Ventura addresses the question of whether it makes sense for legacy 900GSM operators in the UK to bid on 800MHz spectrum in view of a proposed sub-1GHz cap on spectrum. Using our suite of wireless technology models, we calculate under different network clutter types for Greater London and Cambridgeshire the conditions under which it would make sense to deploy LTE in 2.6GHz, 800MHz, or persist with HSPA. Our conclusions validate anecdotal evidence that for legacy 900GSM MNO's, there is little to be gained from bidding on 800MHz unless to achieve deep rural coverage. Ventura has a comprehensive suite of network technology models that are able to calculate network CAPEX and OPEX for GSM, UMTS/HSPA, LTE and WiMAX for any spectrum allocation at any spectrum band. The suite has been designed with CTO technology selection decisions in mind and allows for multi-technology comparisons - quick and simple it isolates the major cost drivers from the perspective of the technology executive. The model outputs cumulative CAPEX, network cost/GB and customer profitability. Used in conjunction with our revenue and market share model, the combined suite can be used to undertake detailed business planning and valuation.

1. turning knowledge into action
HSPA / LTE Business Case
Modeling approach to UK broadband spectrum options
LTE Forum Stockholm April 28th, 2010
David Brown: +447939544481, email: david.brown@venturateam.com

2. Should original GSM900 MNO’s in UK bid for 800MHz?
• Loss of 900Mhz (2x10) and significant migration and disruption costs.
• Both Vodafone & O2 have invested heavily in UMTS/HSPA.
• Both legacy 900GSM operators are investing in HSPA Plus.
• What would we have to assume about the growth of data for it to make sense for
Vodafone UK & O2 to deploy LTE nationally?
Confidential – Page 2

3. Global data set to grow to 3.6 ExaBytes/month
4,000 Mobile Data / Month (Global)
3,500 3.6 • Dongles (USB) being adopted in ever
EB/mont
3,000 h greater quantities.
'000 TBytes/Month
Data CAGR 108%
2,500
2,000
1,500 • New devices – iPad
1,000
500 0.09
EB/month • New media platforms
0
2009 2010 2011 2012 2013 2014 • e.g Iplayer
Source: Cisco Visual Networking Index 2009-2014 • Smart Phones
• W. Europe: ~ 50% EoP
• Lower cost Netbooks, (emerging
markets)
Confidential – Page 3

4. How did we get to 3.6 ExaBytes/month?
Confidential – Page 4

5. Global growth translates into over 400 TB/month for the UK
500 Total UK Traffic Forecast / Month
450
• Aggregate Data CAGR 33% by EoP.
Smart Phone USB/Large Screen
400
'000 TBytes/Month
350
300
250
• USB broadband accounts for 15% of
200 all handsets in market by EoP.
150
100
50
0 • Smart Phones (active data
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 users)50% of all handsets by EoP.
Source: Ventura analysis adapting underlying
Cisco assumptions and trend.
Confidential – Page 5

6. UK data growth translates into over 23GB/month/customer
25 UK Subscriber Traffic / Month
Cisco Data Growth
Scenario ~
20
23GB/month
USB Data Smart Phone Data
GBytes / Month
15
10
5
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Ventura analysis
Confidential – Page 6

7. Options for migrating to LTE in urban and rural areas
HSPA
Dual / Quad Carrier scenario
HSPA Plus
LTE @ 2.6GHz
Hotspots/urban • Is the perceived speed of LTE
noticeably different?
LTE @ 900MHz,
1.8GHz & 2.1GHz • Does HSPA provide sufficient
? LTE @ 800MHz
Coverage
capacity?
• Migration path & timing?
View on forecast data?
Confidential – Page 7

8. Validate the prevailing view 800MHz (2x10) insufficient for LTE
Using our network modeling tool designed for Executive decision making…
Greater London Cambridgeshire
SU,U, DU R, SU, U
HSPA HSPA Plus HSPA HSPA Plus
Target 2Mbps 2Mbps 2Mbps 2Mbps
LTE @ 800MHz LTE @ 800MHz
LTE 2.6GHz (2x20)
(2x10)
4Mbps
2 (2x10)
2Mbps
2Mbps
LTE @ 2.6GHz LTE @ 800MHz
LTE 2.6GHz (2x20)
1 (2x20)
4Mbps
3 (2x10)
4Mbps
4Mbps
LTE @ 800MHz
4 (2x20)
4Mbps
Confidential – Page 8

9. Assumptions 1 / Coverage Greater London
Vodafone est: 2.3 million sub’s (pop x penetration x market share)
Greater London Pop
7.5 million (2006)
Sub-Urban 927km2
Dense Urban 187km2 Sub-Urban 927km2
Density 3,416km2
Urban 1,073km2
Urban 1,073km2 Density 9,164km2
Dense Urban
187km2
Density 18,000km2
(est. day-time pop)
Confidential – Page 9

10. Assumptions 2 / top-level dimensioning
• Modulation Scheme 64QAM
• Both LTE @ 800Mhz & LTE @ 2.6GHz are deployed on existing sites
• Busy hour data calculated on USB dongle only
• Assume Smart Phone data spread more evenly over day
• Only civil upgrade costs incurred
Confidential – Page 10

11. LTE vs HSPA Greater London: comparable service speeds
Customer Proposition
HSPA 2Mbps
LTE 2Mbps
LTE 800MHz (2x10)
(SU,U) & 2.6GHz (2x20)
in Dense Urban only
HSPA @ 2.1GHz (2x15)
+ LTE @ 2.6GHz (2x20)
in Dense Urban only
26GB/month
9GB/month LTE @ 2.6GHz (2x20) in
SU, U, DU
Spectrum costs excluded from analysis.
Confidential – Page 11

12. Assumptions 3 / Coverage Cambridge & surrounding villages
Vodafone est: 240k sub’s (pop x penetration x market share)
Cambridge & Rural
752k (2001 census)
Rural 4759km2 Rural 4759km2
100km2 Density 100/km2
Urban 5km2 Sub-Urban 50km2
Sub-Urban 56km2 Density 2,400km2 Density 1,500km2
1,500km2
Urban 10km2
Density 2,400km2
Confidential – Page 12

13. LTE vs HSPA Cambridge: comparable service speeds
LTE 800MHz (2x10)
converges towards
HSPA Plus at higher
data speeds. No real
16GB/month
advantage to deploy
in 800MHz.
26GB/month
9GB/month
At lower data levels -
LTE 800MHz (2x10)
offers coverage
benefit over HSPA up
until ~ 9GB/month
Spectrum costs excluded from analysis.
Confidential – Page 13

14. LTE vs HSPA Cambridge: higher service speed on LTE
13GB/month
After 9GB/month LTE
26GB/month 800MHz (2x10) is
9GB/month capacity constrained
& LTE 2.6Ghz
performs better.
Spectrum costs excluded from analysis.
Confidential – Page 14

15. LTE vs HSPA Cambridge: higher speed on LTE & 800MHz (2x20)
13GB/month 26GB/month Coverage advantage
for LTE800MHz
(2x20up until ~
13GB/month. There
is marginal coverage
advantage in the long
run.
Spectrum costs excluded from analysis.
Confidential – Page 15

16. LTE vs HSPA Cambridge: Cost/GB
Cost comparison of
deploying LTE in
800Mhz (2x20)
offering 2Mbps.
Initial cost advantage
of deploying in
800MHz (2x20) until
system is capacity
constrained ~
13GB/month 26GB/month 13GB/month.
Benefit of LTE in
2.6Ghz (2x20)
Spectrum costs included in analysis (based on cost / GB for 3G auctions).
Confidential – Page 16

17. LTE vs HSPA Cambridge: Profitability per customer/month
Benefit of LTE in
2.6Ghz (2x20)
Impact of deploying
LTE in 800Mhz
(2x20)
26GB/month
13GB/month
Analysis assumes:
• LTE 4Mbps service
• 10 Euro/month
• 5 EURO assuming 50%
bundle utilisation)
• Overhead
• Network
• Spectrum
Confidential – Page 17

18. Conclusion – we have validated conventional wisdom
• Geography where 800MHz is beneficial may be limited to deep rural coverage,
transport corridors.
• LTE works best in 2x20 as is generally understood.
• 800MHz is potentially less valuable to legacy 900GSM operators (also migration costs).
• More likely deploy LTE in 2.6GHz and in the longer run migrate voice to 2.1GHz and
deploy LTE in 900MHz.
• Despite not having access to 800MHz a 900GSM MNO can still launch a compelling
broadband proposition in 2.6Ghz.
• H3 possibly well positioned to acquire lower band spectrum and deploy a nationwide
broadband network.
Confidential – Page 18