Consumer Issues Relating to Cellular Services

Talaat Laham CEO & Chairman 5 November 2002

sAgenda
Company Overview Quality of Service Customer Care Tariffs Challenges Conclusion

Consumer Issues Relating to Cellular Services Consumer Issues Relating to Cellular Service

Company Overview Saudi Oger

Saudi Oger Saudi Arabia
90%

Oger Telecom South Africa Holdings Ltd. Bermuda

Border
Multiple South African Organizations CellSAf

100%
Oger Telecom (South Africa)

100%

60%

40%

3C Telecommunications Holdco

100%
Cell C Opco [The Licensee]

100%

100%
Cell C Prop Co

Cell C Service Provider Company (Pty) Ltd

Consumer Issues Relating to Cellular Service

Saudi Oger
Privately run conglomerate Operations in the Middle East, Africa and Europe Top tier contractor for the construction, operation and maintenance of complex infrastructure and facilities projects in the Middle East Projects worth over $20bn+ over the past 20 years Also runs operations covering shipping, transportation, banking and telecommunications At December 2001, had equity & retained earnings of >$1bn & >28,000 employees globally In 2002, SOs shareholders transferred $220 million of assets into the business as part of a general recapitalisation
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Company Overview - CellSAf

Social Empowerment Groups Black owned investment and technology groups
51.25% 15%

Regional investment and technology groups

16.25%

CellSAf (Pty) Ltd

Women owned investment and technology groups

Education and training Rural development trusts, SMME and informal business
5% 3.75%

8.75%

Historically disadvantaged persons own 40% of the company CellSAf is formed from more than 30 BEE groups

Consumer Issues Relating to Cellular Service

Company Overview - Who we are?

We are a South African incorporated company, practising true empowerment We are a significant player in the South African economy: creating innovative employment opportunities and contributing to skills development in the country using preferential procurement practices setting and meeting tremendous growth targets We boast a diverse, multicultural, multi-disciplined workforce
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Company Overview - Who we are?

We are a consumer champion, offering: flexible packages tailored to the needs of various target segments in the market innovative, quality products and services at affordable prices

Consumer Issues Relating to Cellular Service

Company Overview - Employment Equity

T o tal C e ll C Op e r ato r & Se r vice Pr o vid e r Pe r m an e n t Fu ll T im e Em p lo ye e (FTE) A fr ican 41%

W h ite 25%
A f ric a n C o lo ure d India n W hit e

In d ian 17%

September 2002

C o lo u r e d 17%

Over 75% of our staff comprise of previously disadvantaged individuals and span all areas of management
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Company Overview Milestones Achieved

Feb 16, 2001 Jun 25, 2001 Aug 3, 2001 Nov 17, 2001 Nov 17, 2001 Dec 11, 2001 Dec 21, 2001 Sept 13, 2002 Nov 5, 2002 Licence awarded by Minister Service licence issued by ICASA Spectrum licence issued by ICASA Commercial Launch Pre-paid Launch Post-Paid Launch E-GSM frequency band awarded Community Service Telephones tariff has been approved More than 970 000 Subscribers

Consumer Issues Relating to Cellular Service

Agenda
 Company Overview

Quality of Service Customer Care Tariffs Challenges Conclusion

Consumer Issues Relating to Cellular Services Consumer Issues Relating to Cellular Service

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Quality of Service - Is Our Differentiator

The South African mobile sector is highly competitive, more so since our entry into the market The South African consumer is discerning and expects high levels of quality It is therefore in our interest to offer the highest levels of quality

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Quality of Service Our Policy

We aim to provide products and services of superior quality to our customers We pursue quality excellence in all areas of our organisation We continually benchmark ourselves against international best practices

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Quality of Service Our Standards

Our licence prescribes the following targets:
 Network Availability to be at least 95%  Call Completion Rate to be at least 95%  Call Blocking to be less than 2%  Call Quality to meet ETSI standards

Our network performance is subject to independent audit and is periodically reported to ICASA

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Quality of Service Network Monitoring

The network is monitored on a 24-hour basis by our Network Management Centre Daily tests are performed on systems for preventative and corrective action Maintenance is planned and performed to ensure the least disruption to service We have invested in world-class test and measurement technology to maintain international standards

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Quality of Service Network Coverage

Since our launch Cell C has offered national coverage via a roaming agreement with Vodacom this is a first for South Africa Cell C is the first dual band cellular operator in SA The 900 MHz band is almost fully utilized in urban areas by the other operators. We are rolling out our own urban network using the 1800MHz band, which provides more capacity hence less congestion for the customer Cell C is using the 900 MHz band in rural areas to achieve cost-effective coverage over larger areas
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Quality of Service Coverage Principles

We use the Siemens GSM/GPRS 900/1800 platform We are aiming for 2500 base stations by the end of 2003 We have focused our rollout on key metropolitan areas Coverage is provided by Vodacom sites in areas where we are still in the process of rolling out sites Our base station sites comply with industry regulated electro-magnetic emission and compatibility standards

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Quality of Service Coverage Locations

Site locations are selected based on Licence requirements to cover 8% of the territory and 60% of the population within 5 years of commercial launch Exclusion zones as per roaming agreement with Vodacom Populated areas in rural South Africa Roads and access points to towns and cities

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Quality of Service - Dropped Calls

Dropped calls are a reality in GSM networks worldwide We are equipped to monitor and manage the dropped call rate on a continual basis Engineering teams are trained to use best practices for investigating and solving dropped calls Our dropped call rate meets internationally accepted norms

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Quality of Service - Reducing Dropped Calls

We experience dropped calls for two main reasons:
 low signal strength  external interference

We can reduce dropped calls by:

 Rolling out base stations without unnecessary delays  Operating without radio interference

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Agenda
 Company Overview  Quality of Service

Customer Care Tariffs Challenges Conclusion

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Customer Care Our Code of Conduct

Our customer service Code of Conduct is approved by ICASA It is available to all customers by telephone, as well as on our website Confidentiality of customer information is sacred Our Customer Call Centre operates 24-hours and aims to resolve queries and complaints

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Customer Care Advice and Assistance

Our customers can expect informed advice and assistance from qualified staff on:  The choice of package best suited to their
needs
 Instructions in the operation and maintenance of handsets and selection of value-added services  Information regarding prices and terms and conditions in accordance with which the service is provided
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Customer Care
All our customers are important to us, therefore: We provide products and services that offer simplicity, choice and value We are committed to providing superior customer service support We invest in staff training in these critical areas:  customer care  products and services  GSM technology All calls to the Call Centre are recorded and monitored for service quality purposes
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Customer Care Multi-lingual service

We employ multi-lingual staff at our Call Centre The many languages spoken by our Call Centre agents is a differentiator of which we are proud

We are striving to ensure that our services are available in each one of the 11 official languages

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Customer Care Please Contact Us

Our Call Centre can be reached by dialling 140 toll-free on a Cell C mobile Or by dialling 084 140 from any other mobile or fixed line Anyone can send a query via email to: custserv@cellc.co.za We have voluntarily registered as a corporate member of the consumer watchdog website, www.hellopeter.com

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Agenda
 Company Overview  Quality of Service  Customer Care

Tariffs Challenges Conclusion

Consumer Issues Relating to Cellular Services Consumer Issues Relating to Cellular Service

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Tariffs - Our Value Proposition

Provision of lifestyle enhancing cellular services based on:
SIMPLICITY
Uncomplicated tariff Per second billing on all tariffs (60/1, 30/1 or 1/1) All day R2 flat rate on pre-paid

CHOICE
Choice of lifestyle taylored tariffs & Value Added Services Choice of Friends and Family Members Choice of contract lengths 1,12,24 months Packages with and without inclusive minutes

VALUE
All day R2 flat rate Discount on frequently used numbers Discount on Cell C to Cell C calls 5 Free Call me back SMSs per day Per second billing (60/1, 30/1 or 1/1) Discount on international calls Upfront voucher bonus minutes Moonlight period

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Tariffs Some Key Benefits

All our tariffs include Per Second Billing at no premium to the standard tariffs Based on usage analysis, a tiered approach includes Per Second Increments after 60s, 30s, or 1 second depending on the chosen package A 10% discount applies when dialing pre-selected Friends and Family numbers Flat rate tariff of R2 per minute is the lowest available in the prepaid market and customers can receive incoming calls for as little as R5 per month.
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Tariffs Post Paid Summary

Casual Chat VAT included Club Chat Casual Chat Contract Lenghth Connection Fee Minimum Turnover Monthly Fee Included Minutes Outs. PSTN NW peak off peak peak off peak peak off peak peak off peak peak Club Chat off peak night Friends&Family (4N) Billing increment Peak hours Included/month SMS peak off peak 60/1 7-20 20 0,75 0,25 1,44 0.70 0.60 -10% on peak call charges (except Club Chat peak) 60/1 7-20 N.A. 0,75 0,25 30/1 7-20 N.A. 0,75 0,25 N.A. 1/1 7-20 N.A. 0,75 0,25 N.A. N.A. N.A. 1 Month 94 78 N.A. N.A. 2,60 0.84 2,00 0,90 1,60 0,80 58 N.A. N.A. 1 Month 94 N.A. 84 100 (Off-peak) 2.60 0.84 2.00 0,90 1.60 0.80 2,00 + (Telkom - 10%) 0,84 + (Telkom - 10%) N.A. 128 N.A. 1.70 0.84 1.85 0,90 1.60 0.80 1,85 + (Telkom - 10%) 0,84 + (Telkom - 10%) Casual Chat 100 24/12/1 Active Chat Active Chat Active Chat 100 94 N.A. 238 100 N.A. 560 400 Business Chat Business Chat Business Chat Business Chat 400 700 1000 24/12/1 94 N.A. 980 700 1.24 0.75 1.41 0.84 1.24 0.80 1,65 + (Telkom - 20%) 0,75 + (Telkom - 20%) N.A. 1400 1000 24/12/1

Inter natio nal

Withi n NW

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Tariffs Pre-Paid Summary

Cell C EASY CHAT VAT included PSTN Easy Chat Standard Loc./ Nat. peak off peak peak off peak peak off peak 2.70 1.35 2.70 2.00 1.35 2.40 1.20
3 zones: R5, R10, R15 10% on peak A ND of f peak

Easy Chat All Day

Withi Outs

International outgoing F riends&F amily (2Numbers) Billing increment SMS Peak hours peak off peak

NW

NW

60/1 7-20 0,75 0,50 0,25

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Agenda
 Company Overview  Quality of Service  Customer Care  Tariffs

Challenges Conclusion

Consumer Issues Relating to Cellular Services Consumer Issues Relating to Cellular Service

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Challenges
We require the assistance of the Portfolio Committee on Communications

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Challenges - Constraints

The frequency bands assigned to Cell C are encumbered with legacy government and industry operators and/or illegal cordless systems.

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Challenges - Interference
Where we experience interference it: Degrades call quality, producing:
 Poor call processing (call set up failure, dropped calls,

failed handovers)  Poor speech quality (breaking up of voice)

Hinders the performance of next generation services ie GPRS, by:

 Constraining data throughput  Restricting data reliability

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Challenges Action Needed

The following actions, if expedited by Parliament would result in better cellular service for our customers: Migration of all legacy systems in accordance with radio frequency band plans i.e. SABRE Budgetary provision for cost of migrating systems Effective mediation between concurrent of the frequencies prior to migration legacy users

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Challenges Site Approval Delays

We are governed by the following legislation with regard to base station site approvals:
Local Authority (LA) Town Planning & Townships Ordinance 15 of 1986 National Building Regulations and Buildings Standards Act 103 of 1977 Municipal System Act 32 of 2000 Environmental Provincial Department (EPD) Environmental Conservation Act 73 of 1988 Regulations contained in Government Notices R 1182, 1183 and 1184 of 1997 promulgated in terms of sections 21, 22 and 26 of the Environment Conservation Act (Act no. 73 of 1989) EIA guideline document: Department of Environmental Affairs and Tourism. 1998. Guideline Document. EIA Regulations. Implementation of Sections 21, 22 and 26 of the Environment Conservation Act. Pretoria. Department of Environmental Affairs and Tourism Civil Aviations Authority Civil Aviations Act Consumer Issues Relating to Cellular Service 36

Challenges Site Approval Delays

Our site approval process is delayed by:

Cumbersome and conflicting administrative processes Unnecessary use of consultants and experts Lengthy advertisement process Lengthy and unstructured public participatory process

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Challenges Other Delaying Factors

Disparate policies and legislation between the local, provincial and national authorities Conflicting approval conditions and processes between the local and provincial authorities Lack of clarity on type, validity and significance of objections that may be lodged within the public participatory process

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Challenges - Approval delays

Environmental Impact Assessment Time Frame Analysis
140 120 100
Days

80 60 40 20 0 JHB PTA DBN

Regions Number of application received after 90 days Number of Applications outstanding post 120 Days Number of application received after 120 days

WCP

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Challenges - Approval delays

Local Authority Approval Time Frame Analysis
70 60 50

Days

40 30 20 10 0 JHB PTA DBN

Regions Number of application received after 90 days Number of Applications outstanding post 120 Days Number of application received after 120 days

WCP

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A prime example of factors contributing to APPROVAL DELAYS

Public Objections to all 6 alternative site options including site sharing. Issue still pending

Construction of permitted site stopped due to public objection

Site cancelled after two years of site acquisition problems owing to irresolvable conflicting permit issues between LA and DACEL

Site stopped due to conflicting permit issues and public objection received

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Challenges - Recommendations
Establishment of a National Environmental Legislative framework that:

Reinforces the essence and purpose of the National Environmental Management Act. Supports a harmonised approach to the creation of policy and legislation at all levels of government. Promotes co-operation between Local Authority and the Provincial Authority

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Challenges - Recommendations
Establishing criteria for assessing the significance of the type and validity of objections received within the public participatory process. Formulating a national legislative framework that allows for a uniform approach to authorisations in the Cellular Industry. Facilitating our network rollout process thereby improving the quality of service given to the consumer

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Agenda
 Company Overview  Quality of Service  Customer Care  Tariffs  Challenges

Conclusion

Services Consumer Issues Relating to Cellular Service

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Conclusion
We are committed to providing a high quality

network to our consumers

Our potential to provide even better service is inhibited by the lack of interference-free spectrum and a coherent and speedy site approval process Your assistance in meeting these objectives is crucial to reduce delays in achieving the national communications objectives

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Agenda
 Company Overview  Quality of Service  Customer Care  Tariffs  Challenges  Conclusion

THANK YOU!
Cell C celebrates its Relating to Cellular November 2002 Consumer Issues first birthday on 17 Service 46