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Appendix

A1. Industry Attractiveness Analysis

A2. Operator SWOT Analysis
A3. CPP vs. MPP Charging Regime
A4. Product Strategy – Vertical Solutions
A5. Product Strategy – Customer Interviews
A6. Market Analysis – by Industry
A7. Market Analysis – by Geography
A8. Market Survey Report

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In analyzing which industries are more important to CKAD in the wireless area,
on the horizontal dimension, we considered the industry attractiveness

Horizontal Factor Sub-factor Proxy Method

dimension

Industry
Size of work Based on number from Zhejiang
employee
force statistics
number

X Personal Average salary

Based on number from Zhejiang
statistics 70% of consideration in
needs per employee
mobile penetration
Industry Mobile
attractiveness penetration
+
Level of Based on assessment based on sales,
Work needs employee maintenance force, on site workers as
mobility % of total work force
X
X
Frequency of
Based on assessment of industry
interaction
inherent information needs
needed

Employee Average salary Based on number from Zhejiang

value to CMCC per employee statistics

Source: A.T.Kearney analysis A1 -

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On the vertical dimension, we considered the feasibility to offer services to the

customers as a group

Vertical Factor Sub-factor Proxy Method

dimension

Communication Frequency of Based on assessment of industry

needs interaction needed inherent information needs
Need for mobile
communication at
X
work
Sales,
Level of maintenance, Based on assessment of employee
employee management and functional structure of each
mobility on-site personnel industry
Feasibility %
X

Openness of
Industry IT
management to IT Based on China IT spending
spending per
adopt innovative sophistication industry ranking
employee
solutions

Source: A.T.Kearney analysis A1 -

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Industry attractiveness in the wireless area - According to our 2-dimension

assessment metrics, finance insurance, government, utilities, transportation,
healthcare, education media scored highest in terms of industry attractiveness
Mobile penetration
Size of work force Employee value
Industry Personal needs Work needs
Overall industry
Frequency of attractiveness
Industry employee number Average salary Level of employee Average salary per
interaction
in 000 per employee mobility employee
needed
Agriculture 9915 2 1 1 12880 2
Mining 90 2 2 1 10276 1
Manufacturing 7263 2 3 3 11357 3
Utilities 91 5 4 3 24019 4
Construction 1572 2 4 4 12894 3
Geology research 19 3 4 2 16428 2
Transportation 1106 4 5 4 19429 4
Retail, trade 3051 2 4 5 12756 4
Finance insurance 181 5 4 5 21408 5
Real estate 47 4 4 4 18130 3
Social services 3021 3 3 3 14363 3
Healthcare 269 5 3 3 21690 4
Education, media 571 4 3 4 19059 4
Science research 46 5 1 2 21633 3
Government 386 5 2 4 21627 4
Source: Zhejiang statistics report, A.T.Kearney analysis A1 -
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In terms of ZMCC’s feasibility for corporate services, transportation, finance

insurance, utilities, retail trade, education media and government scored the
highest
Openness of management to adopt
Need for mobile communication at work
innovative solutions
Industry Communication needs Level of employee mobility IT sophistication Overall feasibility
Frequency of interaction Sales, maintenance, management, Industry IT spending as a % of total
needed on-site personnel % expenditure
Agriculture 1 1 1 1
Mining 1 2 2 1
Manufacturing 3 3 3 3
Utilities 3 4 4 4
Construction 4 4 2 3
Geology 2 4 2 2
Transportation 4 5 4 5
Retail, trade 5 4 2 3
Finance insurance 5 4 5 5
Real estate 4 4 3 4
Social services 3 3 2 3
Healthcare 3 3 3 3
Education, media 4 3 5 4
Science research 2 1 4 3
Government 4 2 5 4
Source: IDC report, Zhejiang statistics report, A.T.Kearney analysis A1 -
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Based on these 2 dimensions, finance insurance, transportation communications,

government, education media and utilities should be CKAD’s high priority
industries for wireless and wireless/fixed-line products

CKAD target industries

High
I Current strategic
G focuses

M
O
J High Priority
D
A Agriculture
H
Industries
B Mining
C3 C1 Manufacturing – heavy
Feasibility C2 C2 Manufacturing – light
C3 Manufacturing - hitech
D Utilities
L E Construction
K E N F Geology research
Not CKAD’s
G Transportation
focus unless C1 H Retail, trade
for image I Finance, insurance
building F J Real estate
purposes Do selectively on K Social services
a case by case L Healthcare
basis M Education, media
N Science research
O Government
B A
Low
Low
Industry attractiveness High

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In the future, the attractiveness and feasibility will shift, healthcare and
manufacturing – high tech should be added to the potential list

CKAD target industries

High I
G
I
G
M
M O
J C3 D O
J
D H A Agriculture
C2 H B Mining
C3 L C1 Manufacturing – heavy
E
Feasibility C2 Manufacturing – light
C2 C3 Manufacturing - hitech
D Utilities
K
N L E Construction
K E N F Geology research
C1 G Transportation
C1 H Retail, trade
I Finance, insurance
F J Real estate
F
K Social services
L Healthcare
M Education, media
B
N Science research
A O Government
B
Low A

Low Industry attractiveness High

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We also make a series of assumptions to identify target industries for fixed-line
offering
Key Assumptions
• Entry point to create a
customer relationship is by
leasing fixed lines - other
services are sold in addition to
it
attractiveness
• All competitors of China
Mobile have even market
share across industries
• The way for China Mobile to
win Type A/B customers is
either by offering lower
prices, improving service
quality, or a combination of
both
Feasibility
Drivers of Industry Attractiveness
Proxy
Number of potential Number of A/B • # of A/B companies in the “14,000
enterprise customers companies in industry database”
Industry Needs for fixed • Frequency of needed interactions,
x communications based on industry’s inherent
information needs
x • Average number of employees in
Average value of Geographic dispersion of
enterprise customer company units industry’s A/B companies
x
Potential to use services • IT spending as percentage of
revenues
beyond leased lines
Drivers of feasibility
Ability to capture Same across
customers through lower industries
prices Proxy
• Inherent need for speed in industry
x Time to install and repair
x • Inherent need for constant
Ability to capture communications in industry
customers through better Network availability
service level
x • Inherent need for frequent
Flexibility of reconfiguration in industry
reconfiguration
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In the fixed line area, finance & insurance, manufacturing – high tech and light,
utilities, transportation, education media, and government are the most attractive
industries
Potential enterprise
Mobile penetration
Industry customers Overall industry
Need for fixed Geographic Potential beyond attractiveness
Number of A/B companies
communications dispersion fixed lines

Agriculture 149 1 465 1 1

Mining 111 1 642 2 1
Manufacturing – high tech 155 4 478 4 4
Manufacturing – light 5907 3 427 3 4
Manufacturing – heavy 901 2 450 2 3
Utilities 184 3 517 4 4
Construction 401 4 1283 2 3
Geology research 85 2 198 2 1
Transportation 145 4 652 4 4
Retail, trade 211 5 491 2 3
Finance insurance 334 5 475 5 5
Real estate 118 4 203 3 3
Social services 104 3 287 2 2
Healthcare 147 3 650 3 3
Education, media 192 4 442 5 4
Science research 126 2 225 4 2
Government 182 4 489 5 4
Source: Zhejiang statistics report, A.T.Kearney analysis A1 -
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In the fixed line area, finance & insurance, healthcare, manufacturing – high
tech, transportation, retail trade, education media, and government are the most
feasible
Capture through better service levels
Capture through lower Feasibility difference
Industry
Time Availability Flexibility prices vs. average

Agriculture 1 1 1 ––
Mining 1 1 1 ––
Manufacturing – high tech 4 4 4 +
Manufacturing – light 2 3 4 1

Constant across industries

Manufacturing – heavy 3 3 2 1
Utilities 2 4 2 1
Construction 3 3 3 1
Geology research 1 1 2 ––
Transportation 4 4 4 +
Retail, trade 4 3 4 +
Finance insurance 5 5 5 ++
Real estate 3 2 2 –
Social services 3 2 3 1
Healthcare 4 5 4 ++
Education, media 4 2 5 +
Science research 2 3 3 –
Government 3 4 4 +
Source: Zhejiang statistics report, A.T.Kearney analysis A1 - 1
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High priority industries for fixed-line products are finance insurance,

transportation communications, government, education media, and
manufacturing – high tech Present

Target industries for fixed line

Higher than
average High Priority I Offer lower prices
L and improved service
Industries
Focus mainly levels
on better G
service H M
O
A Agriculture
C3 B Mining
C1 Manufacturing – heavy
Feasibility C2 Manufacturing – light
E C3 Manufacturing - hitech
D Utilities
K C1
D C2 E Construction
F Geology research
G Transportation
H Retail, trade
N I Finance, insurance
J
J Real estate
Not a priority Focus mainly on K Social services
L Healthcare
price M Education, media
F competitiveness N Science research
B
A O Government
Lower than
average
Low
Industry attractiveness High

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In the future healthcare, manufacturing – light industry will become future

targets
Future

CKAD target industries

High I
L I
L

H M G

G O
H M
O C3
E C3 A Agriculture
K B Mining
C1 Manufacturing – heavy
Feasibility C2 C2 Manufacturing – light
E C3 Manufacturing - hitech
D D Utilities
K C1 C1 D C2 E Construction
F Geology research
N J G Transportation
H Retail, trade
F
N J I Finance, insurance
J Real estate
K Social services
L Healthcare
F B M Education, media
N Science research
B
A A O Government

Low
Lower
Industry attractiveness Higher

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Based on above analysis and current CKAD target sub-industries, we get the high
priority industries for both wireless and fixed-line area

CKAD target industries

Wireless area Fixed-line area
Current CKAD target Sub-Industries

Police Customs Office

Finance insurance Bank and Insurance Hotel
Manufac
Transportation
Utilities turing – Security Education
Government hitech
Education, media Large Enterprise Transportation
Retail, trade Tax Bureau Media
Utilities Social Security

Attractive sub-industries

Manufactu Media
Transpo Retail, Bank & Travel Tax Custom
ring - Hi- Securities Hotel Education Entertainm Police Utilities
rtation trade Insurance Agencies Bureau s Office
tech ent

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