferred or ignored. This would include a strategic initiative such as implementation of the CDMA Framework Agreement. 25. It is also important to point out the resources that DigiTelCom was applying in attempt to implement the CDMA Framework Agreement during and after the Relevant Period. I have been provided by the Claimant a summary of costs that were incurred related to the attempted implementation of the CDMA Framework Agreement. The information provided to me showed these costs to be approximately $1.7 million. The timeframe for these costs were from 2003 to 2009. These costs included travel, housing for personnel, relocation costs, salaries and bonuses, telecom equipment and other costs.

C. Updated Damages due to Non-Performance of the CDMA Framework Agreement

26. Exhibit C-101 contains the updated detailed financial model, methodology, assumptions and damages calculated for Tele2’s breach of the CDMA Framework Agreement. The following is a reconciliation of the major differences between the updated damages compared to the damages calculated as of August 27, 2010:

Page 12 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 14 of 31

August 27, 2010 January 28, 2010 Difference Report Report

CDMA Framework $20,408,175 $20,466,423 $ 58,248 Agreement

Additional Statutory $12,844,904 $14,111,969 $ 1,267,065 Interest

Additional Costs $ 1,000,000 $ 1,670,000 $ 670,000 incurred by DigiTelCom

Total $34,253,079 $36,248,392 $1,995,313

27. The financial model and assumptions used to calculate the capital costs and monthly cash flows as the basis of the CDMA Framework Agreement damages represent a “real-life” financial model. The foundation of the CDMA Framework model I have used is based upon actual financial and operational models associated with the financing, launch and operation of another telecom company of similar size, technology, and relevant characteristics as represented by the CDMA Agreement here. This includes a number of valuation projects for telecom service provider assets. For example, one of these financial models was developed for VeloCom. VeloCom, together with its partners, Bell Canada and Qualcomm, built and operated one of the world’s largest fixed wireless telecom and data networks in Brazil, including major markets such as Rio de Janeiro and Sao Paulo, from 1998 through 2001. The VeloCom experience is very comparable to the CDMA Framework Agreement because: 1) the Network was built and operated using CDMA fixed wireless technology (Qualcomm was also a partner in the venture who developed and owns the CDMA intellectual property) 2) the regulatory framework in Brazil was very similar to that in Russia

Page 13 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 15 of 31

3) the wireless licenses were to be used for fixed purposes only and were precluded from providing mobility, plus the licenses had a fixed term and included minimum coverage requirements for the regions awarded and; 4) the market demographics and competitive landscape in Brazil was similar to that in Russia (high pent up demand, poor landline service and cellular being sold as a land line replacement) Mr. Sadler was responsible for the development of the business plans for the project that were used to successfully raise approximately $800 million of equity and $1.8 billion of debt used to fund the project. The wireless network was built as a pure start-up to an operation that eventually covered 68 million POPs and served several hundred thousand customers within two years of winning the licenses. 28. This “real-life” model was customized for some of the specifics of Russian and the St. Petersburg market. For example, the St Petersburg CDMA network is assumed to be built in 2004 vs. 1998 as in Brazil, the CDMA network had already commenced construction by SPT, plus the switch was in place and could have been partitioned for use by the CDMA network and dealers were in place who could sell the fixed handsets from existing locations versus having to develop and operate company owned retail outlets.

D. Opinion regarding non-performance by Respondent of the Roaming Framework Agreement and calculation of damages suffered

29. As discussed in the August 27, 2010 Affirmative Report, the Roaming Framework Agreement was signed between DigiTelCom and Respondent on July 15, 2003.8 This Agreement allowed DigiTelCom to designate two of its Central Asian Republic (CAR) affiliates to utilize the Tele2 network and roaming relationships that have and were to be established by Tele2. Further, the Claimant’s affiliates were also able to receive preferred pricing for the roaming services provided by this agreement. I am told that the Roaming Framework Agreement was triggered when the Claimant notified Tele2 of the eligible affiliates (e.g. KATEL and SoTel) and that this notification was done within 5 years of the execution of the Roaming Framework Agreement. The term of the agreement was ten years

8 CEWS-1 at ¶ 29.

Page 14 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 16 of 31

from the notification of the eligible affiliates (October 6, 2014), with the option for a five year renewal. 30. As discussed in the August 27, 2010 Affirmative Report, the Roaming Framework Agreement had significant value for the Claimant and was a key element of the consideration related the selling of its ownership in SPT. One such element is that the Roaming Framework Agreement would allow small CAR affiliates the option of not having to negotiate separate roaming agreements with each of the operators and countries where it desired to offer roaming. Based upon my experience, as well as discussions with wireless industry analysts who specialize in international roaming have confirmed that small wireless operators have a significant challenge negotiating these agreements. It is extremely time consuming and often does not lead to an agreement. This involves significant internal and third party costs and puts a smaller operator at a competitive disadvantage to other larger operators offering roaming services. 31. Another principal benefit of the Roaming Framework Agreement was the ability to purchase roaming services at preferential rates. The agreement would allow even small CAR affiliate operators access to Tele2 networks for roaming at the same rate as it provides to its “best” roaming customer. It would also allow these small operators to pay the same rate that Tele2 negotiated with their affiliate partners throughout the word plus a small up-charge of 5%. In my opinion, this would have given the DigiTelCom affiliates a significant cost structure advantage compared to their other options for its roaming services. 32. A third feature that this agreement has was to allow the CAR affiliates to have a unique Russian number. This was enabled by Tele2 providing up to 50,000 ISMI cards. Use of these cards could be used to allow a CAR affiliate roamer to have a dedicated Russian phone number when they are in Russia. From my experience this would have provided very unique market advantages. 33. KATEL’s current roaming offering is an excellent example of the challenges a small operator faces when trying to offer a competitive roaming product. Based upon my experience, information that I have received from the KATEL website, “secret shopper” calls

Page 15 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 17 of 31

as well as information received from KATEL the following are the key elements of KATEL’s roaming “offering”9:

 Equipment deposit: $200.00  Prepayment for the services $150.00  Price per minute: - roaming in Moscow $0,50 (without VAT)  - roaming in Moscow region $0,75 (without VAT)  Price per minute of long-distance calls (not including air time) in Moscow and Moscow region: - in the MTS coverage zone $0,30 (without VAT) - European part of Russia $0,70 (without VAT) - Asian part of Russia $1,00 (without VAT) - European countries $2,00 (without VAT) - North American countries $2,80 (without VAT) - African countries $3,60 (without VAT) - other countries $3,15 (without VAT) Thus, KATEL customer must incur a number of significant up front and ongoing costs, to roam outside the KATEL network. Not surprisingly, KATEL’s roaming service has largely been unsuccessful. According to KATEL, it had less than 50 roaming customers per month from 2005 to 2010. In my opinion, KATEL would have had significantly more roaming customers and traffic if Tele2 would have fulfilled its obligations under the Roaming Framework Agreement. 34. Based on my experience as a telecom executive and consultant, the Roaming Framework Agreement would have been a fundamental “game changer” for the roaming strategy for both KATEL and SoTel. They would have had the ability to develop a significantly differentiated roaming service utilizing the cost and other unique advantages that this agreement presented (e.g. Russian “vanity” numbers, etc.). Utilizing this differentiated roaming strategy would have allowed both KATEL and SoTel to garner a disproportionate share of the roamer segment of their market. From my telecom industry experience, this segment is the most valuable market segment for a wireless operator and make up a disproportionate percentage of profitability. 35. From my experience in the telecom industry, the group at Tele2 with responsibility for implementing the Roaming Framework Agreement would have been the roaming division at Tele2 corporate. This group would have had to coordinate with several other groups within

9 C-96

Page 16 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 18 of 31

Tele2 regarding implementation, and on-going maintenance, of several of the unique aspects of this agreement (ISMI numbers, MFN pricing, etc.). I have no information or data (from Tele2. Tele2 Russia, SPT, or otherwise) which demonstrates that the roaming group, or any group, within Tele2 even acknowledged the existence of the Roaming Framework Agreement, its operational and strategic ramifications, or made any effort to implement it. 36. I have experience in negotiating and implementing strategic “leveraging” agreements in the telecom industry similar to the major terms agreed to in the Roaming Framework Agreement. In my opinion, these agreements are extremely valuable for the smaller company because the agreement allows the smaller company the economies of scale of the larger company. For the larger company this type of agreement, can many times, be operational and economically challenging. 37. Exhibit C-102 contains the updated detailed financial model, methodology, assumptions and damages calculated for Tele2’s breach of the Roaming Framework Agreement. The following is a reconciliation of the major differences between the updated damages compared to the damages calculated as of August 27, 2010:

August 27, 2010 January 28, 2010 Difference Report Report

Roaming Framework $3,908,215 $4,137,713 $229,498 Agreement

Additional Statutory $1,993,190 $2,262,932 $269,742 Interest

Total $5,901,405 $6,400,646 $499,240

38. Parenthetically, Claimant requested as part of the disclosure process that Tele2 produce to it data reflecting what the pricing “would have been” to KATEL and SoTel if Tele2 had fulfilled its obligations under the Roaming Framework Agreement. In my experience this information is readily available, easily accessible, and requires little effort to

Page 17 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 19 of 31

produce the data when demanded. The Claimant received nothing of the sort from Tele 2 in its response to Claimant’s demand for this data. Rather, Claimant was provided information that appeared to be roaming rates for some Tele2 networks, but did not appear to be the “most favored nation” pricing agreed upon in the Roaming Framework Agreement. Neither was Claimant given any of the historical or current rates for roaming on the Tele2 affiliate networks10. In addition, the Respondent’s Expert Report references a Tele2 “rate” for roaming, but his roaming elements are different from the information provided Claimant by Tele2 and include only a price point, which cannot possibly be correct or complete, and which is entirely worthless in any thoughtful, competent evaluation of this element of the claim. 39. Because Tele 2 does not challenge the assumptions contained in this portion of my damage analysis with any useable data of its own, I assume that it is unable to do so, and that my assumptions are thus accurate.

E. “Calculation of Damages Associated with DigiTelCom’s surrender of investment and its Right of First Refusal

40. In the August 27, 2010 Report, I calculated the value of what DigiTelCom surrendered when it transferred its ownership in SPT11. As stated in August 27, 2010 Report the estimated current value of SPT was based on third party estimates of current subscribers and was done at an “enterprise value” level, as we did not know certain elements of SPT’s financial condition at that time. As discussed earlier in the Report, the Respondent did provide in the disclosure process some financial and operational information regarding SPT. The following is an update to the initial estimated value based on the SPT financial and operational information provided. 41. These Alternative Damages were calculated by placing a value on SPT as of today using the actual number of subscribers reported by SPT and a range of multiples from our research of other comparable transactions which results in a valuation of SPT’s enterprise value. We then reduced this enterprise valuation range by the actual reported debt at SPT to

10 Tribunal’s Decision regarding Document request #11, Claimants’ Request for Production of Documents: RedFern Schedule 11 As discussed in the August 27, 2010 Report, prior to entering into the CMDA and Roaming Framework Agreements in July 2003, DigiTelCom was a minority shareholder in SPT. DigiTelCom owned 25.4% of SPT, 36.6% of Oblcom and had a Right of First Refusal to purchase an additional 14% of SPT that was owned by the City of St. Petersburg. (CEWS-1 at ¶ 36).

Page 18 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 20 of 31

calculate a value of the equity ownership at SPT. Based upon these valuations we have determined that if DigiTelCom’s loss as a result of selling its 25.4% equity interest in SPT to Tele2 would range from $194 million to $431 million. Additionally, in connection with the sale of its interest to SPT DigiTelCom also agreed to waive its Right of First Refusal on the 14% equity interest owned by the City of St Petersburg which has an incremental value of $123 million to $254 million that DigiTelCom also lost, bringing the total Alternative damages to $317 million to $685 million. These Alternative Damages represent the value that DigiTelCom lost and Tele2 gained as a result of Tele2’s breach of the CDMA and Roaming Framework Agreements. DigiTelCom would have never agreed to sell its equity interest in SPT and also give up their Right of First Refusal on the 14% equity interest owned by the City of St Petersburg if it knew that Tele2 would breach the CDMA and Roaming Framework Agreements. The detailed calculation of the Alternative Damages is included in Exhibit C-103.

IV. Rebuttal of November 15, 2010 Report of Respondent Expert

42. This section of the Report will provide my comments on Mr. Wreford’s November 15, 2010 report, “Expert analysis of and commentary on the report of Scott C. Chandler and Gregory P. Sadler of 27 August 2010”. 43. Preliminarily, it is my opinion that many of Mr. Wreford’s comments, in addition to a number of his comments being wrong, demonstrate a general lack of telecom industry expertise, and experience in the wireless voice/data industry in particular. This is apparent in several of Mr. Wreford’s comments and observations regarding some of the most sensitive components of the CDMA Framework Agreement damages calculation.

A. Limited Telecom Industry Knowledge / No Operational Telecom Experience

44. Mr. Wreford appears to hold himself out as an expert in forensic accounting.12 Mr. Wreford has listed 28 “example” projects, of which only three appear to be at all related to the telecom industry, and then only tangentially. Mr. Wreford also does not appear to have any

12 REWS-1 at Appendix 1.

Page 19 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 21 of 31

operational telecom experience. The telecom industry is complex and extremely specialized, and understanding it requires specialized experience and training. The absence of that experience and training often leads to erroneous analyses and assessments, and flawed logic and conclusions. This lack of telecom operational experience is undoubtedly one reason why Mr. Wreford does not opine on whether the Respondent breached the CDMA and Roaming Framework Agreements.13 45. I noted several examples in Mr. Wreford’s report where this lack of telecom operational experience reveals that he does not understand fundamental a issue in this dispute, viz. that the two framework agreements signed in July 2003 where never implemented as a result of the Respondent’s actions. His comments in paragraph 35 of his report suggest that the only task that Tele2/SPT failed to do in the CDMA Framework Agreement was simply to transfer SPT’s CDMA license. Similarly, in paragraph 53, he further states “… at the conclusion of the CDMA (Framework) Agreement”, as if just signing that agreement concluded all of the Respondent’s obligations under that agreement. 46. These and other examples reveal that Mr. Wreford does not understand the difference between a framework agreement and the resulting (and necessary) supporting activities and agreements that must be performed before a transaction such as the one contemplated here could occur. In my opinion, his telecom analysis – such as it is – is not only a crucial, but a required part of understanding this difference and being able to opine as to my calculations of the damages suffered. The conclusion of the negotiation of a framework agreement is just the beginning of the many tasks and steps required for successful implementation.

B. Analysis of Mr. Wreford’s Comments and Observations – CDMA Framework Agreement

47. I have analyzed Mr. Wreford’s comments and observations of my August 27, 2010 report. I have classified his comments and observations into four major categories for that Agreement:

13 CEWS-1 at ¶ 9.

Page 20 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 22 of 31

Category Description

1 Comment or observation by Mr. Wreford regarding assumptions included with this updated Report

2 Valid comment or observation by Mr. Wreford, incorporated into the updated Report

3 Comment or observation by Mr. Wreford not supported by data and appears to show lack of telecom expertise and/or experience

4 Other comments and observations by Mr. Wreford

48. Exhibit C-104 is a listing of items in category 1 related to the CDMA Framework Agreement. Exhibit C-105 is a listing of items in category 2 related to the CDMA Framework Agreement.

49. I have identified the following items noted in Mr. Wreford’s report that are not supported by data and which reveal a lack of telecom expertise and/or experience (Category 3):

 St. Petersburg population (Licensed Pops)  Comments regarding termination of CDMA license  Alleged speculative nature of DigiTelCom’s business

50. Preliminarily, and as I stated earlier in this Updated Report, the methodology I used to calculate the value to DigiTelCom of being able to provide voice and data services in the St. Petersburg market was to utilize the assets and services discussed in the CDMA Framework Agreement, and other elements that would have part of the implementation process. I created a financial model to calculate the annual cash flows of the CDMA business assuming that Tele2/SPT did not breach its obligations of the CDMA Framework Agreement. I then utilized a standard telecom industry method of calculating value using an accepted industry model that contains the typical elements of a wireless voice and data business. This methodology has

Page 21 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 23 of 31

been used frequently by me and others in the telecom industry, to value telecom assets both for investment banking purposes (debt/equity raise, buy/sell, fairness letter, etc) as well as damages calculations for other litigation assignments. 51. St. Petersburg population (Licensed POPs). Mr. Wreford states that my damages are overstated due to significantly overstating the population covered by the CDMA license under the CDMA Framework Agreement (the addressable market).14 He further states that the appropriate figure to use in our model is based on the census figure for St. Petersburg as of 2002. This figure is 4.66 million. This is a significant decrease in the population figure I used to derive addressable market for the CDMA business. In fact, Mr. Wreford says that if he makes his recommended reduction to the population figure used in our model, there would be no loss. (REWS-1 at ¶ 95). Mr. Wreford’s approach is simply wrong. 52. My extensive telecom experience has shown that the addressable market (licensed population in this case) is always one of the most sensitive variables in any telecom asset valuation. My experience in international emerging markets is that using only the census figure significantly understates the addressable market. That is due to a large base of the population that is invariably unreported. Based on my experience, industry knowledge, and discussions with industry analysts, this is true in the large Russian markets such as Moscow and St. Petersburg; and this conclusion is supported in research15 on the subject and telecom analyst reports. For example, Advanced Communications and Media (AC & M) reported in its analysis of Russian mobile subscribers in 2005:

Please note that penetration figures are calculated based on official data from 2002 population census (17 mln for Moscow and 6.3 mln for St.Pete). Reportedly, the population in Moscow License Area reaches as high as 23-25 mln while St.Pete License Area population figure is above 7 mln16

53. In addition, my work with telecom investment bankers and investors that are focused on Eastern European markets, such as Russia, reveals that even today this census understatement continues to be an issue. This is significant not only for valuation purposes, but also for operational purposes, as it is critical to any realistic network design and capacity

14 REWS-1 at ¶¶ 92-93. 15 The 2002 Russian Census and the Future of the Russian Population, PONARS Policy Memo 319, Dmitry Gorenburg, The CNA Corporation, November 2003 16 www.acm-consulting.com/news-and-data/market-news.html?start=16

Page 22 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 24 of 31

planning. Bankers and research analysts are constantly looking for “analogs” to predict how much the census understatement is for the telecom industry. Indeed, I know that telecom investors and developers invariably track growth in driver’s licenses, vehicle registrations, etc. as better ways to better calculate the amount and growth of the “true” population. 54. One way to check the reasonableness of Mr. Wreford’s conclusion is to compare his figure to the number of cellular subscribers currently in St. Petersburg. Advanced Communications and Media (AC & M) reported that the St. Petersburg region had 12.2 million wireless subscribers as of June 30, 2010. That is a significantly higher figure than the 4.7 million population as reported through the census. Operational statistics provided by the Claimant show that SPT had 2.1 million subscribers as of November 30, 2010.17 If one used Mr. Wreford’s census figure, then almost 50% of the population is on the SPT network, even though it is only the fourth largest provider in Russia. AC & M reported that Tele2 had approximately 16% market share in the St. Petersburg market as of June 30, 2010. 55. Mr. Wreford’s statement in his November 15, 2010 Report that my model is significantly overstated because I have not adjusted my “assumption as to the population of St. Petersburg to bring it into line with census data”, is flatly inconsistent with customary telecom industry addressable market assessments, as well as with the relevant telecom literature on the subject,18 and he fails to grasp how the industry calculates addressable market in emerging markets with a well recognized under reporting of census. He also appears to not have done a reasonableness check on his proposed change, even with information readily available from his own client. 56. Comments regarding termination of CDMA license - Mr. Wreford also states that I incorrectly calculated damages because I assumed the CDMA license would be extended beyond its original date of expiration,19 suggesting that the government would not cooperate with this entity and shut it down. Again, his underlying assessment is not based on, or supported by, experience in the telecom industry. As will be shown below, there is significant precedent globally, regionally and in Russia regarding regulatory agencies renewing and/or migrating licensed spectrum for wireless operators, especially providers with viable business models that are providing a valuable service in the market. My experience is that the latter

17 C-95 18 REWS-1 at ¶ 22(c). 19 REWS-1 at ¶¶ 80-84

Page 23 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 25 of 31

result is the rule rather than the exception, especially for innovative solutions that are providing value to consumers and businesses as well as stimulating competition among other telecom providers. 57. My experience in the telecom industry for the last 25 years has demonstrated continued increase value in licensed spectrum. This value has been generated by the continued increase in the use of wireless as a “luxury” telecom service, to one that is now becoming the primary form of communications throughout the world. Regulatory bodies have played a crucial role in helping create this change. The U.S. and other of the early markets for wireless utilized a concept called “pioneer’s preference” to grant spectrum to innovative business plans and existing operators that were going to offer new and innovative technologies and services. There are numerous examples of significant value created by entities that have utilized this strategy (examples include Clearwire, FleetCall, OpenRange in the U.S.). My experience is that regulatory bodies in other countries have also followed this strategy. In my opinion, the licensed spectrum granted to SPT for use for CDMA “wireless local loop” was an example of the concept of pioneer’s preference. 58. The increase in the value and the use of wireless frequencies around the world has resulted in regulatory bodies working together to coordinate the allocation and use of frequencies. My experience generally has shown that in these instances where spectrum is to be cleared out for reallocation (as was the case with the relevant frequencies here); the operator(s) affected were given notice and provided alternative spectrum frequencies. 59. In my opinion, this is also the case in Russia and adjacent markets. I am familiar with numerous examples of the Russian government extending existing licenses, or if the license is not extended, by migrating an operator’s customers to alternative wireless frequencies. Even Tele2 was able to negotiate successfully in 2010 the ability to continue to utilize licensed spectrum for 17 GSM regions which it was awarded in 2007. Indeed, I am not aware of, nor have I been able to identify, even a single example of a government or regulatory body shutting down CDMA operators at the end of 2010, especially an operator such at DigiTelCom that would have had a significant customer base by that time. In fact, keeping additional competitors in the market is frequently a government goal because it promotes price and operational efficiencies. Indeed, terminating consumer or business service would create a significant public “firestorm” for the government. I have personal experience in situations

Page 24 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 26 of 31

where the government will step in and refuse to let creditors shut down bankrupt telecom service providers, citing “public good” and necessity. 60. One further comment on this topic is in order. Based on information recently disseminated by the Russian government it appears that the original decision to use the DigiTelCom dedicated frequencies for television has been modified and is not being used for digital TV in Russia, including St. Petersburg. There appears to be regulatory uncertainty whether the frequency bands in the 800 MHZ range are the best frequencies for digital TV in Russia, and that other frequency ranges may be better suited technically due to propagation characteristics and the large geographical distances that need to be serviced. Indeed the most recent discussion, captured in a January 22, 2011, article (C-97) is that these frequencies not be used for digital TV but, rather, licensed for next generation (4G or LTE) service If this result does in fact occur, and if DigiTelCom previously had licensed spectrum in this space, it becomes much more likely that Claimant would be granted some of the 4G/LTE spectrum, a highly valuable asset. Being unable to take advantage of this additional value, because it was unable to build out its network, would substantially increase the magnitude of Claimant’s loss. 61. Speculative Nature of CDMA Damages Model - Mr. Wreford states that my model is speculative, entirely hypothetical and there is no historical financial data upon which to build or compare the results of my calculations. In such circumstances, the usefulness of such model depends on the robustness of the assumptions used to create it.20 Having done a number of valuations of start-up telecom businesses and being a founder and Chief Financial Officer of one, I agree that the usefulness of any financial model is based on the rigor and quality of the assumptions and comparison with other similar business models and plans. 62. While DigiTelCom’s proposed CDMA business at the time that the CDMA Framework Agreement was executed did not have any commercial customers, that does not mean it was speculative. There were a number of existing assets that would have allowed DigiTelCom a rapid market entry. In addition to the licensed spectrum, there was CDMA equipment and six base stations that covered an attractive market area in St. Petersburg. I understand that DigiTelCom’s plan was to begin offering voice and data services in the fourth quarter of 2003. As mentioned, in my August 27, 2010 Report, the attractive aspect of this

20 REWS-1 at ¶¶ 54 and 55

Page 25 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 27 of 31

network model was that it allowed a business to rapidly rollout and “cherry pick” the best areas of St. Petersburg without having to have an entire market covered prior to launch. 63. As discussed earlier in this Updated Report, both Greg Sadler and I have substantial experience with telecom business models very similar to the DigiTelCom CDMA model. I also work with a number of wireless broadband providers in the United States that have a similar “neighborhood by neighborhood” models, and many have higher penetration and operating margins than what was projected for DigiTelCom. There are also numerous similar business models in Russia and adjacent markets. These include companies such as SkyLink, Yota, Metrosvyaz, Freshtel, PeopleNet, ITC, Pentelecom. For example, as of July 2010, Yota has approximately 350,000 subscribers in Moscow and 120,000 in St. Petersburg.21 This result is impressive as Yota did not start offering wireless services in St. Petersburg until 2009 several years after DigiTelCom’s launch. SkyLink, too, reportedly has 2% market share in St. Petersburg. Significantly, several of these providers do not have a true voice and data offering (many are offering voice using voice over IP (VoIP) technology). DigiTelCom’s CDMA solution would have allowed digital voice and data, which in my opinion is a superior product. 64. There are several other items in Mr. Wreford’s report that deserve comment (Category 4)

 MultiCom financial model (C-4)  September 15, 2003 letter from Ross Jacoby (C-5)

65. Mr. Wreford references a business model in his report called the MultiCom business plan. He states in his November 15, 2010 report that the purpose of that plan was to support the process of allowing DigiTelCom to utilize the CDMA license related to the CDMA Framework Agreement. He compares some of the assumptions and projections in MultiCom model compared to my damage model and states that, in his opinion, my assumptions are “aggressive when compared a business plan prepared by MultiCom”.22 I have reviewed the summary information provided to me related to that model. It is irrelevant to any damage model or calculation in this case, in part because:

21 Discussion with Director General of Yota, Mr. Denis Sverdlov

22 REWS-1 at ¶ 19

Page 26 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 28 of 31

 MultiCom model had no input from DigiTelCom23. Indeed it is unclear who prepared it, or why.  DigiTelCom did not even receive a copy of this document until 2004  The purpose of this model is entirely unknown  MutiCom model does not appear to be done in a manner designed to calculate a valuation, and does not have investor/third party rigor and quality  Unclear as to the strategy utilized in the model 66. Mr. Wreford references in several sections of his November 15, 2010 a letter from Ross Jacoby. He states that this letter somehow establishes a value for the CDMA Business that was part of the consideration of DigiTelCom selling its interest in SPT. I did not consider this letter relevant to my assignment as it is unclear to me the purpose of this letter. My assignment was to calculate a valuation of the DigiTelCom’s CDMA business in St. Petersburg if the Respondent’s have not breached their obligations under the CDMA Framework Agreement.

C. Analysis of Mr. Wreford’s Comments and Observations – Roaming Framework Agreement

67. I have analyzed Mr. Wreford’s comments and observations of my August 27, 2010 Affirmative Report that he detailed in his November 15, 2010 report for both the Roaming Framework Agreement. I have classified his comments and observations into three major categories for that Agreement:

23 This fact is even acknowledged by Mr. Wreford (Footnote 4, Expert analysis of and commentary on the report of Scott C. Chandler and Gregory P. Sadler of 27 August 2020, Report of Dominic Wreford, 15 November 2010

Page 27 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 29 of 31

Category Description

1 Comment or observation by Mr. Wreford addressed in the explanation of assumptions included with this updated Report

2 Valid comment or observation by Mr. Wreford, incorporated into the updated Report

3 Comment or observation by Mr. Wreford not supported by data and appears to show lack of telecom expertise and/or experience

68. Preliminarily, the process and methodology I used to calculate the damages sustained was to evaluate the matter as if I was a consultant hired by KATEL and SoTel as part of their team to analyze the pricing and other key attributes that would have been available to them under this strategic agreement. That information would be critical to developing a strategy of how to utilize the speed to market and pricing advantages that this agreement would offer. 69. Exhibit C-106 is a listing of items category 1 related to the Roaming Framework Agreement. Exhibit C-107 is a listing of items in category 2 related to the Roaming Framework Agreement. 70. Similar to the CDMA Framework Agreement, I identified the following items noted in Mr. Wreford’s report related to the Roaming Framework Agreement that are not supported by data and that demonstrate a lack of telecom expertise and/or experience (Category 3):

 Claim that KATEL currently has “widespread” roaming;  Roaming “rates” Mr. Wreford identifies in his Report appear to have no basis.

71. Claim that KATEL currently has “widespread” roaming – Mr. Wreford states in his November 15, 2010 Report that KATEL has “widespread” roaming.24, apparently basing this statement on his review of the roaming section of KATEL’s website (www. Katel.kg/roaming/). Even a cursory review of that webpage identifies many of the current challenges that KATEL has in its roaming offering that I identified earlier in this Updated Report. Mr. Wreford also does not appear to perform any confirmatory work to understand

24 REWS-1 at ¶ 67

Page 28 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 30 of 31

KATEL’s roaming offering by interviewing customers, secret shopper, etc. His comment of “widespread” roaming suggests that KATEL has been able to mitigate its damages caused by Tele2 breaching the Roaming Framework Agreement. As stated earlier in the Updated Report, the current offering that Mr. Wreford claims to be “widespread” only had 64 customers in 2009, less than 0.1 % of KATEL’s subscribers. By any assessment, this is certainly not a “widespread” roaming business. 72. Roaming “rates” Mr. Wreford identifies in his Report appear to have no basis – Mr. Wreford states in his November 15, 2010 Report that he has been provided the current roaming “rates” that would have been provided to both KATEL and SoTel under the Roaming Framework Agreement:

“Mr. Chandler appears to be basing these costs on estimates. I have been provided with information from Tele2 that their current rates are (i) Inbound roaming: 0.36 EUR/minute (ii) Outbound roaming: EU 2.5 SEK/minute, USA 16 SEK/Minute, and Russia 36 SEK/Minute”25

73. However, this information is not in the format of pricing that was discussed in the Roaming Framework between the parties. As noted, roaming service was to be priced as if it was provided on a Tele2 network or through a partner. If on the Tele2 network it would be at MFN and if on an affiliate, it was to be priced at same cost that Tele2 pays plus 5%. His statement of what Tele2’s “rates” above has no correspondence to that type of structure. In fact, one is unable to discern precisely what this “roaming rate” represents. Second, I tried to compare his “rates” to some of the information that was provided by the Respondent and which was “claimed” by it to be all of the rates that would have been charged to the Claimant.26. I was not able to reconcile these and noted the pricing structure stated above was different that what was produced by Tele 2. In addition, pricing for one type of service (inbound roaming – priced in Euros) is different than pricing for another type of service (outbound roaming – priced in Swedish Kronas). Third, It is simply unclear that this is the rate that Tele2 is charging to end users for roaming, or if this is the “cost” that would have been charged under the breached agreement.

25 REWS-1 at ¶ 234 26 Tribunal’s Decision regarding Document request #11, Claimants’ Request for Production of Documents: RedFern Schedule

Page 29 Case 1:12-cv-03082-RJS Document 3-21 Filed 12/23/11 Page 31 of 31

74. Mr. Wreford then states that these "costs" are substantially higher than the estimated costs that I used in my August 27, 2010 damage calculations. As stated earlier in this Updated Report, Tele2 is the only source of what their roaming costs would be under a strategic preferred partner agreement such as the Roaming Framework Agreement. In my opinion, Mr. Wreford's statement shows a lack of telecom and wireless industry knowledge regarding roaming pricing and rate structures. 75. These and other comments again show Mr.Wreford's lack of telecom industry knowledge of the importance that a strategic and potential "game changing" agreement of this type has for a small wireless provider in a smaller country. He appears not to understand the value to small wireless providers such as KATEL and SoTel in the speed to market and attendant cost advantages. He also does not seem to understand and appreciate the complexity, comprehensiveness and changing nature of the "rate table" for roaming that would have existed to implement the Roaming Framework Agreement.

V. Conclusion

76. I declare that the foregoing accurately reflects my opinion in this matter.

cear/('', /- 3/ - 1/ Scott C. Chandler Date

Page 30