【正文】 ries, partners in China ? Service agreement to codevelop VPN offerings Operator* 20 02 PD China Mobile Teles Service Industry IN MOBILE TELECOM SERVICE MARKET, CHINA MOBILE WILL LIKELY REMAIN THE DOMINANT OPERATOR IN BOTH REVENUE… 100%= 1998 1999 2023 2023E 2023E 2023E China Uni China Mobile 66707579828894971218212224242023E 2023E 3 6 3 7 10 Other operators 0 0 0 0 0 US$ Billions, percent CAGR 19982023E Percent 67 18 N/A Source: McKinsey Analysis 21 02 PD China Mobile Teles Service Industry 979488787270646058612222830313231711…AND SUBSCRIBER* SHARE 1997 China Uni China Mobile 3 100%= 5 11 25 43 85 145 155 176 197 218 1998 1999 2023 2023E 2023E 2023E 2023E 2023E Other operator(s) Millions, percent * 0205 forecast are subs after inactive and multisimcard reduction Source: Deutsche Bank。 Company annual report 24 02 PD China Mobile Teles Service Industry Comments ? Decreasing trend due to –Increased petition and lower tariffs –Increased mix of lowvalue prepaid users –Deepening peration which increases lowvalue usership ? China Mobile39。s higher postpaid ARPU is due to its highend customer base and superior marketing 。 McKinsey analysis 25 02 PD China Mobile Teles Service Industry * 100% = million subscribers in 2023 and million in 2023 ** 100% = million subscribers in 2023 and million in 2023 Source: Goldman Sachs。 McKinsey analysis 22 02 PD China Mobile Teles Service Industry * 0205 forecast are subs after inactive and multisimcard reduction ** Acquired by CMHK from parent in Oct 2023 Source: JP Man。 McKinsey analysis Century Mobile Jitong Foreign JV Entrants New telcos Who they are Basis for entry Obstacles ? Consortium of 10 enterprises who have joined together to try to set up mobile enterprise ? Set up in 1994 to develop data munication services ? Potential JVs involving foreign panies ? New players expanding into tele ? Some government contacts ? Originally considered takeover of Great Wall’s assets ? Owns 70% of VoIP market ? Government has indicated desire to see multiple operations with multiple service offerings ? Government may be pressured to show market progress and WTO benefits ? Foreign operators and entities eager to invest ? Desire to enter wireless given opportunities and convergence of technologies ? Great Wall assets moved to China Uni ? No current discussion regarding mobile services observed ? Low capability to utilize mobile spectrum if allocated ? WTO agreements do not require that new tele licenses be issued to new entrants ? Nationwide presence of foreign investment not possible for initial 3 years under WTO ? MII will likely limit the influence of other ministries on their turf (., blocking SARFT entry into Inter) 17 02 PD China Mobile Teles Service Industry EXISTING AND POTENTIAL MOBILE OPERATORS HOLD BROAD BUT DIFFERENT COMPETITIVE POSITIONINGS AND SERVICE OFFERINGS Basic services China Mobile China Uni China Tele China Net ? Mobile voice service ? Mobile data service ? IP ? Multimedia service ? ? ? ? ? ? ? Mobile voice service ? Mobile data service ? IP ? Multimedia service ? Local call ? DLD ? IDD ? Paging ? ? ? ? ? IP ? Multimedia service ? Local call ? DLD ? IDD ? ? Web hosting ? Network element lease and sale ? ? ? IP ? ? ? ? IDD ? ? Web hosting ? Lease and sale of bandwidth Valueadded services ? Fax ?Voice mail ? Caller ID ? Call waiting ? SMS ? VPN/VPDN ? IDC ? ? ? ? ? Fax ? Voice mail ? Caller ID ? Call waiting ? SMS ? VPN ? ? ? ? ? ? Fax ? Voice VAS ? Caller ID ? ? ? VPN ? IDC ? ISDN/DDN ? EDI ? ISP ? Email ? ? ? ? ? ? ? ? Data munication ? Public multimedia services Source: MII。 Industry reports China Tele China Uni ? Became the second mobile work operator in mid 1994 ?However, China Tele as the sole provider of both basic and wireless telephony services made it difficult for Uni to grow China Uni China Rail China Uni Ministry of Posts and Telemunications ? Created in 1994 when former MPT separated into regulatory and operating functions ?China Tele ownership transferred to Ministry of Finance, with regulatory functions placed in the new Ministry of Information Industries (MII) China Tele China Mobile (CMCC) China Tele China Mobile (CMCC) ? Under the government’s antimonopoly plan, in the 1st half of 1999, China Tele was split into 4 operating panies: CT fixed, China Mobile, CT Paging, CT Satellite ?The change became official on April 20, 2023 ? Prior to 1994, the MPT acted as the regulator and sole operator of telemunications ?In 1993, announcement was made to separate operating and regulatory functions along with the establishment of a 2nd operator Great Wall ? Established in 1995 to harness PLA’s radio spectrum ?The pany undertakes “the CDMA project” at the direction of the government Great Wall ? Due to government mitment to separate PLA from mercial activities, Great Wall dissolved with decision to transfer CDMA assets to China Uni made in October 2023 (transfer yet to be pleted) ? 2nd largest fixed line work ?Established December 2023 ?Offers limited GSM service over it’s railway work Pre 1994 Regulator and Operator 1994 to 1999 Virtual Monopoly 1999 To 2023 Deregulation/Breakup 2023 and