Dodo

DAIWA DAIWA INSTITUTE OF RESEARCH LTD.

July 2004 (No. of pages: 52)

Global Telecom Monthly This month •

Global – Another turgid month, as the market’s sense of impending disappointment grew. Our exposure to Yahoo! and Yahoo! Japan did us no favors this month, though the emerging markets names with exposure to SE Asia, India, and Africa did us proud. In another off-road theme piece we look at how changes in information flows and sources may diminish the added value element of traditional telecom research. We think the brokers need to adapt their tools and habits to a more immediate, interactive style, or risk being marginalized.

•

Europe – BT and Yahoo! announce Communicator launch/EC reportedly to press France Telecom for EUR1.1bn tax payment/Virgin Mobile files for IPO/BIICL regulatory study reveals Germany as the slowest to resolve regulatory disputes/Tiscali sued by Belgian artists’ rights group as an "enabler" of P2P piracy/Studies show European countries hold seven of the top ten spots in illegal file sharing rankings.

•

US – Sprint cuts jobs, reiterates guidance/Cablevision launches aggressively priced Triple Play/Verizon asks FCC for recognition as an information service provider, rather than common carrier/SBC announces $4-6bn investment program in all-IP networks and FTTH/Sprint to spe nd $1bn on EV-DO/AT&T pulls back on local service offering and lowers guidance/Cingular reportedly accepting RFPs for UMTS/Nextel- public safety agency interference issue resolved.

•

Asia – DoCoMo regains top share of net adds for first time in nine months/KDDI announces handset and tariff changes/China Netcom reportedly to list by September/China government reportedly considering plan for carrier consolidation as resolution for 3G licensing problem/Unicom discloses terms of proposed rights issue/MIC cuts mobile interconnection rates retroactive to January 1/Singapore upholds leased line price cuts for Singtel/TelstraClear reportedly still planning 3G launch/Telstra and Hutch reportedly in talks on 3G network sharing.

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED ON THE LAST TWO PAGES OF THIS REPORT. Global Equity Research

Contents

Regional/subsector investment stance summary P. 3

Global perspective This month’s focus is on the changing nature of information flow in the sector, and the issues traditional telecoms analysis will face in adapting itself. We also include an analysis of European telecom analysts’ collective track record in calling the direction of the sector, and provide clients with a partial list of useful and helpful RSS-based information sources.

P. 4

News A round-up of global telecoms events over the past month

P. 13

Statistics and valuations Cellular Subs, Cellular Penetration, Cellular ARPU, Broadband Internet Subs, Valuation – Integrated, Valuation – Cellular, Share Price Performance, Corporate Earnings, Earnings Revisions, Rating Revision

P. 19

Monthly stats P. 37

Forthcoming events P. 45

Appendix Equity relationships among global telcos

P. 47

CONTENTS

2

Global Telecom Monthly

Regional/subsector investment stance summary Region/segment

Stance

Europe Integrated

WEAK NEUTRAL

Europe Wireless

Wtd. stock recommendations*

Top picks

Comments/action

3.22

Telenor

Q2 results may offer further grounds for concern. We favor operators with minimal gearing to home markets and high exposure to mobile/emerging markets.

NEUTRAL

2.80

TIM

We favor companies with a strong domestic position, minimal domestic competitive concerns, and good exposure to emerging markets.

US Integrated

WEAK OVERWEIGHT

2.72

Verizon

Proactive stance towards product bundling and some recent regulatory victories make us marginally more positive.

US Wireless

OVERWEIGHT

1.00

Nextel

Consolidation is driving the sector at the moment, but we favor Nextel's unique market positioning.

AsiaPac Integrated OVERWEIGHT

2.21

KT Corp, NTT, Telstra

Going for yield and restructuring potential.

AsiaPac Wireless

1.69

China Mobile, KDDI, The combination of balance sheet strength, NTT DoCoMo secular growth and strong data results sets the sector apart from counterparts elsewhere.

OVERWEIGHT

Source: Daiwa estimates *Based on DIR 1 - 5 rating system

I NVESTMENT S TANCE

July 2004

3

15 July 2004 (No. of pages: 9)

Global perspective Adaptive analyst, or dodo bird?

James Enck (44) 20 7597 8455 [email protected]

•

A bad month overall, and the few bright spots in our portfolio are mostly limited to emerging markets, notably excluding China, where our gamble on the internet names has delivered dismal results this month. Yahoo! and Nokia Q2 numbers indicate a more nervous market with a tendency to punish – worrying signs ahead of the telco reporting season.

•

This month’s focus is on the changing nature of information flow in the sector, and the issues traditional telecoms analysis will face in adapting itself. We also include an analysis of European telecom analysts’ collective track record in calling the direction of the sector, and provide clients with a partial list of useful and helpful RSS-based information sources.

Note: Price and performance data relates to 07:50 am London time on 15 July, 2004.

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Summertime blues Sell in May and go away - maybe there’s something to it

Ahead of the Q2 reporting season, the market is displaying mounting nerves, and as we saw with the reaction to Yahoo!’s numbers (and Nokia’s just out this morning), a growing tendency to react badly to anything short of blowout performance. Worst performance this month came from Japan and Korea, with another poor showing from Europe. Our portfolio is now underperforming the MSCI World Telecoms year-to-date, and our gearing to Yahoo! and Yahoo! Japan have been key contributors. Our angles on disruptive ISPs (Tiscali, Freenet.de, Yahoo! Japan), VoIP (with the exception of deltathree), and China internet (Webzen, Sohu, Sina) have all done poorly. Our conviction in Southeast Asian, Indian and African names continues to be validated by the top performers in the portfolio, and these continue to provide some of the scant bright spots in the sector globally. No changes to the portfolio this month as we ride out the Q2 reporting season.

Key regional sector indices, relative to local/regional broad market MSCI World Telecoms

S&P ASX 300 Telecoms

Hang Seng Commerce & Industry

KOSPI Communications

TOPIX Communications

STOXX Telecoms

S&P 500 Wireless

S&P 500 Integrated (20)%

(10)%

0%

10%

20%

TOPIX KOSPI Communications Communications

30%

40%

Hang Seng Commerce & Industry

S&P ASX 300 Telecoms

MSCI World Telecoms

S&P 500 Integrated

S&P 500 Wireless

STOXX Telecoms

YTD

(4.95)

31.03

(4.74)

(16.54)

(3.87)

1.23

(1.36)

(3.46)

6M

(6.88)

21.95

(8.56)

(15.02)

(5.44)

4.34

(4.02)

(8.31)

3M

(2.44)

6.50

(2.62)

(9.70)

8.64

1.51

3.23

(2.81)

1M

0.14

2.35

(0.90)

(4.16)

(3.34)

0.79

4.01

(0.43)

5D

0.09

(1.40)

(0.18)

(3.15)

0.34

1.44

0.11

(0.45)

Source: Daiwa estimates

Portfolio best and worst, one month ($US) Best 10 deltathree Telkom (SA) Total Access Communications Telkom (Indonesia) XM Satellite Radio Bharti Televentures MTN Taiwan Cellular Orascom Telekom Malaysia

% Change 26.7 15.0 14.6 13.3 12.4 7.8 7.5 6.2 6.2 5.0

Worst 10 Tiscali SK Telecom theglobe.com Yahoo! Japan 8x8 Sirius Satellite Radio Webzen Freenet.de Sohu.com Sina.com

% Change (10.8) (11.4) (12.2) (13.5) (15.3) (18.6) (20.4) (23.3) (27.5) (31.8)

Source: Daiwa estimates

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Why traditional telco analysis will go the way of the dodo One turkey votes for Christmas

In the April edition of our Global Telecom Monthly, I included a short piece on RSS (really simple syndication) and how it might change the world in some very straightforward ways. In that piece, and a subsequent edition of EuroTelcoblog, I speculated that there might be implications for more than just the traditional media, and that brokers’ research efforts might also benefit from RSS and the numerous other advancements being made in real-time information distribution and collaboration technology. My somewhat unorthodox “summer project” for this month is to delve a bit more deeply into precisely what this could mean, and to make a case for why traditional investment banking research is increasingly at risk of being outmoded, if it isn’t already. My ultimate goals here are two-fold: 1) to provide clients with a list of alternative information resources they may not be aware of, and; 2) to stir things up.

The background Analyst – past, present and future

Back in 2002 a friend on the buy-side sent me a copy of a remarkable Powerpoint presentation from Robert Zielinski, then an Asian banks analyst with UBS Asset Management, entitled “Death of an Analyst.” In this extraordinary piece of partially tongue-in-cheek vitriol aimed at investment banking “business-as-usual”, Mr. Zielinski makes a case for why sell-side analysis is a broken model, contributing nothing to the investor’s decision-making process. Looking beyond the humor and bitterness evident in his presentation, however, there is one slide which has remained clearly in my mind since then, and it is reproduced below. In it Mr. Zielinski attempts to give a view of analyst characteristics and duties – past, present and future. Robert Zielinski’ s Evolution of Analysts The past

The present

The future

Information gathers

Industry experts

Data provider

Printed

E- mailed

Live Online

Eager youngsters

Tired veterans

Salarymen

Broad coverage

Limited coverage

All companies

Serve client

Serve bankers

Independent

Use a salesman

Direct contact

Interactive

Pioneer

Bureaucrat

Mechanical

Source: Robert Zielinski, “ Death of an Analyst,” 2002

Analysts living in the past?

What is striking is the list of attributes which make up The Future, and the contrast with the normal way that analysts go about their jobs today. This normally consists of following a relatively small number of companies within a narrowly defined geographic and industry area, producing reports which are then emailed (and, astonishingly, still often physically mailed) to clients, bombarding the same clients with voicemails to alert them to the emailed report, and making marketing trips to reinforce the message face-to-face. This is all well and good, as long as the investor plays along. However, as one buy-side analyst told me not long ago: “My inbox receives, on average, 15 emails every 30 minutes, and I tend to delete approximately 90% of them as useless, dated, or, even worse, completely superficial.”

Pity the fund manager

Numerous other clients I have met have typically described themselves as being “besieged” by broker research, which they find “depressingly undifferentiated.” One group of fund managers only half-jokingly expressed a strong interest in some of the call blocking and diverting features available in VoIP services as a way of freeing themselves from broker voicemails. How could this be the case, given the devotion and tireless efforts of thousands of analysts worldwide to maintaining a steady flow of timely, value-added company and industry research?

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Let’s go back in time to see how primitive man lived

The answer may lie in the way information flow has changed over the past decade. Ten years ago, the Daiwa research department in London had PCs loaded with Excel and Word, but no internet connection and no email. All research produced by Daiwa was printed and mailed, as well as FAXed, to clients. Company releases made to the London Stock Exchange appeared on a proprietary information system called TOPIC, and otherwise company information was sent to analysts by FAX or post. Reuters Business Briefing and Reuters television services were only launched in 1994. Bloomberg TV also launched in 1994, but the company had only sold something lik e 35,000 terminals worldwide, and we were still a year away from the launch of Bloomberg.com. Neither Reuters nor Bloomberg systems were available in Daiwa’s research office. Sitting here in 2004 surrounded by “pervasive communication,” it is hard to imagine/remember a life of such relative isolation as that experienced by Daiwa analysts in 1994, but their experience was probably pretty well the norm for the time.

Analysts no longer the heralds they once were

The principal difference this technology gap made was that in 1994 analysts were a privileged subset of a group (including financial journalists and some more specialist institutional investors) with timely access to information which was exclusive to them, at least for as long as it took them to disseminate it to a wider audience. Today, and for some time now, companies have been using the web as a tool for information distribution, opening themselves up to the world. The latest set of company results (increasingly including a webcast analyst meeting) can be accessed simultaneously by anyone, whether it be an experienced sector analyst on Wall Street, or an elementary school student in Manila. Commercial transcription services such as Call Street produce conference call transcripts in short order, and later issue more detailed reports on the results and the call. At the same time the financial media have invaded every available real-time distribution channel (TV, radio, internet), meaning that the traditional role of the analyst to break and interpret company news is further diluted. Additionally, over the past decade, fund managers have largely moved from a countrybased approach to a sector-specific focus. Today most of Daiwa’s Japanese clients, and virtually all of the fund managers I am in contact with in European institutions, are either sector specialists or work closely with specialist analysts. This was not the case in 1994. In 2004 analysts may now have access to all the modern tools for information retrieval and distribution, but so does everyone else, and investors’ knowledge level may be as good or better. Arguably, analysts are using new tools to distribute the same product as before, but to an audience which may be less in need of it than ever before.

Back to the future

Returning to Robert Zielinski’s slide above, it is remarkable the extent to which parts of this description of the future analyst are already applicable to many people outside the broking world, namely the growing ranks of “bloggers” who are writing on telecom/internet/media/technology-related themes, sometimes in great detail and to a very high standard. The description of “data provider” is not correct in this case (“industry expert” is the norm), and “mechanical” and “salarymen” probably aren’t either (though some of the best bloggers have day jobs closely related to what they write about), but the other four elements match up nicely – live online, all companies, interactive, independent. Let us address each in turn: •

Live online – The various blogware packages available to create blogs are very straightforward to use. If some significant news breaks, a blogger can publish quickly, while the analyst waits for compliance, editorial, and production teams before the .pdf note can be sent out. Web-based packages like Blogger are not as feature-rich as many others available, but they have the advantage of allowing updates from any internet enabled device capable of text entry.

•

All companies – This may be a real killer for the telecom analysts. As we have tried very hard to document over the past 20 months or so, the world is moving in ways which make it difficult to even define what a telco is anymore. Retailers, utilities, municipal governments, banks, and even the UK Royal Mail are moving into offering voice, and the global internet giants (AOL, Yahoo!, Apple, Microsoft, and even P2P network Morpheus) are offering quasi-telephony services. Even the geographical definitions which have traditionally governed coverage allocation at GLOBAL P ERSPECTIVE

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the brokers are increasingly open to question, as SIP-based service providers issue numbers not relating to the market where the customer is physically located (see www.stanaphone.com for an interesting example), and global services like Skype are on the attack. It is no longer enough for the analyst to sit in his silo and write “France Telecom is trading at a 10% discount to DT – buy!” Bloggers typically are not constrained by any coverage allocation issues, and thus can take a wider view. •

Interactive – As described in our April piece, a user of an RSS newsreader will receive a discreet notification that something has been added to a site bookmarked in his list, allowing him to decide when to go in and “pull” the item, rather than being confronted with another piece of broker spam “pushed” to his email inbox. There is also a forum for talking back. Most blogs have a comments section where readers may share views, correct inaccuracies, and criticize biased or unfair views. Sometimes these may be more informative and interesting than the original entry. Many blogs will have a trackback capability to allow readers to see where else the entry has been cited, and many blogs will link to other blogs of potential interest to the reader. New applications such as Gush (http://2entwine.com) combine RSS with instant mes saging, allowing for direct real-time contact between author and reader (substitute analyst and client), and the developers have also experimented with video and voice chat as one new direction for it.

•

Independent – This is a potential minefield issue, but to be fair and discrete, the blogger brigade, in my experience, is not constrained by external considerations of remaining polite or shying away from nebulous or difficult issues. Blog entries often focus on sensitive issues such as questionable corporate ethics and poor standards of customer service, but are also likely to address small unlisted companies with unique products/services, or entirely non-corporate developments such as municipal wireless network initiatives. Additionally, we may often find coverage of listed companies which no broking analysts cover (for example, Bloomberg data shows no active coverage of Calypso Wireless, a $135m company with an interesting product set).

Bloggers – replacement or compliment to brokers’ analysts?

Is there really a case for saying that blogging will make traditional analysis obsolete? This is very debatable. What we haven’t seen (yet) is a blogger, for example, dissecting a company balance sheet in detail, making independent financial forecasts, or doing discounted cash flow analysis. That day may come, however, and in the meantime, if we assume that buy-side analysts and fund managers possess those same skills and are working from the same data (which they should be under fair disclosure rules), then it is not difficult to see investors increasingly relying on these less orthodox and more timely sources of market intelligence, and doing the valuation work themselves. We think this is already happening to some extent. The risk in this dynamic is that the sellside analysts continue to beaver away writing Hold notes on Deutsche Telekom and emailing them to clients, who might not really want them – in fact, might want them less with each passing month.

If you can’t beat ‘em…

How can the brokers respond? One idea might be to incorporate the very same tools and approach being used by the blogosphere. If we assume that IM/presence-based applications (including voice/video) are to become an integral part of corporate communications in the next few years, then this enables a level of immediacy and interaction in creating and marketing research. Blogging tools could be just one added feature of that newfound interactivity. This idea is not an alien one to the financial industry. Venture capitalist Tim Draper (a founding investor in Skype) has used his blog for the past two years to solicit ideas from readers for promising new business models and products, and has offered the most interesting candidates a chance to pitch their ideas to him live via a video conference link (http://www.alwaysonnetwork.com/comments.php?id=4121_0_6_0_C). Is it so far-fetched to suggest that some variant of this model could be employed by the brokers in exchanging ideas and information with investors? We certainly think there may be some pent up demand on the part of the beleaguered fund managers/buy-side analysts, who are under ever

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Global Telecom Monthly

greater pressure to manage information and news flow. An analyst with a hedge fund recently gave me his views: “I feel very strongly that the sell-side needs to: (a) improve the originality of their research, and; (b) provide better syndication options via RSS so that I can deal with the countless upgrades/downgrades, notes, etc.” We think awareness of the blogosphere may be low

One main issue affecting the rate at which the brokers move is likely to be awareness of technology, and perhaps of the potential of the blogging phenomenon itself, both of which we think may be generally poor. We were intrigued by some data included recently in the first anniversary report from the Muniwireless.com site, which covers the phenomenon of municipally-funded/managed wireless networking projects in an indepth and authoritative manner. In it, author/site founder Esme Vos lists (by category) the 466 subscribers to a weekly summary newsletter which she distributes via email (multiple subscribers from the same organization are counted only once, so the numbers in the table below do not add up to 466). It is interesting to note that, of the various categories of recipients listed, broking analysts do not appear at all, and neither do institutional investors, apart from venture capitalists. While it is possible that some of the recipients listed as “other” could be receiving the newsletter via a private Hotmail account rather than the company email, we think this is unlikely. We also concede that some analysts/investors may be subscribing via an RSS newsreader, but we think this is even less likely, given the email addiction of the industry as a whole. It is intriguing to ponder why, when the integrators, operators and vendors all seem to see this relatively niche segment of the market as worthy of monitoring, there are no visible analysts or investors on the list? Recipients of the Muniwireless weekly email newsletter, by category Category City and regional governments Systems integrators and consulting firms Telcos (fixed line and mobile) Cable/satellite Vendors (mostly hardware, a few software) ISPs and VOIP providers Journalists Research firms (the kind that sell analyst reports) PR firms Community volunteer organizations (e.g., Wireless Amsterdam) Venture capital Utility companies Educational institutions (universities/state colleges) Conference organizers Other (people with email addresses at Hotmail or Netscape)

Recipients 54 57 14 7 90 34 16 13 10 9 7 3 13 3 57

Source: Daiwa estimates, from Muniwireless.com anniversary report, June 2004

A matter of culture and vision, more than technology

One other stumbling block to adoption may lie in the attitude the brokers might take to what they perceive as a freer flow of information. The currently highly conservative approach to compliance issues makes for one source of anxiety – how to ensure that readers in the US don’t see or hear something they’re not supposed to? The other would be the legacy of brokers’ research as a closed information loop, theoretically only available to clients, potential clients, or subscribers to research aggregators such as Multex or First Call. In practice, we know that brokers’ notes get circulated far more widely than this, but this is the unofficial distribution system that is likely to plague any type of publication. The assumption is that the research product is free, but exclusive to clients or prospective clients on the implicit understanding that access to it involves getting some business out of it at some point. If the brokers take on an openaccess approach, how does this model translate? RSS does allow for conditional access, so the brokers could tailor specific content feeds for particular classes of clients (those physically present in the US, those interested only in telecoms), or perhaps move to a chargeable structure with different tiers of access privileges. Adding richer communication tools and comments sections/discussion forums would make for a more interactive experience. This would be a chance to move from brokers’ research as a GLOBAL P ERSPECTIVE

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“push” medium, to one based on “push and pull.” The key question is probably one of culture and vision more than technology, and we will see who goes for it first. The risks for those left behind might be great. Annex: Analysts, who needs ‘em? Will you miss me when I’m gone?

Would anyone miss the brokers if they disappeared? To assess this we must first get a handle on the track record of analysts in calling it right. In the chart below, we have plotted current year net EPS revisions (3-month moving average), net analyst ratings revisions (also 3-month moving average) and the relative performance of the STOXX Telecoms index (rebased) on a monthly basis from December 1997 to 5th July, 2004, when the data was collected. Careful perusal of the chart reveals a history of very mixed performance. Trail of tears – analyst forecast revisions, ratings trends and the sector 2.5

250

STOXX Telecoms relative performance vs. STOXX 600, rebased (RHS)

2.0

200

1.5

150

1.0

100

0.5

STOXX Telecoms analyst net EPS revisions for current FY, 3-month moving average (LHS)

0.0 Dec-97

Sep-98

Jun-99

Mar-00

Nov-00

STOXX Telecoms analyst net ratings revisions, 3-month moving average (LHS) Aug-01

May-02

Jan-03

Oct-03

50 0 Jul-04

Source: Daiwa estimates, from JCFQuant data

A blow-by-blow account Like nailing jelly to the wall

The EPS and ratings revision lines track pretty well up until 1999, when things start to go profoundly wrong. From the beginning of Q2 1999 through Q1 2001, the trends in EPS and ratings revisions are largely at odds. The analysts’ ratings get bullish as EPS momentum turns negative (Q2 99), then ratings downgrades intensify through a period when EPS revision momentum is neutral to mildly favorable (Q2 to Q4 99). During this period of intensely negative ratings revision momentum, the sector goes up by 35% in absolute terms. The brokers then turn wildly positive in December 1999, upgrading the sector into Q1 2000 as it moves up 64% - yet EPS revisions momentum turns negative at exactly the same time! (As an analyst who had Sonera on a buy rating at another firm at the time, I must hold my hand up and admit that I also fell prey to the collective insanity prevalent at the time.)

Behind the curve

STOXX Telecoms peaks at 1,063 on 6th March, 2000, and never looks back, but EPS revision momentum turns positive, and ratings revision momentum remains positive for another three months, while the sector loses 35%. There is then a process of capitulation, which runs through April 2001, when we see upgrade momentum reverse into a positive trend, though the sector loses another 34% over this period. Momentum turns negative just as the sector rallies 16.5% in the wake of the 9/11 attacks. As this rally fizzles, the analysts upgrade EPS numbers and ratings, leading with their collective chin into a 16% decline in the sector.

Getting it together in 2002

The sector then begins a period of strong relative performance in June 2002, rising 14.9% in absolute terms over the following year, and this time the analysts are on board (we upgraded the sector at the beginning of August), aided by increasing confidence in restructuring potential, recapitalization and management changes within the five problem companies in the sector (BT Group, DT, FT, KPN and Sonera).

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Global Telecom Monthly

However, it is interesting to note that the ratings revisions lack the conviction shown in the EPS revision trend, as though perhaps there is an element of disbelief among analysts. Irrational exuberance returns?

By the end of May 2003, the rally has ended (we downgraded the sector on 27th May), and revisions/ratings are in a downtrend. However, EPS revision momentum subsequently turns positive, followed after a two-month lag by ratings revisions, and both run wild in H2 2003. The sector rises 10% in H2 in absolute terms, but on a relative basis underperforms the broad market by 4.6%. Moving into 2004, EPS revision momentum has been strongly negative to date, but in the second quarter we have seen positive ratings momentum, leading us to ponder whether ratings and numbers are beginning to diverge again as they did in 1999.

Brokers on the whole are a bad directional indicator

Admittedly, with an aggregate set of data like consensus numbers, inevitably much detail is obscured. Clearly there have been some very good individual stock and sector calls in the past seven years, but as a directional indicator of where the sector is going overall, we cannot escape the conclusion that historically, analysts overall are not a reliable indicator. Based on the relative performance of the sector and ratings revision trends over the 26 quarters covered by this analysis, we determine that consensus was a sound directional indicator for only 10 quarters, or a hit rate of 38.5%. Consistency is not a strong trait either – the longest stretch of good calls was three quarters (Q3 2000 and Q1 2001). The only year where the brokers got it right more than half the time was 2000, strangely the time when the sector bubble burst. Good times, bad times – Brokers’ history of getting it right Year 1998 1999 2000 2001 2002 2003 2004 H1

Number of “good” quarters 1 2 3 1 2 1 0

Source: Daiwa estimates, from JCFQuant data

Epilogue: Knowledge is power In visiting a number of clients over the past year or so, and in speaking with friends and acquaintances generally, it has been striking to see so little awareness of RSS and its potential to cut down on email overload and websurfing time. Presumably this means that a great many telecom investors out there may be unaware of some of the very fine information resources available in real time, many of which deal with aspects of the industry not commonly addressed in standard broker research products. I present a list of resources which I find particularly informative below. In doing so, I am in no way endorsing the views of the creators of these sites. I simply wish to convey that I have found them very useful and unique. In each case I have copied the RSS/XML feed, which will only work for those who use an RSS news reader. Others will need to simply copy the URL portion of the address to access standard HTML. Undoubtedly I have missed out something valuable, so apologies in advance for omissions, and thanks in advance for any suggested additions.

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A resource list of potentially useful RSS feeds for the buy-side analyst/fund manager Name

Description

RSS feed

Corante: Get Real

Part of the growing Corante techblog http://www.corante.com/getreal/index.xml network. Good coverage of new developments in instant messaging, social software and collaboration tools. Author Stowe Boyd is currently leading a campaign to abandon email in favor of IM.

Corante: Mobile Mesh Networking

Written by Paris-based consultant Marc Cabiling, focuses on the not widely covered developments in wireless mesh networking.

http://mcabiling.persozone.net/mobilemesh/mobilemesh.xml

Gizmodo

Devoted to new gadgets of every description, but with a heavy presence from mobile phones, PDAs, digital music players, and the like.

http://www.gizmodo.com/atom.xml

Engadget

Similar angle to Gizmodo, but definitely worth adding to your newsreader.

http://www.engadget.com/rss.xml

Geekzone

Despite the name, a digestible site with interesting takes on new developments within tech.

http://www.geekzone.co.nz/geekzone_rss.asp

Techdirt

Coverage of the tech world from a decidedly irreverent point of view.

http://www.techdirt.com/techdirt_rss.xml

Wireless Watch Japan

Ground level view of all things wireless in the Japanese market (small registration fee required).

http://www.wirelesswatch.jp/backend.php

Reiter’s Wireless Data Web Log

In- depth, first-hand user experiences from http://reiter.weblogger.com/xml/rss.xml an authority in the field. Very US-centric, but a good read.

Smartmobs

Coverage of social aspects and impacts of http://www.smartmobs.com/index.rdf mobile technology. Always an interesting read.

Wireless IQ

Comprehensive coverage of the wireless http://www.wirelessiq.info/rss/newsfeed.jsp networking equipment and services world.

Daily Wireless

Some amazingly detailed coverage of developments in wireless technology and services.

http://dailywireless.org//newsrss10.php

Wi- Fi Networking News

Similar coverage area to Daily Wireless, but with a tighter focus on Wi-Fi.

http://wifinetnews.com/index.rdf

Muniwireless

Coverage of developments in municipal wireless network projects worldwide. The authoritative site on this issue.

http://www.muniwireless.com/reports/index.xml

Om Malik on Broadband Wide-ranging coverage of telecom/tech by http://gigaom.com/feed/atom/ Business 2.0 journalist and author. VoIP Watch

Wide-ranging coverage of the VoIP phenomenon.

http://andyabramson.blogs.com/voipwatch/atom.xml

Slashdot

More moderated chat room than blog, this http://slashdot.org/slashdot.rss is often an interesting source of obscure information, particularly in the comments threads.

Source: Daiwa estimates

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Global Telecom Monthly

News Europe BT and Yahoo! formally launched their co-branded Communicator IM/VoIP product in the UK market, with no modifications to previously announced features or strategy. Video conferencing should be added in 2005. Reuters reported a source close the European Commission as saying that the EC will demand that France Telecom pay €1.1bn in back taxes to the French government relating to the period preceding its partial privatization. The report also claimed that the Commission considered asking FT to pay €7bn relating to the issue of “psychological state aid” ahead of the rights issue in 2003, but did not feel the legal grounds for such a step were sound. The British Institute of International & Comparative Law released a detailed report benchmarking transparency in telecom regulation across six EU member states. Germany and Spain fared worst, with the report estimating that the average time required for resolution of regulatory disputes involving legal action is 5 – 6 years in Germany and up to five years in Spain. During the time frame 1997 – 2003, Germany had 750 regulatory and dispute resolution orders from the national regulator and 1,000 court appeals, 500 of which are still pending. Pan-European ISP Tiscali is being sued in a Belgian court by SABAM, a Belgian music and publishing industry group representing 25,000 artists. The suit claims that Tiscali contributes to copyright infringement by not attempting to block or degrade traffic from P2P file sharing sites. Previous actions against file sharing have focused on end-users and the P2P networks themselves, but this is the first time to our knowledge when the industry has attempted to sue a perceived "enabler" of copyright infringement. This case could serve as a precedent for future action at national level against other ISPs. Data released by the OECD showed that European countries occupy seven of the top ten positions in the global file sharing list for 2003. Germany is second only to the US, accounting for 10.2% of global P2P network users. In France and Germany, it is now estimated that 0.6% of the general population has used P2P networks at some point. Despite reports earlier this year that file sharing was on the wane, the OECD data found that the number of simultaneous users of all measured file sharing networks globally has risen from just over 6m in August, 2003, to nearly 10m in April 2004. Separate research from UK company CacheLogic showed 10m concurrent users on the major P2P platforms, sharing 10 petabytes of data (that’s 10m gigabytes) at any given time. Virgin Mobile announced on July 7th details concerning its IPO scheduled for later this month. The pricing and allocation of shares is expected to take place on July 20, 2004 with the admission to the Official List of the UK Listing Authority and trading on the LSE scheduled for July 26, 2004. The indicative price range has been set at 235p to 285p per share implying an EV range of £900m to £1,025m (assuming pro-forma net debt as at March 31, 2004 of £311m). The offer consists of up to 98m shares (not including the shares that may be acquired under the over-allotment arrangements) which, taking into account the indicative price range, should yield proceeds of £230m to £279m. The free-float, prior to the exercise of the over-allotment, is expected to be roughly 37%, on a fully-diluted basis. A further 14.7m shares are available in the overallotment which, if it was exercised, would result in a free-float of approximately 43%.

NEWS – EUROPE

July 2004

13

US Sprint Corporation announced on June 16 that it will cut 1,100 employees, 850 from Sprint Business Solution (SBS) and 250 from administrative and IT functions that support SBS. The company had earlier slashed the same number of employees by closing a number of customer call centers. This latest announcement reflects sluggish enterprise demand, but the company said better-than-expected improvement in its wireless business would offset the impact of SBS. Sprint also reiterated its FY04 guidance: EPS at $0.70~0.75, and free cash flow of $1.8bn. Cablevision announced it is introducing a ‘Triple Play’ package deal, in which the company sells cable TV (more than 140 channels), high-speed Internet, and IP phone services at $29.95 each. With the total package coming to only $89.95, it is the most aggressive offer in the US. Meanwhile, Verizon Communications asked the FCC to approve special treatment if the company started offering FTTH service. Verizon asked the agency to treat it as an information service provider instead of common carrier, as the latter category is required to open its networks to competitors. The company also asked the FCC to finalize regulation related to broadband service offerings. The company insisted broadband service from telephone companies should be treated equally with that of cable operators. Meanwhile, Verizon said it is applying for a cable franchise in order to offer TV, in addition to Internet and voice service, over FTTH. SBC Communications announced on June 22 that it will invest $4-6bn over the next five years to construct IP based broadband networks. The company plans to roll out FTTP (fiber-to-the-premises) in new housing and FTTN (fiber-to-the-node) in existing buildings. SBC is finishing its Project Pronto, in which the company has laid out optical fibers connecting central offices to remote terminals. Under a new initiative the company will connect remote terminals to buildings with optical fiber. At the same time, SBC will begin to replace circuit switches with packet switches in order to offer IP phone, Internet and TV services. Earlier the company announced it is deploying Siemens softswitches, and this time the company also announced it is using on IPTV platform offered by Microsoft. Sprint Corporation on June 22 announced it will invest in CDMA 1x EV-DO (Evolution Data Optimized) for its next generation mobile data service. The company will start offering the service in select markets in 2H04 and continue to expand coverage to a majority of markets through 2005. Sprint earlier said it had opted for 1x EV-DV, but obviously the company didn’t want to be left out waiting for the latest technologies to mature when competitors had already started deploying currently available next generation infrastructure. The company plans to spend $1bn on the project, the majority of which is to be realized in 2005, with completion by 2006. CNET news reported that Cingular Wireless had issued a RFP (request for proposal) to equipment vendors in order to launch UMTS service using 850MHz in 2005. Cingular Wireless selected Lucent Technologies for field trials in Atlanta this year, but the company hasn’t decided which vendors it will use in commercial deployment. AT&T announced on June 23 that it will stop accepting new customers in 7 of 46 states where the company offers local telephone services. The company will continue to provide services to existing customers and to exploit markets for enterprise local service and DSL services. On the same day, the company announced it is reducing its financial guidance for FY04. The reduction came mainly from continued price competition faced by AT&T Business Services, but the consumer business has also been hurt by its failure to expand consumer local service, as well as higher marketing costs, as it rolls out consumer VoIP services. On June 24 Standard and Poor’s announced it is placing AT&T’s short-term credit rating of A-3 on credit watch with a negative implication. AT&T’s long-term credit rating of BBB has been on the negative watch list since April 28. The credit agency said the reduced guidance prompted the action, and the downgrade could be one to two notches. NEWS – US

14

Global Telecom Monthly

At a July 8 open meeting, the Federal Communications Commission voted to resolve interference problems at public safety agencies caused by Nextel Communications. The Commission approved Nextel’s proposal to surrender licenses in the 800MHz spectrum and instead receive licenses in the 1.9GHz spectrum. The FCC values licenses in 1.9GHz at $4.8bn. Nextel will compensate by surrendering 4MHz licenses in 700MHz and 4.5MHz licenses in 800MHz, in addition to subsidy payments for the public safety agencies to realign themselves to the new spectrum. Nextel Communications must pay the balance in cash to make up the shortfall from $4.8bn. The FCC also ordered Nextel to set up a credit facility in an escrow account to compensate as much as $2.5bn to the public safety agencies. Meanwhile, the General Accounting Office announced it has initiated an investigation as to whether the decision is fair to the federal government. Industry associations also denounced it as unfair, and Verizon Communications, the decision’s most avid opponent, said it would consider making criminal allegations against Nextel.

NEWS – US

July 2004

15

Japan On July 7, the Telecommunication Carriers Association (TCA) announced that the total number of mobile subscribers as of end-June had risen 384,000 MoM to 82.71 million. KDDI (au) acquired 157,000 net subscriber additions (41% of total), NTT DoCoMo 166,000 (43.3%), and Vodafone 64,000 (16.7%). NTT DoCoMo regained the top position for the first time in nine months. As for 3G services, NTT DoCoMo attracted 573,000 net subscriber additions and KDDI (au) gained 342,000. Vodafone is still behind its peers due to its poor line up of handsets. On July 9, Usen announced that its number of broadband subscribers had reached 267,696 as of end-June. On July 12, the Ministry of Public Management, Home Affairs, Posts and Telecommunications announced that the number of xDSL subscribers as of end-June had increased 250,000 MoM to 12.07 million. Softbank BB’s share of net additions was up 0.9 percentage points MoM to 37.7%, and the share of NTT East and West rose 4.3 percentage points MoM to 40.5%. Softbank BB admitted in mid-June that there was a leak of customer call logs and this may affect its net additions in July. On July 12, KDDI (au) announced three new WIN handset models. We note that it announced enriched content and new rates at the same time, with the latter in particular aimed at benefiting average users. While mobile operators have generally announced new models and services separately, we think KDDI’s simultaneous announcement is more effective in appealing to consumers. Although KDDI (au) lost its top position in net subscriber additions to NTT DoCoMo in June because consumers refrained from replacing handsets ahead of new model launches, the company is expected to maintain its momentum thanks to the new models and services.

NEWS – JAPAN

16

Global Telecom Monthly

Asia ex-Japan It was reported by the SCMP that two senior executives from separate mainland carriers have confirmed that the State Council and the Stated-owned Assets Supervision and Administration Commission was reviewing a plan to merge China Mobile Communications Group with China Network Communication Group and China Telecommunications Group with China United Telecommunications Group. According to the news report, the government was convinced the merger plan could resolve the 3G licence problem as only two next-generation mobile licenses would be needed instead of four. The MII and National Development and Reform Commission (NDRC) recently issued a notice to the six telecom operators which aims to strengthen their control over telecom tariffs. The notice reportedly (Zhongguo Jingji Shibao) requests that the local branch office of each operator seeks the prior approval of its respective head office on new promotional offerings before submitting it to the local regulators for approval. At the same time, the head offices of each operator have to report those new promotional plans they agree to to the MII and NDRC. China Netcom has reportedly (SCMP) secured permission from China’s central government to list on the Hong Kong Stock Exchange as a red chip. It was also reported in The Asia Wall Street Journal that the company hopes to acquire the entire Hong Kong telephone network of PCCW, allowing it to combine this with its network in southern China. According to Bloomberg, quoting unidentified sources, China Netcom plans to seek permission from U.S. and Hong Kong regulators to sell about U$1.5bn worth of shares in an IPO. According to the news report, it may file with the Securities and Exchange Commission in the week starting 12 July and sell shares as soon as September. PCCW denied that it has reached a framework agreement with China Netcom in relation to the sale of an equity stake in the company’s core telecom operation and denied that China Netcom had offered a price of HK$6.00 per share for such an equity stake. According to PCCW’s announcement, it is still in discussions with China Netcom but no definitive agreement or letter of intent has yet been signed by the parties. Unicom announced the pricing details of the rights issues proposed earlier by its A-share shareholder (China United Telecom, 600050 CH). The total number of rights shares will be 1.5bn and the price is Rmb3.00 per share. The estimated proceeds of Rmb4.5bn will all be used for the acquisition of part of the shareholding of Unicom Group in Unicom BVI. In the rights issue prospectus, Unicom also disclosed that USO has been launched on a trial basis in certain areas in 1H04, although the formal USO scheme is still being studied by the relevant government departments. Unicom further said that if the MII decides to fully launch USO, the company’s operating costs may rise. Yonhap reports that SK Telecom (SKT) will spend W700m on a 40-day campaign offering gift certificates and free overseas travel for customers who switch to its service from KT Freetel (KTF). Asia Pulse reported that MIC Minister Chin Dae-je announced that the Korean government will set a timetable by the end of July for issuing 2.3Ghz licences. The Minister also reportedly said there will be a further announcement in August on details such as how many licences will be issued. The MIC announced new interconnection rates for 2004, which will take a retro-active effect from 1 January. The Singapore government has upheld a December 2003 ruling by the IDA that Singapore Telecom should provide wholesale local leased circuits (LLCs) at prices 30% below its retail prices for connections from end-users’ sites to facilities-based operators’ exchange buildings or data centers. For connection from end-users’ sites to SingTel’s exchange buildings, the price should be 50% below SingTel’s retail prices. The six-month lock-up period on Temasek selling more of its holding in Singapore Telecom has now expired. In addition, Capital Group has trimmed its holding in SingTel from 5.96% to 4.997%. SingTel-Optus announced that its OptusNet broadband customer base has now grown to 185,000, marking a 36,000 increase since 31 March 2004. OptusNet Cable customers now total 162,000 and OptusNet DSL customers 23,000. In addition, the company has also introduced a new entry-level DSL plan (named ‘yes’ Basic 200mb) NEWS – ASIA

July 2004

17

for a flat bundled rate of A$29.95 a month, offering 200mb of data and a download speed of up to 256kbps. Australian energy retailer, Alinta Ltd., has agreed to sell its 66% stake in Australian fibre-optic network operator, Uecomm Ltd. (UEC.AU), to SingTel-Optus. Optus’ A$226.8m offer for Uecomm is now unconditional, as it has acquired more than 65% of Uecomm’s shares. Telstra and SingTel-Optus have agreed to new fixed-line access pricing, which will last until mid-2006. No pricing details were released by the companies. According to Dow Jones, Telecom Corporation of New Zealand (TNZ) and TelstraClear (TLC), a subsidiary of Telstra, have applied separately for the New Zealand Commerce Commission (NZCC) to review the price of residential wholesale products. The NZCC is expected to calculate residential wholesale prices by measuring the cost savings from TNZ supplying services at the wholesale rather than the retail level. The current pricing methodology for wholesale products recommended by the NZCC is a 2% discount to TNZ’s retail pricing. According to Dow Jones, TelstraClear, Telstra’s New Zealand subsidiary, is still planning to launch a 3G mobile network in New Zealand. The company said issues concerning mobile number portability, roaming and termination were the main areas holding back a decision to build its own network. According to The Australian Financial Review, the appointment of a new chairman for Telstra will be made within a few weeks, and that the appointment will be a surprise and a controversial decision. The newspaper also said several existing board members were candidates, although several external candidates were also in the running. Among the internal candidates, the newspaper named CSIRO chairman, Catherine Livingstone, Reserve Bank director Donald McGauchie and IOOF Chairman Charles Macek. The Australian government has announced the appointment of a new telecommunications minister, to replace Mr. Daryl Williams, who oversaw few regulatory changes during his tenure. Mr. Williams, who is retiring from politics, will be replaced by assistant treasurer Ms. Helen Coonan. According to Reuters, Vodafone Australia has announced it will launch its 3G services before June 2005. The company has already appointed Nokia to upgrade its existing 2G GSM based network to the WCDMA standard. According to The Australian Financial Review, Hutchison Telecom Australia is close to signing a 3G network sharing agreement with Telstra. Hutchison released a statement neither denying nor confirming the talks, saying it remained in talks with several carriers, and Telstra was one of them.

NEWS – ASIA

18

Global Telecom Monthly

Statistics and valuations Cellular subs 2001A

2002A

2003A

2004F

2005F

2006F

2007F

288.8 18

303.2 5

325.0 7

343.2 6

358.0 4

368.7 3

376.1 2

UK % change

44.9 12

49.9 11

51.3 3

53.7 5

54.9 2

56.1 2

57.3 2

France % change

37.0 25

38.6 4

41.7 8

44.5 7

46.1 4

47.3 3

47.7 1

Germany % change

54.2 13

57.0 5

62.2 9

66.4 7

68.1 2

69.7 2

70.5 1

Italy % change

49.9 19

52.9 6

55.2 4

56.3 2

56.5 1

56.8 1

57.4 1

33.2 15

37.0 12

38.3 3

39.1 2

39.5 1

39.9 1

128.4 17

140.8 10

158.7 13

173.8 10

177.9 2

182.2 2

183.7 1

67.1 16

73.5 10

79.8 9

84.7 6

88.4 4

91.2 3

93.2 2

144.8 70

206.6 43

268.7 30

320.4 19

353.8 10

389.0 10

424.4 9

Hong Kong % change

5.7 9

6.2 9

7.2 16

7.4 3

7.6 3

7.8 2

8.0 2

Singapore % change

2.9 17

3.2 13

3.5 7

3.8 10

3.9 3

4.1 3

4.2 3

Korea % change

29.0 8

32.4 12

33.6 4

36.8 10

38.2 4

38.9 2

39.8 2

Taiwan % change

21.6 21

23.9 11

25.1 5

23.8 (5)

24.4 2

24.9 2

25.2 1

Australia % change

12.0 18

13.5 12

15.2 13

16.5 8

17.2 4

17.8 4

18.3 3

2.4 24

2.5 7

2.8 10

3.0 8

3.1 5

3.3 4

3.4 4

Europe (m) Western Europe % change

Spain 28.8 % change 19 Source: Mobile Communications/DIR forecasts USA (m) USA % change Japan (m) Japan % change Asia (ex-Japan) (m) China % change

New Zealand % change Source: Daiwa estimates

STATISTICS & VALUATIONS

July 2004

19

Cellular penetration 2001A Europe (%) Western Europe 74.8 UK 76.4 France 66.4 Germany 65.9 Italy 87.2 Spain 72.7 Source: Mobile Communications/DIR forecasts

2002A

2003A

2004F

2005F

2006F

2007F

78.5 84.9 69.3 69.3 92.3 83.7

84.1 85.9 69.8 75.8 96.1 92.8

88.9 90.0 74.5 81.0 98.0 96.0

92.7 92.0 77.2 83.0 98.5 98.0

95.5 94.0 79.3 85.0 99.0 99.0

97.4 96.0 79.9 86.0 100.0 100.0

USA (%) USA

46.2

50.2

56.1

60.9

61.8

62.8

62.8

Japan (%) Japan

53.9

58.6

63.2

67.1

70.0

72.1

73.6

11.3 84.4 71.2 61.0 96.6 63.4 60.4

16.1 91.1 77.9 68.0 106.2 70.5 63.3

20.7 105.6 83.1 70.1 111.0 78.9 68.4

24.5 107.6 90.3 76.5 105.0 84.5 73.5

26.8 109.6 92.4 79.0 107.0 87.0 76.5

29.3 110.6 94.4 80.0 109.0 89.0 79.0

31.7 111.6 96.4 81.5 110.0 90.5 81.0

Asia (ex-Japan) (%) China Hong Kong Singapore Korea Taiwan Australia New Zealand Source: Daiwa estimates

STATISTICS & VALUATIONS

20

Global Telecom Monthly

Cellular ARPU GDP* (US$ PPP/capita)

2001A

2002A

2003A

2004F

2005F

2006F

2007F

24,700

33.0 n.a. 12 145

37.5 14 14 182

45.2 20 16 200

46.8 4 17 234

44.8 (4) 17 235

44.7 0 18 238

43.5 (3) 19 232

36,300

45.6 5 -

46.2 1 -

46.6 1 -

46.5 0 -

47.9 3 -

47.4 (1)

n.a. n.a.

27,200

77.7 (2) 18 404

74.4 (4) 22 399

72.3 (3) 25 381

68.0 (6) 25 347

65.8 (3) 27 340

n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a.

NTT DoCoMo

4,300

17.0 (36) 3 127

13.9 (18) 4 99

12.3 (11) 8 86

10.8 (12) 11 74

10.6 (2) 14 71

10.6 0 16 71

10.6 0 17 71

China Mobile HK

Hong Kong % change % non-voice Line yield (US$)

25,000

23.4 (7) 2 10

23.4 0 4 74

23.9 2 5 99

24.5 3 6 117

25.2 3 10 115

26.1 4 14 115

26.8 3 17 129

SmarTone

Singapore % change % non-voice

26,500

30.3 (32) 0

32.2 6 13

30.8 (4) 17

31.4 2 21

31.5 1 26

31.6 0 28

33.3 5 31

Singapore Telecom

Korea % change % non-voice Line yield (US$)

18,000

31.5 n.a. 5

32.7 4 10

33.9 4 16

34.7 2 20

36.1 4 23

36.9 2 26

38.3 4 29

Taiwan % change % non-voice Line yield (US$)

17,200

22.8 n.a. 1

18.4 (19) 2

17.2 (7) 5

19.4 13 5

19.6 1 7

20.2 3 9

20.5 2 11

TCC

Australia % change % non-voice

24,000

28.8 (2) 4

27.1 (6) 7

27.9 3 10

28.3 1 14

29.9 5 19

31.0 4 24

32.2 4 27

Telstra

Europe (US$) UK % change % non-voice Line yield (US$) USA (US$) USA % change Line yield (US$) Japan (US$) Japan % change % non(voice Line yield (US$) Asia (ex-Japan) (US$) China % change % non-voice Line yield (US$)

Name of operator Vodafone UK

Industry Average

SK Telecom

New Zealand 20,200 14.8 15.7 19.7 21.7 24.6 26.2 27.7 Telecom New Zealand % change (39) 6 26 10 13 7 6 % non-voice 1 3 6 11 17 21 25 Source: Daiwa estimates Note: Line yield (EBITDA per sub in US$) is only provided for operators that breakdown EBITDA by business segment. * GDP PPP figures are for 2001 (Source: CIA Worldfactbook)

STATISTICS & VALUATIONS

July 2004

21

Broadband Internet subs 2001A

2002A

2003A

2004F

2005F

2006F

2007F

Europe (m) UK % change

0.34 817

1.37 303

3.19 133

4.90 54

5.70 16

6.30 11

6.70 6

Germany % change

2.46 274

3.37 37

4.39 30

6.00 37

6.60 10

7.40 12

8.00 8

France % change

0.61 271

1.69 178

3.42 102

5.00 46

5.60 12

6.00 7

6.30 5

Netherlands % change

0.47 113

1.12 139

1.72 54

2.40 40

2.80 17

3.10 11

3.20 3

Western Europe Total % change

6.51 272

13.56 108

23.00 70

35.00 52

42.00 20

46.00 10

49.00 7

USA (m) USA % change

12.8 81

19.9 55

28.2 42

35.0 24

42.2 21

49.8 18

57.8 16

Japan (m) Japan % change

2.8 347

7.8 175

13.6 75

18.6 36

23.3 25

27.3 17

n.a. n.a.

Asia (ex-Japan) (m) China % change

1.0 232

3.3 244

10.4 210

22.3 116

35.5 59

44.4 25

54.0 22

Hong Kong % change

0.62 59

0.99 59

1.23 24

1.47 20

1.71 16

1.93 13

2.14 11

Singapore % change

0.14 85

0.23 70

0.39 71

0.52 32

0.62 20

0.71 13

0.77 9

Korea % change

7.8 94

10.4 33

11.2 8

11.8 5

12.4 5

12.8 4

13.1 2

Taiwan % change

1.13 393

2.10 86

3.00 43

3.90 30

5.05 29

6.30 25

7.55 20

Australia % change

0.22 201

0.41 83

0.69 69

1.08 57

1.58 46

2.19 38

2.90 33

New Zealand % change

0.05 n.a.

0.09 102

0.16 66

0.23 44

0.30 32

0.37 26

0.46 22

Source: Daiwa estimates

STATISTICS & VALUATIONS

22

Global Telecom Monthly

Valuation –––––––––––––EV/EBITDA –––––––––––

Company Rating Currency Price Integrated operators AT&T (T US) 3 US$ 14.96 BellSouth (BLS US) 2 US$ 26.00 BT Group (BT/A LN) 3 GBp 191 China Telecom (728 HK) 2 HK$ 2.55 Chunghwa Telecom (2412 TT) 3 NT$ 52.50 Deutsche Telekom (DTE GR) 3 Eur 14.15 France Telecom (FTE FP) 4 Eur 20.45 KPN (KPN NA) 4 Eur 6.26 KT Corp (3020 KS) 2 Won 36,950 NTT (9432 JP) 2 Yen 578,000 PCCW (8 HK) 4 HK$ 5.45 Portugal Telecom (PTC PL) 3 Eur 8.63 Qwest (Q US) 4 US$ 3.55 SBC (SBC US) 4 US$ 23.54 Singapore Telecom (ST SP) 3 S$ 2.26 Sprint (FON US) 2 US$ 18.17 Swisscom (SCMN VX) 4 CHF 415.00 Telecom Italia ordinaries (TIT IM) 2 Eur 2.51 Telecom Italia savers (TITR IM) 3 Eur 1.80 Telecom New Zealand (TEL NZ) 2 NZD 5.83 Telefonica (TEF SM) 3 Eur 12.05 Telenor (TEL NO) 2 NOK 46.70 TeliaSonera (TLSN SS) 4 SEK 31.90 Telstra (TLS AU) 2 A$ 5.00 Verizon (VZ US) 2 US$ 35.16 Weighted average Cellular/wireless -centric China Mobile (941 HK) China Unicom (762 HK) KDDI (9433 JP) KT Freetel (3239 KS) M1 (M1 SP) mmO2 (OOM LN) Nextel (NXTL US) NTT DoCoMo (9437 JP) SK Telecom (1767 KS) Smartone (315 HK) Taiwan Cellular (3045 TT) Telecom Italia (TIM IM) Telefonica Moviles (TEM SM) Vodafone (VOD LN)

1 3 1 3 3 UR 1 2 2 2 3 2 3 3

HK$ 21.85 HK$ 5.90 Yen 587,000 Won 20,000 S$ 1.47 GBp 94 US$ 25.16 Yen 184,000 Won 168,500 HK$ 8.50 NT$ 33.30 Eur 4.57 Eur 8.77 GBp 120

Weighted average

–––––––––––––––EV/sales –––––––––––––

2002

2003

2004

2005

2002

2003

2004

2005

2.5 5.4 4.5 5.9 5.0 7.4 8.9 6.4 3.2 3.6 7.7 6.8 6.4 5.6 9.8 6.1 6.4 5.3 5.3 7.1 7.2 8.1 7.4 7.9 5.1

2.5 5.2 4.5 5.1 4.7 6.3 6.3 5.0 3.8 3.5 7.9 7.2 6.8 6.4 8.2 5.2 6.2 5.3 5.3 6.6 7.7 5.8 5.5 7.3 5.1

3.0 4.0 4.5 4.2 4.3 5.6 5.7 4.8 3.2 3.3 6.8 6.2 6.2 6.4 7.5 4.4 5.8 6.3 6.3 6.4 7.0 5.0 5.3 7.1 4.7

2.6 3.5 4.4 3.7 3.9 4.6 5.3 4.6 3.0 3.1 6.1 4.9 5.0 5.9 7.0 3.7 5.3 5.8 5.8 6.2 6.1 4.6 4.9 6.8 4.0

0.7 2.4 1.4 2.7 2.7 2.2 2.8 2.3 1.2 1.3 3.1 2.7 1.7 2.2 4.9 1.7 1.9 2.2 2.2 2.9 3.0 2.3 2.3 3.6 2.2

0.6 2.2 1.4 2.5 2.5 2.1 2.4 2.0 1.3 1.2 2.6 2.4 1.5 2.2 3.9 1.6 2.8 2.8 2.8 3.0 3.1 2.0 2.0 3.5 2.1

0.6 1.8 1.4 2.2 2.4 1.9 2.2 1.9 1.3 1.1 2.2 2.3 1.5 2.2 3.7 1.4 2.6 2.6 2.6 2.9 3.0 1.8 1.9 3.5 1.9

0.6 1.6 1.4 1.9 2.2 1.6 2.0 1.7 1.2 1.1 2.1 2.0 1.4 2.1 3.4 1.3 2.4 2.5 2.5 2.8 2.7 1.6 1.7 3.3 1.7

6.2

5.8

5.4

4.8

2.4

2.3

2.1

2.0

6.1 6.0 6.8 3.8 5.9 10.1 11.8 5.2 3.8 2.4 9.6 4.4 12.0 8.5

4.8 4.9 5.3 3.8 6.0 7.3 8.3 4.9 3.3 1.4 7.5 3.5 9.6 7.1

4.1 3.8 4.4 3.2 5.9 6.0 6.0 4.7 3.0 3.5 7.0 3.6 8.8 7.1

3.4 3.2 3.8 2.9 5.5 4.9 4.7 4.3 2.4 3.3 6.1 3.1 7.1 6.4

3.7 2.8 1.4 1.3 2.4 1.8 4.3 2.0 1.8 0.6 3.5 2.0 4.9 3.1

2.8 1.8 1.2 1.2 2.4 1.7 3.2 1.8 1.6 0.4 2.9 1.6 4.3 2.7

2.3 1.4 1.1 1.1 2.3 1.5 2.5 1.7 1.4 1.0 2.9 1.7 3.7 2.7

1.9 1.2 1.0 1.0 2.2 1.3 2.1 1.6 1.1 0.9 2.5 1.5 3.2 2.5

7.6

6.2

5.7

5.0

3.0

2.5

2.3

2.0

Source: Daiwa estimates Note: UR; Under Revision due to a change of coverage responsibility Unless otherwise stated, share price as of 14 July 2004

STATISTICS & VALUATIONS

July 2004

23

Valuation (cont’d) Company Rating Currency Price Integrated operators AT&T (T US) 3 US$ 14.96 BellSouth (BLS US) 2 US$ 26.00 BT Group (BT/A LN) 3 GBp 191 China Telecom (728 HK) 2 HK$ 2.55 Chunghwa Telecom (2412 TT) 3 NT$ 52.50 Deutsche Telekom (DTE GR) 3 Eur 14.15 France Telecom (FTE FP) 4 Eur 20.45 KPN (KPN NA) 4 Eur 6.26 KT Corp (030200 KS) 2 Won 36,950 NTT (9432 JP) 2 Yen 578,000 PCCW (8 HK) 4 HK$ 5.45 Portugal Telecom (PTC PL) 3 Eur 8.63 Qwest (Q US) 4 US$ 3.55 SBC (SBC US) 4 US$ 23.54 Singapore Telecom (ST SP) 3 S$ 2.26 Sprint (FON US) 2 US$ 18.17 Swisscom (SCMN VX) 4 CHF 415.00 Telecom Italia ordinaries (TIT IM) 2 Eur 2.51 Telecom Italia savers (TITR IM) 3 Eur 1.80 Telecom New Zealand (TEL NZ) 2 NZD 5.83 Telefonica (TEF SM) 3 Eur 12.05 Telenor (TEL NO) 2 NOK 46.70 TeliaSonera (TLSN SS) 4 SEK 31.90 Telstra (TLS AU) 2 A$ 5.00 Verizon (VZ US) 2 US$ 35.16 Weighted average Cellular/wireless -centric China Mobile (941 HK) China Unicom (762 HK) KDDI (9433 JP) KT Freetel (3239 KS) M1 (M1 SP) mmO2 (OOM LN) Nextel (NXTL US) NTT DoCoMo (9437 JP) SK Telecom (1767 KS) Smartone (315 HK) Taiwan Cellular (3045 TT) Telecom Italia (TIM IM) Telefonica Moviles (TEM SM) Vodafone (VOD LN)

1 3 1 4 3 UR 1 2 2 2 3 2 3 3

HK$ 21.85 HK$ 5.90 Yen 587,000 Won 20,000 S$ 1.47 GBp 94 US$ 25.16 Yen 184,000 Won 168,500 HK$ 8.50 NT$ 33.30 Eur 4.57 Eur 8.77 GBp 120

Weighted average

–––––– EV/Net PP&E ––––– 2002 2003 2004 2005

––––– Capex/sales (%) ––––– 2002 2003 2004 2005

1.0 2.7 1.6 1.1 1.4 2.1 3.9 2.7 1.2 1.3 2.6 2.4 1.1 2.0 3.8 1.6 3.6 3.4 3.4 3.3 2.6 2.7 3.3 3.2 2.0

0.9 2.5 1.7 1.2 1.4 2.3 3.0 2.6 1.2 1.2 2.6 2.5 1.2 1.8 3.8 1.5 3.8 4.5 4.5 3.3 3.4 2.8 3.2 3.2 1.9

0.9 2.1 1.7 1.1 1.3 2.3 2.8 2.6 1.2 1.2 2.6 3.3 1.2 1.7 3.7 1.5 3.7 4.4 4.4 3.3 3.7 2.9 3.3 3.3 1.8

0.9 2.0 1.7 1.0 1.3 2.1 2.6 2.5 1.2 1.1 2.5 3.3 1.2 1.8 3.5 1.4 3.6 4.2 4.2 3.4 3.7 2.8 3.3 3.4 1.8

10.3 14.4 12.8 45.9 24.1 12.6 16.4 9.3 19.7 18.1 8.0 20.1 18.0 15.8 16.3 18.2 8.4 15.4 15.4 14.1 13.3 20.8 14.1 16.8 19.4

9.1 11.5 14.4 43.5 18.3 11.2 12.1 11.7 19.8 18.1 8.7 11.3 14.6 12.8 10.2 14.6 12.1 15.9 15.9 11.6 13.1 13.2 11.0 15.3 17.5

5.9 11.5 15.0 36.9 13.4 13.0 12.3 13.9 19.4 18.2 8.2 11.7 14.9 13.4 15.1 14.3 11.9 17.3 17.3 11.4 12.7 13.0 10.7 13.9 17.9

6.0 12.2 15.3 33.3 15.1 12.0 12.6 15.1 16.7 17.8 8.0 9.7 14.6 14.0 14.8 16.0 12.6 16.2 16.2 14.4 13.2 13.8 11.9 14.1 17.0

2.4

2.4

2.4

2.4

16.6

14.8

14.9

14.8

3.5 1.2 2.2 1.4 2.3 2.2 4.1 3.6 4.1 0.7 3.0 5.4 9.1 5.0

2.6 1.1 2.2 1.4 2.2 2.2 3.9 3.4 3.4 0.6 2.5 4.9 9.5 4.8

2.3 1.0 2.2 1.4 2.0 2.1 3.5 3.1 3.0 1.8 2.4 4.8 9.3 5.0

1.8 0.9 2.1 1.4 1.9 1.9 2.9 2.8 2.6 1.6 2.2 3.8 8.7 4.7

38.6 46.7 8.8 18.5 16.4 16.0 21.4 17.8 22.8 8.9 18.4 15.8 10.1 17.7

31.3 29.2 8.9 18.9 24.1 25.0 15.9 16.0 17.8 11.2 9.7 16.6 12.1 13.5

30.0 24.8 10.9 18.6 20.8 22.0 18.6 16.0 17.1 23.5 13.6 19.5 13.5 14.6

23.7 20.4 11.5 18.7 17.7 18.0 17.2 15.4 17.0 15.0 13.0 16.0 10.7 14.6

4.6

4.4

4.3

3.9

19.6

16.8

17.6

15.8

Source: Daiwa estimates Note: UR; Under Revision due to a change of coverage responsibility Unless otherwise stated, share price as of 14 July 2004

STATISTICS & VALUATIONS

24

Global Telecom Monthly

Valuation (cont’d) Company Rating Curre ncy Price Integrated operators AT&T (T US) 3 US$ 14.96 BellSouth (BLS US) 2 US$ 26.00 BT Group (BT/A LN) 3 GBp 191 China Telecom (728 HK) 2 HK$ 2.55 Chunghwa Telecom (2412 TT) 3 NT$ 52.50 Deutsche Telekom (DTE GR) 3 Eur 14.15 France Telecom (FTE FP) 4 Eur 20.45 KPN (KPN NA) 4 Eur 6.26 KT Corp (030200 KS) 2 Won 36,950 NTT (9432 JP) 2 Yen 578,000 PCCW (8 HK) 4 HK$ 5.45 Portugal Telecom (PTC PL) 3 Eur 8.63 Qwest (Q US) 4 US$ 3.55 SBC (SBC US) 4 US$ 23.54 Singapore Telecom (ST SP) 3 S$ 2.26 Sprint (FON US) 2 US$ 18.17 Swisscom (SCMN VX) 4 CHF 415.00 Telecom Italia ordinaries (TIT IM) 2 Eur 2.51 Telecom Italia savers (TITR IM) 3 Eur 1.80 Telecom New Zealand (TEL NZ) 2 NZD 5.83 Telefonica (TEF SM) 3 Eur 12.05 Telenor (TEL NO) 2 NOK 46.70 TeliaSonera (TLSN SS) 4 SEK 31.90 Telstra (TLS AU) 2 A$ 5.00 Verizon (VZ US) 2 US$ 35.16 Weighted average Cellular/wireless -centric China Mobile (941 HK) China Unicom (762 HK) KDDI (9433 JP) KT Freetel (3239 KS) M1 (M1 SP) mmO2 (OOM LN) Nextel (NXTL US) NTT DoCoMo (9437 JP) SK Telecom (1767 KS) Smartone (315 HK) Taiwan Cellular (3045 TT) Telecom Italia (TIM IM) Telefonica Moviles (TEM SM) Vodafone (VOD LN)

1 3 1 4 3 UR 1 2 2 2 3 2 3 3

HK$ 21.85 HK$ 5.90 Yen 587,000 Won 20,000 S$ 1.47 GBp 94 US$ 25.16 Yen 184,000 Won 168,500 HK$ 8.50 TND 33.30 Eur 4.57 Eur 8.77 GBp 120

Weighted average

––––––––– P/OFCF ––––––– 2002 2003 2004 2005

––––––––– PER (x) ––––––– 2002 2003 2004 2005

3.1 10.5 9.0 n.m. 12.1 11.3 16.1 9.9 3.7 7.1 7.5 20.9 3.0 11.9 25.0 21.7 11.7 4.0 4.0 7.2 6.1 n.m. 22.6 17.0 8.5

3.3 9.5 8.7 90.1 9.4 7.2 6.4 6.8 6.5 7.7 16.2 10.3 n.m. 14.1 15.2 8.7 8.6 6.2 6.2 7.0 9.9 12.4 9.9 13.7 8.5

2.9 8.3 10.3 11.3 7.9 7.7 6.1 6.2 5.1 10.1 10.2 5.9 39.2 14.7 35.3 9.0 9.3 6.6 6.6 6.6 7.7 8.5 10.6 14.6 9.0

3.3 8.0 10.1 8.9 8.2 5.6 5.9 7.8 3.8 7.8 8.6 5.3 9.3 13.3 37.8 8.5 8.6 6.8 6.8 6.4 6.7 9.0 10.8 13.4 7.3

n.m. 13.2 13.4 25.0 10.6 n.m. n.m. n.m. 6.7 39.5 n.m. 27.7 n.m. 13.9 28.8 42.0 34.1 n.m. n.m. 15.5 n.m. n.m. n.m. 17.6 11.6

6.3 13.6 11.3 13.1 10.4 44.1 14.0 24.1 13.7 14.1 n.m. 44.9 4.1 9.2 9.0 21.3 17.5 33.9 33.9 14.8 27.3 15.0 19.5 16.5 13.4

18.8 12.1 10.6 9.5 9.9 17.8 14.8 13.8 10.2 11.7 12.9 17.6 n.m. 14.2 17.4 15.9 13.4 26.6 26.6 13.3 25.1 15.0 13.8 14.8 13.9

22.4 11.2 9.4 8.3 9.4 9.4 11.9 14.0 8.5 14.4 11.7 11.2 n.m. 14.3 17.0 12.0 12.3 21.6 21.6 12.9 17.1 12.2 12.8 14.1 11.0

11.0

11.6

10.1

9.0

20.9

19.0

15.6

13.2

26.6 n.m. 10.4 9.0 9.5 623.6 n.m. 13.0 9.9 13.2 16.7 6.6 24.2 18.2

16.0 36.9 9.6 8.4 14.6 n.m. 16.9 14.8 6.5 11.0 10.7 11.9 13.5 12.7

10.2 14.3 10.1 5.9 16.6 60.3 12.8 16.8 6.3 29.2 12.0 15.3 16.1 15.4

8.3 7.8 10.3 5.7 12.2 15.4 9.3 14.6 5.4 11.7 11.5 6.9 13.1 14.8

13.6 17.2 n.m. 7.9 10.9 n.m. 14.6 43.4 8.9 43.5 10.0 35.4 n.m. n.m.

12.8 18.6 21.1 9.9 10.5 n.m. 18.6 13.8 7.0 12.2 11.5 16.8 23.6 n.m.

11.4 11.6 12.7 7.7 10.4 n.m. 10.7 10.3 6.8 10.6 10.6 20.9 19.9 n.m.

10.2 10.3 10.6 8.4 9.8 n.m. 8.7 14.8 5.7 11.4 11.0 15.1 15.8 n.m.

16.9

13.9

15.8

12.1

29.3

16.3

13.7

12.7

Source: Daiwa estimates Note: For P/OFCF, n.m. indicates either negative or over 100 UR; Under Revision due to a change of coverage responsibility Unless otherwise stated, share price as of 14 July 2004

STATISTICS & VALUATIONS

July 2004

25

Valuation (cont’d) Company Rating Currency Price Integrated operators AT&T (T US) 3 US$ 14.96 BellSouth (BLS US) 2 US$ 26.00 BT Group (BT/A LN) 3 GBp 191 China Telecom (728 HK) 2 HK$ 2.55 Chunghwa Telecom (2412 TT) 3 NT$ 52.50 Deutsche Telekom (DTE GR) 3 Eur 14.15 France Telecom (FTE FP) 4 Eur 20.45 KPN (KPN NA) 4 Eur 6.26 KT Corp (030200 KS) 2 Won 36,950 NTT (9432 JP) 2 Yen 578,000 PCCW (8 HK) 4 HK$ 5.45 Portugal Telecom (PTC PL) 3 Eur 8.63 Qwest (Q US) 4 US$ 3.55 SBC (SBC US) 4 US$ 23.54 Singapore Telecom (ST SP) 3 S$ 2.26 Sprint (FON US) 2 US$ 18.17 Swisscom (SCMN VX) 4 CHF 415.00 Telecom Italia ordinaries (TIT IM) 2 Eur 2.51 Telecom Italia savers (TITR IM) 3 Eur 1.80 Telecom New Zealand (TEL NZ) 2 NZD 5.83 Telefonica (TEF SM) 3 Eur 12.05 Telenor (TEL NO) 2 NOK 46.70 TeliaSonera (TLSN SS) 4 SEK 31.90 Telstra (TLS AU) 2 A$ 5.00 Verizon (VZ US) 2 US$ 35.16 Weighted average Cellular/wireless -centric China Mobile (941 HK) China Unicom (762 HK) KDDI (9433 JP) KT Freetel (3239 KS) M1 (M1 SP) mmO2 (OOM LN) Nextel (NXTL US) NTT DoCoMo (9437 JP) SK Telecom (1767 KS) Smartone (315 HK) Taiwan Cellular (3045 TT) Telecom Italia (TIM IM) Telefonica Moviles (TEM SM) Vodafone (VOD LN)

1 3 1 4 3 UR 1 2 2 2 3 2 3 3

HK$ 21.85 HK$ 5.90 Yen 587,000 Won 20,000 S$ 1.47 GBp 94 US$ 25.16 Yen 184,000 Won 168,500 HK$ 8.50 NT$ 33.30 Eur 4.57 Eur 8.77 GBp 120

Weighted average

–––– EBITDA margin (%)––– 2002 2003 2004 2005

–––––––– Yield (%) –––––––– 2002 2003 2004 2005

28.2 44.6 31.0 46.3 53.5 30.3 32.0 36.0 37.4 36.3 40.4 39.0 27.0 39.9 49.8 27.8 30.4 42.2 42.2 26.2 41.3 27.7 30.6 46.0 43.3

25.3 43.0 31.4 49.4 53.8 32.9 37.2 40.5 34.3 35.5 32.7 33.8 22.8 35.1 47.9 30.2 44.9 44.4 44.4 28.8 39.5 34.6 37.5 47.9 40.3

21.6 44.8 31.1 51.6 55.0 32.9 38.0 39.7 38.9 34.3 32.5 37.0 25.0 34.1 48.9 32.7 44.0 45.6 45.6 29.6 42.2 34.9 36.1 48.6 40.5

21.5 45.4 31.1 52.3 55.0 34.7 37.3 38.3 40.1 34.8 33.9 40.9 28.2 35.9 49.0 35.6 45.8 46.3 46.3 29.6 44.4 34.5 35.0 48.8 43.1

4.7 3.0 3.4 8.3 2.0 0.9 1.9 4.5 2.4 2.7 2.9 12.4 17.3 3.6 2.1 1.1 1.3 4.4 4.4

5.3 3.5 4.5 2.5 8.7 1.2 4.0 4.5 0.9 2.5 5.8 2.8 2.7 3.1 4.3 6.0 3.6 3.3 2.1 3.1 5.4 4.4

6.3 3.7 5.6 2.5 9.1 1.7 4.4 3.6 8.3 1.0 3.2 5.9 3.0 2.7 4.1 5.4 7.6 4.5 3.3 3.2 4.0 5.2 4.4

6.3 4.0 6.6 2.5 9.5 3.2 5.4 4.3 7.3 1.0 1.7 3.9 6.5 3.1 2.8 4.6 6.6 9.3 5.4 4.2 2.8 4.7 6.4 4.4

38.2

38.6

39.1

40.1

3.9

3.6

3.8

4.5

60.1 45.8 20.5 33.1 40.4 17.6 36.3 38.4 47.3 23.7 36.5 45.0 40.9 36.9

58.2 36.8 23.1 30.8 40.0 23.2 39.0 37.0 48.0 26.6 38.3 45.5 44.3 37.7

56.7 35.9 24.8 33.9 39.5 25.5 41.0 35.6 46.2 28.9 41.3 45.7 42.0 37.6

55.7 37.0 25.6 34.1 40.4 27.3 44.0 36.5 47.4 28.7 41.3 47.4 44.5 38.4

1.5 1.6 0.4 2.5 6.4 0.3 1.1 0.8 6.0 5.1 2.0 1.4

1.6 1.6 0.6 3.1 6.7 0.8 3.4 46.7 7.2 5.6 2.1 1.7

1.9 2.6 0.8 3.9 6.7 1.1 4.1 6.3 7.9 5.8 2.2 2.0

2.1 2.9 0.8 5.3 7.1 1.1 4.9 5.9 7.6 5.9 2.3 2.1

40.0

40.5

40.1

41.1

1.7

2.1

2.3

2.5

Source: Daiwa estimates Note: For Yield, - indicates no dividend UR; Under Revision due to a change of coverage responsibility Unless otherwise stated, share price as of 14 July 2004

STATISTICS & VALUATIONS

26

Global Telecom Monthly

Valuation (cont’d) Company Rating Currency Price Integrated operators AT&T (T US) 3 US$ 14.96 BellSouth (BLS US) 2 US$ 26.00 BT Group (BT/A LN) 3 GBp 191 China Telecom (728 HK) 2 HK$ 2.55 Chunghwa Telecom (2412 TT) 3 NT$ 52.50 Deutsche Telekom (DTE GR) 3 Eur 14.15 France Telecom (FTE FP) 4 Eur 20.45 KPN (KPN NA) 4 Eur 6.26 KT Corp (030200 KS) 2 Won 36,950 NTT (9432 JP) 2 Yen 578,000 PCCW (8 HK) 4 HK$ 5.45 Portugal Telecom (PTC PL) 3 Eur 8.63 Q w est (Q US) 4 US$ 3.55 SBC (SBC US) 4 US$ 23.54 Singapore Telecom (ST SP) 3 S$ 2.26 Sprint (FON US) 2 US$ 18.17 Swisscom (SCMN VX) 4 CHF 415.00 Telecom Italia ordinaries (TIT IM) 2 Eur 2.51 Telecom Italia savers (TITR IM) 3 Eur 1.80 Telecom New Zealand (TEL NZ) 2 NZD 5.83 Telefonica (TEF SM) 3 Eur 12.05 TeliaSonera (TLSN SS) 2 SEK 46.70 TeliaSonera (TLSN SS) 4 SEK 31.90 Telstra (TLS AU) 2 A$ 5.00 Verizon (VZ US) 2 US$ 35.16 Weighted average Cellular/wireless -centric China Mobile (941 HK) China Unicom (762 HK) KDDI (9433 JP) KT Freetel (3239 KS) M1 (M1 SP) mmO2 (OOM LN) Nextel (NXTL US) NTT DoCoMo (9437 JP) SK Telecom (1767 KS) Smartone (315 HK) Taiwan Cellular (3045 TT) Telecom Italia (TIM IM) Telefonica Moviles (TEM SM) Vodafone (VOD LN)

1 3 1 4 3 UR 1 2 2 2 3 2 3 3

HK$ 21.85 HK$ 5.90 Yen 587,000 Won 20,000 S$ 1.47 GBp 94 US$ 25.16 Yen 184,000 Won 168,500 HK$ 8.50 NT$ 33.30 Eur 4.57 Eur 8.77 GBp 120

Weighted average

–––– Net debt/EBITDA ––––– 2002 2003 2004 2005

–––– Net debt/equity (%) ––– 2002 2003 2004 2005

1.36 1.27 1.65 2.48 0.10 3.76 4.58 2.82 1.71 1.36 4.05 1.85 4.89 1.07 1.90 2.64 0.13 2.52 2.52 2.32 2.10 2.00 1.50 1.19 1.74

1.15 0.92 1.45 2.20 n.m. 2.54 2.66 1.71 2.09 1.14 3.95 1.65 4.85 0.92 1.17 1.93 0.09 2.43 2.43 2.01 1.89 0.97 0.60 0.98 1.56

1.21 n.m. 1.37 1.65 n.m. 2.05 2.19 1.37 1.76 0.90 3.26 1.36 4.40 0.72 0.90 1.47 n.m. 2.08 2.08 1.86 1.87 0.76 0.31 1.00 1.40

0.76 n.m. 1.32 1.39 n.m. 1.39 1.91 1.10 1.60 0.65 2.65 0.82 3.48 0.46 0.50 1.11 n.m. 1.86 1.86 1.75 1.52 0.46 0.06 0.99 1.02

46 84 n.m. 94 3 122 n.m. 150 90 94 n.m. 103 124 56 65 86 6 88 88 317 115 n.m. 35 43 155

77 56 294 109 n.m. 135 388 144 118 75 n.m. 106 n.m. 37 38 76 5 100 100 301 126 36 17 37 129

58 n.m. 224 94 n.m. 105 113 88 146 51 n.m. 100 n.m. 26 29 59 n.m. 99 99 230 141 47 7 39 119

37 n.m. 199 69 n.m. 59 89 68 138 33 n.m. 73 n.m. 17 17 51 n.m. 98 98 195 124 44 1 40 90

2.14

1.44

1.24

0.97

98

121

92

72

0.2 1.8 2.4 1.6 0.6 0.6 3.4 0.4 1.0 n.m. 2.4 0.4 1.9 1.2

n.m. 1.8 1.6 1.6 0.7 0.6 2.0 0.1 0.7 n.m. 0.9 n.m. 1.1 0.7

n.m. 1.2 1.0 1.3 0.7 0.4 1.0 n.m. 0.4 n.m. 0.5 0.3 0.9 0.7

n.m. 0.9 0.7 1.2 0.6 0.0 0.4 n.m. 0.0 n.m. 0.0 0.1 0.4 0.4

12 53 156 98 37 0 n.m. 20 71 n.m. 84 27 131 11

n.m. 65 108 86 41 7 n.m. 7 59 n.m. 29 n.m. 140 7

n.m. 52 70 75 38 5 75 n.m. 29 n.m. 17 24 96 8

n.m. 38 39 66 31 0 21 n.m. 3 n.m. 2 12 42 5

1.1

0.8

0.7

0.4

37

40

35

16

Source: Daiwa estimates Note: UR; Under Revision due to a change of coverage responsibility Unless otherwise stated, share price as of 14 July 2004

STATISTICS & VALUATIONS

July 2004

27

Share price performance Company

Bloomberg code

Share Shares price in issue (14 Jul) (m)

Market cap (US$m)

1-wk

Relative performance 1-mth 3-mth 12-mth

Absolute performance (US$) 1-wk 1-mth 3-mth 12-mth

Europe BT Group plc

BT/A LN

1.905

8,670.0

30,656.1 (2.12)

3.05

10.59 (12.39)

(2.15)

(0.22)

3.64 (19.95)

(2.41) (11.67)

(0.99)

(9.79)

(8.54) (19.30)

(0.38)

(1.29)

(3.13)

(6.12) (0.10)

Cable & Wireless

CW/ LN

1.17

2,382.1

5,151.0 (0.96)

(6.83)

Deutsche Telekom

DTE GR

14.15

4,197.8

73,535.0 (0.52)

0.84

Equant

EQU FP

4.50

282.1

France Telecom

FTE FP

20.45

2,467.1

62,460.1 (1.27)

1.20

1.48 (15.91)

KPN

KPN NA

6.26

2,445.3

18,950.8

1.92

6.20

3.21

KPNQwest

KQIP NA

0.09

457.4

50.9

0.62

2.13

15,046.4

0.75

(0.43)

mmO2

1,571.5 (16.86) (22.74) (39.83) (29.73) (17.10) (24.82) (42.91) (27.18)

OOM LN

0.935

8,670.0

MOBB BB

53.20

62.7

4,126.7 (1.54)

Portugal Telecom SGPS SA PTC PL

8.63

1254.3

13,400.7 (1.60)

Mobistar

(1.52)

(3.72) (12.85)

1.33

2.15

(5.02) (4.35)

(5.33) (44.10)

0.04

(1.76) (12.88) (45.82)

(3.42)

57.35

0.72

(3.59)

(9.49)

43.77

(4.64) (11.61) (19.04)

0.41

5.68

(6.11)

39.65

(1.16)

9.53

0.62

(2.56)

(9.10)

23.11

(5.36) (25.12)

48.42

(2.53)

STHLY US

15.020

83.2

Swisscom

SCMN VX

415.00

66.2

Tele2 AB

TEL2B SS

305.00

125.9

5,169.3 (1.54)

Telecom Italia Mobile SpA

TIM IM

4.573

8,434.0

47,748.1 (0.66)

1.06

(2.02)

Telecom Italia S.p.A.

TIT IM

2.511 10,308.3

32,044.6 (1.48)

(1.18)

(3.03)

TITR IM

1.802

5,795.9

12,930.0 (1.28)

(2.38)

(4.00)

Telefonica

TEF SM

12.05

4,955.9

73,931.5 (0.56)

0.74

Telefonica Moviles

TEM SM

8.77

4,330.6

47,017.9

2.53

0.10

TeliaSonera AB

TLSN SS

31.90

4,675.2

20,081.7

1.52

0.99

Vodafone Vodafone Panafon

VOD LN

1,009.3 (6.60)

(1.55)

(1.32)

Stet Hellas

Telecom Italia- RNC

(3.96)

22,346.0

1.200 66,865.7 148,931.2

PANF GA

5.500

0.36

(3.61) (23.95)

33.59

(7.17)

(3.31)

0.17

(4.64) (11.61) (19.04)

5.93

0.30

(4.22)

543.3

3,699.4

0.38

8.36

2.41

5.32

3.48

21.91

(2.27)

(3.70) (12.58)

9.36

0.67

(0.98)

(2.26)

(7.04) (1.07)

(3.81)

(1.80)

(4.43)

(8.00) (5.47)

n.a.

(1.60)

(5.59)

(8.91)

(3.17)

4.09

(0.95)

(1.03)

(9.44)

7.82

1.30

9.38

2.13

(1.65)

(5.25)

13.29

(2.56) (20.26)

0.76

1.99

(3.62)

7.71

(5.61)

n.a.

(5.98)

0.27

(2.06) (24.05)

0.04

(7.26) (11.54) (14.10)

(5.83) (18.49) (31.30)

2.68

(7.54) (19.74) (23.67)

0.00

(0.28)

3.50

(8.21) (18.05)

USA AT&T AT&T Wireless Bellsouth

T US

14.96

793.9

11,876.8

3.31

AWE US

14.30

2,321.4

33,195.5

0.62

1.56

7.58

60.49

BLS US

26.00

1,834.4

47,693.2

0.97

2.48

0.71 (11.99)

Nextelcommunications

NXTL US

25.16

1,074.1

27,025.4 (4.11)

3.58

5.90

Qwest Communication

Q US

3.55

1,784.3

SBC Communications

SBC US

23.54

3,311.9

77,961.6 (0.69)

Sprint

FON US

18.17

1,333.9

24,237.8

4.35

3.56

VZ US

35.16

2,770.3

97,404.2 (1.92)

KDDI

9433 JP

587,000

4.2

22,804 (3.15)

NTT

9432 JP

578,000

15.7

83,342

NTT DoCoMo

9437 JP

184,000

50.2

84,576 (5.72)

Softbank

9984 JP

4,220

351.4

Usen

4842 JP

30,150

6.2

Vodafone Holdings

9434 JP

287,000

3.2

Yahoo! Japan

4689 JP

932,000

3.8

Verizon Communications

6,334.4

1.19

0.35

0.62

16.85

(4.70)

1.70

(0.12) (11.63) (33.84)

0.57

(2.02)

(1.86) (14.56)

5.93

78.30

(0.84) (2.22) 4.27

29.82

(1.93) (12.99) (26.50)

(1.30)

(3.80)

7.67

3.71

1.68

(0.36)

(3.64) (14.35)

(2.52)

(2.17)

(5.13) (4.84)

(2.58)

(2.14)

(2.43)

(2.31)

(2.67)

(6.85)

26.59

4.20

(0.63)

(7.95)

3.25

4.29

(5.25)

19.63

(8.72) (15.90) (47.22)

(2.79)

(1.89)

(3.37) (5.08) (3.40)

19.62

Japan 2.18

13,585 (3.83) (11.11) (16.28)

0.09 (0.64)

30.03

4.92 339.61

0.20

(3.71)

14.31 (20.90)

1,717 (5.91)

24.33

5.29 223.67

8,400 (1.01)

(3.95)

19.68 (39.24)

32,205 (6.15) (12.85) (24.27)

(6.78) (18.17) (30.00)

10.58

49.65

(1.31)

(8.37) (17.78)

48.03

(9.23) (24.85) 102.40

Source: Bloomberg

STATISTICS & VALUATIONS

28

Global Telecom Monthly

Share price performance (cont’d) Company Hong Kong/China APT Satellite AsiaSat CCT China Mobile China Telecom China Unicom CTI Hutchison Whampoa i-Cable PCCW SmarTone Sunday Korea Dacom Daum Hanaro Hanaro (ADR) KT Corp (ADR) KT Corp (local) KT Freetel KT Hitel LG Telecom SK Telecom (ADR) SK Telecom (local)

Share Shares Bloomberg price in issue code (14 Jul) (m) 1045 HK 1135 HK 138 HK 941 HK 728 HK 762 HK 1137 HK 13 HK 1097 HK 8 HK 315 HK 866 HK

Market cap (US$m)

Relative performance 1 Wk 1-mth 3-mth 12-mth

Absolute performance (US$) 1 Wk 1-mth 3-mth 12-mth

1.630 413.3 86.4 13.00 390.3 650.4 0.91 422.1 49.2 21.85 19,672.0 55,106.5 2.55 13,877.4 4,536.8 5.90 12,561.9 9,501.9 1.45 610.6 113.5 51.75 4,263.4 28,285.6 2.70 2,019.2 699.0 5.45 5,368.8 3,751.2 8.50 584.8 637.2 0.51 2,990.0 195.5

(2.10) (8.60) (12.63) (64.75) 1.12 3.31 3.32 (17.65) (1.73) (6.28) (31.08) (29.13) (2.93) (1.76) 2.64 (12.72) (2.32) (0.05) 5.55 8.23 (4.22) (1.60) (8.74) (13.64) (2.53) 7.61 (38.14) (55.24) (0.42) 1.42 (2.98) (14.70) (7.24) (10.85) (7.68) (1.12) 1.51 0.93 0.78 (4.50) (0.84) 1.53 3.90 7.37 4.58 5.05 13.41 6.90

(3.69) (0.53) (3.33) (4.59) (3.78) (4.98) (4.11) (2.04) (7.03) 0.78 (1.88) 2.88

015940 KS 4,040 035720 KS 46,150 033630 KS 2,515 HANA US 2.25 KTC US 17.69 030200 KS 36,950 032390 KS 20,000 036030 KS 4,900 032640 KS 3,280 SKM US 18.53 017670 KS 168,500

(9.16) 2.69 (6.85) (2.91) (0.99) (1.36) 6.95 0.80 (9.72) 1.24 1.51 4.41

(17.10) (55.13) (1.96) 4.82 (34.60) (9.80) (2.03) 2.58 0.97 27.49 (12.67) 10.86 (41.30) (43.03) (7.94) 8.57 (10.74) 28.23 (3.48) 22.67 (0.82) 37.46 7.62 36.05

50.4 176.7 15.0 598.9 462.1 1,008.1 462.1 1,039.8 569.7 10,078.0 284.8 9,129.3 186.3 3,232.6 34.5 146.6 277.3 788.9 740.5 13,721.3 82.3 12,025.0

0.41 (10.76) (28.37) (62.86) 0.79 (13.05) 24.73 (36.88) (3.31) (1.10) 3.12 (17.16) (8.71) 1.75 (12.84) (10.13) 1.33 3.18 (2.95) (6.97) 2.37 (1.64) 12.35 (19.85) 1.63 5.40 27.12 (19.77) 0.60 7.10 (16.70) (50.76) 7.06 3.19 16.21 (21.21) (3.45) (7.71) (9.47) (6.07) (1.72) (6.95) 6.03 (23.17)

(2.43) (13.48) (43.50) (61.53) (2.06) (15.69) (1.62) (34.62) (7.49) (6.44) (19.94) (17.39) (11.29) (0.23) (15.29) (10.69) (1.28) 0.51 (5.45) (9.38) (0.53) (4.63) (11.39) (16.98) (1.24) 2.19 0.27 (16.90) (2.25) 3.84 (34.29) (49.00) 4.03 0.05 (8.34) (18.39) (5.94) (10.09) (11.80) (8.49) (4.51) (9.78) (16.37) (20.42)

9,647.7 15,133.9 3,391.9 3,322.9 50.2 50.2 4,703.6 4,635.8

(4.80) (2.52) 14.24 0.24 9.58 10.78 26.37 36.34 (9.40) (10.46) (22.92) (62.17) 6.15 9.30 21.06 27.99

(7.83) (4.51) (6.20) 3.92 5.13 7.54 2.82 40.06 (12.28) (12.28) (36.71) (60.78) 2.16 6.43 (1.19) 31.89

0.82 545.8 262.8 1.47 1,051.8 908.0 7.05 13.0 91.9 2.26 17,862.6 23,707.7

(2.25) (2.61) (4.24) (23.37) (1.87) (5.86) 2.04 (11.49) (6.50) (26.46) (35.88) (29.41) 1.48 0.65 (1.17) 21.53

(2.11) (0.03) (4.90) (7.47) (1.73) (3.36) 1.34 6.89 (6.62) (26.56) (35.97) (29.50) 1.62 3.33 (1.85) 46.76

TEL AU TLS AU

5.28 5.00

1,937.0 7,401.9 6,182.4 22,372.4

(0.39) 0.52

1.34 4.74

3.76 3.26

2.01 (6.13)

(2.03) (1.53)

(0.63) 2.29

DIGI MK T MK

4.76 10.60

750.0 3,349.9

939.5 9,344.6

(0.46) 0.26

0.04 1.07

11.72 7.99

6.88 12.35

(1.65) (0.94)

3.93 5.00

Thailand Advanced Info Services ADVANC TB True Corp PCL TRUE TB Total Access Comms TAC SP

89.00 6.35 2.69

2,943.3 2,994.9 474.4

6,426.0 466.5 749.5

(3.13) (0.65) (2.27)

3.81 (3.97) 31.20 10.12 (24.51) (33.38) 5.38 5.53 28.08

(3.12) (0.64) (4.27)

6.56 (5.90) 58.44 13.04 (26.02) (19.55) 12.08 (1.82) 69.18

GLO PM 815.00 TEL PM 1,205.00

139.9 169.4

2,041.6 3,654.6

(1.24) (0.87)

(5.91) (10.33) 8.92 8.91

(2.40) (2.43)

(3.95) 10.75

Taiwan Chunghwa Telecom Far EasTone GigaMedia Taiwan Cellular

2412 TT 4904 TT GIGM US 3045 TT

Singapore Keppel T&T MobileOne (Asia) Pacific Internet Singapore Telecom

KPTT SP M1 SP PCNTF US ST SP

Australasia Telecom NZ Telstra Malaysia Digi.com Telekom Malaysia

Philippines Globe Telecom PLDT Source: Bloomberg

53.00 33.10 1.00 33.30

(6.05) 75.91

9.68 4.86 8.72 (3.89)

9.17 5.53

23.32 29.63

(4.66) 11.73 15.33 108.35

STATISTICS & VALUATIONS

July 2004

29

Corporate earnings Europe Revenue Y/E December (EURm) (%) France Telecom FY02 46,630 8.4 FY03 46,121 (1.1) FY04F 47,991 4.1 FY05F 49,719 3.6 FY06F 50,728 2.0

Op. profit (EURm) (%)

EBITDA (EURm) (%)

Net profit (EURm) (%)

EPS (EUR)

DPS (EUR)

CAPX (EURm)

4,455 9,554 11,160 11,138 11,348

54.8 114.4 16.8 (0.2) 1.9

14,916 17,303 18,232 18,548 18,708

21.1 16.0 5.4 1.7 0.9

(20,737) 3,205 3,516 4,354 4,876

n.m. n.m. 9.7 23.8 12.0

(19.11) 1.53 1.39 1.72 1.92

0.00 0.25 0.90 1.10 1.20

7,656 5,573 5,911 6,286 6,235

Deutsche Telekom FY02 53,689 FY03 55,930 FY04F 59,213 FY05F 60,959 FY06F 63,908

11.1 4.2 5.9 2.9 4.8

829 5,465 7,632 9,998 11,058

-53.0 559.3 39.6 31.0 10.6

16,314 18,324 19,164 21,167 21,867

7.4 12.3 4.6 10.4 3.3

(24,587) 1,289 3,347 6,319 7,766

n.m. n.m. 159.6 88.8 22.9

(5.86) 0.31 0.80 1.51 1.85

0.00 0.00 0.24 0.45 0.65

7,589 6,272 7,528 7,295 7,105

KPN FY02 FY03 FY04F FY05F FY06F

12,170 12,209 11,964 12,106 12,018

(1.6) 0.3 (2.0) 1.2 (0.7)

1,614 2,400 2,165 1,860 1,753

n.m. 48.7 (9.8) (14.1) (5.7)

4,378 4,958 4,745 4,642 4,535

22.0 13.2 (4.3) (2.2) (2.3)

-9,542 655 1,114 1,091 1,096

n.m. n.m. 70.1 (2.1) 0.5

(3.83) 1.11 0.45 0.45 0.45

0.00 0.25 0.23 0.27 0.36

1,136 1,411 1,663 1,830 1,592

Revenue (CHFm)

(%)

Op. profit (CHFm)

(%)

EBITDA (CHFm)

(%)

Net profit (CHFm)

(%)

EPS (CHF)

DPS (CHF)

CAPX (CHFm)

14,526 2.5 10,026 (31.0) 10,151 1.2 10,063 (0.9) 10,089 0.3

2,408 2,819 2,787 2,930 3,048

8.0 17.1 (1.1) 5.1 4.0

4,413 4,504 4,469 4,612 4,630

0.1 2.1 (0.8) 3.2 0.4

761 (84.6) 1,723 126.3 2,048 18.9 2,280 11.3 2,469 8.3

12.18 23.70 30.90 33.84 37.18

12.00 13.00 17.00 19.00 20.00

1,222 1,214 1,209 1,263 1,077

Y/E December Swisscom FY02 FY03 FY04F FY05F FY05F

Y/E March BT Group FY02 FY03 FY04 FY05F FY06F

Revenue (GBPm)

(%)

Op. profit (GBPm)

(%)

EBITDA (GBPm)

(%)

Net profit (GBPm)

(%)

EPS (GBp)

DPS (GBp)

CAPX (GBPm)

18,447 18,727 18,512 18,657 19,333

7.6 1.5 (1.1) 0.8 3.6

2,655 2,790 2,880 2,807 3,125

(13.9) 5.1 3.2 (2.5) 11.3

5,748 5,805 5,816 5,810 6,069

(0.5) 1.0 0.2 (0.1) 4.4

995 1,226 1,446 1,510 1,758

n.m. 23.2 17.9 4.4 16.4

8.80 14.23 16.90 18.00 21.51

2.00 6.50 8.50 10.70 13.34

3,140 2,396 2,673 2,791 2,934

EBITDA (EURm)

(%)

Net profit (EURm)

(%)

EPS (EUR)

DPS (EUR)

CAPX (EURm)

391 27.4 240 (38.5) 554 130.5 867 56.6 1,176 35.5

0.31 0.19 0.49 0.77 1.04

0.16 0.22 0.28 0.34 0.52

1,124 652 707 624 619

Revenue Y/E December (EURm) Portugal Telecom FY02 5,582 FY03 5,776 FY04F 6,063 FY05F 6,455 FY06F 6,738

(%)

Op. profit (EURm)

(%)

(2.5) 3.5 5.0 6.5 4.4

1,267 1,314 1,421 1,685 1,952

8.5 3.7 8.1 18.6 15.8

Telefonica FY02 FY03 FY04F FY05F FY06F

28,411 28,400 30,177 32,463 34,206

(8.5) 0.0 6.3 7.6 5.4

4,366 4,513 6,231 7,738 8,170

(19.6) 3.4 38.1 24.2 5.6

11,724 11,230 12,737 14,414 15,096

(8.4) (4.2) 13.4 13.2 4.7

(5,577) 2,204 2,330 3,326 3,803

n.m. n.m. 5.8 42.7 14.4

(1.13) 0.44 0.48 0.71 0.83

0.25 0.40 0.40 0.50 0.50

3,789 3,727 3,839 4,280 4,432

Telecom Italia FY02 FY03 FY04F FY05F FY06F

31,408 30,850 31,087 32,435 33,633

(1.9) (1.8) 0.8 4.3 3.7

5,989 6,789 7,424 8,087 8,864

12.8 13.4 9.4 8.9 9.6

13,257 13,709 14,187 15,020 15,736

2.4 3.4 3.5 5.9 4.8

(773) 1,192 1,516 1,866 2,579

n.m. n.m. 27.1 23.1 38.2

(0.09) 0.07 0.09 0.12 0.16

0.00 0.11 0.14 0.17 0.23

4,842 4,894 5,367 5,260 4,944

2,176 12.1 1,954 (10.2) 2,244 14.8 2,638 17.6 2,888 9.5

Source: Daiwa estimates Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest.

STATISTICS & VALUATIONS

30

Global Telecom Monthly

Corporate earnings (cont’d) Y/E December TeliaSonera FY02 FY03 FY04F FY05F FY06F

Y/E December Telenor FY02 FY03 FY04F FY05F FY06F

Y/E March Vodafone FY03 FY04 FY05F FY06F FY07F mmO2 FY02 FY03 FY04F FY05F FY06F

Revenue (SEKm) (%)

Op. profit (SEKm) (%)

EBITDA (SEKm) (%)

Net profit (SEKm) (%)

EPS (SEK)

DPS (SEK)

CAPX (SEKm)

83,090 81,772 81,134 84,124 87,648

n.a. (1.6) (0.8) 3.7 4.2

5,992 13,140 13,948 14,337 14,472

n.a. 119.3 6.1 2.8 0.9

25,457 30,690 29,805 30,681 32,541

n.a. 20.6 (2.9) 2.9 6.1

-34,039 7,671 8,472 9,812 11,097

n.a. n.m. n.m. 15.8 13.1

(10.90) 1.64 1.81 2.10 2.37

0.40 1.00 1.18 1.36 1.54

11,710 8,960 8,614 9,994 10,551

Revenue (NOKm)

(%)

Op. profit (NOKm)

(%)

EBITDA (NOKm)

(%)

Net profit (NOKm)

(%)

EPS (NOK)

DPS (NOK)

CAPX (NOKm)

48,668 52,889 59,016 61,188 63,104

n.a. 8.7 11.6 3.7 3.1

3,233 7,705 8,925 9,059 9,758

n.a. 138.3 15.8 1.5 7.7

13,458 18,299 20,604 21,151 23,018

n.a. 36.0 12.6 2.7 8.8

(4,298) n.a. 4,560 n.m. 6,522 n.m. 5,727 (12.2) 6,568 14.7

(2.42) 2.57 3.70 3.29 3.80

0.50 1.00 1.48 1.31 1.52

10,126 7,004 7,706 8,466 8,626

Revenue (GBPm)

(%)

Op. profit (GBPm)

(%)

EBITDA (GBPm)

(%)

Net profit (GBPm)

(%)

EPS (GBp)

DPS (GBp)

CAPX (GBPm)

30,375 33,559 34,134 35,054 36,129

33.0 10.5 1.7 2.7 3.1

(4,799) (5,004) (5,317) (5,480) (5,659)

n.m. n.m. n.m. n.m. n.m.

11,217 12,640 12,842 13,467 13,916

39.7 12.7 1.6 4.9 3.3

(9,819) (9,015) (9,145) (8,996) (8,982)

n.m. n.m. n.m. n.m. n.m.

(14.41) (13.30) (14.00) (13.80) (13.80)

1.69 2.03 2.34 2.57 2.70

5,388 4,529 5,000 5,119 5,058

4,276 4,874 5,179 5,618 6,091

11.5 14.0 6.3 8.5 8.4

(856) (8,778) (44) (41) 48

n.m. n.m. n.m. n.m. n.m.

433 859 1,204 1,431 1,660

n.m. 98.4 40.2 18.8 16.0

(850) (10,148) (100) (102) 12

n.m. n.m. n.m. n.m. n.m.

(9.80) (117.00) (1.15) (1.18) 0.13

0.00 0.00 0.00 0.00 0.00

1,240 975 1,295 1,236 1,096

Revenue Y/E December (EURm) Telefonica Moviles FY02 9,140 FY03 10,070 FY04F 11,444 FY05F 12,820 FY06F 13,808

(%)

Op. profit (EURm)

(%)

EBITDA (EURm)

(%)

Net profit (EURm)

(%)

EPS (EUR)

DPS (EUR)

CAPX (EURm)

8.7 10.2 13.6 12.0 7.7

2,332 2,940 3,168 3,894 4,696

15.4 26.1 7.8 22.9 20.6

3,736 4,463 4,807 5,710 6,361

12.1 19.5 7.7 18.8 11.4

(3,724) 1,608 1,887 2,396 2,967

n.m. n.m. 17.4 27.0 23.8

(0.86) 0.37 0.44 0.55 0.69

0.18 0.18 0.19 0.20 0.21

919 1,214 1,548 1,371 1,424

Telecom Italia Mobile FY02 10,867 FY03 11,782 FY04F 12,967 FY05F 14,171 FY06F 15,005

6.0 8.4 10.1 9.3 5.9

3,298 3,786 3,935 4,559 5,150

5.2 14.8 3.9 15.9 13.0

4,886 5,364 5,925 6,715 7,286

5.0 9.8 10.5 13.3 8.5

1,105 16.3 2,342 111.9 1,875 (19.9) 2,586 37.9 3,009 16.4

0.13 0.27 0.22 0.30 0.35

0.23 0.26 0.26 0.27 0.28

1,715 1,957 2,526 2,264 2,093

EBITDA (US$m) (%)

Net profit (US$m) (%)

EPS (US$)

DPS (US$)

CAPX (US$m)

USA Y/E December AT&T FY02 FY03 FY04F FY05F FY06F Bellsouth FY02 FY03 FY04F FY05F FY06F

Revenue (US$m) (%)

Op. profit (US$m) (%)

37,827 (10.4) 34,528 (8.7) 30,426 (11.9) 30,174 (0.8) 30,316 0.5

4,361 3,656 1,281 1,434 1,241

(44.3) (16.2) (65.0) 12.0 (13.5)

10,686 (20.4) 8,727 (18.3) 6,557 (24.9) 6,485 (1.1) 6,357 (2.0)

(13,083) n.m. 1,864 n.m. 640 (65.7) 561 (12.2) 457 (18.7)

1.26 2.36 1.02 0.67 0.52

0.71 0.80 0.94 0.94 0.94

3,878 3,157 1,803 1,810 2,122

26,334 (11.0) 26,364 0.1 26,908 2.1 27,683 2.9 28,403 2.6

6,805 6,681 7,071 7,407 7,912

(11.8) (1.8) 5.9 4.7 6.8

11,747 (11.4) 11,328 (3.6) 12,060 6.5 12,562 4.2 13,092 4.2

3,704 (13.2) 3,614 (2.4) 4,052 12.1 4,363 7.7 4,783 9.6

1.97 1.92 2.15 2.31 2.54

0.78 0.90 0.96 1.04 1.07

3,785 3,029 3,102 3,386 3,523

Source: Daiwa estimates Note: EPS for US companies are pro-forma basis. Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest.

STATISTICS & VALUATIONS

July 2004

31

Corporate earnings (cont’d) Revenue Op. profit Y/E December (US$m) (%) (US$m) (%) Qwest Communications International FY02 15,371 (7.0) (18,917) n.a. FY03 14,281 (7.1) (261) n.m. FY04F 14,119 (1.1) 378 n.m. FY05F 14,755 4.5 1,060 180.1 FY06F 15,372 4.2 1,576 48.8

EBITDA (US$m) (%) 4,146 (43.6) 3,249 (21.6) 3,525 8.5 4,168 18.2 4,659 11.8

Net profit (US$m) (%)

EPS (US$)

DPS (US$)

CAPX (US$m)

(38,468) 1,505 (878) (261) 110

n.a. n.m. n.m. n.m. n.m.

(9.40) (0.33) (0.48) (0.14) 0.06

0.00 0.00 0.00 0.00 0.00

2,764 2,088 2,105 2,150 2,200

SBC Communications FY02 43,138 FY03 40,885 FY04F 40,459 FY05F 40,404 FY06F 41,252

(6.0) (5.2) (1.0) (0.1) 2.1

8,623 6,469 5,691 6,065 7,264

(17.9) (25.0) (12.0) 6.6 19.8

17,201 (12.2) 14,339 (16.6) 13,814 (3.7) 14,488 4.9 15,850 9.4

5,653 (19.3) 8,505 50.5 5,506 (35.3) 5,455 (0.9 6,358 16.5

2.17 1.56 1.44 1.65 1.92

1.07 1.37 1.39 1.52 1.52

6,808 5,219 5,415 5,657 5,775

Verizon Communications FY02 67,304 FY03 67,752 FY04F 71,483 FY05F 75,275 FY06F 76,932

0.2 0.7 5.5 5.3 2.2

15,004 7,494 13,892 18,144 17,990

30.1 (50.1) 85.4 30.6 (0.9)

29,124 27,289 28,945 32,456 33,289

1.0 (6.3) 6.1 12.1 2.6

4,079 945.9 3,077 (24.6) 6,522 112.0 8,662 32.8 9,051 4.5

3.04 2.62 2.53 3.19 3.34

1.53 1.53 1.54 1.54 1.54

13,058 11,884 12,789 12,806 12,348

Sprint Corporation FY02 26,679 FY03 26,197 FY04F 27,257 FY05F 27,468 FY06F 26,878

3.4 (1.8) 4.0 0.8 (2.1)

2,091 861 3,899 4,677 4,544

n.m. (58.8) 352.7 20.0 (2.8)

7,405 7,917 8,904 9,789 9,823

31.0 6.9 12.5 9.9 0.4

623 1,208 1,652 2,253 2,241

n.m. n.m. 36.7 36.4 (0.5)

0.43 0.85 1.14 1.52 1.51

0.49 0.49 0.50 0.50 0.50

4,849 3,824 3,889 4,300 4,300

Nextel Communications FY02 8,721 FY03 10,820 FY04F 13,114 FY05F 13,959 FY06F 14,096

13.4 24.1 21.2 6.4 1.0

1,536 2,522 3,577 4,283 4,185

n.m. 64.2 41.8 19.8 (2.3)

3,166 4,216 5,374 6,146 6,138

66.5 33.2 27.5 14.4 (0.1)

1,660 n.m. 1,472 (11.3) 2,688 82.6 3,337 24.1 3,312 (0.7)

1.72 1.35 2.36 2.90 2.82

0.00 0.00 0.00 0.00 0.00

1,863 1,716 2,444 2,400 2,300

EBITDA (¥m) (%)

Net profit (¥m) (%)

EPS (¥)

DPS (¥)

CAPX (¥m)

2,669,121 (28.6) 3,966,557 48.6 3,933,821 (0.8) 3,772,000 (4.1) 3,774,000 0.1

(834,672) n.m. 233,358 n.m. 643,862 175.9 776,000 20.5 630,000 (18.8)

(52,383) 14,647 40,903 49,297 40,022

5,000 5,000 5,000 6,000 6,000

2,291,900 1,977,600 2,013,600 1,998,000 1,933,000

(3.3) 341.9 104.0 66.6 19.5

3,061 13,561 27,748 46,274 55,292

1,790 2,095 3,600 4,800 4,800

369,300 246,200 253,300 328,000 351,000

(116,191) n.m. 212,491 n.m. 650,007 205.9 869,000 33.7 605,000 (30.4)

(11,577) 4,235 13,099 17,882 12,449

1,500 500 1,500 2,000 2,000

1,032,200 854,000 805,500 796,000 756,000

Source: Daiwa estimates Note: EPS for US companies are pro-forma basis. Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest. Japan Y/E March NTT FY01 FY02 FY03 FY04F FY05F

Revenue (¥m) (%)

Op. profit (¥m) (%)

11,027,753 10,923,146 11,095,537 10,996,000 10,848,000

(3.4) (0.9) 1.6 (0.9) (1.3)

61,534 1,363,557 1,560,321 1,438,000 1,528,000

(93.2) n.m. 14.4 (7.8) 6.3

KDDI FY01 FY02 FY03 FY04F FY05F

2,833,799 2,785,343 2,846,097 3,002,000 3,056,000

24.9 (1.7) 2.2 5.5 1.8

102,297 140,652 292,104 354,000 409,000

15.2 37.5 107.7 21.2 15.5

522,697 569,752 688,004 744,000 783,000

5.2 9.0 20.8 8.1 5.2

NTT DoCoMo FY01 FY02 FY03 FY04F FY05F

4,659,254 4,809,088 5,048,065 4,970,000 4,921,000

(0.6) 3.2 5.0 (1.5) (1.0)

1,000,887 1,056,719 1,102,918 984,000 1,042,000

28.8 5.6 4.4 (10.8) 5.9

1,679,987 1,844,491 1,867,918 1,771,000 1,797,000

17.6 9.8 1.3 (5.2) 1.5

12,979 57,358 117,025 195,000 233,000

Source: Daiwa estimates Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest.

STATISTICS & VALUATIONS

32

Global Telecom Monthly

Corporate earnings (cont’d) Asia ex-Japan Revenue Y/E December (Rmb m ) (%) China Mobile FY02 128,561 28.1 FY03 158,604 23.4 FY04F 193,612 22.1 FY05F 211,884 9.4 FY06F 226,675 7.0 China Unicom FY02 FY03 FY04F FY05F FY06F

Op. profit (Rmb m) (%)

EBITDA (Rmb m) (%)

Net profit (Rmb m) (%)

EPS (HK$)

DPS (HK$)

CAPX (Rmb m)

49,546 53,817 60,503 66,563 75,124

16.3 8.6 12.4 10.0 12.9

77,309 92,278 109,742 118,032 126,897

28.3 19.4 18.9 7.6 7.5

32,601 35,556 40,122 44,825 50,793

16.4 9.1 12.8 11.7 13.3

1.61 1.71 1.92 2.15 2.44

0.32 0.36 0.41 0.45 0.51

49,680 49,680 58,024 50,155 45,259

40,577 67,636 84,224 89,811 95,182

38.0 66.7 24.5 6.6 6.0

7,324 8,514 11,504 12,838 11,560

39.1 16.3 35.1 11.6 (10.0)

18,579 24,899 30,213 33,273 33,220

37.4 34.0 21.3 10.1 (0.2)

4,566 4,217 6,750 7,626 6,927

2.5 (7.6) 60.1 13.0 (9.2)

0.34 0.32 0.51 0.57 0.52

0.09 n.a. 0.15 0.17 0.15

18,944 19,760 20,858 18,307 16,925

China Telecom * FY02 130,342 FY03 141,537 FY04F 156,784 FY05F 168,419 FY06F 174,168

9.4 8.6 10.8 7.4 3.4

14,544 26,587 36,277 41,466 42,056

48.8 82.8 36.4 14.3 1.4

60,354 69,878 80,890 88,026 90,178

17.1 15.8 15.8 8.8 2.4

7,497 15,655 23,130 26,498 26,898

n.a. 108.8 47.7 14.6 1.5

0.10 0.20 0.27 0.31 0.31

0.01 0.07 0.07 0.07 0.07

59,865 61,587 57,800 56,125 51,675

* Numbers exclude amortised revenue on connection fee. Historic al numbers have been restated to include contributions of the newly acquired networks.

Y/E December PCCW FY02 FY03 FY04F FY05F FY06F

Y/E June SmarTone FY02 FY03 FY04F FY05F FY06F

Revenue (HK$m) (%) 20,112 22,550 25,110 25,260 25,554

(8.4) 12.1 11.4 0.6 1.2

Revenue (HK$m) (%) 2,401 2,832 3,190 3,341 3,475

(3.4) 17.9 12.7 4.7 4.0

Op. profit (HK$m) (%) 5,288 4,483 5,270 5,569 5,778

9.4 (15.2) 17.5 5.7 3.7

Op. profit (HK$m) (%) 145 352 497 473 426

n.m. 141.7 41.3 (4.7) (9.9)

Revenue Op. profit Y/E March (S$m) (%) (S$m) (%) Singapore Telecom FY03 10,259 39.8 3,743 22.4 FY04 11,994 16.9 4,288 14.6 FY05F 12,438 3.7 4,385 2.3 FY06F 12,729 2.3 4,336 (1.1) FY07F 12,664 (0.5) 4,537 4.6 * EBITDA include IDA compensation & associate contribution.

Y/E December MobileOne FY02 FY03 FY04F FY05F FY06F

Revenue (S$m) (%) 699 717 730 752 773

9.3 2.6 1.8 3.0 2.8

Op. profit (S$m) (%) 173 194 187 189 200

24.9 12.0 (3.6) 1.0 5.9

EBITDA (HK$m) (%)

EPS (HK$)

DPS (HK$)

CAPX (HK$m)

n.m. n.m. n.m. 11.0 23.7

(1.69) (1.23) 0.42 0.47 0.57

0.00 0.00 0.00 0.09 0.11

1,611 1,958 2,063 2,012 2,012

Net profit (HK$m) (%)

EPS (HK$)

DPS (HK$)

CAPX (HK$m)

n.m. 254.1 15.3 (7.6) (9.2)

0.20 0.70 0.81 0.74 0.67

0.07 3.97 0.54 0.50 0.45

250 316 750 500 500

Net profit (S$m) (%)

EPS (S¢)

DPS (S¢)

CAPX (S$m)

40.7 12.4 5.9 2.5 7.3

1,401 (14.1) 4,485 220.2 2,153 (52.0) 2,201 2.3 2,760 25.4

7.86 25.15 13.00 13.30 16.60

5.50 6.40 6.81 6.92 8.20

1,668 1,225 1,881 1,879 1,773

EBITDA (S$m) (%)

Net profit (S$m) (%)

EPS (S¢)

DPS (S¢)

CAPX (S$m)

12.23 13.49 13.99 14.11 14.97

7.33 9.40 9.80 9.88 10.48

134 117 176 157 137

8,120 7,372 8,163 8,562 8,881

9.8 (9.2) 10.7 4.9 3.7

EBITDA (HK$m) (%) 568 657.4 753 32.6 923 22.5 958 3.8 970 1.3 EBITDA (S$m) (%) 5,112 5,745 6,082 6,233 6,690

271 290 292 297 313

21.6 6.9 0.8 1.7 5.3

Net profit (HK$m) (%) (7,762) (6,100) 2,271 2,521 3,119

115 408 470 434 395

128 142 147 148 157

28.0 10.3 3.7 0.9 6.1

Source: Daiwa estimates Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest.

STATISTICS & VALUATIONS

July 2004

33

Corporate earnings (cont’d) Revenue Y/E December (Wonbn) (%) KT Corp FY02 16,394 2.8 FY03 16,001 (2.4) FY04F 16,299 1.9 FY05F 16,814 3.2 FY06F 17,264 2.7 SK Telecom FY02 FY03 FY04F FY05F FY06F KT Freetel FY02 FY03 FY04F FY05F FY06F

Op. profit (Wonbn) (%) 2,338 1,740 2,495 2,858 3,021

20.4 (25.6) 43.4 14.5 5.7

EBITDA (Wonbn) (%)

Net profit (Wonbn) (%)

EPS (Won)

DPS (Won)

CAPX (Wonbn)

6,135 3.1 5,492 (10.5) 6,334 15.3 6,735 6.3 6,949 3.2

1,947 74.9 830 (57.4) 1,145 38.0 1,392 21.5 1,638 17.7

5,998 3,218 4,325 5,189 6,056

860 2,000 3,648 3,214 3,784

3,232 3,162 3,160 2,814 2,899

1,511 1,943 1,936 2,285 2,529

17.0 28.5 (0.3) 18.0 10.7

17,934 22,664 23,535 27,778 30,744

1,800 5,500 6,576 7,762 8,590

1,968 1,696 1,700 1,818 1,910

532 22.4 472 (11.2) 381 (19.4) 488 28.1 444 (9.1)

2,891 2,519 2,014 2,608 2,371

0 500 611 782 1,067

1,125 955 1,050 1,101 1,178

(%)

EPS (NT$)

DPS (NT$)

CAPX (NT$m)

14,937 (10.8) 13,344 (10.7) 14,668 9.9 14,205 (3.2) 14,596 2.8

3.33 2.91 3.13 3.02 3.09

3.33 2.40 2.64 2.53 2.60

10,800 5,823 7,800 7,993 7,396

8,635 9,520 9,939 10,693 11,234

13.9 10.3 4.4 7.6 5.1

2,673 3,081 2,935 3,326 3,571

14.8 15.3 (4.7) 13.3 7.4

4,087 4,569 4,588 5,064 5,397

2.2 11.8 0.4 10.4 6.6

5,354 5,150 5,560 5,935 6,313

6.7 (3.8) 8.0 6.7 6.4

844 855 678 849 847

7.1 1.3 (20.7) 25.2 (0.3)

1,570 1,704 1,714 2,013 2,155

11.6 8.6 0.5 17.5 7.1

(%)

Op. profit (NT$m)

(%)

EBITDA (NT$m)

(%)

(3.1) 2.0 (4.1) 6.8 4.9

16,124 16,895 16,902 17,729 19,163

(17.2) 4.8 0.0 4.9 8.1

Revenue Y/E December (NT$m) Taiwan Cellular Corp FY02 58,730 FY03 59,876 FY04F 57,449 FY05F 61,364 FY06F 64,375

21,450 (11.0) 22,949 7.0 23,725 3.4 25,319 6.7 26,789 5.8

Net profit (NT$m)

Revenue Y/E December (NT$bn) Chunghwa Telecom FY02 179.4 FY03 182.5 FY04F 180.6 FY05F 182.3 FY06F 189.9

(%)

Op. profit (NT$bn)

(%)

EBITDA (NT$bn)

(%)

Net profit (NT$bn)

(%)

EPS (NT$)

DPS (NT$)

CAPX (NT$bn)

(2.8) 1.7 (1.1) 1.0 4.2

55.7 56.0 56.1 54.5 57.6

24.7 0.6 0.2 (2.8) 5.6

96.0 97.5 98.1 97.6 102.2

14.9 1.6 0.6 (0.5) 4.7

44.1 47.3 47.4 47.0 47.7

17.7 7.3 0.2 (0.9) 1.6

4.57 4.90 4.91 4.87 4.94

4.00 4.50 4.50 4.50 4.54

43.3 32.8 23.3 27.0 28.4

Revenue (A$m)

(%)

Op. profit (A$m)

(%)

EBITDA (A$m)

(%)

Net profit (A$m)

(%)

EPS (A$)

DPS (A$)

CAPX (A$m)

20,802 21,616 21,627 22,647 23,437

(9.5) 3.9 0.1 4.7 3.5

6,297 6,748 6,794 7,054 7,297

(11.9) 7.2 0.7 3.8 3.4

9,564 10,195 10,505 11,044 11,491

(4.5) 6.6 3.0 5.1 4.0

3,661 3,895 4,252 4,396 4,588

2.8 6.4 9.2 3.4 4.4

0.28 0.30 0.34 0.35 0.37

0.22 0.27 0.26 0.32 0.29

3,491 3,261 3,000 3,200 3,296

(%)

Op. profit (NZ$m)

(%)

EBITDA (NZ$m)

(%)

Net profit (NZ$m)

(%)

EPS (NZ$)

DPS (NZ$)

CAPX (NZ$m)

(2.0) (6.2) 1.3 2.0 2.3

1,450 1,496 1,554 1,589 1,625

(9.0) 3.2 3.9 2.3 2.3

2,265 2,316 2,373 2,437 2,505

(2.2) 2.3 2.5 2.7 2.8

670 709 805 837 867

9.1 5.8 13.5 4.0 3.5

0.36 0.38 0.42 0.43 0.44

0.20 0.20 0.25 0.30 0.31

778 600 600 770 800

Y/E June Telstra FY02 FY03 FY04F FY05F FY06F

Revenue Y/E December (NZ$m) Telecom New Zealand FY02 5,537 FY03 5,191 FY04F 5,257 FY05F 5,364 FY06F 5,488

Source: Daiwa estimates Note: All the forecasts are as of 14 July 2004, please contact to analyst for the latest.

STATISTICS & VALUATIONS

34

Global Telecom Monthly

Earnings revisions Europe Date of change: 30 Jun Revenue (EURm) –––––––––––– Previous Revised % revision

––––––––––––

Y/E Dec

–––––––––––––

Previous

EBITDA (EURm) –––––––––– Revised % revision

Telefonica Moviles FY04F 11,407 11,444 0 4,788 4,807 0 FY05F 12,776 12,820 0 5,698 5,710 0 FY06F 13,731 13,808 1 6,336 6,361 0 Reason for revision: The better than expected performance of subscriber additions in Brazil. Date of change: 30 Jun Revenue (EURm) –––––––––––– Previous Revised % revision

––––––––––––

Y/E Dec

–––––––––––––

Previous

EBITDA (EURm) –––––––––– Revised % revision

Telecom Italia Mobile FY04F 12,892 12,967 1 5,917 5,925 0 FY05F 14,074 14,171 1 6,685 6,715 0 FY06F 14,886 15,005 1 7,243 7,286 1 Reason for revision: The better than expected performance of subscriber additions in Brazil. Date of change: 30 Jun Revenue (GBPm) –––––––––––– Previous Revised % revision

––––––––––––

Y/E Mar

–––––––––––––

Previous

EBITDA (GBPm) –––––––––– Revised % revision

Vodafone FY05F 33,370 34,134 2 12,843 12,842 FY06F 34,740 35,054 1 13,557 13,467 Reason for revision: Forecasts have been revised due to a change in coverage.

0 (1)

Net profit (EURm) ––––––––– Previous Revised % revision

––––––––––

1,818 2,207 2,873

1,887 2,396 2,967

4 9 3

Net profit (EURm) ––––––––– Previous Revised % revision

––––––––––

1,876 2,608 2,991

1,875 2,586 3,009

0 (1) 1

Net profit (GBPm) ––––––––– Previous Revised % revision

––––––––––

(8,678) (8,498)

(9,145) (8,996)

5 6

US Date of change: 1 Jul Revenue (US$m) –––––––––––– Previous Revised % revision

––––––––––––

Y/E Dec AT&T FY05F FY06F FY07F

30,988 31,048 31,427

30,426 30,174 30,316

(2) (3) (4)

–––––––––––––

Previous

EBITDA (US$m) –––––––––– Revised % revision

7,082 7,180 7,210

6,557 6,485 6,357

(7) (1) (12)

Net profit (US$m) ––––––––– Previous Revised % revision

––––––––––

974 988 974

640 561 457

(34) (43) (53)

Reason for revision: The company reduced its financial guidance for FY04, due to price competition at business service division. The company also announced it is not expanding local telephone services. Japan Date of change: 13 Jul Revenue (¥m) –––––––––––––– Previous Revised % revision

––––––––––––––

Y/E Mar

–––––––––––––––

Previous

EBITDA (¥m) –––––––––––– Revised % revision

NTT FY04F 11,002,000 10,996,000 0 3,772,000 3,772,000 FY05F 10,856,000 10,848,000 0 3,749,000 3,774,000 Reason for revision: Reflecting the improvement in local services. Date of change: 13 Jul Revenue (¥m) –––––––––––––– Previous Revised % revision

0 1

––––––––––––––– EBITDA (¥m) –––––––––––– Y/E Mar Previous Revised % revision NTT DoCoMo FY04F 4,970,000 4,970,000 0 1,771,400 1,771,000 0 FY05F 4,921,000 4,921,000 0 1,796,700 1,797,000 0 Reason for revision: Slight adjustment, considering the latest development. ––––––––––––––

––––––––––––

Previous 743,000 606,000

––––––––––––

Previous 863,000 613,000

Net profit (¥m) ––––––––––– Revised % revision 776,000 630,000

4 4

Net profit (¥m) ––––––––––– Revised % revision 869,000 605,000

1 (1)

STATISTICS & VALUATIONS

July 2004

35

Asia e x-Japan Date of change: 14 Jul Revenue (Rmb m) –––––––––– Previous Revised % revision ––––––––––

Y/E Dec

––––––––––– EBITDA (Rmb m) ––––––––– Previous Revised % revision

China Telecom (HK) FY04F 154,476 156,784 1 FY05F 164,299 168,419 3 FY06F 170,052 174,168 2 Reason for revision: Our earnings upgrade w as due mainly to forecast, as well as to our local voice MOU assumptions. Date of change: 13 Jul Revenue (Won bn) –––––––––– Previous Revised % revision

––––––––––

Y/E Dec

79,411 80,890 2 21,504 23,130 8 85,210 88,026 3 24,111 26,498 10 88,133 90,178 2 25,535 26,898 5 upward revisions to both our local fixed line and broadband subscriber

EBITDA (Won bn) ––––––––– Previous Revised % revision –––––––––––

SKT FY05F 10,171 9,939 (2) FY06F 10,911 10,693 (2) FY07F 11,435 11,234 (2) Reason for revision: Changes to interconnection rates, revision Date of change: 14 Jul Revenue (Won bn) –––––––––– Previous Revised % revision

––––––––––

Y/E Dec KT Freetel FY05F FY06F FY07F

5,345 5,726 6,071

5,560 5,935 6,313

4,659 5,150 5,606 of operating

4,588 5,064 5,397 costs.

EBITDA (Won bn) ––––––––– Previous Revised % revision 1,605 1,898 2,062

Net profit (Wonb bn) –––––––– Previous Revised % revision

–––––––––

(2) (2) (4)

–––––––––––

4 4 4

Net profit (Rmb m) –––––––– Previous Revised % revision

–––––––––

1,714 2,013 2,155

1,981 2,337 2,667

1,936 2,285 2,529

(2) (2) (5)

Net profit (Wonb bn) –––––––– Previous Revised % revision

–––––––––

7 6 5

319 446 445

381 488 444

19 9 0

Reason for revision: Changes to interconnection rates, revision of subscriber and tax assumptions. Australia Date of change: 14 Jul Revenue (A$m) –––––––––– Previous Revised % revision ––––––––––

Y/E Jun

–––––––––––

Previous

Telstra FY04F 61,090 57,449 (6) FY05F 64,413 61,364 (5) FY06F 68,190 64,375 (6) Reason for revision: Adjusted earnings higher to account for Telstra's directories/advertising business.

EBITDA (A$m) ––––––––– Revised % revision

10,457 10,967 11,385 better than

10,505 11,044 11,491 expected revenue

––––––––– Net profit (A$m) –––––––– Previous Revised % revision

0 4,218 4,252 1 1 4,339 4,396 1 1 4,509 4,588 2 and earnings performance by Sensis ,

Source: Daiwa estimates

Rating revision Date of

6-month rating

change

Previous

Revised

Reason for revision

Telefonica Moviles

30-Jun

4

3

Better than expected subscriber additions in the Brazilian market.

Telecom Italia Mobile

30-Jun

new

2

Initiated on shares with a 2 rating due to its strong domestic position and growth prospects in the Brazilian market

Vodafone

30-Jun

new

3

Due to change in coverage we have reinitiated on Vodafone with a 3 rating.

AT&T

1-Jul

5

3

We think downside risk has been reflected in the share prices. The company has minimum debt payment schedule for the next two years. We believe current weakness reflecting credit downgrade is overdone.

KT Freetel

2-Jul

4

3

Overweighting more defensive stocks.

Source: Daiwa estimates

STATISTICS & VALUATIONS

36

Global Telecom Monthly

Europe cellular subscribers Subscribers (m) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Net additions (m) Jan-02 Feb(02 Mar(02 Apr(02 May(02 Jun(02 Jul(02 Aug(02 Sep(02 Oct(02 Nov(02 Dec(02 Jan(03 Feb(03 Mar(03 Apr(03 May(03 Jun(03 Jul(03 Aug(03 Sep(03 Oct(03 Nov(03 Dec(03 Jan(04 Feb(04 Mar(04 Apr(04 May(04

France

UK

Germany

Italy

Spain

Others

Western Europe

37.5 38.0 37.3 35.5 35.7 35.8 36.0 36.2 36.0 36.1 36.3 36.8 37.1 37.3 37.1 37.2 37.4 37.5 39.3 39.8 40.3 40.6 41.1 41.0 41.3 41.5 41.8 41.4 41.5

45.9 46.1 46.1 46.4 46.4 46.8 47.0 47.1 47.4 48.2 48.4 49.5 50.1 50.4 49.7 49.8 49.8 49.9 50.3 50.4 50.8 51.2 51.3 53.2 53.4 53.7 53.9 54.9 55.4

56.4 56.6 54.0 53.8 54.0 54.3 54.3 54.5 54.7 55.5 55.8 57.0 57.5 57.3 57.6 57.9 58.3 58.6 59.5 59.8 60.1 60.4 60.7 62.2 62.5 62.9 63.3 63.6 64.4

51.4 51.5 50.5 50.6 50.7 51.0 51.0 51.2 51.2 51.9 52.0 52.9 53.7 52.5 52.9 53.4 53.7 53.9 53.0 53.1 53.5 54.9 55.0 55.2 55.6 55.7 55.9 56.3 56.7

29.9 30.1 29.9 30.1 30.2 30.8 31.0 31.1 31.6 32.0 32.2 33.2 33.3 33.5 34.0 34.6 34.8 35.0 34.8 35.0 35.2 35.8 36.0 37.0 37.2 37.4 37.7 37.9 38.1

70.3 70.8 70.2 70.1 70.2 71.0 71.4 71.9 72.4 72.5 73.1 73.7 74.3 74.3 74.7 74.8 75.1 75.5 76.7 77.1 77.6 79.5 80.3 81.2 82.1 82.3 82.7 83.1 83.7

291.4 293.1 287.9 286.5 287.3 289.7 290.8 291.9 293.3 296.3 297.8 303.1 306.0 305.2 306.0 307.7 309.1 310.3 313.6 315.2 317.5 322.4 324.5 329.8 332.2 333.5 335.3 337.2 339.7

0.50 0.49 (0.68) (1.78) 0.21 0.09 0.16 0.18 (0.21) 0.14 0.15 0.58 0.23 0.21 (0.18) 0.13 0.13 0.13 1.77 0.53 0.51 0.34 0.47 0.58 (0.45) 0.27 0.27 (0.44 0.09

0.21 0.17 0.04 0.32 0.03 0.37 0.24 0.10 0.26 0.82 0.19 1.11 0.61 0.24 (0.68) 0.07 0.07 0.06 0.43 0.13 0.39 0.38 0.10 0.44 1.73 0.27 0.22 0.98 0.46

0.51 0.25 (2.68) (0.13) 0.16 0.32 0.00 0.17 0.19 0.84 0.34 1.16 0.46 (0.20) 0.36 0.31 0.34 0.30 0.90 0.32 0.35 0.26 0.32 0.52 1.30 0.36 0.34 0.40 0.75

0.59 0.15 (1.04) 0.13 0.06 0.31 0.04 0.14 0.05 0.73 0.09 0.88 0.82 (1.18) 0.33 0.54 0.24 0.21 (0.83) 0.03 0.37 1.43 0.12 0.45 0.16 0.03 0.20 0.41 0.43

0.26 0.18 (0.21) 0.19 0.18 0.54 0.19 0.12 0.51 0.41 0.14 1.03 0.12 0.17 0.47 0.61 0.25 0.15 (0.14) 0.14 0.22 0.61 0.21 0.62 0.56 0.19 0.28 0.25 0.11

0.53 0.47 (0.60) (0.10) 0.18 0.73 0.47 0.43 0.54 0.10 0.56 0.58 0.63 0.02 0.44 0.08 0.32 0.36 1.15 0.49 0.51 1.88 0.81 0.95 0.85 0.21 0.43 0.36 0.63

2.60 1.70 (5.18 (1.38) 0.82 2.36 1.10 1.13 1.33 3.04 1.47 5.33 2.87 (0.73) 0.75 1.73 1.35 1.21 3.28 1.62 2.34 4.90 2.03 3.56 4.16 1.32 1.74 1.96 2.47

Source: Mobile Communications

MONTHLY S TATISTICS

July 2004

37

Quarterly broadband stats (subscriber ‘000) UK––––––––––––––––––––––––––––––– Cable Penetration (%) 44,916 0.38 76,892 0.61 132,334 0.95 203,222 1.39 309,200 1.96 452,994 2.98 596,773 3.91 779,319 5.35 960,121 6.99 1,093,536 8.45 1,232,010 10.22 1,360,000 12.45 1,487,800 14.74

–––––––––––––––––––––––––––––––

2001 1Q 2Q 3Q 4Q 2002 1Q 2Q 3Q 4Q 2003 1Q 2Q 3Q 4Q 2004 1Q

ADSL 49,000 72,000 99,000 136,164 170,250 300,800 404,500 590,100 831,200 1,071,700 1,385,700 1,828,200 2,288,850

Germany––––––––––––––––––––––––––––––– Cable Penetration (%) 24,300 2.84 27,000 4.07 31,055 6.44 39,131 6.81 45,000 7.10 49,000 7.74 49,000 8.31 53,000 9.57 61,500 9.83 70,000 10.51 78,000 11.56 87,000 12.43 91,000 13.86

––––––––––––––––––––––––––––––––––

2001 1Q 2Q 3Q 4Q 2002 1Q 2Q 3Q 4Q 2003 1Q 2Q 3Q 4Q 2004 1Q

ADSL 1,000,000 1,440,000 2,292,000 2,420,000 2,640,000 2,860,000 2,968,000 3,320,000 3,410,000 3,640,000 4,002,000 4,300,000 4,800,000

Spain––––––––––––––––––––––––––––––––––– Cable Penetration (%) 42,000 1.05 54,000 1.56 62,000 2.10 70,000 3.29 115,000 4.74 141,000 6.43 165,000 7.59 195,000 9.49 390,000 11.14 440,000 12.68 465,000 13.81 494,000 15.70 525,000 16.91

––––––––––––––––––––––––––––––––

2001 1Q 2Q 3Q 4Q 2002 1Q 2Q 3Q 4Q 2003 1Q 2Q 3Q 4Q 2004 1Q

ADSL 100,000 157,702 223,158 375,816 527,604 661,261 847,769 951,100 1,141,964 1,303,315 1,433,395 1,665,100 1,800,000

Netherlands ––––––––––––––––––––––––––– Cable Penetration (%) 260,000 3.80 300,000 4.40 330,000 5.96 350,000 6.82 390,000 8.32 427,000 11.72 460,000 13.69 650,000 15.77 804,000 17.84 850,000 19.89 905,000 22.11 940,000 24.54 970,000 27.55

–––––––––––––––––––––––––––

2001 1Q 2Q 3Q 4Q 2002 1Q 2Q 3Q 4Q 2003 1Q 2Q 3Q 4Q 2004 1Q

ADSL 1,140 1,939 79,000 118,000 151,000 208,000 269,000 333,000 445,000 543,000 643,000 778,000 959,000

France ––––––––––––––––––––––––––––––– Cable Penetration (%) 151,109 1.01 163,302 1.39 169,302 1.78 188,522 2.48 208,663 3.25 233,579 3.93 250,053 4.62 276,000 6.91 312,707 8.53 336,668 9.69 361,000 11.69 393,854 13.95 412,000 16.64

–––––––––––––––––––––––––––––––

ADSL 96,000 177,000 267,000 420,400 587,472 730,800 882,150 1,415,800 1,778,630 2,039,171 2,503,500 3,023,995 3,665,010

Italy––––––––––––––––––––––––––––––––––––– FTTH Penetration (%) 10,000 0.90 14,500 1.20 22,700 1.57 48,900 2.07 76,700 2.75 104,000 3.40 131,500 3.93 176,100 5.20 213,313 6.67 249,035 8.40 290,200 9.46 330,000 11.28 365,000 12.36

–––––––––––––––––––––––––––––––––

ADSL 180,000 239,000 310,000 390,000 505,000 615,000 700,000 805,000 1,197,150 1,529,000 1,712,000 2,057,000 2,250,000

Switzerland––––––––––––––––––––––––––––– Cable Penetration (%) 85,100 2.90 106,300 4.18 124,800 5.13 145,300 6.30 168,000 7.65 185,000 9.48 200,000 11.01 247,000 14.60 290,000 17.83 318,000 20.01 345,000 21.95 370,000 28.29 400,000 32.88

–––––––––––––––––––––––––––––

ADSL 2,492 20,000 30,000 45,000 62,966 101,177 132,617 195,220 250,000 288,000 320,000 487,000 596,000

Sweden–––––––––––––––––––––––––––––––– Cable/FTTH Penetration (%) 132,000 4.98 181,900 7.08 190,000 8.34 227,200 11.54 252,200 14.37 263,080 15.60 269,020 16.63 283,300 18.19 293,600 18.87 304,240 19.45 312,060 19.92 346,100 21.72 380,000 23.84

–––––––––––––––––––––––––––––––––

ADSL 61,600 93,765 135,850 223,953 304,611 345,200 383,400 436,000 462,250 484,308 505,763 546,100 600,000

Source: Daiwa N.B. FTTH = fibre to the home; Penetration is against numbers of households.

MONTHLY S TATISTICS

38

Global Telecom Monthly

Japan monthly data (mobile) KDDI Group au

NTT DoCoMo

Vodafone HD Vodafone Vodafone Total Global Standard

Total

FOMA

Total

CDMA 2000 1x

43.0 43.2 43.9 44.1 44.2 44.4 44.7 44.9 45.0 45.2 45.3 45.4 45.4 45.5 45.9 46.1 46.2 46.4

0.15 0.19 0.33 0.42 0.48 0.53 0.66 0.79 1.00 1.34 1.63 1.88 2.01 2.32 3.05 3.58 4.01 4.58

13.6 13.7 14.0 14.3 14.5 14.7 14.9 15.1 15.3 15.4 15.7 16.0 16.2 16.5 17.0 17.2 17.4 17.6

5.31 5.89 6.81 7.51 8.03 8.57 9.16 9.73 10.20 10.66 11.17 11.76 12.26 12.77 13.51 14.00 14.36 14.70

13.5 13.6 14.0 14.2 14.3 14.4 14.5 14.6 14.6 14.6 14.7 14.8 14.8 14.9 15.0 15.0 15.0 15.1

Net new additions (m) Jan-03 0.16 Feb-03 0.20 Mar-03 0.63 Apr-03 0.21 May-03 0.12 Jun-03 0.17 Jul- 03 0.31 Aug-03 0.19 Sep-03 0.18 Oct-03 0.15 Nov-03 0.06 Dec-03 0.11 Jan-04 0.06 Feb-04 0.09 Mar-04 0.41 Apr-04 0.18 May-04 0.13 Jun-04 0.17

0.00 0.04 0.14 0.09 0.06 0.06 0.12 0.13 0.22 0.33 0.29 0.26 0.13 0.31 0.72 0.53 0.43 0.57

0.12 0.13 0.33 0.25 0.18 0.19 0.21 0.20 0.18 0.19 0.24 0.29 0.23 0.27 0.48 0.29 0.19 0.16

0.64 0.58 0.91 0.71 0.52 0.54 0.58 0.57 0.48 0.46 0.51 0.59 0.50 0.50 0.74 0.49 0.36 0.34

0.13 0.16 0.34 0.20 0.13 0.14 0.07 0.05 0.03 0.03 0.04 0.11 0.06 0.06 0.10 0.02 0.02 0.06

Subscribers (m) Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04

Japan total Total

3G service

0.00 0.01 0.03 0.03 0.04 0.06 0.07 0.08 0.08 0.09 0.09 0.11 0.12 0.13 0.14 0.15 0.17 0.20

73.9 74.4 75.7 76.3 76.7 77.2 77.8 78.2 78.6 78.9 79.3 79.8 80.1 80.5 81.5 82.0 82.3 82.7

5.47 6.09 7.16 7.97 8.56 9.16 9.88 10.59 11.29 12.09 12.89 13.76 14.40 15.22 16.69 17.72 18.55 19.49

0.00 0.01 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.02 0.01 0.01 0.01 0.01 0.02 0.03

0.39 0.47 1.29 0.66 0.41 0.49 0.58 0.43 0.37 0.35 0.33 0.51 0.34 0.41 0.98 0.49 0.32 0.38

0.65 0.62 1.07 0.81 0.59 0.61 0.72 0.71 0.70 0.80 0.80 0.87 0.64 0.82 1.47 1.03 0.82 0.94

Source: NTT DoCoMo, KDDI, Japan Telecom, Daiwa

Japan broadband subscribers Subscribers ('000) Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04

ADSL 6,119.8 6,589.9 7,023.0 7,477.9 7,907.4 8,257.1 8,541.3 8,881.0 9,228.7 9,590.3 9,911.3 10,272.1 10,612.7 10,904.2 11,196.8 11,515.0 11,819.2 12,068.7

CATV 1,992 2,028 2,069 2,135 2,183 2,224 2,283 2,304 2,339 2,376 2,428 2,475 2,510 2,546 2,578 2,623 2,661 n.a.

FTTH 233.1 263.1 305.4 346.9 398.3 458.3 531.3 608.0 688.5 756.2 815.4 894.3 960.9 1,042.8 1,142.3 1,240.9 1,327.8 n.a.

Total 8,345 8,881 9,397 9,960 10,489 10,939 11,356 11,793 12,256 12,723 13,155 13,641 14,084 14,493 14,917 15,379 15,808 n.a.

Source: Ministry of Public Management, Home affairs, Posts and Telecommunications

MONTHLY S TATISTICS

July 2004

39

China monthly data Subscribers (m) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 # Feb-04 Mar-04 Apr-04 May-04

CMHK 71.6 73.2 75.3 77.0 78.9 80.3 107.4 109.4 111.4 113.6 115.6 117.7 119.8 121.8 123.8 125.5 127.2 129.1 131.0 132.9 135.0 137.1 139.3 141.6 144.1 147.2 150.3 153.3 155.9

Unicom 28.5 29.7 30.8 31.8 32.9 34.1 35.4 36.9 38.4 40.1 41.6 43.1 61.7 63.1 64.9 66.6 68.1 69.6 71.4 73.0 74.9 77.0 78.9 80.8 93.6 95.4 97.3 99.0 100.8

China Mobile 35.3 37.6 39.3 41.0 42.3 43.0 18.1 18.6 19.1 19.5 19.9 20.8 22.3 22.7 23.6 24.1 25.0 25.7 26.7 27.5 29.0 31.6 34.0 34.9 37.9 38.5 41.5 42.2 42.5

Unicom Group 14.5 15.4 16.1 16.8 17.3 18.8 19.3 20.0 21.5 22.7 23.3 25.1 8.7 8.8 9.2 9.4 9.8 10.1 10.4 10.6 11.0 11.2 11.3 11.4 1.1 1.2 1.3 1.3 1.3

China total 149.9 155.9 161.5 166.6 171.4 176.2 180.3 184.9 190.4 195.8 200.3 206.6 212.4 216.4 221.5 225.7 230.1 234.5 239.5 244.1 250.0 256.9 263.5 268.7 276.8 282.3 290.3 295.8 300.6

Net new additions (m) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 # Feb-04 Mar-04 Apr-04 May-04

CMHK 1.9 1.7 2.1 1.7 1.9 1.4 27.1 1.9 2.1 2.1 2.0 2.1 2.1 2.0 2.0 1.7 1.7 1.9 1.9 1.9 2.1 2.1 2.2 2.3 2.5 3.1 3.1 3.0 2.7

Unicom 1.5 1.1 1.1 1.0 1.1 1.2 1.3 1.4 1.6 1.6 1.5 1.6 18.6 1.4 1.8 1.7 1.5 1.5 1.7 1.7 1.9 2.1 1.9 2.0 12.8 1.8 1.9 1.8 1.7

China Mobile (parent) 1.1 2.3 1.7 1.7 1.2 0.7 (24.9) 0.5 0.4 0.4 0.4 0.9 1.5 0.4 0.9 0.6 0.8 0.7 1.0 0.8 1.5 2.6 2.3 0.9 3.1 0.6 3.0 0.7 0.4

Unicom Group (parent) 0.5 0.9 0.7 0.7 0.5 1.5 0.5 0.7 1.5 1.3 0.6 1.8 (16.4) 0.2 0.4 0.2 0.4 0.3 0.3 0.3 0.4 0.2 0.1 0.0 (10.2) 0.1 0.0 0.0 0.1

China total 5.1 6.0 5.6 5.1 4.7 4.8 4.1 4.5 5.5 5.4 4.5 6.3 5.8 4.0 5.1 4.2 4.3 4.4 5.0 4.7 5.9 7.0 6.5 5.2 8.1 5.5 8.0 5.4 4.8

Source: Companies, Daiwa estimates # For Unicom, subscribers of the nine newly acquired network have been included since January 1, 2004. The nine networks had a subscriber base of 10.68m by end-2003.

MONTHLY S TATISTICS

40

Global Telecom Monthly

Korea monthly broadband subscriber data Korea Telecom

Hanaro

Thrunet

Dreamline

Dacom

Other

Total

3.91 3.96 4.08 4.16 4.25 4.33 4.39 4.47 4.56 4.67 4.80 4.92 5.05 5.13 5.25 5.30 5.35 5.39 5.45 5.49 5.52 5.55 5.58 5.59 5.66 5.71 5.76 5.81 5.86 5.90

2.16 2.27 2.43 2.54 2.65 2.73 2.73 2.80 2.85 2.88 2.89 2.87 2.90 2.93 2.97 2.98 2.97 2.96 2.97 2.97 2.98 2.73 2.73 2.73 2.73 2.73 2.74 2.77 2.77 n.a.

1.34 1.37 1.40 1.31 1.31 1.30 1.31 1.32 1.31 1.30 1.31 1.30 1.30 1.30 1.30 1.30 1.30 1.29 1.49 1.29 1.31 1.29 1.30 1.30 1.30 1.29 1.29 1.30 1.30 n.a.

0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18 n.a.

0.13 0.13 0.14 0.14 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.77 0.78 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 n.a.

0.30 0.14 0.10 0.15 0.14 0.10 0.10 0.34 0.40 0.49 0.51 0.37 0.36 0.38 0.38 0.38 0.44 0.49 0.34 0.54 0.54 0.61 0.63 0.60 0.63 0.65 0.67 0.65 0.69 n.a.

8.02 8.06 8.32 8.49 8.68 8.79 8.86 9.26 9.46 9.67 9.83 10.41 10.57 10.71 10.87 10.92 11.03 11.10 11.22 11.25 11.32 11.15 11.20 11.18 11.27 11.35 11.43 11.49 11.57 n.a.

Net new additions (m) Jan-02 0.05 0.12 0.03 Feb-02 0.06 0.11 0.03 Mar-02 0.11 0.15 0.03 Apr-02 0.08 0.12 (0.09) May-02 0.09 0.11 (0.01) Jun-02 0.08 0.08 (0.00) Jul- 02 0.06 0.00 0.00 Aug-02 0.07 0.07 0.02 Sep-02 0.09 0.05 (0.01) Oct-02 0.11 0.03 (0.01) Nov-02 0.12 0.01 0.00 Dec-02 0.13 (0.02) (0.00) Jan-03 0.13 0.02 0.00 Feb-03 0.08 0.04 0.00 Mar-03 0.12 0.04 Apr-03 0.05 0.00 May-03 0.05 (0.01) Jun-03 0.04 (0.01) (0.02) Jul- 03 0.06 0.01 0.20 Aug-03 0.04 (0.00) (0.20) Sep-03 0.03 0.01 0.02 Oct-03 0.03 (0.25) (0.02) Nov-03 0.02 (0.00) 0.01 Dec-03 0.01 (0.00) (0.00) Jan-04 0.07 (0.00) (0.00) Feb-04 0.05 0.01 (0.00) Mar-04 0.05 0.01 (0.00) Apr-04 0.06 0.03 0.01 May-04 0.04 (0.00) (0.00) Jun-04 0.04 n.a. n.a. Source: Companies, MIC, National Statistics Office, Daiwa estimates

0.00 0.00 0.00 0.00 0.00 (0.00) 0.00 (0.00) (0.00) (0.00) 0.00 n.a.

0.00 0.00 0.01 0.00 0.01 0.00 0.00 0.00 0.00 (0.00) (0.07) 0.01 0.00 n.a.

0.01 (0.16) (0.04) 0.05 (0.01) (0.04) (0.00) 0.24 0.06 0.09 0.02 (0.14) (0.01) 0.02 (0.00) 0.00 0.06 0.05 (0.15) 0.20 0.01 0.07 0.02 (0.03) 0.02 0.02 0.02 (0.03) 0.05 n.a.

0.21 0.04 0.26 0.17 0.19 0.11 0.06 0.40 0.19 0.22 0.15 0.58 0.16 0.14 0.16 0.06 0.10 0.07 0.12 0.04 0.07 (0.17) 0.05 (0.02) 0.09 0.08 0.08 0.06 0.08 n.a.

Subscribers (m) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04

MONTHLY S TATISTICS

July 2004

41

Korea monthly cellular subscriber data SK Telecom, STI Total 2.5G Subscribers (m) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04

15.34 15.58 16.00 16.05 16.30 16.46 16.62 16.79 17.00 17.11 17.15 17.22 17.36 17.50 17.63 17.72 17.77 17.86 17.90 17.96 18.02 18.08 18.16 18.31 18.30 18.36 18.44 18.50 18.60 18.60

3.84 4.41 5.11 5.54 6.13 6.67 7.36 7.97 8.51 8.81 9.46 9.94 10.37 10.71 11.17 11.60 12.00 12.38 12.76 13.17 13.48 13.79 14.07 14.42 14.76 15.11 15.45 15.76 16.08 16.21

KT Freetel Total 2.5G 9.61 9.77 9.95 9.93 10.01 10.13 10.08 10.13 10.38 10.49 10.50 10.33 10.28 10.33 10.38 10.43 10.47 10.49 10.47 10.45 10.45 10.45 10.47 10.44 10.81 11.05 11.29 11.52 11.77 11.95

Net new additions (m) Jan-02 0.16 0.58 0.02 Feb-02 0.24 0.57 0.16 Mar-02 0.42 0.70 0.18 Apr-02 0.05 0.43 (0.03) May-02 0.24 0.59 0.09 Jun-02 0.17 0.54 0.12 Jul- 02 0.15 0.69 (0.05) Aug-02 0.17 0.62 0.05 Sep-02 0.21 0.54 0.25 Oct-02 0.11 0.30 0.11 Nov-02 0.04 0.65 0.01 Dec-02 0.07 0.48 (0.16) Jan-03 0.14 0.43 (0.06) Feb-03 0.13 0.35 0.06 Mar-03 0.13 0.46 0.04 Apr-03 0.09 0.43 0.05 May-03 0.04 0.40 0.04 Jun-03 0.09 0.38 0.02 Jul- 03 0.05 0.38 (0.02) Aug-03 0.05 0.41 (0.02) Sep-03 0.06 0.31 (0.00) Oct-03 0.06 0.31 0.00 Nov-03 0.08 0.29 0.02 Dec-03 0.15 0.35 (0.03) Jan-04 (0.02) 0.34 0.37 Feb-04 0.06 0.35 0.24 Mar-04 0.08 0.34 0.24 Apr-04 0.06 0.31 0.23 May-04 0.11 0.32 0.25 Jun-04 (0.01) 0.13 0.18 Source: MIC, SK Telecom, KT Freetel, LG Telecom, Daiwa estimates

LG Telecom Total 2.5G

Korea total Total 2.5G

1.02 1.42 1.93 2.15 2.53 2.89 3.17 3.55 4.08 4.45 4.86 4.86 5.05 5.36 5.66 5.92 6.17 6.40 6.59 6.78 6.99 7.18 7.35 7.47 8.03 8.45 8.86 9.25 9.67 10.00

4.29 4.32 4.35 4.29 4.26 4.29 4.31 4.41 4.71 4.73 4.78 4.79 4.78 4.80 4.86 4.84 4.84 4.82 4.79 4.75 4.74 4.75 4.81 4.84 4.92 5.06 5.27 5.55 5.65 5.70

0.26 0.41 0.54 0.58 0.65 0.76 0.94 1.18 1.43 1.58 1.69 1.74 1.80 1.87 1.99 2.06 2.13 2.25 2.34 2.45 2.53 2.67 2.84 2.93 3.10 3.34 3.61 3.97 4.19 n.a.

29.24 29.67 30.31 30.27 30.57 30.89 31.01 31.33 32.08 32.32 32.43 32.34 32.42 32.63 32.86 32.99 33.07 33.17 33.16 33.16 33.21 33.28 33.45 33.59 34.03 34.47 35.00 35.56 36.03 36.24

5.13 6.25 7.58 8.28 9.30 10.32 11.46 12.69 14.02 14.83 16.01 16.54 17.21 17.94 18.82 19.58 20.30 21.02 21.69 22.41 22.99 23.64 24.27 24.83 25.89 26.90 27.92 28.98 29.94 n.a.

0.27 0.30 0.51 0.22 0.37 0.36 0.28 0.38 0.54 0.37 0.41 0.19 0.31 0.30 0.26 0.25 0.22 0.20 0.19 0.21 0.19 0.17 0.12 0.56 0.41 0.41 0.40 0.42 0.33

0.01 0.04 0.03 (0.06) (0.03) 0.04 0.02 0.09 0.30 0.02 0.05 0.01 (0.01) 0.03 0.06 (0.01) (0.01) (0.01) (0.04) (0.04) (0.01) 0.01 0.06 0.02 0.09 0.14 0.21 0.27 0.11 0.04

0.05 0.15 0.13 0.04 0.07 0.11 0.18 0.24 0.25 0.15 0.11 0.05 0.06 0.07 0.12 0.07 0.07 0.08 0.09 0.12 0.07 0.15 0.17 0.09 0.17 0.24 0.27 0.36 n.a. n.a.

0.19 0.43 0.64 (0.04) 0.30 0.32 0.12 0.32 0.76 0.24 0.11 (0.09) 0.08 0.21 0.23 0.13 0.07 0.10 (0.01) (0.00) 0.05 0.07 0.16 0.15 0.43 0.44 0.53 0.56 0.46 0.21

0.89 1.01 1.34 0.69 1.03 1.02 1.14 1.23 1.32 0.81 1.18 0.53 0.67 0.73 0.88 0.76 0.72 0.69 0.67 0.72 0.59 0.65 0.63 0.56 1.07 1.01 1.02 1.07 0.96 n.a.

MONTHLY S TATISTICS

42

Global Telecom Monthly

Taiwan cellular subscribers Chunghwa Telecom Subscribers (‘000) Jan-02 6,377 Feb-02 6,478 Mar-02 6,537 Apr-02 6,644 May-02 6,777 Jun-02 6,940 Jul- 02 7,058 Aug-02 7,144 Sep-02 7,229 Oct-02 7,294 Nov-02 7,340 Dec-02 7,422 Jan-03 7,510 Feb-03 7,563 Mar-03 7,619 Apr-03 7,676 May-03 7,726 Jun-03 7,765 Jul- 03 7,825 Aug-03 7,877 Sep-03 7,963 Oct-03 8,050 Nov-03 8,147 Dec-03 8,267 Jan-04 8,357 Feb-04 8,365 Mar-04 8,079 Apr-04 8,021 Net additions ('000) Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04

144 101 59 108 133 162 118 86 85 65 46 82 89 53 57 56 50 39 60 52 86 87 97 120 90 8 (286) (58)

Taiwan Cellular

Transasia

TCC Group

Far EasTone

KG Telecom

FET+KGT

Mobitai

Total

5,566 5,546 5,657 5,605 5,571 5,625 5,820 5,972 5,974 6,132 6,141 6,240 6,326 6,479 6,626 6,626 6,633 6,633 6,635 6,536 6,332 6,106 5,956 5,811 5,803 5,715 5,611 5,570

1,053 1,115 1,187 1,249 1,307 1,375 1,429 1,513 1,623 1,743 1,805 1,876 1,946 1,994 2,053 2,112 2,178 2,246 2,332 2,370 2,381 2,337 2,280 2,200 2,128 2,077 2,004 1,953

6,619 6,661 6,843 6,854 6,878 7,000 7,249 7,485 7,597 7,875 7,946 8,116 8,272 8,473 8,678 8,738 8,811 8,879 8,968 8,907 8,713 8,443 8,235 8,011 7,932 7,792 7,615 7,523

3,819 3,914 4,005 4,093 4,140 4,163 4,151 4,040 4,200 4,226 4,278 4,341 4,353 4,380 4,384 4,358 4,344 4,327 4,305 4,286 4,312 4,326 4,366 4,431 4,476 4,494 4,475 4,480

4,468 4,427 4,425 4,390 4,355 4,256 4,151 4,183 3,932 3,715 3,512 3,306 3,340 3,343 3,336 3,358 3,387 3,417 3,442 3,499 3,566 3,603 3,626 3,670 3,733 3,728 2,758 2,404

8,287 8,341 8,430 8,483 8,495 8,419 8,302 8,223 8,133 7,942 7,791 7,647 7,693 7,723 7,720 7,716 7,731 7,744 7,747 7,786 7,879 7,929 7,992 8,101 8,209 8,222 7,232 6,884

605 608 612 623 635 651 671 689 708 715 722 721 721 721 721 722 721 721 721 721 721 719 715 710 709 710 709 701

21,888 22,088 22,423 22,605 22,785 23,010 23,280 23,540 23,666 23,825 23,799 23,905 24,197 24,480 24,738 24,851 24,989 25,109 25,260 25,290 25,275 25,141 25,089 25,090 25,207 25,089 23,636 23,129

(37) (19) 110 (52) (34) 54 195 152 2 158 9 99 86 153 147 0 7 2 (99) (204) (226) (151) (145) (8) (88) (104) (41)

66 62 72 63 57 68 54 84 110 120 62 71 70 48 58 59 66 68 86 38 11 (44) (57) (79) (72) (52) (72) (51)

30 43 182 11 23 123 248 236 112 278 71 170 157 201 205 60 73 68 89 (61) (194) (270) (208) (224) (79) (140) (177) (92)

44 95 92 87 47 23 (12) (112) 161 26 52 62 13 27 4 (26) (14) (17) (22) (18) 26 14 40 65 45 18 (20) 5

35 (41) (2) (35) (35) (99) (105) 32 (251) (217) (203) (206) 34 2 (7) 22 29 30 25 57 67 37 23 44 63 (5) (970) (354)

79 54 89 53 12 (76) (117) (79) (90) (191) (151) (144) 47 29 (3) (4) 15 13 3 39 93 50 63 109 108 13 (990) (348)

3 3 5 10 12 16 20 18 19 7 7 (0) (0) (0) 0 0 (1) 0 0 (0) (2) (4) (5) (1) 1 (1) (8)

256 200 335 181 181 225 269 260 126 160 (27) 107 292 283 259 113 138 120 151 30 (15) (135) (51) 0 117 (117) (1,454) (507)

Source: Ministry of Transport and Communications (MoTC), Daiwa estimates

MONTHLY S TATISTICS

July 2004

43

Singapore cellular subscribers (‘000) Date Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul- 02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul- 03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

Postpaid 2,207 2,224 2,232 2,242 2,268 2,250 2,307 2,291 2,307 2,330 2,362 2,404 2,416 2,421 2,422 2,419 2,437 2,440 2,443 2,468 2,475 2,474 2,481 2,496 2,515 2,512 2,527 2,531 2,539

Prepaid 713 730 760 764 760 791 779 811 815 802 816 841 856 874 890 877 883 896 914 923 927 937 956 981 1,007 1,029 1,051 1,075 1,091

Subs 2,920 2,954 2,992 3,006 3,027 3,041 3,087 3,102 3,122 3,132 3,178 3,245 3,272 3,295 3,313 3,296 3,320 3,336 3,356 3,390 3,402 3,411 3,437 3,477 3,522 3,544 3,578 3,606 3,630

% change 2 1 1 0 1 0 2 1 1 0 1 2 1 1 1 0 1 1 1 1 0 0 1 1 1 1 1 1 1

Net adds 61 34 38 14 21 14 46 16 20 10 46 67 27 23 18 (16) 23 17 20 34 12 9 27 40 45 23 33 28 25

% change (32) (45) 11 (62) 49 (35) 231 (66) 25 (48) 355 45 (59) (16) (24) n.m. n.m. (27) 16 75 (65) (29) 213 50 12 (49) 46 (15) (13)

Source: IDA, Daiwa estimates

MONTHLY S TATISTICS

44

Global Telecom Monthly

Europe 23 July

Telenor Q2 results

26 July

TIM board meets to examine preliminary H1 2004 financial results

26 July

Vodafone Q1 KPIs

27 July

Vodafone AGM

27 July

FT H1 results

27 July

Telefonica Moviles Q2 results

27 July

TI board meets to examine preliminary H1 2004 financial results

28 July

Carphone Warehouse AGM and Q1 trading update

28 July

Telefonica Q2 results

28 July

TeliaSonera Q2 results

29 July

BT Group Q1 results

29 July

Vivendi Universal Q2 revenues

2 August

Tele2 Q2 results

4 August

BSkyB full year 2004 results

4 August

NTL Q2 results

5 August

Elisa Q2 results

5 August

TDC Q2 reuslts

5 August

Tiscali Q2 financial results approved

9 August

KPN Q2 results

12 August

DT Q2/H1 results (provisional date)

13 August

Swisscom Q2 results

24 August

Telekom Austria Q2 results

26 August

Cablecom Q2 results

27 August

e.Biscom Q2 results

USA 26 July

BellSouth 2Q 2004 earnings conference call

27 July

Verizon Communications 2Q 2004 earnings conference call

4 August

Federal Communications Committee open commission meeting, possibly discuss provisional UNE-P rule.

Japan 26 July

Vodafoe Holdings Q1 KPI

28 July

Okinawa Cellular Q1 results

29 July

KDDI Q1 results

30 July

NTT DoCoMo Q1 results

End-July

Number of Internet users as of end-June

5 August

NTT Q1 results

6 August

Number of mobile phone subscribers for July

Around 10 August

Number of DSL users as of end-July

Around 10 August

Number of subscribers to broadband services at Usen as of end-July

Around 10 August

Number of subscribers to broadband services for Yahoo BB services (operated by Softbank BB) as of end-July

FORTHCOMING EVENTS

July 2004

45

Asia 22 July

Telstra Technology Briefing

29 July

SK Telecom – 2Q04 results

30 July

LG Telecom – 2Q04 results

3 August

KTF 2Q04 results

4 August

KT Corp – 2Q04 results

5 August

Telecom New Zealand full-year results

5 August

Singapore Telecom 1Q05 results

9 August (pending)

Advanced Info Service is to announce its 2Q04 results

12 August

Telstra full-year results

Mid-August

China Mobile (HK) - 1H04 results

18 August

Hutchison Telecom Australia interim results

Late-August

China Unicom - 1H04 results

Late-August

PCCW - 1H04 results

Early-September

China Telecom - 1H04 results

FORTHCOMING EVENTS

46

Global Telecom Monthly

Equity relationships among global telcos China Mobile (HK) (China)

Connex GSM (Romania)

3.3 75

25

25

20

77

OPI (Italy)

75 20

Swisscom Mobile (Swiss)

Swiscom (Swiss)

Vodafone (UK)

55

Rogers Communications (Canada)

12

9

Cegetel (France)

Vodafone (Japan)

StarHub (Singapore)

SBC Communications (USA) BellSouth (USA)

NTT (Japan)

60

PLDT (Philippine)

15

40 Cingular Wireless (USA)

67

16

NTT DoCoMo (Japan)

24

2.2

Orange (France)

50

Sprint Corporation (USA) 8.2

Virgin Mobile USA (USA)

Portugal Telecom (Portugal)

41

BITCO (Thailand)

29 MobilCom (Germany)

97.8

KPN Mobile (Netherland)

49 France Telecom (France)

Telefonica (Spain)

42

BT Group (UK)

14.5

AT&T Wireless (USA)

Hutchison Telephone

80

45

34

Telmex (Mexico)

TDC (Denmark)

SFR (France)

40

Vodafone Holdings (Japan)

Rogers Wireless (Canada)

Polkomtel (Poland)

30 96

51

Belgacom (Belgium)

20

Verizon Wireless (USA)

Verizon Communications (USA)

Proximus (Belgium)

20

45 23

TIW (Canada)

55

KPN (Netherland)

TelecomAsia Corporation

99.8 TA Orange (Thailand) 50

Virgin Mobile (UK)

Telecom Italia (Italy)

56

TIM (Italy) 40 TT & TIM (Turkey)

Listed Company

Non-listed Company

Integrated Mobile

Source: Daiwa

July 2004

47

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48

Global Telecom Monthly

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July 2004

49

DIR telecom contacts Global Telecom Strategy

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(44 20) 7597 8455

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Coverage

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50

Global Telecom Monthly

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Ltd.; China Merchants Holdings; China Resources Power Holdings Co., China Shipping Container Lines Ltd.; China Southern Airlines ; Chloride Group; Chi Mei Optoelectronics; Chubu Electric Power Co. Inc.; Chugoku Electric Power Co Inc/The; Chugoku Marine Paints Ltd.; Chunghwa Telecom; Cima Co Ltd.; CIT Group, Inc.; Citigroup Inc.; Citizen Watch Co. Ltd.; Clariant Ltd.; CMIC Co. Ltd.; Cognis Group; Commonwealth Bank of Australia; Commuture Corp.; Concorde Securities; Connect Technologies Corp.; Continental AG; Conversebank; Corrsys-Datron GmbH; Cosel Co. Ltd.; Cosworth Tech/LDV/ MSX Int.; Create SD Co. Ltd.; Credit Saison Co. Ltd.; Cross Plus Inc.; Crymson Co. Ltd.; CSK Corp.; Culture Convenience Club Co. Ltd. Cyber Communications, Inc.; Dah Sing Bank; Dah Sing Financial Holdings Ltd.; Daibiru Corp.; Daidoh Ltd.; Daihatsu Diesel; Dai-Ichi Cutter Kogyo KK; Daiichi Pharmaceutical Co. Ltd.; Daikokutenbussan Co. 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Disclaimer (cont’d) Harakosan Co. Ltd.; HBOS Treasury Service; HCA Inc.; Heiwado Co. Ltd.; Heiwa Real Estate Co. Ltd.; Hellenic Bank; Henkel; Hephaist Seiko Co. Ltd.; Hertz Corp.; Hiday Hidaka Corp.; Higashinihon Gas Corp.; Hikari Tsushin, Inc.; H Hitachi Construction Machinery Co. Ltd.; Hokkaido Electric Power Co. Inc.; Hokuriku Electric Power Co.; Honeys Co. Ltd.; Hoosiers Corp.; Hopewell Highway Infrastructure Ltd.; Hoshiden; Hosiden Corp.; HSH N Finance; HSH Nordbank AG; Hutchison Telecom; Hutchison Whampoa Ltd.; Hyundai Motor Co.; Ibiden Co Ltd.; Icom, Inc.; IKB Finance BV; IK Co. Ltd.; Impexbank; Index Corp.; Industrial Bank of Korea; INPEX Corp.; International Business Machine Corp; International Hotel Group; Internix, Inc.; Ishikawajima-Harima Heavy Industries Co. Ltd.; Itochu Europe; Ito En Ltd.; ItoYokado Co. Ltd.; Izumiya Co Ltd.; JFE Holdings Inc.; Jaccs Co. Ltd.; Japan Airalines Co. Ltd.; Japan Automobile Auction Inc.; Japan Aviation Electronics Industry Ltd.; Japan Longlife Co. Ltd.; Japan National Oil Corp.; Japan Petroleum Exploration Co.; Japan Prime Realty Investment Corp.; Japan Pulp & Paper Co. Ltd.; Japan Real Estate Investement Corp.; Japan Retail Fund Investment; Japan Tobacco Inc.; Japan Wind Development Co. Ltd.; JSAT Corp.; JSR Corp.; Kadokawa Holdings Inc.; Kagawa Bank Ltd/The; Kajima Corp.; Kakaku.com, Inc.; Kanebo; Kanemi Co. Ltd.; Kansai Electric Power Co.; Kansai Electric Power Co. Inc./ The; Karula Co. Ltd.; Kappa Create Co. Ltd.; Katokichi Co. Ltd.; Kato Sangyo Co. Ltd.; Kawasaki Heavy Industries Ltd.; KBC IFIMA NV; Keisei Electric Railway Co. Ltd.; Kenko.com, Inc.; Keyence Corp.; KGaA; Kia Motors Corp.; Kinki Nippon Railw ay Co. Ltd.; Kintetsu World Express Inc.; Kiriu Corp.; Kobe Steel Ltd.; Kohsoku Corp.; Komatsu Ltd.; Kookmin Bank; KorAm Bank; Kourakuen Corp.; Koyo Seiko Co. Ltd.; KT Corporation; Kuraudia Co. Ltd.; Kureha Chemical Industry Co. Ltd.; Kurita Water Industries Ltd.; Kyushu Electric Power Co. Ltd.; Laird plc.; LAND Co. Ltd.; Landbanki Islands HF; Lehman Brothers Holding; Leopalace21 Corp.; Lifestyle Internantional Holdings Limited; Linde AG; Li Ning Company Ltd.; LVMH; Mag Garden Corp.; Maeda Corp.; Macquarie Bank Limited; Macromill, Inc.; Mainichi Comnet Co. Ltd.; Maruetsu, Inc./The; Maruichi Steel Tube Ltd.; Matsuda Sangyo Co. Ltd.; Matsushita Electric Works Ltd.; Matsushita Electric Works Information Systems Co.; Mazda Motor Corp.; MCJ Co. Ltd.; MDM Holdings GmbH; Meadwestvaco Corp.; Mega Financial Holding Co. Ltd.; Meiji Dairies Corp.; Meiji Seika Kaisha Ltd.; Meiho Enterprise Co. Ltd,; Meisei Electric Co. Ltd.; Meisei Industrial, Meitetsu Transportation Co.; Melco Holdings Inc.; Message Co. Ltd.; MG Technologies; Micronics Japan Co. Ltd.; Mikikogyo Co. Ltd.; Mikuni, Millennium America; Mitachi Co. Ltd.; Mitsubishi Chemical Corp.; Mitsubishi Kakoki Kaish; Mitsubishi Tokyo Financial Group Inc.; Mitsui & Associates Telepark Corp.; .Mitsui Mining & Smelting Co Ltd.; Mitsui-Soko Co. Ltd.; Miyachi Technos Corp.; Miyoshi Oil & Fat Co. Ltd.; MOC Corporation; Modec, Inc.; Mori Trust Sogo Reit, Inc.; MP Technologies Inc.; MTR Corporation Ltd.; Musashino Bank Ltd/The; Nafco Co. Ltd.; Nagaileben Co. Ltd.; Nagoya Railroad Co. Ltd.; Nankai Electric Railway Co. Ltd.; Nan Ya Plastics Ltd.; Nanya Technology Corporation; National Bank of Canada; National Grid Co. Plc.; National Rural Utilities Cooperation Finance Corp.; Nationwide Building Society; NEC; NEC Corp.; NEC Electronics Corp.; NEC Mobiling Ltd.; NEC System Technologies Ltd.; Nestle Australia Limited; Netprice Ltd.; NextCom KK; NGK Spark Plug Co. Ltd,; Nichirei Corp.; Nidec Copal Corp.; Nidec Tosok Corp.; NIF Ventures Ltd.: Nippon Building Fund, Inc.; Nippon Care Supply Co Ltd.; Nippon Electric Glass Co. Ltd Nippon Primex Inc.; Nippon Residential Investment Corp.; Nippon Restaurant Corp.; Nippon Restaurant System, Inc.; Nippon Sanso Corp.; Nippon Sheet Glass Co. Ltd.; Nippon Unipac Holding; Nishimatsuya Chain Co Ltd.; Nishi-Nippon Railroad Co. Ltd.; Nissen Co. Ltd.; Nissho Iwai Corp.; Nitori Co. Ltd.; Nittyu Co. Ltd.; Noda Corp.; NOK Corp.; Nomura Real Estate Office Fund, Inc.; Noritsu Koki Co. Ltd.; Noritz Corp; Northern Rock Plc.; NTT Data Corp.; Obara Corp.; Obayashi Corp.; Oenon Holdings, Inc.; Orix JREIT, Inc.; Odakyu Electric Railway Co. Ltd.; Ohashi Technica, Inc.; OIE Sangyo Co. Ltd.; OJI Paper Co. Ltd.; Okamoto Glass Co. Ltd.; Okinawa Electric Power; Okuwa Co. Ltd.;Onco Therapy Science Inc. Onoken Co. Ltd.; ORIX Corp.; Osaka Securities Exchange Co. Ltd.; Overnight Corporation; OX Information; Pal Co. Ltd.; Paltac Corp.; Parco Co. Ltd.; Pasona, Inc.; Pasona Tech Inc.; Peoples Insurance Company of China; Pharmarise Corp.; PHH Corp.;; Pia Corp.; Ping An Insurance Co. ; Pioneer Corp.; Pla Matels Corp.; Planet Inc.; Pochet SA; Point, Inc.; POSCO; Postabank rt; Precision System Science Co. Ltd.; Premier Investment Co.; QP Corp.; Quin Land Co. Ltd.; Rabobank Nederland; Rakuten Inc. Rann International; Raytex Corp.; Reins International Inc.; Renaissance Inc.; Renault S.A.; Rengo Co. Ltd.; Renown; Rentokil Initial; Resorttrust Inc.; Rinnai Corp.; Risa Partners Inc.; Roland DG Corp.; Royal Bank of Scotland; Saibu Gas Co. Ltd.; Sakata INX Corp.; San-A Co. Ltd.; Sanken Electric Co. Ltd.; Sanyo Electric Credit Co. Ltd.; Sapporo Breweries Ltd.; Sapporo Drug Store Co. Ltd.; S&B Foods, Inc.; Sato Corp.; Satori Electric Co. Ltd.; Sawai Pharmaceutical Co Ltd.; Securicor plc.; Segami Medics Co. Ltd.; Seiren Co. Ltd.; Septeni Co.; Sharp Corp.; Shikoku Electric Power Co. Inc.; Shimadzu Corp.; Shimojima Co. Ltd.; Shingakukai Co. Ltd.; Shinohara System of Construction Co. Ltd.; Shin Nippon Biomedical Laboratories Ltd.; Shinsei Bank; Shiseido Co. Ltd.; Shochiku Co. Ltd.; Showa Highpolymer Co. Ltd.; Showa Shell Sekiyu KK; Showa Shinku Co. Ltd.; Shuei Yobiko Co. Ltd.; Siemens AG; Silex Technology, Inc.; Silicon Sensor International AG; Sinocom Software Group Limited; Site Support Institute Co. Ltd.; SK-Electronics, Ltd.; SKI Corp.; Skylark Co.; Softbank Investment Corporation; Sogo Clinical Pharmacology Co. Ltd.; Sohken Homes Co. Ltd.; Soken Chemical & Engineering Co. Ltd.; Soiken Inc.; Sparebanken Rogaland; Spectris; SPK Corp.; Stanley Electric Co. Ltd.; STB Leasing Co. Ltd.; St. Marc Co. Ltd.; Strawberry Corp.; Studio Alice Co. Ltd.; Sumitomo Chemical Co. Ltd.; Sumitomo Corp.; Sumitomo Light Metal Industries Ltd.; Sumitomo Mitsui Banking Corp.; Sumitomo Osaka Cement Co. Ltd.; Sumitomo Realty & Development Co. Ltd.; Sumitomo Trust & Banking Co Ltd/The; Sumitomo Wiring Systems Ltd.; Sunx Ltd.; Suzuken Co. Ltd.; Ltd.; SVOX AG; Sysmex Corp.; Tac Co. Ltd.; Taisei Corp.; Taiyo Life Insurance Company; Taiyo Tuden Co. Ltd.; Takachiho Electric Co. Ltd.; Takara Leben Co. Ltd.; Takeuchi Manufacturing Co. Ltd.; Tamron Co. Ltd.; TCL International Holdings; Techno Medica Co. Ltd.; Telstra; T Hasegawa Co. Ltd..; Tietech Co. Ltd.; TK Corp.; Tobu Railway Co. Ltd.; Tocalo Co. Ltd.; Toho Gas Co. Ltd.; Tohoku Electric Power Co. Inc.; Tokai Rika Co. Ltd.; Token Corp.; Tokyo Electric Power Co.; Tokyo Gas Co. Ltd.; Tokyo Tatemono Co. Ltd.; Tokyu Corp.; Tokyu REIT, Inc.; Tokyu Store Chain; Tomen Devices Corp.; Tomy Co. Ltd.; Toppan Printing Co. Ltd.; Toray Industries Inc.; Toray Medical; Tosei Corp.; Toshiba Corp.; Tosho Co. Ltd.; Total Capital SA; Touei Housing Corp.; Toya Ink Manufacturing Co. Ltd.; Toyoda Gosei Co Ltd.; Toyoda Machine Works Ltd.; Toyo Radiator Co. Ltd.; Toyota Credit Canada, Inc.; Toyota Finance Australia Ltd.; Toyota Motor Corp.; Toyota Motor Credit Corporation; Toyo Tire & Rubber Co Ltd.; Trusco Nakayama Corp.; Tsukui Corp.; TT Electronics; UFJ Central Leasing Co. Ltd.; UFJ Holdings Inc.; Ulvac Inc.; Union Oil Co. of California; Union Pacific Corp.; United Microelectronics Corporation; United Urban Investement Corp.; Up Garage Co. Ltd.; US Cellular Corp.; Valic Co. Ltd.; Valor Co. Ltd.; USC Corp.; US Cellular Corp.; Usen Corp.; VeriServe Corp.; VeriSign Japan KK; Verizon Global Funding Corp.; Viacom Inc.; Village Vanguard Co. Ltd.; Volkswagen Financial Services AG; Volkswagen International Finance NV; VT Holdings Co.; Wacom Co Ltd./Japan; Warabeya Nichiyo Co. Ltd.; Watts Co. Ltd.; Webzen Inc.; West Co Ltd.; West Japan Railway Co. ; Westpac Banking Corporation; Wintest Corp.; Wolstenholme International Ltd.; Woori Financial Holdings Co. Ltd.; World Co. Ltd.; Yamazawa Co Ltd.; Y’s table Corp.; Yusen Air & Sea Service Co. Ltd.; Ziphyr Co. Ltd. The statements in the two preceding paragraphs are made as of July 1, 2004. DSA Market Making. DSA made a market in securities or ADRs of the following issuers at the time this report was published: Mitsui & Co.; NEC; Millea Holdings; Trend Micro; Crayfish; Makita; Internet Initiative Japan; Fuji Photo Film; Kirin Brewery; Nissan Motor; Sanyo Electric; CSK Corp.; Daiei Inc.; Wacoal Corp.; All Nippon Airways; Bandai; Bridgestone; Casio; Fujitsu; Isuzu; Sega; Sharp; Shiseido; Q.P. Corp.; and Sumitomo Corporation. Research Analyst Conflicts. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not aware of any material relevant conflict of interest involving them or DSA, except as noted: no exceptions. Research Certification. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts(s) is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst(s) is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report. The following explains the rating system in the report as compared to relevant local indices, based on the beliefs of the author of the report. "1": the security could outperform the local index by more than 15% over the next six months. "2": the security is expected to outperform the local index by 5-15% over the next six months. "3": the security is expected to perform within 5% of the local index (better or worse) over the next six months. "4": the security is expected to underperform the local index by 5-15% over the next six months. "5": the security could underperform the local index by more than 15% over the next six months. Additional information may be available upon request.