briefing The Mobile World in Q Part 3: Caribbean and Latin America Global Overview Q Subscribing to the Service

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1 The Hop Exchange 24 Southwark St. London SE1 1TY United Kingdom briefing Tel: +44 (0) Web: : 3 rd July 2006 The Mobile World in Q Part 3: and Latin Q results are now in, and the global picture for the period ended 31st March 2006 has been completed in The Mobile World Database. Until the release of second quarter figures begins in the latter half of July, issues of The Mobile World Briefing will draw together all of the latest data in the sector for Q1 2006, region by region. In Part 3, we focus on and Latin (CALA). Global Overview Q The charts below show the global distribution of population, mobile customers and mobile customer growth in the quarter and year to 31 st March Distribution of World Population Q % 10% 5% 4% 9% 55% Distribution of World Mobile Customers Q % 9% 26% 6% 11% 38% The Mobile World Briefing The Mobile World Briefing is designed to keep you in touch with the key trends, figures and statistics in the mobile industry as it develops. A new issue is circulated at the beginning of each week during the four financial reporting seasons of the year, and on an occasional basis at other times. The Mobile World Briefing is a partner publication to The Mobile World Database, an online business tool providing definitive market data for the mobile community. The articles contained in each briefing reflect the daily updates made to the Database during the previous week. All Database users will automatically receive The Mobile World Briefing as it is released. Clients: to access The Mobile World Database, please go to our website at and log in using your username and password. Distribution of World Mobile Customer Growth, quarter to 31 st March % 6% 15% 7% 14% 43% Distribution of World Mobile Customer Growth, year to 31 st March % 16% 17% 11% 35% 15% Subscribing to the Service If you do not have a subscription to The Mobile World Database, please us at: info@themobileworld.com telephone us on +44 (0) or visit our website at and click request a trial Asia Pac CALA Europe MEA N. Am Russia & C. Asia Contents: World mobile customers grew by 5.1% in the first quarter to reach 2.296bn at the end of Q The growth rate was identical to that achieved in Q1 2005, but down on Q s 6.9%. In the year to 31 st March 2006 customer growth was 26.1%, the same as it was in the 12 months to December Global penetration reached 35.3% by the end of Q compared to 33.7% at the end of Q4 2005, and 28.3% at the end of the first quarter last year. Mobile customers in the & Latin (CALA) region grew in number by 6.4% in Q1 2006, with the annual increase standing at almost 38%. New CALA mobile customers in the first quarter made up 14% of world net additions, versus 15% in the year to 31 st March % of the world s mobile customers were in the CALA region at the end of Q1, as the region approached 46% penetration. p2 CALA market roundup p3 quarterly customer growth p6 CALA market rankings p7 top 10 CALA operators p8 net additions & growth p9 special feature: vivo brazil Unauthorised reproduction and distribution prohibited. Subject to disclaimers. The Mobile World is the trading name of Silventa Ltd., registered in England No Registered Address c/o Baker Tilly, Mount Ephraim Road, Tunbridge Wells, Kent TN2 5JG. 1

2 CALA market roundup Q Customer growth in the and Latin (CALA) region (including Mexico) slowed in Q1 2006, from a record fourth quarter of 2005, although this year s first quarter net additions were more than 30% up on the equivalent period in As a result the total number of customers in the region grew by more than 70m in the twelve months to 31 st March 2006, compared with 67m net new connections in the calendar year There were over a quarter of a billion mobile customers in the CALA region at the end of the first quarter 256.3m to be precise giving an overall penetration rate of 45.7% within the region, compared to 33.6% at the end of Q In terms of mobile customers the region as a whole is the third largest of the geographic groupings as defined in The Mobile World Database, behind Asia Pacific and Europe. CALA accounts for 11% of the global market total of mobile customers, against 9% of its population. In the year to 31 st March 2006 the region accounted for 15% of worldwide mobile customer growth, and in the three months to that date, 14%. We divide the and Latin region into three sub-regions, Central and South which we define in the table below. Sub-Region Central South Constituent Countries Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Cayman Islands, Cuba, Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, Montserrat, Netherlands Antilles, Puerto Rico, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, Virgin Islands, Virgin Islands (British) Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Suriname Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Falkland Islands, French Guiana, Guyana, Paraguay, Peru, Uruguay, Venezuela The following charts show the distribution in CALA of population, mobile customers and mobile customer growth in Distribution of CALA Population at 31st March 2006 Distribution of CALA Mobile Customers at 31st March % 5% 26% Central 24% Central 67% 71% South South Distribution of CALA Mobile Customer Growth, 3 months to 31st March 2006 Distribution of CALA Mobile Customer Growth, 12 months to 31st March % 3% 22% Central 18% Central 75% 79% South South 2

3 There are marked differences between the CALA sub-regions, as can be seen from the charts on the previous page and the chart below. The South sub-region has been the strongest performing in both the quarter and year to 31 st March 2006, accounting for 75% and 79% of the overall customer growth in the region in these two periods respectively. Whilst starting the year to 31 st March 2006 from a virtually identical position in terms of penetration, the Central sub-region has under-performed South, reaching 42.4% penetration by the end of Q versus 48.8% on the South n continent proper. The sub-region, home to just 7% of CALA s population, lags some way behind in terms of penetration. To those who know the markets of the region this may seem slightly counter-intuitive, given the very high penetration rates seen on many of the islands. However, the Carribean s four largest markets of Haiti, Cuba, the Dominican Republic and Puerto Rico account for 84% of the region s population, and the penetration rates in these markets pulled the regional average down to 29.5% at the end of Q1 2006, up from 24.4% at the end of Q Cuba is a case all of its own, but the recent entrance of Digicel into Haiti and Movil into the Dominican Republic and Puerto Rico may well stimulate an acceleration of growth in the region as a whole as a degree of pent-up demand is satisfied. CALA Mobile Penetration Q Q % South Penetration, EOP (%) 45.0% 40.0% 35.0% 30.0% 25.0% Total CALA Central 20.0% Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Unlike Europe (See Briefing Issue 22) where the trend in quarterly growth tends to exhibit a marked fourth quarter peak and first quarter trough, the trend in CALA in the last two and a half years has shown a different pattern. Since Q3 2003, the second and fourth quarters in the region have shown much stronger growth than first and third quarters, with the even quarters all showing proportionate growth rates of greater than 7.5%, and odd quarters showing growth rates of less than 7.5%. The reason for the fourth quarter peak is obvious one would expect a Christmas quarter effect in the majority of countries in the region the reason for the second quarter peak less so. CALA: Proportionate customer growth in quarter (%), Q Q % Customer growth in quarter (%) 20.0% 15.0% 10.0% 5.0% 0.0% Q1 96 Q2 96 Q3 96 Q4 96 Q1 97 Q2 97 Q3 97 Q4 97 Q1 98 Q2 98 Q3 98 Q4 98 Q1 99 Q2 99 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 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 3

4 CALA Markets: Proportionate Mobile Customer Growth, 12 months to 31st March % 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% Colombia Uruguay Honduras Ecuador Guyana Nicaragua Argentina Costa Rica Guatemala Paraguay El Salvador Belize Peru Dominican Republic Bolivia M ontserrat Brazil Panama Saint Kitts and Nevis Anguilla Haiti French Guiana Virgin Islands Mexico Jamaica Netherlands Antilles Chile Bahamas, The Dominica Suriname Saint Lucia Virgin Islands, British Saint Vincent and the Grenadines Puerto Rico Bermuda Barbados Cayman Islands M artinique Turks and Caicos Islands Guadeloupe Trinidad and Tobago Antigua and Barbuda Cuba Aruba Grenada 59.6% 57.9% 57.6% 54.8% 53.3% 48.4% 47.2% 46.4% 41.2% 40.1% 31.6% 30.5% 30.3% 28.1% 25.6% 25.4% 25.1% 23.6% 21.1% 20.0% 17.4% 17.2% 17.1% 17.1% 17.0% 16.6% 15.9% 14.1% 14.0% 13.3% 13.0% 12.6% 12.2% 10.8% 10.7% 9.4% 8.7% 7.7% 7.4% 7.2% 7.1% 76.8% 83.7% 93.4% 105.3% 4

5 CALA Markets: Penetration, EOP (%), Q Q Q1 05 Q % 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 110.0% 120.0% Aruba Cayman Islands Bermuda Antigua and Barbuda Saint Vincent and the Grenadines Virgin Islands Jamaica Anguilla Virgin Islands, British Guadeloupe Turks and Caicos Islands M artinique Dominica Saint Lucia Chile Grenada Netherlands Antilles Saint Kitts and Nevis French Guiana Trinidad and Tobago Bahamas, The Suriname Argentina Colombia M ontserrat Puerto Rico Barbados Panama Ecuador Belize Brazil Mexico Dominican Republic El Salvador Uruguay Costa Rica Guatemala Guyana Falkland Islands Paraguay Bolivia Nicaragua Peru Honduras Haiti Cuba 5

6 Looking at the chart on page 4, Colombia once again dominates the rankings in terms of proportionate annual customer base growth, as it did for the 12 month period to 31 st December Uruguay makes second place, with 93% year on year growth to Colombia s 105%, in no small part thanks to Movil s start-up increasing the competitiveness of this market. South and Central n countries occupy all of the top 10 places in the rankings, the first Carribean country to make an appearance being the Dominican Republic in 14 th place. Conversely, at the other end of the scale, the 15 slowest growing markets were all Carribean countries understandable given the high penetration levels seen in many of these small island markets. Turning to the chart on page 5 of penetration levels in each market at the end of Q1 2006, this effect is clearly evident. Carribean countries occupy the top 14 places in the rankings; Chile is the top-ranked market on the South n continent in 15 th place with 72.1% penetration at the end of March In terms of penetration increases in the year, the Falkland Islands lead the pack with a 31pp improvement, a mobile service only having being launched here by Cable & Wireless just before Christmas Whilst this is something of an anomaly, the major South n markets of Colombia, Ecuador, Argentina and Uruguay occupied positions two, three four and five respectively in terms of annual penetration increases to 31 st March CALA Market Rankings Q The region is dominated by two giant markets, which together account for 54% of the 256m total. Brazil, with 89.4m mobile customers accounts for 35% all customers, while Mexico with 48.6m makes up 19%. This said, however, the dominance of the two largest markets is slowly diminishing as a proportion of the total thanks to markets like Colombia, Argentina and Venezuela occupying third, fourth and fifth positions respectively which have all grown impressively over the past year. In fact both Colombia and Argentina accounted for more of the net additions in the 12 months to 31 st March 2006 than Mexico, with 18.2% and 12.0% of the region s 70.4m net new customers respectively. Mexico accounted for 11.5% of the total, whilst new Brazilian customers accounted for 29.5%. As the chart below shows, Chile is the only other country to enjoy membership of the 10m+ customer club, ending Q with 11.6m mobile customers. 10 Largest CALA Markets by Customer Base, Q Customers, EOP (m) Brazil Mexico C olombia Argentina Venezuela C hile Ecuador Peru Guatemala Dominican Republic 6

7 CALA Operators in Q1 2006: Movil, Telefonica, and the top 10 Movil has retained its position as the largest mobile business in the and Latin region. It has over 100m customers across the region on a venture basis and very nearly that number 99.8m on a proportionate basis. It continues to grow at a prodigious rate, producing a 7.2% rise in the customer base in the first quarter and a 52% increase year on year. It also owns four of the ten largest individual operators in the region, including the largest, Telcel of Mexico. We have commented upon the extraordinary performance of this business before, noting not only that it has shown remarkable growth over the years, but that it has managed to maintain a higher market share than any other major operator in a competitive environment. For the record, Telcel grew by 23% year on year, substantially outpacing its only real rival in Mexico, Telefonica, which only managed 8%. Telecel tops the list with a massive base of 37.6m customers, 7m more than second placed Vivo, from Brazil. It has raised its market share once more during the quarter, by a further 24 basis points, to a total of 77.27%. Movil is also the controlling shareholder in Telecom s, the third largest mobile business in Brazil. This ended the quarter with 19.5m customers, up from 18.7m at the end of the year, equivalent to 4.2% growth in the quarter and 36% over the year. Overall, this is the fourth largest business in the region. The fifth largest is also an Movil subsidiary, Comcel in Colombia. This has produced the fastest growth rate of any of the major operators over both the three month and twelve month periods to 31 st March It added over 2m customers in the first quarter alone, to take its total to 15.9m, up from 7m at the end of March last year. This has taken it up one place in the rankings, from a position of sixth at the end of the first quarter last year. The final Movil subsidiary in the top ten is in Argentina. The company is CTI, which has a total of 7.3m customers, up 10% on the quarter. CTI is slightly smaller than Telefonica s Communicaciones Personales, which is the market leader, with 39% of the market. That said, in terms of proportionate growth CTI substantially outpaced TCP over both the quarter and the year, with increases of 10% and 78% respectively, to take its share of the market from 28% to 32%. During the last quarter, Movil has concluded negotiations with Verizon to acquire that company s three interests in the region in Venezuela, the Dominican Republic and Puerto Rico. This leaves the company with a near complete footprint across CALA as we define it, with the only real gaps being in Bolivia and the remainder of the. No other operator has managed to achieve such a concentration of power in a single region, not even Vodafone in Europe. It raises a number of interesting questions. Customers, EOP CALA: Top 10 Network Operators by Customer Base, Q Telcel Mexico Vivo TIM Brazil AM Brazil Comcel Colombia TNL Brazil Telefonica Argentina CTI Argentina Telefonica Colombia Telefonica Mexico Telecom Argentina At the time that Telefonica acquired BellSouth s Latin n properties, some observers thought that this concentration of market power could cause competition problems, but clearly, Telefonica is not the most powerful player in the region, nor has it the greatest market reach. It has fewer markets and, in aggregate, fewer customers. Moreover, it is not in sole control in its largest market Brazil. Over the last quarter, Telefonica and its partner (Portugal Telecom) have reorganised their Brazilian joint venture, exchanging minority shareholdings in the regional operating companies for shares in a new vehicle, Vivo Participacoes (VP). This is a holding company that now owns 100% of each of the seven regional businesses. VP is quoted in Brazil and also New York. In aggregate, Vivo has 30.1m customers, an increase of 340k over the quarter, or just 1.1%. Telefonica s other businesses to make our Q top ten are in Argentina, Colombia and Mexico. Telefonica is the market leader in Argentina and, although its position is being threatened by Movil, it has risen to seventh place overall, having added just over 3m customers over the course of the last year to take its total to 8.74m. In Colombia, Telefonica has not quite matched the progress of Comcel, but its 84% year on year growth (13% in the first quarter alone) has propelled it from 13 th last year to 9 th. This leaves it one place ahead of its sister company in Mexico, which has 6.56m customers. Telefonica de Mexico faces the toughest competitor in the region (if not the world) but still, its performance is something of a disappointment. It only managed to raise its base by 8% year on year and ceded further market share to its larger rival. Two of the companies to make the top ten list that are not controlled by either Telefonica Moviles or Movil are based in Brazil. TIM Brasil is the third largest business in the region, behind Telcel and Vivo. Like Vivo, it has been restructured during the quarter with four separate entities being merged into a single national entity. Unlike Vivo though or Telecom s for that matter TIM Brasil has a full national footprint covering all ten of the cellular regions. This may, in part, explain why it has managed to outpace both of its main rivals in Brazil. The other Brazilian company is TNL Brazil, better known as Telemar, which itself is better known as Oi : this business ended the quarter with more than 11m customers, and holds sixth place in the continental rankings. In tenth place is our final independent, Telecom Argentina, with its Telecom Personal operation in its home market. 7

8 CALA Operators in Q1 2006: net additions in the year to 31 st March 2006 In absolute terms, some 14 companies in the region added more than one million customers over the past year, while three managed that in just the last quarter alone. On an annual view Movil takes first and second place, its businesses in Colombia and Mexico having added 8.9m and 6.9m customers respectively in the 12 months to 31 st March TIM Brazil is next, with 6.4m adds, which gives it a total of 21m. Movil s Brazilian business Telecom s is in fourth place, with 5.2m adds, while Telemar in Brazil comes in fifth, with just under four million additions. The remainder of the top ten are fairly predictable Telefonica s company in Argentina is sixth, while Movil s is seventh. Vivo in Brazil is the fourth company from that country to make the list, in eighth position, having added 3.2m customers over the year. Quite what management thinks of this performance can probably be inferred from our discussion below on page 9. Telefonica s Colombian subsidiary is in ninth place, with a gain of 2.75m, while CANTV in Venezuela the business where Movil is replacing Verizon as the major shareholder is tenth with an increase of 75% or 2.4m customers. The chart below shows this in declining order of growth. CALA: Top 10 operators by net additions (m), 12 months to 31st March 2006 AM Colombia +8.9 AM Mexico +7.0 TIM Brazil AM Brazil TNL +4.0 Telefonica Argentina AM Argentina Vivo Brazil +3.2 Telefonica Colombia CANTV Customers, EOP (m) March 2005 Net Additions (m), 12 months to 31st March 2006 Only one of the four remaining businesses with seven figure increases is associated with either of the region s giants. Telecom Argentina s Telecom Personal is 11 th, with an increase of 2.1m, Movil s Ecuadorian subsidiary Conetel is 12 th, with a 1.8m gain, while Brasil Telecom and Otecel Colombia take 13 th and 14 th places with 1.5m and 1.2m respectively. Over the quarter, seven companies added more than 500,000 customers. The first two places were the same as in the annual list, while Telefonica Argentina came third, TIM Brasil fourth and Telefonica Colombia fifth. CALA Operators in Q1 2006: proportionate growth The proportionate growth data shows some remarkable increases, as new or newer entrants establish themselves, but those looking for a change of theme and an end to the dominance of the two giants are likely to be disappointed. The fastest growing business in South over the past year was, predictably enough, another Movil subsidiary. The award in this case goes to the company s new operation in Uruguay, which has grown from 36,000 subscribers at the end of Q to some 219,000 a year later a 508% increase. A total of ten separate CALA businesses grew by more than 100% year on year, while a further 16 increased their bases by more than 50%. Admittedly, there is a degree of estimation here, at least as far as some of the smaller markets in the are concerned, as disclosure here is minimal. In some other regions, the first quarter of the year usually brings a material slowdown in growth. That is also true here, but not, perhaps to such a great extent (see page 3). Overall penetration levels are still nowhere near saturation and as a result, we see double digit and high single digit growth in several markets. No fewer than 18 networks achieved double digit growth. There are no prizes for guessing the stable from which the leaders come here yes (you ve guessed it) Movil, whose Paraguayan and Uruguyan businesses increased their bases by 34% and 30% respectively. Otecel in Ecuador came close to splitting these two at the top of the list, with a 28.8% gain, while Cel*Star Guyana (linked by some rumours to approaches by Digicel) continued its impressive run with a 26.7% increase. Paraguay and Uruguay also produced the fourth and fifth highest gains by way of Telecom Argentina s Nucleo and Uruguayan incumbent Abiatar while Comcel Guatemala, in sixth place, also grew by more than one sixth. The penetration tables in the earlier pages of this document suggest that this kind of growth can be sustained for several more quarters yet. In previous regional reviews, we have also highlighted the slowest growth in the region. This time, there s not much to tell. Few networks did anything other than add to their customer bases, though some have experienced a material loss of market share. In particular, we believe that Cable & Wireless has come under severe pressure from Digicel, the Irish owned operator. 8

9 Many of the networks in the region are operated by Cable & Wireless. This company is, in our humble opinion, by far the worst major quoted company when it comes to disclosure. By comparison, Tele2 appears positively loquacious. Yet recently Richard Lapthorne, the company s chairman, was bemoaning the fact that analysts didn t ascribe any value to its various, less obvious components, such as the 20% stake it owns in Batelco in Bahrain. He might equally have mentioned the company s mobile networks in the various islands of the. Which sum of the parts calculation has a line for C&W s St Lucia subsidiary? Or even its activities in Barbados? None, we would suggest, and the reason is obvious Cable & Wireless has done nothing to highlight the value or even to alert observers to its existence in the first place. Only the most diligent or least time-pressured financial analyst will be able to put a value on a business without a single clue from the company as to where to begin. Some sort of indication of scale would be a start, but there, we suspect, is the rub. Invariably, when an operator reduces its disclosure, it is because the news that is no longer being reported doesn t make good reading. C&W had one of the lucrative monopolies here, yet it allowed Digicel to grab market leadership in the space of just a few months. It may well be the case that C&W isn t saying anything about the region because it would just too embarrassing to do so. Special Feature: Vivo Brazil hints at a new direction Vivo, as we have just seen, is the market leader in Brazil. Quite how long this will continue to be the case, however, is something of a moot point, as its main rivals TIM, Telecom s and TNL have all gown faster over the last year. Indeed, Vivo only added 334k customers in the first quarter of this year, while all three of its rivals comfortably exceeded 0.75m. This quarter is not atypical and Vivo has, in effect, been going backwards for some while now. Brazil: Market share of Net Additions, Q % 1% 2% 8% 27% 10% 25% Others Telemig Brasil Telecom Vivo Telecom s TIM TNL In previous issues of this Briefing, we had suggested that this was in part due to the fact that it was using CDMA technology, rather than GSM. The European standard may not be better, but it is certainly far more widely used and has a massive advantage when it comes to handset availability. Furthermore, Vivo does not have a full national footprint and this has put it at a material disadvantage. Other operators could offer seamless, national coverage through national roaming arrangements, but as Vivo was the sole CDMA operator in the country, it could not. On Friday (June 30 th ), Vivo announced that it intended to adopt W-CDMA technology for its third generation service and that to facilitate the transfer from its existing CDMA network, it would be looking to deploy a GSM/EDGE overlay. This clearly represents a body blow to the CDMA lobby. The chart below shows the world s nine largest CDMA operators incidentally, the only nine to have more than 10m customers each with Vivo in fourth position. Equally significantly, if Vivo really is going to turn to the red side of the force and become a GSM operator, the number of major countries where CDMA will be available will drop from six to five. With four of those five being in the Pacific Rim, it looks like the hope the CDG had of establishing CDMA as a convincing rival to GSM has passed. World's largest CDMA Networks by Customers (m) as at 31st March Customers, EOP (m) Alltel KT Freetel Reliance Infocomm SK Telecom au Group Vivo Sprint China Unicom Verizon Wireless 9

10 Does that suggest that these other operators will have to make the same decision? Frankly, it seems less likely. Korea is utterly committed to CDMA operation and, equally importantly, CDMA manufacture and we don t see that changing in the near future. Equally, Unicom isn t going to be under the same kind of pressure as Vivo, as it has a GSM network as well as a CDMA one, so it has backed both horses. What will au do? Backing CDMA has proved to be a great success and has been the main reason behind its strong showing in recent years. While it may adjust its future strategy to accommodate W-CDMA, it has no need to make immediate changes. Reliance in India is in the same happy position. Although it has nearly 16m mobile customers connected to CDMA in 23 separate markets in India, it also has GSM networks in eight of these and a rapidly growing base of customers on these alternative networks. Rumour has it that Reliance is looking to roll out GSM across all of its regions, which would leave CDMA rather friendless in India. That leaves the three big US operators. Sprint, like Unicom, is effectively backing two horses following its merger with Nextel, but reading its SEC filing, we get the strong impression that ideally, it would like to increase its emphasis on CDMA and reduce its exposure to iden, where it is reliant upon a single source supplier for both handsets and infrastructure. Equally, Alltel has spent considerable sums in the last few months converting the customer bases it acquired from Cingular from GSM to CDMA. It would be a strange move to reverse this decision now. That leaves Verizon. Again, we can t see that the US giant is in any hurry to drop its chosen technology. The argument that Cingular has a procurement advantage is much reduced when it is remembered that the US spectrum is in the 850 MHz and 1.9 GHz bands, not the conventional 900 MHz and 1.8 GHz bands, as it is in other countries. Neither has Cingular managed to make any advantage it might enjoy count for much its market share has been static at a time when Verizon s has been rising. Given this and all that has gone before we can t see Verizon doing such a spectacular about-turn. Vivo s shares have been hard hit by the decision, which other commentators have deplored. Yet it seems to us that the company had little option. If it couldn t offer a full national footprint, its chances of holding onto its high spending corporate customers would be diminished and without them, the economics of the whole enterprise come under pressure. And there are positives Vivo is coming into line with every other business in the Telefonica and Portugal Telecom groups, which will pay dividends in terms of international roaming and on-net traffic. With an increasingly mobile world, this must be a key consideration. 10