The document analyzes value added services (VAS) worldwide and in Latin America. It finds that VAS continues to grow as a share of total revenue for major carriers globally, now representing 25-54% of revenues. In Latin America, VAS grew 40% year-over-year in Q3 2011 and now makes up 25% of service revenues. SMS remains a key driver of VAS growth in developing markets like India, while mobile internet is more important in markets with higher smartphone penetration. The future of VAS lies in new messaging services and IP-based services as carriers respond to over-the-top competitors.

1. MAVAM Brazil
10th Edición
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T. + 54 11 4345-3036
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2. Editorial
As the global leader in mobile messaging with more than one one-third of the global
SMS infrastructure market (as calculated by Informa Telecoms & Media in 2011),
Acision launches the tenth edition of MAVAM Brazil with the special theme
¨Messaging”. This edition continues to demonstrate Acision’s commitment to
providing a tool that analysis the trends associated with the consumption of mobile
VAS and messaging across the Brazilian mobile market during the last quarter
messaging
and how this impacts operators.
In 2011, we witnessed the Brazilian carriers launch aggressive pricing models and
offers around SMS to encourage the uptake of this service, while also highlightin
highlighting
the advantages and potential of using it. However, while widely used in other
countries in Latin America, we still see low penetration in the Brazilian market.
Subscribers have started to respond positively to alternative and better pricing
models, and this research indicates that consumption of SMS is increasing in
this
Brazil, with some carriers experiencing a rise in traffic by up to four times,
depending on the carrier.
Oliveira Vancrei
Net sales of SMS and MMS during the third quarter of 2011 reached R$ 964
million, representing 37.1% of VAS revenues. Although SMS and messaging
representing
Acision
stands for a major proportion of mobile VAS today, we have used this MAVAM
VP regional Am´wrica Latina research to better understand the reasons that motivate or inhibit the use of text
and multimedia messaging, with the results represented in this report.
results
We also demonstrate that opportunities based on SMS go beyond the basic
service as we know it today with value added, personalised messaging providing
value-added,
an enriched user experience through services such as group messaging, auto auto-
reply / auto signature and parental control. These services have the potential to
auto-signature
increase messaging revenues by up to 15 percent and vastly improve the
messaging experience and relevance for the end
end-user.
In addition, we expect to see widespread adoption of services like Collect SMS
and Prepaid SMS Reply services in 2012, which modelled on the well known
collect call procedure enables prepaid customers to send messages even when
out of credit.
We also expect IP Messaging services to be a priority for oper
operators in 2012, as
they seek to deliver new innovative services to compete with ‘OTT’ messaging
services. IP Messaging, such as is RCS e, is key to delivering services that have
RCS-e,
the same user experience, reach and reliability that users have become
accustomed
accustomed to with SMS, while leveraging the capabilities of broadband IP
network and delivering services such as IM, group chat, file transfer and video
sharing. Operators will also begin to adopt cloud based services, which will
cloud-based
become a prominent delivery model in 2012, also means that these innovations
will be brought to market faster.
With this in mind, this edition of MAVAM has researched the potential demand for
new messaging services that enrich and expand the use of messaging, how users
use messaging services and looks at business models for paying for each service
services
and driving up operator revenue.
We hope you enjoy reading!
|2|

3. Index
1. Introduction....................................................................................................................................................................................................... 4
1.1. Value Added Services worldwide ............................................................................................................................................................... 5
1.2. Value Added services in Latin America ...................................................................................................................................................... 9
1.3. Value Added Services in Brazil ................................................................................................................................................................ 12
2. MAVAM (Acision Monitor for Mobile VAS) ...................................................................................................................................................... 16
3. Messaging Services (Special Topic) ............................................................................................................................................................... 17
3.1. SMS ........................................................................................................................................................................................................ 18
3.1.1. Future importance of SMS ................................................................................................................................................................ 20
3.1.2. Barriers to SMS usage ...................................................................................................................................................................... 20
3.1.3. New SMS and MMS-based services ................................................................................................................................................. 21
3.2. MMS ........................................................................................................................................................................................................ 25
3.3. Instant messaging (IM) ............................................................................................................................................................................ 28
3.4. Advantages of SMS over instant messaging ............................................................................................................................................ 33
3.5. Advantages of instant messaging over SMS ............................................................................................................................................ 34
3.5.1. Service preference among recipients ................................................................................................................................................ 35
3.5.2. Service preference based on circumstances ..................................................................................................................................... 36
3.5.3. Service speed and reliability.............................................................................................................................................................. 37
3.6. Use of messaging during end of year festivities ....................................................................................................................................... 38
3.7. Use of advertising to reduce SMS prices ................................................................................................................................................. 39
4. MAVAM Brazil ................................................................................................................................................................................................ 40
4.1. Entertainment .......................................................................................................................................................................................... 40
4.1.1. File types (images, music, games, ringtones and videos).................................................................................................................. 40
4.1.2. Mobile TV (viewing) .......................................................................................................................................................................... 41
4.2. E-Mail ...................................................................................................................................................................................................... 41
4.3. Mobile Internet ......................................................................................................................................................................................... 43
4.4. Social Networks ....................................................................................................................................................................................... 45
4.5. Mobile Marketing ..................................................................................................................................................................................... 47
4.6. Cash and mobile banking ........................................................................................................................................................................ 49
4.7. GPS and maps ........................................................................................................................................................................................ 50
5. Conclusions .................................................................................................................................................................................................... 51
6. Glossary ......................................................................................................................................................................................................... 52
7. Technical File ................................................................................................................................................................................................. 56
8. Equipo ............................................................................................................................................................................................................ 58
|3|

4. 1. Introduction
During the third quarter of 2011, we saw mobile telephony connections pass the 100% milestone in Latin America,
although there are still countries like Mexico, Bolivia, Nicaragua, Cuba, Peru and others yet to hit this mark. Today,
there is more than one connection per person because of circumstances where people own more than two
telephones, have machine to machine (M2M) connections, mobile broadband USB modems and connections
which are almost redundant.
2011 also saw smartphone penetration increase and mobile broadband services evolve. Mobile broadband is also
driving a surge in post-paid clients for operators, especially in major markets, while pre-paid plans still account for
the larger share of the market. Social networks and apps are the drivers of this new phase for mobile broadband.
In 2012, the main markets in Latin America will have adopted portability and a number of mobile virtual network
operator (MVNO) businesses will be built. Today, Columbia has the biggest MVNO market which is principally
focused on broadband. New virtual mobile operators are expected to enter the markets in Brazil, Argentina, Mexico
and Chile, as well as other countries. These operators focus on niche markets and their potential market share is
estimated to be 2%. Virgin Mobile is expected to be the newest entrant, which is seeking to become the first
regional mobile virtual operator focusing on the 14-34 age range.
The arrival of mobile virtual operators brings a new outlook for spectrum in various countries, generally attracting
new players who will increase competition.
Based on these factors, 2012 should see more competition rise, especially in mobile broadband, with growing use
of social networks and application by pre-paid clients as well as new businesses.
|4|

5. 1.1. Value Added Services worldwide
To understand the value added services (VAS) business worldwide, we analyzed VAS evolution for the world’s
biggest mobile carriers in various regions of the world. We compared the 3Q values for 2010 and 2011, except for
China Mobile, whose data only allows us to compare changes between 1H 2010 and 1H 2011.
The companies evaluated are:
América Móvil – Latin America Verizon – United States
AT&T - United States Vodafone
China Mobile – China* Vodafone United Kingdom
Orange - France Vodafone Germany
NTT Docomo - Japan Vodafone India
Telefónica
Telefónica Spain Chart 1
Operators analyzed
Telefónica United Kingdom
Telefónica Latin America
AT& T / Verizon
America Móvil + TEF Latam
China Telecom
France Telecom
NTT Docomo
Telefónica
Vodafone
*
China Mobile 1H 2010 x 1H 2011
|5|

6. Chart 2
Change in share of voice service revenue vs. value added service (VAS) revenue. Between the
second and third quarter 2011. Except China Mobile, comparing 1H 2010 with 1H 2011
20%
16%
Voice Services VAS Services
15%
10%
7%
6%
4% 5%
5% 4% 3% 3%
2% 2% 2% 3% 3%
1% 1%
0%
-1% 0% -1%-1%
-3%-3%-3%
-5% -4% -5%
-10%
America Movil Telefónica Latin America AT&T United States
France Telecom France NTT Docomo Vodafone United Kingdom
Telecom Italy Telefónica United Kingdom Verizon
Vodafone Germany Telefónica Spain Vodafone India
Source: Convergencia Research based on carriers’ published financial reports.
VAS continues to grow its share of total revenue among the carriers surveyed, independent of country. Positive
changes in voice service revenue contributions are normally explained by specific events, such as regulatory
measures (reduced interconnection fees – Se MAVAM Brazil 9th Edition), competition or seasonal effect.
In more advanced countries, the increase is mainly based on mobile Internet revenues driven by the increasing
number of smartphones. In countries where there is still room to grow the number of connections, SMS still plays a
major role in VAS growth.
|6|

7. Chart 3
VAS share of total ARPU. 3Q 2011. Except China Mobile, comparing 1H 2010 with 1H 2011
100%
80%
VAS over the total %
60%
40%
54%
46%
46%
43%
40%
39%
35%
20%
32%
30%
26%
25%
25%
16%
0%
Source: Convergencia Research based on carriers’ corresponding financial reports – 3Q 2011
It is interesting to compare the operations of Vodafone UK, Germany and India.
In the UK, Vodafone’s VAS represent 46% of service sales and this share is almost identical to its main competitor,
O2 UK (Telefonica).
In the UK, which has a significant number of smartphones, Vodafone’s mobile Internet service sales have grown
around 3% quarterly/per quarter, while messaging (SMS and MMS) grow around 2%. However, in Germany
messaging revenues are also growing at 2%, while mobile Internet revenues are growing at 6%.
In contrast, India, which has mobile penetration of around 70% of the population, SMS grows at around 43% and
mobile Internet at just 2%, mainly because 3G networks were only recently launched (See previous editions of
MAVAM).
In the US, both Verizon and AT&T present similar figures to Vodafone, with VAS growth of no more than 5% per
quarter and voice revenues declining by 1 to 3%, depending on the carrier, although in this market VAS
contribution (40%) is lower that the European countries where Vodafone operates. In Japan, voice and data growth
rates for NTT Docomo are similar to the USA, but the main difference is that VAS (contributing 54% of revenues) is
NTT Docomo’s main source of income, instead of voice revenues, on which other carriers depend.
|7|

8. At China Mobile, whose figures only allow for a six-monthly comparison, the number of subscribers grew 11.3%
annually between the first semester of 2010 and 2011 to 617 million lines, in a country where 75% penetration still
offers room for post-paid plan growth. As new users are usually “low usage clients” and the “one client with several
chips” is becoming more commonplace, total ARPU dropped 3% in the first half of 2011, year on year.
China Mobile has 35 million 3G subscribers (5% of its customer base). At the end of the first half of 2011, VAS
represented 32.2% of carrier revenues, up 18% year on year compared with 5% for voice services, in local
currency. Of the VAS, the contribution made by SMS has dropped almost 1 percentage point, while revenue for
voice services, mobile Internet and “other VAS” rose between 0.5 and 1 percentage point.
Chart 4
Mobile penetration vs. VAS contribution to ARPU. 3Q 2011. China Mobile 1H 2010 x 1H 2011
160%
VAS % 3Q 11
140% Penetration / 100 inhabitants
120%
100%
80%
60%
40%
20%
0%
Source: Convergencia Research based on carriers’ corresponding financial reports and penetration data from various sources.
|8|

9. 1.2. Value Added services in Latin America
The third quarter of 2011 ended with 607 million mobile telephone lines (including 10.5 million trunking2 lines) in
1
Latin America and the Caribbean . The number of lines brings regional penetration up to 104% -taking into account
trunking lines and 102% without them-, although some countries3 have yet to achieve this level of mobile
subscriptions. South America4 and Mexico represent 89% of these lines (540.4 million). The remainder are in
Central America5 (41.7 million) and the Caribbean6 (24.6 million).
The main regional telecom holdings are America Movil, operating in 18 countries, and Telefonica, in 14. Together,
they represent 64% of lines in Latin America and the Caribbean (37% and 27% respectively).
During the quarter through September 30, 2011, total sales for mobile operators in the countries researched were
23,397 billion dollars (without trunking services revenues), up 17% year on year. Convergencia Research
estimates that 2011 should end with sales 14% up on 2010 to 91,500 billion dollars.
89% of regional revenues are generated in South America and Mexico (17,138 million dollars and 3,753 million
dollars respectively) and the remaining 11% is split between Central America (1,446 million dollars) and the
Caribbean (1,061 million dollars).
Voice revenues were up 11% between 3Q 2010 and 3Q 2011 to 15,967 billion dollars.
Revenues from device sales rose to 2,052 billion dollars, 20% up on the 1,716 billion dollars registered last year.
Value added services (VAS) continue to show the most robust growth. During the third quarter of 2011 they
generated 5,378 billion dollars, 40% up year on year. This means that VAS now represent 25% of service revenues
(voice + VAS), compared with 21% previously.
2
Trunking or Specialized Mobile Service (SME for its initials in Portuguese) is a service of terrestrial mobile telecommunications of collective
interest that uses the radio system, mainly, to perform delivery operations or other forms of telecommunications. Sourse: Annex to resolution
No. 404 of May 5, 2005 (Anatel).
3
Bolivia, Paraguay, Perú, Venezuela, Guyana y Guyana Francesa, México, Belice, Costa Rica, Guatemala, Honduras y Nicaragua, Antillas
Francesas, Bonaire, Cuba, Curazao, Haití, Islas Turcas y Caicos, Montserrat, Puerto Rico, República Dominicana y Santa Lucía.
4
Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Guiana, French Guiana, Paraguay, Peru, Suriname, Uruguay and Venezuela.
5
Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama.
6
Anguilla, Antigua and Barbados, French Antilles, Aruba, Bahamas, Barbados, Bermuda, Bonaire, Cuba, Curacao, Dominica, Granada, Haiti,
Cayman Islands, Turks and Caicos Islands, British Virgin Islands, Jamaica, Montserrat, Porto Rico, Dominican Republic, Saint Kitts and Neves,
Saint Vicente and the Grenadines, Santa Lucia, Trinidad and Tobago.
|9|

10. Chart 5
Mobile telephony revenue growth in Latin America, by service type. 3Q 2010 x 3Q 2011
USD 25,000 3Q 10 3Q 11 Variation 45%
40%
40%
USD 23,397
USD 20,000 35%
Revenues in USD Million
USD 20,006
30%
USD 15,000
USD 15,967
25%
USD 14,439
20%
USD 5,378
17% 20%
USD 10,000
USD 3,851
15%
USD 2,052
USD 1,716
11%
USD 5,000 10%
5%
USD 0 0%
Total Mobile Voice Service VAS Terminals
Phone Service
Chart 6
Mobile telephony sales by revenue source. 3Q 2010 x 3Q 2011
USD 25,000
USD 144 USD 23.397
USD 840 USD 543
USD 1.527 USD 337
USD 20,006
USD 20,000
Revenues in USD Million
USD 15,000
USD 10,000
USD 5,000
USD 0
3Q10 Voice Serv. Terminals Internet Messaging Other VAS 3Q11
Voice Serv. Terminals Internet Messaging Other VAS
Of the added value services, SMS and MMS have a 51% market share, with mobile Internet at 38% and other VAS
representing 11%. Other VAS revenue flows include, for example, mobile marketing, revenue sharing for content
and application downloads, mobile banking solutions and others.
Mobile Internet revenues have risen 69%, driven by the growth of smartphones, which now represent around 10%
of all cell phones in Latin America.
| 10 |

11. Brazil is the biggest mobile Internet market by revenue and users, although Central America and countries with low
levels of fixed line broadband penetration also drive significant volumes.
Text and multimedia messaging services have seen sales rise by 25%, mainly because there are still countries with
very low usage levels and there are still opportunities to increase usage through devices and other commercial
tactics.
The other VAS’s have seen revenues rise by 31%, based on new mobile businesses like mobile payments, mobile
marketing and application downloads, among others.
Chart 7
VAS Revenue Shares. Through 3Q 2011.
Voice Serv. VAS SMS + MMS Internet Other VAS
USD 2,052
38%
USD 15,967 USD 5,378
75% 25%
USD 2,714
51%
USD 613
11%
| 11 |

12. 1.3. Value Added Services in Brazil
Brazil ended the third quarter of 2011 with 231 million mobile telephone connections (including 3.9 million trunking
lines from Nextel), representing 120% penetration of the local population. Annual growth is 19% between the third
quarters of 2010 and 2011. When this study was being concluded, Anatel announced that there were 242.2 million
mobile lines at the end of December 2011, which increases penetration to 124%.
Chart 8
Mobile Telephone connections by operator. Variation between 3Q 2011 and 3Q 2011
80,000 3Q10 3Q11 Variation 30%
26%
70,000
Mobile Phone Service Customers - In
25%
67,038
60,000
59,210
57,714
57,514
18% 20%
50,000
thousands
16%
48,767
46,947
15%
40,000 15%
42,871
37,387
30,000
10%
20,000
5%
10,000
0 0%
Vivo Claro TIM Oi
Vivo remains in the top spot by number of connections, with 67 million connections and year on year growth of
16%. In second spot is TIM, with 59.2 million connections and 26% annual growth. In third place is Claro, which
grew by 18% and now has 57.5 million subscribers. Oi is in fourth place with 42.8 million connections and posted
the lowest annual growth (15%).
| 12 |

13. Chart 9
Market share by number of lines. In thousands.
Oi CTBC
TIM 42,871 633
59,210 19% 0.28%
26%
Sercomtel
76
0.03%
Vivo
Claro 67,038
57,514 30%
25%
Vivo and Oi increased ARPU, which fell slightly for Claro and TIM in these quarters.
Vivo remained leader in ARPU (25.2 BRL and $ 16). In second place is TIM with ARPU of 23.5 BRL and $12.9.
Chart 10
Total ARPU for the major operators. 3Q 2010 and 3Q 2011, in BRL and US$
USD 18 3Q10 3Q11 R$ 30 3Q10 3Q11
USD 16
USD 16.0
R$ 25
R$ 26.2
R$ 25.2
USD 14
USD 14.4
R$ 23.5
R$ 22.9
USD 13.5
USD 13.4
R$ 22.2
USD 13.1
USD 12.9
USD 12 R$ 20
ARPU - In USD
R$ 21.2
ARPU - In R$
R$ 19.0
USD 10.9
USD 10
USD 10.4
R$ 17.0
R$ 15
USD 8
USD 6 R$ 10
USD 4
R$ 5
USD 2
USD 0 R$ 0
Vivo Claro TIM Oi Vivo Claro TIM Oi
Gross mobile sales, including device sales in the third quarter of 2011 were 21,332 billion BRL, up 11% year on
year.
| 13 |

14. Chart 11
Gross and net revenues for the mobile telephone business. 3Q 2010 and 3Q 2011, in BRL and US$
Voice Services Voice Services
USD 20,000
Terminals R$ 25,000 R$ 21,332 Terminals
USD 13,007 R$ 19,301 R$ 1,535
USD 15,000 R$ 20,000 R$ 1,347
USD 936 R$ 15,412
In Million USD
USD 11,029
USD 9,397
In Million R$
USD 770 R$ 13,130 R$ 1,182
USD 7,503 USD 721 R$ 15,000 R$ 840
USD 10,000
R$ 19,797
USD 12,071
R$ 17,955
USD 480
USD 10,260
R$ 14,231
R$ 10,000
USD 8,677
R$ 12,291
USD 7,023
USD 5,000
R$ 5,000
USD 0
R$ 0
3Q10 3Q11 3Q10 3Q11
3Q10 3Q11 3Q10 3Q11
Gross revenues in USD Net revenues in USD
Gross revenues in R$ Net revenues in R$
Mobile services represent 92.7% of all gross sales, up 10% year on year. The remaining 7.3% is revenues from
devices, which rose 14%.
Between July and September 2011, net VAS sales reached 2,601 billion BRL, up 36% year on year. VAS revenues
represent 19.83% of Brazilian mobile operators’ service sales, similar to the contribution recorded in 2Q 2011.
In the third quarter, mobile broadband generated net sales of 1,413 billion BRL, representing 54.3% of the VAS
business. Annual growth was 64%.
Instant messaging services (SMS + MMS) rose 14% to 0,964 billion BRL. SMS represents 37.10% of VAS.
Other VAS’s grew 6% generating net sales of 0,224 billion BRL. Other VAS represented 8.6% of the value added
business.
| 14 |

15. Chart 12
Net revenue distribution by service. 3Q 2011, in millions of BRL and US$
Voice Serv. VAS SMS + MMS Internet Other VAS
USD 862
R$ 1,413
54%
USD 6,411 USD 1,586
R$ 10,514 R$ 2,601
80% 20%
USD 588
R$ 964 USD 136
37% R$ 224
9%
Vivo retains top spot in VAS as a percentage contribution to total revenues (23%). VAS represents 18% of service
sales to both TIM and Oi.
Chart 13
Net VAS sales as a percentage of service sales. Quarterly evolution 2009 – 3Q 2011.
25% 23% 23%
Vivo 23%
22% 22% 22%
TIM
20%
20% Oi
18%
17% 17%
15% 15% 18%
15% 13% 13% 14% 16%
13% 13% 15%
12% 12%
11%
12%
10% 12% 12%
11% 11%
11%
10% 10%
9% 9%
5%
0%
3Q 3Q 3Q 4Q 3Q 3Q 3Q 4Q 1Q 2Q 3Q
2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011
| 15 |

16. 2. MAVAM (Acision Monitor for Mobile VAS)
MAVAM Acision aims at analyzing the trends of value added services in Latin America. This study has been carried
out in Brazil since 2009. It started to be carried out in Mexico in 2010 and in Argentina in 2011.
This edition of MAVAM Brazil has the following methodological features:
a) It was carried out through a survey addressed to 1,493 mobile phone users across Brazil, by means of two
different surveying techniques: the Computer-assisted Web Interviewing (CAWI) technique and Computer-
assisted Telephone Interviewing (CATI) technique. The sample consists of 193 people interviewed on the phone
(CATI) from December 5th through December 15th, 2011, and of 1,300 people interviewed on the Internet
(CAWI) from December 5th through December 16th, 2011.
b) The geographic area covered by the sample comprises all of Brazil’s regions. The sample considers the number
of inhabitants, their socioeconomic status, age and gender in order to improve representativeness nationwide.
As the number of Internet users is lower than the number of mobile users, and given that the sample represents
a population which is very familiar with the use of technology, the values obtained in some cases bar projections
from applying to the entire market, and they are only reference and indicative data. These cases are explained
throughout the study.
c) The CAWI was supplemented by the CATI in order to create a group for data monitoring and comparison
purposes.
d) The services analyzed in this edition include:
Messaging Mobile Internet
• SMS • Social networks
• MMS • Payments and mobile banking
• E-mail • Mobile Marketing
• Instant messaging • Location services (GPS)
Entertainment Brazil: Geographical areas
• Music Sample Participation
North 44 2.9%
• Images
North-East 266 17.8%
• Games South-East 840 56.3%
South 256 17.1%
• Ringtones Center-West 87 5.8%
• TV
• Video
| 16 |

17. 3. Messaging Services (Special Topic)
Widespread adoption of mobile telephony is also reflected by text messaging services. It is reasonable to say that
almost 100% of telephones worldwide can be used to send and receive messages. However, as seen in previous
editions of MAVAM, frequency of SMS usage differs by country.
The increasing number of smartphones available and instant (IM) or over the top ‘OTT’ messaging solutions for
mobile phones are challenging traditional text messaging services in the field of interpersonal communications.
This is why this tenth edition of MAVAM will look at the new products and solutions that seek to enrich traditional
SMS and generate new operator revenues.
The characteristics of the messaging services examined in this section are:
1. Automatic signature: define a signature or greeting at the end of messages (E.g.: “I’m on vacation”, “I’m busy
right now / I’m out of office”).
2. Personal White List / Black List: create contact lists to define who can and cannot send messages to users.
3. Automatic forwarding: allows for automatic resending of messages received to another telephone number (e.g.
your personal or work phone).
4. Automatic email forwarding: allows messages received to be automatically forwarded to an email account for
backup or reading on a PC.
5. Distribution list: to send messages to a group of contacts whose recipients can also respond to the entire group.
6. Delivery receipt: receive a delivery confirmation for sent messages.
7. Search: ability to search saved messages
8. Reminders: Receive reminders for appointments.
9. The party called pays for sending the message: in order to be able to send a message, it is paid for by the
recipient.
10. Cloud-based archive to save all messages in a cloud storage service provided by the operator.
11. Multiple SIM cards: the ability to send messages from any other device (tablets, dongles, USB modems, etc.).
12. Alias: configure names or nicknames for a user’s number.
13. SMS Pager: receive text messages or calls without showing a number, but showing a nickname: people send
SMS messages to a service center (for example, 12345) starting with the nickname, followed by the message.
We also compare the features users find most important in an instant messaging and SMS services. Additionally,
we look at situations in which users prefer to use other forms of communication.
| 17 |

18. Although our assessment is based on message communications between persons, we should point out that
machine to machine communications and enterprise messaging through the adoption as a new B2C (business to
consumer) communication channel (e.g. mobile couponing, promotions, SMS bank services, government
procedures, etc.) will play an important role in the future of SMS.
3.1. SMS
89% of participants said they have used some sort of text messaging (SMS) service in the last three months. These
figures have remained steady over the past four quarters with positive and negative variations not exceeding one
percentage point.
Chart 14
Use of text messaging (SMS). Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q
2011: 1,493 cases)
100%
95%
Percentage of cases
90% 90%
90% 89%
88%
85%
80%
4Q2010 1Q2011 2Q2011 4Q2011
Among SMS users, usage frequency shows a slightly upward trend. 58% of users send more than one SMS daily,
2 percentage points up on the second quarter of 2011, while at the same time the proportion of those not using the
service has fallen (21% versus 24% in the second quarter).
| 18 |

19. Chart 15
Use of text messaging (SMS). Base: total sample (1,493 cases)
21%
5% 21%
Yes
89%
6%
58%
I have not sent any SMS over the last 3 months
I do not make use of the service
I send very f ew text messages. I hardly ever send text messages
I send one SMS per week
I send more than one SMS per week
Increased frequency can be explained as a result of the more aggressive bundles and offerings in the SMS market
during 2011. For example, when we finalized this edition, Brazilian operators were offering pre-paid SMS packages
that reduced SMS prices by between 50% (Claro) and 88% (Oi). Monthly packages of 100 SMS messages cost
around $5.
| 19 |

20. 3.1.1. Future importance of SMS
Participants were asked to compare the importance of SMS services today and in the future. 46% said that SMS
will be more important than it is now, while 18% felt it would be less important.
Chart 16
Future importance of SMS. Base: total sample (1,493 cases)
100%
80%
Percentage of cases
60%
46%
40%
18% 28% 27%
19%
20%
11%
7% 8%
0%
I don't know / It will be less It will have It will be It will be more It will be more
no answer important than small important important important than
today importance today
3.1.2. Barriers to SMS usage
It is important to ask what impedes greater SMS usage. Among SMS users (89% of the sample), the main reason
they do not use the service more is that there is no need to (16%), the service is expensive (18%) and some users
prefer voice communications (18%). Other less common responses include a lack of (pre-paid) credit and
promotional messaging packages (7%) and a lack of contacts who use the service (3%).
Among non-users (11% of participants), the main reason for lack of uptake (for 66%7) is that they prefer voice
communications. This adoption barrier has remained constant throughout MAVAM’s 2011 surveys. Other reasons
include a lack of usage – where user is not familiarized with its use (24%) or no need to use the service (21%).
Price does not seem to be a significant barrier to people who have not adopted the service.
7
Multiple response.
| 20 |

21. 3.1.3. New SMS and MMS-based services
Preferred products and solutions
Interviewees were asked to look at a list of 13 services as add-ons and improvements to text messaging as we
know it today, and select the ones they would like to use. Each participant was allowed to select more than one
option from the list.
The most popular were: delivery receipt (86%), multiple SIM cards (85%), reminders (82%) and searching saved
messages (80%).
Chart 17
Which of these features would you like to see available for SMS (text messaging) Service.
Base: total sample (1,493 cases). Multiple responses.
Receipt notif ication 86%
Multiple SIM 85%
Reminders 82%
Search 80%
Alias 72%
Auto-signature 71%
Distribuition list 71%
Auto-send to an email account 70%
White/black lists personalization 68%
Cloud message 66%
Paid in the destination 63%
SMS Beeper 63%
Auto-send to another cell phone 60%
0% 20% 40% 60% 80% 100%
Percentage of cases
Participants were asked how difficult it was to understand each of the proposed services. Between 2% and 4% of
interviewees had difficulty understanding the value of the proposed services. The biggest percentage (4%) was
recorded for the following solutions: automatically forwarding received messages, creating discussion lists, creating
nicknames (aliases) and the SMS Pager.
| 21 |

22. Most important services
Interviewees were asked how likely they were to buy each of the selected solutions. In this case, participants used
a scale of importance ranging from 1 (not important) to 5 (very important).
Of the four features with the biggest potential for adoption (delivery receipt, multiple SIM cards, reminders and
searches) users said that delivery confirmation was the most important (81%).
Chart 18
How important are each of the SMS services you said you would like to have in the future?
Base: cases in which users would like certain features. Note: to make the graph easier to read, we have only included the features with the most
potential.
Receipt notif ication 7% 12% 81%
Multiple SIM 6% 17% 77%
Reminders 7% 14% 79%
Search 8% 20% 72%
0% 20% 40% 60% 80% 100%
Percentage of cases
Not important / Somewhat important Neutral Important / Very important
| 22 |

23. Willingness to pay for a service
The services people would be more willing to pay for include reminders (44%), automatic SMS forwarding to an
email account (43%), Multiple SIM cards (43%), cloud-based files (43%) and the SMS Pager (41%).
For these five services, the average value people would be willing to pay is between 3.4 and 3.8 BRL. The highest
and most frequently mentioned value is 5 BRL for the automatic forwarding and cloud storage service.
Willingness to pay for SMS service features. Base: 852 (Number of people who said they would like to have each of the
services). Multiple responses.
% of people that Average value
Most frequently
Feature would be willing to people would be
mentioned value
pay for the service willing to pay
Reminders 44% R$3.5 R$0.5
Auto-send to an email account 43% R$3.4 R$5.0
Multiple SIM 43% R$3.7 R$1.0
Cloud message 43% R$3.8 R$5.0
SMS Beeper 41% R$4.3 R$1.0
Auto-send to another cell phone 39% R$3.1 R$1.0
Receipt notification 39% R$3.3 R$0.5
Paid in the destination 38% R$3.2 R$0.5
Distribuition list 37% R$4.0 R$1.0
White/black lists personalization 35% R$5.1 R$5.0
Auto-signature 30% R$4.6 R$5.0
Search 29% R$3.3 R$0.5
Alias 27% R$3.7 R$1.0
| 23 |

24. New feature configuration
33% of users who would consider using at least one of the suggested products said that the ideal method for
configuring the service would be via an application installed on their phone. In second place, 26% of participants
said that the best option would be SMS configuration and 24% said they would prefer to configure the service via
the operator’s Internet portal.
Chart 19
What would be the best way to configure the SMS services listed. Base: People who like to have at least one
feature (1,428 cases). Multiple responses.
Through an app installed on your cell phone 33%
Sending an SMS to conf igure services 26%
Through the operator's web site 24%
Through an app installed on your computer 8%
through a complement installed in the email
4%
manager
Through a WAP portal 3%
Other 2%
0% 20% 40% 60% 80% 100%
Percentage of cases
| 24 |

25. 3.2. MMS
MMS usage has remained stable throughout the second quarter of 2011: 12% of the sample said they sent at least
one MMS per week (active users). 77% of interviewees said that their cell phones were able to send multimedia
messages, similar to the figure in the second quarter (75%).
Chart 20
MMS (Multimedia Messaging) usage. Base: total sample (4Q 2011: 1,493 cases; 2Q 2011: 1,570 cases)
100%
2Q2011
77% of users with MMS-enabled cell phones 4Q2011
80% 75% 77%
Percentage of cases
60%
40%
10% of users who may
prospectively be turned
into active users 12% of active users
20%
12% 10%
6% 7%
5% 5%
0%
Mobile Phones enabled I send very few MMS, I I send one MMS in I send more than one
to send MMS hardly send MMS average MMS
In this edition, we surveyed the occasions and situations that users send MMS messages. Our results showed that
69% of users who sent MMS messages in the last three months said they do so on special occasions like birthdays
and other celebrations. 33% send MMS messages when they are with friends, and 27% send them at the
weekends. Other situations mentioned by 11% of the sample are: when they want to send photos to relatives or as
a surprise, when they want someone’s opinion about something they are going to buy or want to show someone a
photo taken in an unusual situation.
| 25 |

26. Chart 21
In which situations do you send Multimedia Messages (MMS). Base: Users sending at least one MMS in the last
three months (325 cases). Multiple responses.
On special occasions (eg:
anniversaries, birthdays, 69%
etc..)
When hanging out with
33%
f riends
On holidays 27%
For some labor issue 19%
Other situation 11%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Percentage of cases
As the user base is so low (12% of active users), we asked why people didn’t use MMS more. 41% said that
sending MMS messages is expensive. 18% believe that the service does not work properly and 16% said that they
did not use the service more regularly because they are not sure if the messages are received. Among other
reasons not listed (13%), people said they didn’t see a need to use MMS, they preferred not to send photos in
messages and email is better for sending photos.
Chart 22
What are your reasons for not using MMS messages on your cell phone (or not using them
more)? Base: total sample (1,493 cases). Multiple responses.
It is very expensive 41%
I do not have how to conf irm if the receiver
16%
received the message
My cell phone is easy to send MMS 8%
My cell phone is not conf igured to send MMS 8%
MMS service does not work well 18%
Never try sending a multimedia message 24%
Other reasons 13%
0% 10% 20% 30% 40% 50%
Percentage of cases
| 26 |

27. Response to incentives
55% of interviewees said that one incentive for MMS usage would be lower prices. Another, similar to SMS, would
be delivery confirmation (29%).
22% believe that MMS messaging packages would also encourage usage.
Among the 5% of responses presenting other incentives, the most interesting are: faster delivery, offering support
for using the service on mobile phones and that all devices should be able to open these types of message.
Chart 23
What would encourage you to use MMS messaging more (or more frequently)? Base: total sample
(1,493 cases). Multiple responses.
Cost per message should be lower (f or
55%
example: it could cost the same as SMS)
Be sure that the message will reach the
29%
destination
Operators would have to of f er MMS
22%
bundle
Owning a cell phone able to send MMS 13%
Others 5%
Don't know 16%
0% 10% 20% 30% 40% 50% 60%
Percentage of cases
| 27 |

28. 3.3. Instant messaging (IM)
44% of participants have used some sort of instant messaging service from their mobile phones in the past three
months.
Chart 24
Access to instant messaging. Base: total sample (4Q 2010: 1,206 cases; 1Q 2011; 1,494 cases; 2Q 2011: 1,570 cases; 4Q
2011: 1,493 cases)
100%
80%
Percentage of cases
60%
44%
40%
33%
28%
20%
20%
0%
4Q 2010 1Q 2011 2Q 2011 4Q 2011
Chart 25
Use of instant messaging. Base: total sample (1,493 cases)
Yes, I made use of Instant Messaging
37% services during the last three months
44%
No, I didn't make use of Instant Messaging
services during the last three months
19% I never made use of Instant Messaging
services during the last three months
IM usage increases when people switch to new devices. 56% of people who bought their device in the last six
months have used instant messaging. This percentage drops to 51% and 33% among people who have had the
same device for between 6 months and one year and for more than one year, respectively.
| 28 |

29. IM usage is higher if people have smartphones (66%) compared with people who use traditional phones (27%).
Men (47%) use instant messaging more than women (40%).
Of those who use instant messaging (44%), the most frequently mentioned chat service is Facebook (29%),
followed by Twitter (20%) when used as a messenger. While Twitter is not an instant messaging service, rather
more of a social network, the immediate delivery and short message length result in users treating the service in
roughly the same way as an instant messaging service.
Chart 26
Use of instant messaging as a platform. Base: IM users (653 cases). Multiple responses.
Facebook Chat 29%
Twitter 20%
eBuddy XMS 10%
Google Talk 10%
iMessage 7%
Skype Messenger 7%
BlackBerry Messenger/Ping 2%
WhatsApp 2%
Others 4%
0% 5% 10% 15% 20% 25% 30% 35%
Percentage of cases
We asked people who said they used the IM services in Chart 27 how many messages they sent and received on
average every week over the past three months. The results show that some platforms are used to send messages
and others to receive them.
Twitter, BBM and Skype are preferred to send messages and GTalk, eBuddy, iMessage, Facebook Chat and
WhatsApp to receive them.
eBuddy posts the biggest difference between the average number of messages sent and received: 15 places.
Twitter (2.4 posts) and Facebook Chat (1.5 posts) are the most balanced services in terms of messages sent and
received.
| 29 |

30. Chart 27
Average number of messages sent and received via instant messaging services. Base: Users who
have used each of the services.
37.3
Google Talk
29.1
48.0
eBuddy XMS
33.1
28.3
Twitter
30.8
Average messages
39.6 received per week
iMessage
32.8
Average messages sent
21.5 per week
BlackBerry Messenger/Ping
30.1
39.0
Facebook Chat
37.5
26.7
Skype Messenger
30.8
39.1
WhatsApp
35.5
0 10 20 30 40 50 60
Messanges per week
Barriers to instant messaging adoption
The main reason that people do not use instant messaging from their mobile phone is that their phone does not
allow for installation of this type of application (54%). Second ranked is the low speed and reliability of mobile
internet connections (20%). Third place is the fact that people prefer to access these services from a PC or
notebook, make voice calls or use SMS (8%).
Chart 28
What reasons keep you from using (or using more often) instant messaging services from the
cell phone you use with the greatest frequency? Base: total sample (1,493 cases). Multiple responses.
My phone does not support IM 54%
Internet connection is too slow 20%
I pref er to access in my computer in the of f ice /
8%
f azer chamadas de voz ou enviar SMS
Not interesting / need / time 7%
The internet connection f rom the cell phone is
expensive / i don't have credit or data bundle to 5%
access the internet
Don't know how to use or access the application 4%
Others 4%
0% 10% 20% 30% 40% 50% 60%
Percentage of cases
| 30 |

31. Requirements for a new instant messaging service
Interviewees were asked what the main characteristics should be for a new instant messaging service.
In first place are reasons based on the type of contract. 59% of the sample said that the cost of using the service
should be included in the plan (this is the most common form of benefit).
In second place are reasons linked to guaranteed performance. 56% said it should work smoothly.
Chart 29
Features a new instant messaging service should offer. Base: total sample (1,493 cases). Multiple responses.
It must be without cost / included in the contract 59%
Service should always work, without troubles 56%
Cost must be reasonable 52%
It must be sure message is received af ter seconds 51%
Service should be used also in the computer 40%
Able to share f iles, images, videos with my f riends 39%
Able to see when the other party is typing an answer 38%
Able to contact anyone 35%
Able to contact all SMS users 32%
Able to chat with others in the contact group 27%
Able to see the latter conversations 25%
Able to share status and f eelings with f riends 20%
Able to share my location 14%
Others 4%
0% 20% 40% 60% 80%
Percentage of cases
| 31 |

32. If the new service meets the quality and feature requirements described, 76% of those interviewed said they would
use the service. Potential for instant messaging is greater among people between 18 and 24 years of age (81%)
and 25-34 (79%).
Chart 30
What would be your attitude towards using a single instant messaging service? Base: total sample
(1,493 cases)
100%
80%
Percentage of cases
76%
60%
Would use it
41%
40% 35%
4%
Would not use it 18%
20%
3% 2% 2%
0%
Don't know Certainly would Probably would Maybe yes or Probably would Certainly would
not use not use no use use
22% of people who said they used instant messaging reported they would only do so if it is free of charge. 9% did
not say how much they were willing to pay.
58% of people who use the service would be willing to pay between 0.25 and 2.00 BRL per month.
How much would you be willing to pay for these services? Base: total sample (1,493 cases)
Value people would be willing to pay %
Nothing or would only use if free of charge 22%
Less than 0.25 BRL per month 14%
Between 0.25 and 0.50 BRL per month 17%
Between 0.50 and 1.00 BRL per month 12%
Between 1.00 and 2.00 BRL per month 15%
More than 2.00 BRL per month 12%
Don't know 9%
| 32 |

33. 3.4. Advantages of SMS over instant messaging
We asked people the advantages each service had over the other.
46% of people said that SMS costs less than instant messaging. While the total amount a user pays for SMS
messages depends on usage, the view that text messaging is cheaper than instant messaging can be linked to the
position that, generally speaking, better quality phones like smartphones are needed to use instant messaging, as
well as a data plan. The importance of this response is that the user’s perceptions can be altered through product
communication proposals.
Another 33% said that unlike instant messaging, people know that when someone receives an SMS text message,
the message is important. This response reveals that instant messaging is a communication method used in more
informal situations.
In third place as a comparative advantage over instant messaging, with 32%, is the ability to communicate with
anyone. This response may indicate the users know that only more expensive devices provide IM access, while
SMS is available on almost any device on the market.
Chart 31
In your opinion, what are the advantages of SMS compared with instant messaging services
used from your mobile phone? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant
advantages for illustrative purposes.
Have low cost 46%
When I use SMS I know that the recipient
33%
knows it's an important message
I can communicate with any person 32%
I can easily send a message to a large
25%
quantity of people
To know that the message is received
23%
af ter seconds
0% 10% 20% 30% 40% 50%
Percentage of cases
Other advantages of SMS over IM mentioned: ease of use (no additional application needed), no Internet access
required and unlimited SMS packages are available.
| 33 |

34. 3.5. Advantages of instant messaging over SMS
Among the advantages of instant messaging over SMS, 41% of interviewees mentioned low cost. In this case, we
can presume that when a user has chosen a more expensive device that allows for instant messaging and
subsequently pays for a data plan, they realize that in general terms, instant messaging does not incur any
additional cost. The fact that the advantage of both services are linked to a perception of lower cost for subscribers
means that operators need to pay special attention to their pricing models when expanding either service.
38% said that one advantage is IM can be used on a PC. This is important because it reveals all communication
options need to be available on several devices (voice, messaging, emails, video, etc.).
38% also said that an IM advantage over SMS is knowing the message will be received in a matter of seconds.
Chart 32
In your opinion, what are the advantages of instant messaging services (e.g.: WhatsApp, Skype
Messenger, Facebook Chat, BlackBerry Messenger, Google Talk, etc.) Compared with
SMS/MMS? Base: 1,322 cases. Multiple responses. Note: We have only shown the five most significant advantages for illustrative
purposes.
Have low cost 41%
Use the service also in the
38%
personal computer
To know that the message is
38%
received af ter seconds
Be sure that the answer will be
35%
received f ast
Be sure the receiver will read the
35%
message promptly
0% 10% 20% 30% 40% 50%
Percentage of cases
Other benefits of IM over SMS mentioned by interviewees is that IM is free, you can speak to people whose
telephone number you do not know, it can be used over Wi-Fi and you can see the status of other contacts.
| 34 |

35. 3.5.1. Service preference among recipients
In this edition of MAVAM, we asked whether recipients preferred to receive messages by SMS or IM, when sent by
a friend, relative, business partner, colleague or based on the message content: work vs. personal.
SMS was the preferred option in each situation, especially in the workplace. 39% of the sample said they prefer
SMS when they need to communicate with work colleagues and 40% prefer text messages when dealing with work
issues.
Chart 33
Preferred method of communication for each recipient. Base: 1,322 cases. Note: We have omitted percentages for
people who said they would not use either service to facilitate viewing. Multiple responses.
100%
SMS (Text Messages)
Sometimes SMS, sometimes
80% Instant Messaging
IM sent f rom my cell phone
SMS is mostly used
Percentage of cases
within work situations
60%
38% 38% 39% 40%
40% 35% 36%36%
33%
31%
25% 25%
19% 21% 20% 20%
19%
20% 16%
9%
0%
Friends Relatives Boyf riend/ Work Work issues Others
Girlfriend - colleagues
Husband/Wif e
| 35 |