Bear Stearns Research Finds Diverse Mobile Phone Use in Europe Has Earnings Implications for Major Operators; Rising Mobile-to-Mobile Calls Lead to Measurable Effect on Key Industry Metrics.

LONDON -- A greater number of calls from fixed lines to mobile phones and vice-versa are being replaced by more mobile-to-mobile calling in Europe. While the trend is gaining in popularity, a report by Bear, Stearns International Limited (BSIL) finds that overall mobile phone patterns, typically undisclosed by the operators themselves, vary across Europe and can have major earnings implications for mobile companies. The findings were reported in a study authored by BSIL European Wireless analyst Fanos Hira who researched the make-up of MOU (minutes of use) and ARPU (average revenue per user) for key mobile operators in five European countries.

"Mobile phone use can vary to such a degree across Europe that operators have the potential to experience an earnings surprise in one country and a disappointment in the next," said Hira. "Knowing just how much and how fast calling patterns change has taken on greater importance for European mobile operators."

To illustrate the mix and the rate at which mobile phone use in Europe is changing, Hira points to Spain and the United Kingdom. According to Hira, in the fourth quarter of 2002, approximately 46% all mobile calls in the UK were to fixed lines. By the fourth quarter of last year, Hira estimates that number fell to 34% and declined another 5% through March of this year. In Spain, however, calls from mobile phones to fixed lines are the lowest in Europe at 10.1%, with mobile-to-mobile calling in some cases more than double that of its European peers.

The significance of the shift towards more mobile-to-mobile calling lies in minutes of use, or MOU, a key metric in the wireless industry. When a mobile phone calls a fixed line it counts as one mobile minute. But a call made from one mobile phone to another counts as two minutes, one for the caller and one for the recipient of the call. Changes in calling patterns affect not just MOU (minutes of use) but ARPU (average revenue per user) as well, which would rise by the greater inbound traffic.

"As calling patterns change, it becomes clear that not all mobile phone minutes are created equally," said Hira. "Knowing the key differences in calling patterns sheds light on which European countries could benefit the most, and by extension, which mobile phone operators."

The report by Hira entitled, "Dispelling ARPU, MOU and Elasticity Myths," takes an in-depth look at mobile phone markets in Italy, Spain, Germany, the UK and France and includes company profiles of O2, Telefonica Moviles, Telefonica, Vodaphone, France Telecom, Telecom Italia, and Deutsche Telekom. For a copy of the reports, members of the press may contact John Knight at [e-mail] or call 0207-516-6270. In New York, press may contact Monica Orbe at [e-mail] or call [phone].

Bear, Stearns International Limited is a wholly owned subsidiary of The Bear Stearns Companies Inc. (NYSE: BSC) BSIL currently employs more than 900 staff in London who serve corporations, institutions, partnerships and governmental entities in the United Kingdom, Europe and the Middle East. BSIL's capabilities include investment banking, institutional equities and fixed income sales, trading and research, derivative products, financial futures, foreign exchange, private client services and global clearing.