1

Key Tracfone Statistics

8,000,000
Tracfone
7,000,000
Product PP
6,000,000
Total Subs 7 230 000
7,230,000
5,000,000

Total Prepaid 7,230,000

4,000,000

Q4 PP Adds5 366,000
3,000,000

Adds5
Q3 PP Add 215 000
215,000 2,000,000

Gross ARPU $13 1,000,000

Voice ARPU $11.60 0

2005 Q1 06 Q2 06 Q3 06 Q1 07

Data ARPU $1 40
$1.40 Tracfone

+SMS 60%

+Ringtones 38%

+Content/App 2%

PP MOU 68 min

PP Churn 5.4%

SMS Ringtones Applications

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Copyright © 2006 Provizio, Inc., All rights reserved.
 2
TracFone
P
Prepaid
id
Acquisition Strategy
+ Offers lowest priced plan package along with rollover minutes and long-term incentives
+ Reduces churn by targeting low-usage “Safety” customers (seniors, young children),
low income, and Hispanics (Less than 2% used SMS in Q3 & Q4)
+ “Best bang for the buck” advertising & marketing
¾ Referrals from current users, associations (AARP, LAA, HAA)
¾ Radio: Dr. Laura, Paul Harvey, and other national programs
¾ Internet: Web banners, affiliate marketing
+ Focused marketing to specific target customer segments:
¾ Strong following with senior & Hispanic customers 9%
26%
+ Opportunistic
O t i ti marketing
k ti approach:
h
¾ Launched “Project Katrina” within 36 hours after 30%
the hurricanes, gaining 30K new subs from specific
campaign
¾Targets marketing & advertising specific to
customer segment characteristics:
15%
9 Advertising on NPR with specific messages
for the senior population 5% 15%
9Markets on Hispanic-focused websites with Senior Youth Credit Discreet User Hispanic Other
culturally-specific messaging
9Spent $18 million in 2006 on national
daytime radio promotions

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Copyright © 2006 Provizio, Inc., All rights reserved.
 3
TracFone
Prepaid
Dealer/Partner Strategies
+ Wide distribution focus with minimal ongoing dealer support
¾ 65
65,400
400 retail outlets in the US; Office Depot is a significant partner
partner, average 3
3-4
4 handsets per week per store
¾ Heavy presence on the Internet with “affiliate” partners
+ Simple dealer compensation models; retailers are provided with a flat-rate 12% margin
on all handsets and 10% on all refill cards
Field level management of dealers conducted by five 3rd-party
+ Field-level party companies (POP
material, inventory, training, etc.)
¾ Heavy focus on support/providing Spanish language POP materials and training

Brand Loyalty Strategies

+ Rollover minutes & high POP availability have also contributed to lower churn numbers
+ Customer loyalty, especially in the safety customer demographic, has increased with
programs such as AutoPay, deactivation protection, and Worry-Free Wireless
+ Strong push to TracFone’s website for initial activation & customer & technical support
issues
¾ Provides incentives to subscribers to use web for activation & customer/technical support (10-15 units per
event)
¾ Significant customer care program that is linked to all aspects of the business
(operations, CRM, sales & marketing, & retail)
¾ Focus is to identify churn trends and create strategies to counter trends (specific programs, market-specific
Confidential dealer incentives, customer segment-specific incentives)
Copyright © 2006 Provizio, Inc., All rights reserved.
 4
TracFone
P
Prepaid
id
Handsets
+ Low-end handsets with limited data/application
pp capabilities
p
+ Subsidized to attract targeted audience at multiple POS environments
+ Handsets are “disposable”

General Perceptions
+ Significant gains have been achieved due to appeal of inexpensive entry to seniors
(23%) & the youth market
+ Low MOU (68 min/mo), low ARPU ($13/mo), and churn (5.4%) are the result of
capturing
t i the th ‘safety
‘ f t user’’ space
+ Customers perceive Tracfone takes advantage of customers’ confusion over the use
of “units” rather than minutes as the standard for billing & account metering

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Copyright © 2006 Provizio, Inc., All rights reserved.
 5
TracFone
P
Prepaid
id
Future Strategies
+ Spin-off
p prepaid/PAYG
p p wireless broadband company;
p y; re-sell Clearwire ((current
spectrum & future WiMax)

Strengths
-Aggressive R&D capabilities and programs into new
technologies
-Flexible sales & marketing plans and processes
Opportunities
-Moving to capture more Hispanic, senior, and youth
subscribers in underserved markets
Weaknesses
-Q3 to Q4 churn increased from 4.8% to 5.4% (13%
increase)
-Cingular, T-Mobile, & VzW all report Tracfone’s
subscriber numbers integrated into their own prepaid
numbers
-Use of “units” rather than “minutes” is confusing to
customers
Threats
-Strong ability to capture youth market (under 18
years) where parents control buying habits

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Copyright © 2006 Provizio, Inc., All rights reserved.