London, March 16, 2005 — The Technology, Media and Telecommunications (TMT) Industry Group at Deloitte today released its Deloitte Touche Tohmatsu (DTT) Global Telecommunications Index ("Global Telco Index"), revealing that the combined market value of the Index companies increased 29 percent from 1 January 2003 to 31 December 2004 — a far cry from the previous publication, which outlined a 69 percent decrease from 1 January 2000 to 31 July 2003.

The report does not point to any single global phenomenon associated with the increase in combined market value of the DTT Global Telco Index, but says that each region is facing specific structural and competitive issues. In addition, the Index demonstrates a reduction in the dominance of the top five industry players in each region and predicts that areas such as China and Eastern Europe will continue to grow and influence their regions.

The DTT Global Telco Index analyzes telecommunications companies worldwide with a market capitalization in excess of US$1 billion. It draws upon expert analysis by DTT's global team of telecommunications practitioners, and offers both quantitative and qualitative analysis of the telecommunications industry. The Index examines the sector in a national, regional, economic, competitive, regulatory and technological context in an effort to make sense of movements in the industry since January 2003 as well as provide guidance on the industry’s short term future. In the report, Deloitte predicts that:

• China will continue to grow and influence the Asia Pacific region, which will be driven by significant increases in mobile subscriptions and the incumbent operators looking for opportunities outside its own borders;
• The developing Eastern European market will continue to be the main driver of growth in the European region;
• India's potential for growth is equivalent to China's and is a wildcard in the Asia Pacific region;
• The American market will see dramatic change as the traditional telcos lose their wireline customers to the cable operators, who are now offering bundled voice, video and data packages;
• Telco companies will strive to be truly global, responding to the increased demand for seamless communication across borders and regions.

Igal Brightman, Global Managing Partner for Deloitte Technology, Media & Telecommunications, commented, "European telecom companies have focused on cost reductions over the past several years, which have resulted in higher earnings and market valuations. In addition, there have been new entrants to the European Index from Eastern Europe and the Middle East. Since these countries have low wireline and wireless penetrations, their enormous growth potential helped drive the increase in the European combined market value."

The new entrants include the four IPO listings in the last two years (including Saudi Telecom and Eircom Group), as well as relistings of several telcos.

"In Asia Pacific, similar operating cost reductions in developed countries, along with continued growth in China, has also generated increased earnings in this region. These positive factors, however, have been partially offset by lower multiples, reflecting lower growth prospects from some of the relatively mature markets in the region, such as Japan and Korea.

"The American market is currently the subject of fierce competition between the cable operators and the traditional telco operators. The tipping point has been the growing loss of wireline to wireless and, more recently, improvements in voice over internet protocol (VoIP) technology, which is enabling cable operators to offer triple play bundles of voice, data and television. Consumers are starting to transfer to wireless companies for voice services and hence cable companies' ability to offer the complete package — bundled voice, video and data — known as triple play."

Igal Brightman continued, "The industry appears to have adhered to a number of principles highlighted in Deloitte's last Global Telco Index, in particular focussing on debt and operating cost reductions, as well as strategic acquisitions and alliances. In addition, companies are being cautious when rolling out technologies such as 3G where business models are yet to be proven."

To schedule a briefing or for more information, please contact Deloitte's Helen den Held, TMT marketing director for EMEA, at +31 10 272 1030.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of 120,000 people worldwide, Deloitte delivers services in four professional areas — audit, tax, consulting and financial advisory services — and serves more than one-half of the world’s largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein, and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas.

As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names.