Nokia Networks – APAC Update

Simon Beresford-Wylie Senior Vice President, APAC Nokia Networks

1 © NOKIA Talks Vision and Strategy in China 2004 Outline

• APAC Review 2003

• The mobile infrastructure market in APAC 2004-2007

• Focus on India

• Summary

2 © NOKIA Talks Vision and Strategy in China 2004 Nokia Networks in APAC

• Leading provider of network infrastructure, service delivery platforms and related services

S.Korea • Leader in GSM, EDGE and Japan WCDMA networks • Regional HQ in Singapore Taiwan • Offices in 12 countries across India the region Philippines • Nearly 1000 people Thailand Vietnam supporting Sales & Marketing, Malaysia Delivery Services and Support Singapore • Networks represented 19% of Indonesia Nokia’s net sales in 2003

Australia

New Zealand 3 © NOKIA Talks Vision and Strategy in China 2004 Review of Networks in APAC 2003

• 2H 2003 - Resumption of Capex investment by operators

• Strong Growth in key markets of Philippines and Thailand

• Significant WCDMA wins in Taiwan and Singapore

• Strong market share gains in India, Indonesia and Thailand

• Good progress on EDGE deployment

4 © NOKIA Talks Vision and Strategy in China 2004 Networks gained market share in 2003 Overall global market share all mobile standards, 12 month rolling average

30 %

Ericsson Nokia 20 % Siemens Nor t el Lucent Mo t o r o la 10 % Alcat el Ot h er NEC 0 % Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04

(Includes infrastructure & services – all technologies)

Source: Nokia May 2004

5 © NOKIA Talks Vision and Strategy in China 2004 The Mobile Infrastructure Market in APAC

6 © NOKIA Talks Vision and Strategy in China 2004 Key Market Trends

• Strong progress in WCDMA and EDGE Deployments both globally and regionally

• Healthy growth continues in Mobile Services market • Voice & rich call service CAGR 5% (2003-2008) • Data Services CAGR 30% (2003-2008)

• Operators outsource Network Services in a bid to sharpen focus and improve cost competitiveness

• Significant subscriber growth in Emerging or New Growth Markets -> 2B subs globally by 2008 as voice drive penetration

7 © NOKIA Talks Vision and Strategy in China 2004 Key Market Trends - Voice drives penetration

• New Growth Markets will deliver majority of the 2bn subs growth Target: 2 Billion subscribers by 2008 • Majority of voice growth will come 2.3 from lower income segments 2.1 TCO –50% 1.9 • Growth is driven by lower Total TCO –25% Cost of Ownership (TCO) 1.7 1.5 TCO • New user segments can become 1.3 (current) very active consumers 1.1 2003 global penetration only 22% • Key services will be mobile voice Source: Nokia and basic messaging initially, but will grow over time

8 © NOKIA Talks Vision and Strategy in China 2004 Nokia Networks in APAC - WCDMA/EDGE Presence WCDMA

WCDMA and EDGE JapanJapan EDGE S Korea Cdma 1x operators

TaiwanTaiwan IndiaIndia HongHong KongKong Vietnam ThailandThailand PhilippinesPhilippines

SingaporeSingapore

IndonesiaIndonesia AustraliaAustralia

Source: Nokia New Zealand 9 © NOKIA Talks Vision and Strategy in China 2004 Forecast of subscriber growth 2004-7 in APAC

Subscriber NET Adds 2004-7

120.00

100.00 Ca. 200m new subs over next 3 years 80.00

60.00

40.00

20.00

0.00

n nd sia m India a y land Japa Korea a Brunei Vietna Taiwan Indonesia Thail Mala AustraliaSri Lanka Myanmar Philippines CambodiaSingapore Bangladesh New Ze Subscriber NET Adds

Source: Nokia

10 © NOKIA Talks Vision and Strategy in China 2004 APAC Market Characteristics

Two distinct market segments exist requiring distinct strategies:

• Japan, Taiwan, Australia and Singapore drive WCDMA and capex ‘refresh’

• The New Growth Markets of India, Indonesia, Thailand & Philippines drive growth with a substantial 80% subscriber Net additions in APAC by 2007

CDMA standard has not been able to build greater presence in the region outside Korea and Japan although in India Reliance has had a good run

11 © NOKIA Talks Vision and Strategy in China 2004 WCDMA in APAC

Wide scale commercial WCDMA 3G launches by year end 2004, with over 50 networks expected worldwide. Of these close to 20 will be in APAC

• Japan, Taiwan, Australia, Singapore and Hong Kong lead the WCDMA growth and a related move into next generation core networks - Of the 20 launches in APAC Nokia will supply to at least 10 operators

• Next Generation Core Networks which include ‘intelligent Content Delivery System’, ‘PoC’ and ‘IP Multimedia Subsystem’ will pave the way to extensive Mobile IP capability

• Commercial HSDPA functionality available in networks and terminals within the 2005-2006 timeframe

12 © NOKIA Talks Vision and Strategy in China 2004 New Growth Markets in APAC

India, Indonesia, Thailand & Philippines key markets - Vietnam and Bangladesh offer market share opportunity for Nokia Networks

Operator business cases for Network coverage rollout over large areas with the prospect of attracting low ARPUs requires significant cost advantage:

• Solutions that lower total cost of ownership to enable strong subscriber growth with low ARPU

• Solutions that minimise customer management e.g. E-Refill for small top- ups, Customer Selfcare and AMR Half-rate for better utilisation of network capacity

• Managed Services as a way of improving QoS whilst lowering Network OPEX

• End-to-end solution including terminals

13 © NOKIA Talks Vision and Strategy in China 2004 Focus on India

14 © NOKIA Talks Vision and Strategy in China 2004 Indian Economy – the perfect storm

GDP growth of 8.1% Crosses $110bn For 2003-04 (10% in In forex reserves Q3 of FY) 300m middle class with 44% population < 19 yrs

Expected to create 2m jobs In IT/telecom in 5 years Telecom fastest growing Sector of economy

4th largest economy in PPP 10th most industrialized nation Largest democracy in the World with stable govt. and Telecom friendly regulator 15 © NOKIA Talks Vision and Strategy in China 2004 The India – China Telecom Growth Equation

CHINA(mio.) INDIA (000’s) 210 14,000

200 13,000

190 China Mobile Growth since launch in 1990 12,000 11,000 180 10,000 160 India's Mobile Market – September 2001 is 9,000 140 equal to China’s customers in mid- 1995. 8,000 120 7,000

100 6,000 China takes 4 years to 5,000 80 reach 1 mio. 4,000 60 3,000 40 2,000

20 1,000

0 0 1990 1991 2001 1992 1993 1994 1998 1996 2002 1999 2000 1997 1995 2003

16 © NOKIA Talks Vision and Strategy in China 2004 Subscriber Net Adds 2001 – 2003 in APAC India represents fastest growth 6000

5000

4000 India 3000 Indonesia Philippines 2000 Thailand Malaysia 1000 Korea 0 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 -1000

Source: COAI

17 © NOKIA Talks Vision and Strategy in China 2004 India represents among the largest untapped telecom potential in the developing world

Percent of Percent Percent Average Average Population Covered by Covered by Geographic Density of Density of Uncovered Country Covered One Operator Multiple Operators Coverage Covered Areas Areas Brazil 68.2% 24.2% 44.9% 10.9% 129.6 7.4

China 72.7% 72.7% - 25.3% 391.9 49.8

India 41.4% 16.2% 25.2% 18.0% 754.8 234.8

Indonesia 62.9% 12.7% 50.2% 9.4% 812.9 49.8

Russia 77.6% 21.6% 56.0% 9.7% 72.2 2.2

Vietnam 71.7% 26.8% 44.9% 31.7% 553.0 101.7

Source: TESFA Report April 2004

18 © NOKIA Talks Vision and Strategy in China 2004 Tremendous Opportunity for Network Growth Overlay of Coverage on Population

Population Operator Density Coverage None OneMultiple >755 377 to 755 188 to 377 94 to 188 47 to 94 23 to 47 11 to 23 0 to 11

Source: TESFA Report April 2004

19 © NOKIA Talks Vision and Strategy in China 2004 40,000,000 Market trends in India 2003 – Q1 2004 CDMA has seen recent growth - GSM continues the classic growth curves 35,000,000

30,000,000

25,000,000

20,000,000 Total CDMA 15,000,000 Total GSM

10,000,000

5,000,000

- Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 04' 04' 04'

Source: COAI

8000000

7000000

Bharti 6000000 Hutch BSNL 5000000 Idea+Escotel Escotel 4000000 BPL Reliance 3000000 Others Tata 2000000 Reliance

1000000

0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 03' 04' 04' 04' Source: COAI

• Markets in APAC are back on growth path

• Networks has strong strategic focus on both the advanced WCDMA 3G markets and the New Growth Markets

• Significant volume growth will come from the New Growth Markets – Networks will take a significant market share of the high growth Indian and Indonesia Market

• Nokia Networks is poised to continue to gain market share in both market segments