Report by Arthur D. Little and Exane BNP Paribas: ´In the Eye of the Telecom-Media Storm´

As consumer demand for mobile broadband services reaches critical
mass ... telecom operators can expect that 50 per cent of the European
population will access the internet through broadband on their mobile
phones by 2012, according to the seventh annual research report, "In
the eye of the telecom-media storm." Published today by Exane BNP
Paribas and Arthur D. Little, the report is based on 71 interviews
with managers from leading telecom and media companies in 12 countries
in Europe and the USA.

At this stage, mobile service providers have a job to do in
catching up with consumer expectations regarding mobile broadband, and
part of that work will lead to greater fixed-mobile network
integration. Mobile operators will experience huge growth in mobile
broadband traffic - as is already seen in some advanced countries like
Austria.

Wireless technology is progressing fast, but it will not be able
to bring the same performance at the same price as fixed networks. To
cope with the fast-growing traffic and to make sure that customer
devices are always connected to the best available network, mobile
operators will be partnering with fixed-infrastructure providers.
Arthur D. Little and Exane BNP Paribas forecast that 20 per cent of
mobile broadband traffic could be carried through fixed networks. As
such, in this upcoming "all-mobile" world, fixed infrastructure will
remain key. Wireless providers can expect to enjoy re-accelerating
revenue growth (2.6 per cent per year over 2007-2012), but the
integration of fixed infrastructure into their networks will have a
negative impact on their margins. Revenue streams from products that
converge fixed and mobile broadband will increasingly be the focus of
new product development for both mobile operators and fixed broadband
providers.

New competition has arrived. In the 2007 Exane BNP Paribas report,
"Caution - Work ahead", the authors expected that within the next two
to three years, Internet players could compete with mobile operators.
This year, the report concludes that telecoms providers are facing the
tightening grip of fast-growing global Internet giants on Internet
services and on the monetisation of online advertising, plus the
increasing pressure from global hardware manufacturers who also want
to develop revenue streams from Internet and content service. As such,
operators will struggle with developing revenue streams from Internet
services and advertising. The bulk of their revenues and profits will
continue to come from connectivity.

"We believe that mobile broadband offers large opportunities for
value creation at all levels of the value chain, but while telecom
operators have traditionally occupied a prime spot in the value chain,
they face fast-moving competition from sophisticated global giants
coming from the Internet and hardware worlds", says Jean-Luc Cyrot,
co-author of the report and director in Arthur D. Little´s TIME
Practice. In order to create opportunities for growth in an "all-IP"
environment, telecom operators cannot avoid collaboration with these
global giants.

Towards market consolidation. Domestic consolidation will continue
in 2008, especially amongst fixed providers. As a result, the report
forecasts that the number of fixed and mobile network operators in
each of the European markets will fall progressively from seven to
four - on average. In particular, sub-scale broadband providers will
be under mounting pressure as a result of the move to triple-play,
fibre and mobile broadband competition.

Beyond local market consolidation, a wider-ranging pan-European
consolidation could be on the cards. The report outlines two scenarios
for the sector: the "Access Specialisation" scenario, which could
benefit small, aggressive providers, and a scenario of "Pan-European
Consolidation," which would see larger operators scoop up the smaller
providers. According to Antoine Pradayrol, author of the report and
Head of the Telecom team at Exane BNP Paribas in London, "It is
increasingly clear that larger multi-country operators have an
advantage in negotiating with Internet giants and device
manufacturers. This could become a very powerful rationale for
pan-European consolidation of telecom operators".

To access the full report, please visit
www.adlittle.com/mediastorm.

About Exane BNP Paribas

Exane is a leading independent investment company in Europe,
specialising in three businesses: cash equities, equity derivatives
and asset management.

Our cash equities business, carried out under the Exane BNP
Paribas brand, covers research, distribution and execution on European
stocks. Our business is underpinned by a strong culture of
investigation and performance, which is regularly rewarded in the key
industry surveys, in which our teams shine consistently.

With 900 employees, the Group has offices in eight financial
capitals: London, Paris, Frankfurt, Geneva, Milan, New York, Singapore
and Zurich.

About Arthur D. Little

Arthur D. Little (ADL), founded in 1886, is a leading global
management consulting firm that links strategy, innovation and
technology to master complex business challenges while delivering
sustainable results to our clients. Arthur D. Little has a
collaborative client engagement style, exceptional people, and a firm
wide commitment to quality and integrity. ADL is proud to serve many
of the Fortune 100 companies globally in addition to many other
leading firms and public sector organizations.

Arthur D. Little has over 30 offices worldwide, employing over
1,000 people. If you would like additional information on the firm,
please visit www.adl.com.

TIME (Telecommunications, Information Technology, Media,
Electronics)

The global TIME Practice of Arthur D. Little advises companies in
the telecommunications, information technology, media and electronics
sectors. ADL consultants assist their clients around the world in
solving strategic, operational and technological problems. The range
of advice extends from concept development (strategy, organisation,
processes, IT) to implementation. In addition, the TIME practice works
with investors on major financing projects and corporate purchases and
sales.