re: SK Telecom & 2.5G/3G CDMA Services
Below is an abstract of the slides used by Moonsoo Pyo, President and CEO of SK Telecom when he recently made to the Merrill Lynch Global Communications Conference:
sktelecom.co.kr
I find this set of statistics most interesting:
* Wireless Internet ARPU by Handset type
- 2G Non-Color $1,60 USD
- 2.5G Non-Color $3.40 USD
- 2.5G Color $6.30 USD
The above statistics and a review of SKT's services indicate to me that the success of 1xRTT "Data" at SKT and in Korea is due to a combination of factors (not necessarrily in this order):
--> 1xRTT data transmission speed
--> "Always On" packet-switched data connection
--> Color handsets
--> Color microbrowser (based on WAP 2.0)
--> Other "data oriented" functions in handset OS (SKT's GVM) & UI
--> Steadily increasing Content (including color content)
--> Strong development communitty
--> Java (SKT) or BREW (KTF) Content
--> Refined market segmentation and new service offerings (SKT's TING & UTO)
--> Integrated multi-interface Internet Portal Offering (SKT's NATE)
Slides 9 & 10 deal with 2.5G. It should be noted that SKT classifies both IS-95A introduced in January 1996 and IS-95B introduced in August 1999 as 2.5G. This in contrast to Sprint PCS (and others) in the United States, who call IS-95B (which they don't use) 2.5G and cdma2000 1xRTT Release 0, 3G. Evidently Sprint PCS read Dr. Jacobs letter to the Koreans and SKT ignored it.
>> SK Telecom: Moving Towards Next Generation Wireless
* Snapshot of SK Telecom *
Slide 4: A Snapshot of SK Telecom
* Leading Korean wireless operator with 16 million subscribers
* 52% market share in Korea and 58% revenue share
* One of the global leaders in wireless Internet with 4.4 million 2.5G subscribers
* As of February 2002:
- Listed on NYSE and KSE with market cap of US$ 20 billion
- Second largest Korean company in terms of market capitalization
Slide 5: A Quick History of SKT
* Mar 1984 - Business established
* Jan 1996 - World’s first commercial CDMA cellular service launched
* Oct 1999 - Handset based wireless Internet service (n. Top) launched
* Apr 2000 - Shinsegi Telecom acquired
* Oct 2000 - World’s first commercial CDMA 1x service launched
* Dec 2000 - 3G (W-CDMA) license awarded
* Oct 2001 Integrated multi-interface Internet portal (NATE) launched
* Feb 2002 - 1x EV- DO service launched
Slide 6: Robust Financial Robust Financial Performance
* Revenue increased +9% in 2001 from $4.4 bn to $4.8 bn
* EBITDA increased +25% from $2.0 bn to $2.5 bn and EBITDA Margin increased 9 ppts from 44% to 53%
* Year-End ARPU increased +14% from $32.5 to $37.1 primarily as a result of increased development of data services and content to support 1xRTT and newly introduced color handsets.
* Unique Merits of the Korean Wireless Market *
Slide 8: Unique Merits of the Korean Wireless Market
* Market consolidated from 5 to 3 players: Limited competition
* 61% penetration as of December 2001 (Forecasted 79% penetration in 2005)
* ARPU steadily growing
* Prepaid almost non-existent: 0.5% of total subscribers
* Relatively low 3G license fees : 25% level of European telcos
* Customers extremely receptive to new technology
* Technology leadership
Slide 8: Korean Consumers are Technology Friendly
* Fixed Broadband Penetration per household remarkably increased in Korea from 5% in Q1 2000 to 55% in Q4 2001
* SKT’s 2.5G (1xRTT) Penetration of SKT's subscriber base increased from 5% in July 2001 to 21% in Q4.
* Color handsets were <1% of SKT's user base in July and August, 1% in September, 2% in October, 3% in November, and 4% in December.
Slide 9: 2.5G Services Uptake Bodes Well for the Future
* 2.5G Penetration (1xRTT) Penetration is forecasted to increase from 21% of SKT's total subs to 60%
* Penetration of color handsets are forecast to 28% of the user base by end of 2002
* Wireless Internet ARPU by Handset type
- 2G Non-Color $1,60 USD
- 2.5G Non-Color $3.40 USD
- 2.5G Color $6.30 USD
Slide 11: Technology Leadership
* SKT "CDMA" Migration Path
Generation Standard Introduced Data Speed
- 2G IS-95A January 1996 9.6 kbps
- 2G IS-95B August 1999 64 kbps
- 2.5G 1xRTT October 2000 144 kbps
- 3G 1xEV-DO February 2000 2.4 Mbps
- 3G W-CDMA 2003 Onward
¦ R99 384 kbps
¦ R4 2 Mbps
¦ R5 10 Mbps
* Capex per Sub
IS-95A/B 1xRTT 1xEV-DO W-CDMA
$300 $150 to 200 $20 TBD
Slide 12: EV-DO Handset Roll-out Plan on Track
* Testing underway
* Expected number of major vendors: 7
* EV- DO phones are color, have 40 polyphonic tones and video enabled
* Introduce EV-DO Services
- Feb 2002: Notebook PCMCIA Card for Notebook PC
- May 2002: Non-VOD Handset with 65K Color STN LCD and Camera
* Drive EV-DO Penetration
- Jun 2002: VOD Handset with 260K Color TFT LCD and Camera
- Aug 2002: Ultra Videophone with Enhanced Display and Large Memory
* Wireless Internet Strategy *
Slide 14: Wireless Internet Usage Patterns
Accesses
User Internet Revenue
User Type Mix Per month Mix
Trial 75% 1-9x 43%
Active 19% 10-29x 31%
Heavy 6% >30x 26%
Slide 15: Market Segmentation
Refined Segmentation Structure
* Old Structure
-- Kids and ages 13 to 24 served by "TTL"
-- Middle aged and fully mature "silver" citizens served by "SPEED 011"
-- Ages 25 ~ 35 served by combining "TTL" & "SPEED 011"
* New Structure
-- Kids
-- New Junior product "TING"
-- "TTL" retained & refined for ages 18-24
-- New Young Adult product "UTO"
-- "SPEED 011" retained for middle aged and "silver" citizens.
-- "Housewife" offering within "SPEED 011"
* New Products
¦ "TING"
-- Target age 13~ 18 (launched Aug 01)
-- Low penetration (31% as of Mar 01)
-- Future wireless internet users
¦ "UTO"
-- Target age: 25~ 35 (launched Oct 01)
-- Lock in high ARPU users
-- Induce churn- in of competitors ’ subs
-- Active users with high buying power
* Multi-Platform Model *
Slide 18: "NATE" Multi-Platform Model
* Multi- Device Integration for a Single point of entry to the Internet
¦ Mobile Platform
-- Handset
-- PDA
-- VMT (Vehichle Mounted Terminal)
¦ Fixed Platform
-- PC
-- TV
-- Home Appliance
Slide 19: Evolution of Multi-Platform Services
¦ Service evolution and SKT focus areas for 2002
* Evolution of Multi-Platform Services
-- Voice Telephony and Text Messaging to Audio & Video Streaming
Slide 20: "NATE" on Handset
¦ From basic applications to high-powered multimedia services
* NATE Wizard
-- Support GVM/JAVA Application Download - Games /Stock Quotes/Chatting/e-Book
* NATE Air (Mobile broadcasting)
-- 9 Channels of News/ Movies /Adult Fashion/Comedy/Music/English
* Coupack (Mobile Couponing)
-- Discount Coupons:Over 75 Products - Supermarkets/Department Stores
* NATE Drive (Location Based Service)
-- Map/Local Information/Friend Finder/Path Finder
* Mobile Ad (Mobile Advertising)
-- Localized Ads/Personalized Ads
Slide 21: "NATE" on PC
¦ Closely linked to the wireless Internet
* General Offerings
• Mail
• My NATE
• Community
• Messaging
• Life
• Entertainment
• Money
• Shopping
* NATE Photo Portal
• Photo Mail
• Photo Printing
• Photo Album
* My PC
• PC- Phone Sync Service
• PIMS (Personal Information Management Service)
• e-mail Management
* Content Mall
• Ring Tone & Picture Download to Mobile Phone
Slide 22: "NATE" on PDA (Launched in November 2001)
¦ Recreates PC based Internet environment anytime, anywhere
* Wireless Service
-- Transforms the standalone PDA into a full-featured communications device
* Full Functionality
-- Improved user interface for heavy users
Slide 23: "NATE"on VMT (Vehichle Mounted Terminal)
¦ Total transportation and related information for life on the go
- Navigation Search
- Convenience
- Information
- Favorites
- Emergency
- Services
- Real Time Traffic
- Information
* Financial Enabler Model *
Slide 25: The Financial Enabler Model
* SKT’s Resources
- Customer Base (16 mm Subscribers)
- Brand (# 1 Market Position)
- Multi- Platform Access (NATE)
* Financial Enabler Business
¦ PAYMENT SERVICES
- Petty Cash Settlement
- Person to Person
- MONETA Card
¦ FINANCIAL PORTAL
- Billing and Payment
- Bank Account Management
- Personal Asset Management Advice
- Information / Community
* Benefits to SKT
¦ Transaction Fee
¦ Payment Fee
¦ Revenue Sharing with Financial Institutions
Slide 26: Financial Enabler Services: Example (VISA MONETA IC Card)
¦ Lock in customers and leverage our subscriber base for M-Commerce
¦ Low risk strategic alliances involving no equity investment
¦ Win- Win for Customers & SK Telecom Win for Customers & SK Telecom
* MONETA Card
¦ Currently, an IC chip installed multi- function credit
card
- Credit Card
- e- Money
- Transportation
- Membership
¦ Will evolve into IC chip installed handsets
¦ Customer incentive and cost- effective marketing tool
- Credit card partners provide up-front credit up to US$ 150 for handset purchase
Slide 27: Prospects for Wireless Internet
* 2001 - $228 mm: 5% of Total Revenue
* 2005 - $3 bn: 20% of Total Revenue
* 2001 to 2005 - CAGR of 90% <<
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- Eric - |
