Colombia 2007 Market Overview Page 1
Agenda
• Video “Colombia is Passion” • • • • • • • •
Introduction, Country Data Our Company Our Strategy Our Commercial Results Our Regions Value Added Services Technical Operations and Network Overview Finance
MARKET OVERVIEW - COLOMBIA
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Introduction Country Data
Colombia Key Data Population:
42.357.980 (Sep 2007 est.)
Population growth:
1.433%
Total Area:
1,138,910 sq km
GDP:
USD 374.4 billion purchasing power parity
Real GDP Growth (2006)
6.8%
GDP Per capita (PPP) (2006)
USD 8,600
Inflation:
4.48% (2006), 5.5% (2007 est.)
Population below poverty line:
49,2%
Mobile market operators:
3 GSM + 1 IDEN (PTT)
Source as for September 07: https://www.cia.gov/cia/publications/factbook/geos/co.html Page 4
Tigo Colombia Regions Population Distribution
Region
% Population
Center
30.28%
Caribbean
18.71%
East
14.10%
South West
22.03%
North West
14.89%
Total
42,357,980
Source: DANE (National Statistics Department) – Internal Estimations
Total Area:
1,138,910 sq km
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Economic Activity Colombia's economy has experienced strong positive growth over the past three years. The economy continues to improve in part because of austere government budgets, focused efforts to reduce public debt levels, an export-oriented growth strategy and improved security situation in the country. This economic performance corroborates the country is strengthening as a stable and attractive foreign investment. Official reports show that the GDP grew 6.8% during 2006. The Economy's good behavior has also motivated a positive trend for FDI (Foreign Direct Investment) attraction. Colombia will consolidate itself as one of the most attractive countries in the region for foreign companies, thus generating a virtuous cycle of investment and growth. GDP Growth
6.8%
GNP Distribution Public Utilities 4%
5.1% 3.8%
Transport & Communic. 8%
3.9%
2.8% 1.5%
2000
2001
Agriculture 11% Industry 15%
Commerce 11%
1.9%
2002
Mining Industry 6%
2003
2004
Source: DANE (National Statistics Department)
2005
2006
Construction 7%
Services 38%
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Demographics Total Population (Thousand): 42’358 80+ 70 - 79
2,0%
60 - 69 50 - 59 40 - 49 30 - 39 20 - 29 10 - 19 0-9
Gender 48,60%
Age distribution
1,0%
51,40%
4,0% 8,0% 12,0% 15,0% 17,0% 20,0% 21,0%
None Specialization/Master/Ph
Female
8,0%
Technical
9,0%
Source: DANE (National Statistics Department)
Elementary
Education
1,0%
University
High school Male
9,0%
32,6% 40,6%
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Our Company
Organizational Chart Board
José Manuel Astigarraga General Manager
609
SOX Officer
Management Assistant
Supplying Projects Leader
Clara Salas
Ana. Jiménez Silvana Pezzano
HR Director
Legal Director
9
6
Interconnect & Regulatory Affairs Director
11
1
Security Officer
2
2
Process Management 2 Analyst
1
Alexis Carlos Huertas Zacharzewski Fraud & Revenue
Alvaro Bermúdez
José David Mantilla
Finance & Administration Director
Assurance Director
Ramiro Avendaño Commercial Director
Customer Operations Director
Network Director
73
8
126
86
177
MARKET OVERVIEW - COLOMBIA
Luis Feria
Marcelo Benítez
IT Director
VAS Director
Juan Manuel García Corporate Cust. Director
71
10
23
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Local Management Team
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Fixed - Mobile Penetration 65,8%
68,8%
52,8%
25,6% 19,6%
15,4%
2003
18,2%
18,5%
18,2%
18,0%
2004
2005
2006
2007
Mobile (000)
Fixed
2003
2004
2005
2006
2007
Population
40.086
40.743
41.412
42.091
42.358
Mobile lines
6.186
10.437
21.850
27.711
29.453
Fixed lines
7.850
7.400
7.660
7.680
7.700
Source: DANE (National Statistics Department) – Bureau of Industry & Commerce – Internal Estimations
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Market Share Evolution (Subscribers Base) Market Share Comcel Movistar TIGO Total TIGO´s growth % Market Share % Comcel Movistar TIGO
Q4-06
Q1-07
Q2-07
Q3-07
Q3 growth %
17.800.554 7.759.670 2.150.828 27.711.052
18.254.767 7.545.204 2.243.856 28.043.827 4,33%
18.532.860 7.611.845 2.403.775 28.548.480 7,13%
19.235.823 7.551.528 2.666.125 29.453.476 10,91%
8,06% -2,68% 23,96% 6,29%
64,24% 28,00% 7,76%
65,09% 26,91% 8,00%
64,92% 26,66% 8,42%
65,31% 25,64% 9,05%
1,67% -8,44% 16,62%
Source: Superintendence of Industry & Commerce
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What do customers want ? Importance for Customer
Availability Affordability Accessibility
37%
34%
29%
In order to acknowledge the importance of these three drivers (Affordability, Accessibility and Availability) for the customer, Tigo does a tracking every two months. Source: Marketing research; Ipsos Napoleón Franco, 3A Bimonthly tracking; August 2007. Page 13
Reasons for Activation Why have you purchased a mobile phone? # of surveys % prepaid Reasons of activation Onnet Tariffs Offnet Tariffs Greater of variety handsets More affordable handsets Coverage Quality of the signal Friends and familiy with this operator Best service More points of sale Better promotions
COMCEL MOVISTAR 300 200 87% 96% 10% 2% 1% 0% 40% 31% 26% 13% 0% 4%
31% 19% 4% 3% 9% 8% 26% 15% 2% 18%
TIGO 100 99% 47% 23% 0% 9% 3% 3% 38% 5% 0% 7%
Source: Internal Marketing Research Multiple answers
The leader of the market is positioned in Availability, Tigo is positioned in Affordability Page 14
Our Strategy
Our Strategy Implementation
Affordability
Market Overview - Colombia
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Affordability • • • • • • • •
Implementation of Carry Over (Only offered by TIGO) General tariffs reduction VAS tariffs reduction Implementation of low denomination top ups Welcome and double balance for new customers Low entry barriers (SIM cards and handsets) TIGO Days Promotional off peak tariffs
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Affordability Survey Results June 2007
August 2007
65
Total Subs
(+)
60
68 63
Subs Tigo
47
76
(+)
64
Subs Comcel
64
67
(+)
69
Subs Movistar
55
66 Tigo
Comcel
Movistar
(=)
Sample:1400 interviews in the year, 350 every two months
Note: The chart shows the percentage of subscribers who evaluated in a positive range each operator in the Affordability variables. The company has been doing this marketing research bimonthly; these are the two first results. Source: Marketing Research; Ipsos, Napoleón Franco, 3A bimonthly tracking June and August-07
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Our Strategy Implementation Accessibility
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Accessibility Activation and Reload POS 411% 319% 252%
157%
235% 177%
130% 100% 81% Q3-06
Q4-06 Activation Points
Q1-07
Q2-07
Q3-07
Reload Points
Source: Internal Data
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Accessibility AC Nielsen LSDA (%) 10
9
9
9
8
8
Apr-07
Aug-07
9 8 7 6 5
6
4 3 2 1 0 Dec-06
Tigo
Movistar
Comcel
Source: ACNielsen, October 2007.
Telecommunication products are sold in 54,908 of the total surveyed POS by AC Nielsen in Colombia (515,000). Not all formats of POS are considered by AC Nielsen. Page 21
Accessibility
Accesible
Share of reload value
7%
65,6%
21%
15,9% 19,2%
Tigo
7%
18,5%
19,8%
Movistar Oct-06
60,9%
Comcel Aug 07
Source: ACNielsen, October 2007.
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POS Material More than 400.000 flag banners and other POS material have been installed in groceries, pharmacies and Tigo dealers all over the country
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POS Material
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Our Strategy Implementation Availability
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Availability Survey Results
August 2007
June 2007 71
Total Subs
84
60 70
83
Subs Tigo 68 67
Subs Comcel
85
59 78
Subs Movistar
82
55 Tigo
Comcel
Movistar
Sample:1400 interviews in the year, 350 every two months
Note: The chart shows the percentage of subscribers who evaluated in a positive range each operator in the Availability variables. The company has been doing this marketing research bimonthly; these are the two first results. Source: Marketing Research; Ipsos, Napoleón Franco, 3A bimonthly tracking June and August-07
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Coverage and Network Quality
Growth 69%
The company has been doing a very strong effort in order to increase the coverage
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Coverage and Network Quality Call Success Rate & SMS Success Rate 97,6%
97,9%
98,5%
79,8%
98,0%
84,5%
65,9% 40,4%
Q4-06
Q1-07
Call Success Rate (%)
Q2-07
Q3-07
SMS Success Rate (%)
Call Drop Rate & Block Rate 0,86%
0,82%
0,36%
0,18% Q4-06
0,33%
Although the Regulator requires network block and drop call levels of 5% and 3% respectively, the company obtains less than 1% every month in each indicator.
0,25% 0,13% Q1-07
Call Drop Rate (TCH) (%) MARKET OVERVIEW - COLOMBIA
0,12% Q2-07
Q3-07
Block Rate (TCH) (%) Page 28
Our Commercial Results
Gross Adds
274%
178% 141% 100%
Q4-06
Q1-07
Q2-07
Q3-07
Source: Internal Data
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Closing Subscribers 124%
112% 104% 100%
4Q-06
1Q-07
2Q-07
3Q-07
Source: Internal Data
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Prepaid Reloads US$ 137%
120%
100%
Q4-06
97%
Q1-07
Q2-07
Q3-07
Source: Internal Data
Although the number of subscribers grew 24%, the reloads grew 37% thanks to the successful 3A implementation. MARKET OVERVIEW - COLOMBIA
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Our Regions
Colombian Regions Caribbean 5 Departments Population: 7.924.246 - 18.7% of country population Km2: 98.422 Region's main city : Barranquilla Other important cities: Cartagena, Santa Marta Key economic drivers: Tourism, Ports, Coal, Petrochemical. International celebrities: Shakira, Carlos Vives, Gabriel García Márquez, El Pibe Valderrama, Edgar Rentería.
Source: Internal Data
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Our People
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Tigo Service Centers Caribbean Region ( 10 )
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Tigo Service Centers Caribbean Region ( 10 )
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Tigo Store in Store Caribbean Region ( 63 )
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Tigo Store in Store Caribbean Region ( 63 )
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Grocery Stores Caribbean Region (6,890)
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Painted Facades Caribbean Region (2.666) In order to create the strongest brand awareness, the company has painted more than 9.500 store fronts and facades across the country
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Painted Facades Caribbean Region ( 2.666 )
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Signs Caribbean Region (2.391)
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Billboards Caribbean Region ( 119 ) More than 500 billboards have been installed across the country. In every single town Tigo announces its presence with a billboard
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Events Caribbean Region Barranquilla’s Carnival
Barranquilla´s Carnival is one of the most popular festivals in Latin America.
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Events Caribbean Region Fiestas del Mar
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Events Caribbean Region Jorge Baron's Concert Jorge Baron’s concert is one of the most popular musical events in the country gathering more than 10.000 people in every show. This sponsorship helps Tigo stay close to people and increase brand awareness and perceived availability.
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Brand Visibility and Territory Domination Caribbean Region
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Brand Visibility and Territory Domination Caribbean Region Tigo days is a promotion to increase customers reloads.
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Sport Scenarios Caribbean Region Having presence in sport scenarios and sponsoring sport activities, have been successful creating brand awareness and staying close to people
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Colombian Regions North West 3 Departments Population: 6.306.156 – 14.89% Of country population Km2: 110.955 Region's main city: Medellín Other important cities: Quibdó, San Andrés Key economic drivers: Textiles, financial services, Agriculture (Banana) International Celebrities: Fernando Botero, Juanes, Camilo Villegas, René Higuita, current Colombian President, Alvaro Uribe.
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Our People
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Tigo Service Centers North West Region ( 11 ) In order to improve Customer Care, opening Service Centers has been a priority to the Company. More than 25 Service Centers has been opened around the country and the number keeps growing.
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Tigo Store in Store North West Region ( 35 )
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Grocery Stores North West Region (6,582) POS material have been installed in more than 45.000 grocery stores all over the country , making sure the company increases brand visibility and product accessibility
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Grocery Stores North West Region (6,582) As an alternative to painting facades, the Tigo mosaic is used to provide long lasting visibility.
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Tigo Dealers North West Region ( 72 ) Tigo increased more than 300% the number of dealers all over the country.
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Tigo Dealers North West Region ( 72 )
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Signs North West Region ( 3.506 )
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Billboard North West Region ( 78 )
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Signs for Places Classified as Cultural Heritage Special signs are designed in order to maintain the style of places of cultural heritage
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Painted Facades & Walls North West Region (1.765)
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Brand Visibility and Territory Domination North West Region
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Brand Visibility and Territory Domination North West Region
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Colombian Regions South West 6 Departments Population: 9.330.142 – 22.03% of country population Km2: 100.575 Region’s main city : Cali Other important cities: Buenaventura, Pereira, Pasto, Armenia, Manizales Key economic drivers: Main port of Colombia (Buenaventura), Pharmaceutical, Cane industry and Coffee main producers.
Source: Internal Data
MARKET OVERVIEW - COLOMBIA
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Our People
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Tigo Service Centers South West Region ( 17 )
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Tigo Dealers South West Region ( 54 )
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Grocery Stores South West Region (4,487)
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Grocery Stores South West Region (4,487)
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Signs South West Region (3.395) More than 16.000 signs have been installed in the country. Co branding signs are a very strong strategy since it assures that the establishment owner will keep the sign that also has the name of his business.
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Painted Facades South West Region (1.716)
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Walls South West Region ( 1.716 )
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Walls South West Region ( 1.716 )
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Billboards South West Region ( 119 )
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Brand Visibility and Territory Domination South West Region To give useful merchandising material gets Tigo close to people
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Brand Visibility and Territory Domination South West Region
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Brand Visibility and Territory Domination South West Region
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Brand Visibility and Territory Domination South West Region
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Brand Visibility and Territory Domination South West Region
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Events South West Region Blancos y Negros Carnival
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Events South West Region Jorge Baron's Concert
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Sports South West Region Tigo is the main sponsor of “Atlético Quindío” a professional soccer team of the Region.
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Colombian Regions Center
6 Departments Population: 12.825.767 30.28% of Country population Km2 : 288.489 Region's Main City: Bogotá D.C. Nations Capital Other important cities: Neiva, Ibagué, Villavicencio Key economic drivers: Flowers, Industry, Finance
Source: Internal Data
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Our People
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Tigo Service Centers Center Region ( 21 )
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Tigo Service Centers Center Region ( 21 )
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Tigo Service Centers Center Region ( 21 )
POS material with current promotions is always available in all Tigo stores and dealers
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Tigo Store in Stores Center Region ( 114 ) Tigo has presence in almost 300 points through the main retails chains in the country
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Grocery Stores Center Region (8,672)
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Grocery Stores Center Region (8,672)
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Tigo Dealers Center Region ( 77 )
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Painted Facades Center Region (1.654)
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Painted Facades Center Region ( 1.654 )
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Signs Center Region (5.318)
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Billboards Center Region ( 119 )
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Brand Visibility and Territory Domination Center Region
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Brand Visibility and Territory Domination Center Region
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Events Center Region
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Events Center Region Catama´s Fair
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Sports Center Region Tigo is one of the sponsors of “Millonarios”, one of the most important professional soccer teams in the country and the one that has more national titles in the history of Colombian soccer.
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Co Branded Campaigns
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Colombian Regions East 11 Departments Population: 4.745.280 14,1%of country population Km2: 427.067 Region’s important City: Bucaramanga Other principal cities: Cúcuta, Tunja, Valledupar, Barranca Key economic drivers: Oil, Agriculture. Main border with Venezuela
Source: Internal Data
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Our People
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Tigo Service Centers East Region ( 10 )
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Tigo Service Centers East Region ( 10 )
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Store in Store East Region ( 23 )
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Grocery Stores East Region (4,855)
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Dealers East Region ( 40 )
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Dealers East Region ( 40 )
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Signs East Region (3.435)
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Billboards East Region ( 79 )
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Buses East Region
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Signs in Places Classified as Cultural Heritage
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Painted Facades East Region (2.180)
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Events East Region
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Events East Region Cattle Fair
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Events East Region Jorge Baron's Concert
At Jorge Baron's Concert there is always a Tigo sales representative who has the opportunity to address the general public about the company and its products.
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Brand Visibility and Territory Domination East Region
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Sport Scenarios East Region
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Value Added Services
VAS Revenue Evolution 184% 134% 117% 100%
Q4-06
Q1-07
Q2-07
Q3-07
Source: Internal Data
During the last year VAS has increased its revenue in a monthly average of 9% MARKET OVERVIEW - COLOMBIA
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SMS Traffic per Subscriber 227% 153%
169%
100%
Q4-06
Q1-07
Q2-07
Q3-07
Source: Internal Data
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SMS Penetration as a % of total customers
48% 31%
Q4-06
37%
Q1-07
38%
Q2-07
Q3-07
Source: Internal Data
TV Spot (Fingers) Paquete MARKET OVERVIEW - COLOMBIA
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Technical Operations and Network Overview
Current Coverage
2.081 Base Stations Rural Coverage 19% Urban Coverage 93% 2’666,125 Active Subs
Source: Internal Data MARKET OVERVIEW - COLOMBIA
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GSM Network Overview Sep 2007
Dec 2007
NUMBER OF MSC’S
5
5
NUMBER OF MSS Mobile Soft Switch
2
4
NUMBER OF MEDIA GATEWAYS
8
11
NUMBER OF BSC’S
33
33
NUMBER OF BASE STATION
2081
2325
NUMBER OF TRANSCEIVERS (TRX)
15703
15800
YEAR END POP COVERAGE PERCENTAGE-RURAL (%Cities with less than 20.000 inhabitants)
18.94
27.18
YEAR END POP COVERAGE PERCENTAGE-URBAN (%Cities with more than 20.000 inhabitants)
92.32
94.85
Source: Internal Data
MARKET OVERVIEW - COLOMBIA
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BTS
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BTS
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BTS
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BTS
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BTS
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BTS
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BTS
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BTS
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BTS
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Difficult Access Areas
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Customer Operations
Informe Trimestral SIC IIIQ-07 Customer Operations Results
Complaints Evolution 112% 100%
124%
104%
100% 88%
64%
4Q-06
1Q-07
Customer base
2Q-07
68%
3Q-07
Complaints
Source: Superintendence of Industry & Commerce
Mayo 2007
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Customer Service Centers 2 1 1
1 2 1 1
11 1
15 1
1 11
1
1
5 2 1
1
1
2
1
January 2007
21 14 2
1
1
1 4 52 1 12 1 1 1 1 2 5 19 1
11 1 6 1 5
1
1
1
1
12
1
1 1 1 1 1 1
1 1 3 1 1
1 1 1 1 3 1 3
21 1 9 4 1 1 17 2 18 1 1
September 2007
1
1 1
1
CSC: 60
CSC: 43
CSC: Custmer Service Centers
Dealer: 11 CSC In Dec. 2007: 59
Forecast- December 2007 43 Tigo Centers located in 21 cities of the country Coast Region: Central Region: East Region: North West Region: South West Region:
6 17 5 5 10
130 points covering 54 new sites where there is not Tigo presence yet Coast Region:
23
Central Region:
34
East Region:
20
North West Region: 25 South West Region: 28
Source: Internal Data Mayo 2007
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Financial Results
Customers, Revenues & EBITDA in US$ 200%
194%
137%
135% 121%
100%
104%
124% 112%
103% 4Q-06
1Q-07 Revenues
2Q-07 Customers
3Q-07
EBITDA
Source: Internal Data
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G&A Expenses as % of total revenues
Source: Internal Data MARKET OVERVIEW - COLOMBIA
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ARPU Trend
Index
ARPU Trend 140,0% 135,0% 130,0% 125,0% 120,0% 115,0% 110,0% 105,0% 100,0% 95,0% 90,0% Oct-06
Q406
Q107
ARPU - Pre
Q207
Q307
ARPU - Pos
Source: Internal Data Page 144
Quarterly CAPEX Growth 210%
148% 118% 100%
4Q-06
1Q-07
2Q-07
3Q-07
Source: Internal Data
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Debt / EBITDA Ratio Rating company Duff & Phelps for Debt 2005 rating was B+ (perspective in evolution), 2006 ranting changed to B+ (Positive)
6,7
4,8 3,8 3,3
Q406
Q107
Q207
Q307
Source: Internal Data
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Corporate Social Responsibility
CSR - Swing Latino Tigo Swing Latino is a Salsa Group; world champions of these music genre. It's members come from poor families and they have struggled to accomplished their goals. Tigo is now sponsoring them.
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CSR - Swing Latino Tigo
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CSR – Beach Tents
Beach tents are given to help local workers. They rent them to tourists and make a living out of it.
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CSR – Siloé South West Region Tigo paints walls in poor neighborhoods helping them to keep the walls clean and therefore embellishing the environment
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CSR – Siloé South West Region
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I Am Tigo I Am with you
Thank you MARKET OVERVIEW - COLOMBIA
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