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Title A Bankable WiFi and LTE Business Plan for a Fixed Line Operator 22 nd September 2014 Dr. Dennis Magaya www.rubiem.com +27 84 777 0666

Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

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Page 1: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

A Bankable WiFi and LTE Business Plan for a

Fixed Line Operator22nd September 2014

Dr. Dennis Magaya

www.rubiem.com

+27 84 777 0666

Page 2: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Agenda

1. Introduction

2. Market Analysis

3. Operating Model

4. Business Case Unpacked

a. Operating Model

b. Revenue Model

c. Capex Model

d. Opex Model

5. Implementation

Page 3: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Purpose

A Leader in High Value Consultancy Services in Africa

VISION

Sincerity - Honesty - Passion - Excellence

VALUES

Page 4: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Strategy

Positioning Offer High Value Consultancy and Implementation Services to Top-end Markets and

Deliver Results that Transform the Bottom Line

Differentiators• Implementation and Results

• Diversity of Expertise, Skills and Culture from all Over Africa

• Customer Experience

We deliver exceptional customer experience.

We walk the journey with our clients

by seeing through the implementation

and operations of our proposed solutions.

We believe that ‘Results don't lie.’

Page 5: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

We set up an office with local partners in every country

that we operate. This ensures skills transfer,

empowerment and job creation.

We aim to cover the whole of Africa growing from

the SADC region.

We have Offices and Operation in

1. South Sudan,

2. Malawi,

3. Mauritius,

4. Mozambique,

5. Namibia,

6. South Africa,

7. Swaziland,

8. Zimbabwe,

9. Tanzania

Current Footprint

Page 6: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

SKILLS AND RESOURCES

Engineers,

Project Managers

Solutions Architects, IT Consultants, Business Analysts,

Software Developers, Testers,

Marketing/Sales Consultants,

HR Consultants,

Financial Analysts,

Mergers & Acquisitions Consultants,

Customer Experience Specialists.

rubiem has 30 Staff Members

Our Human Resources Skills Include

Page 7: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

1. ICT Communications and Broadcasting

1. Financial Banks, Insurances and Medical Aid

1. Commercial Retail and Manufacturing

1. Organizations Government, Regulators and NGO

Our Target Markets include the following segments:

MARKETS

Page 8: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

rubiem STRUCTURE

rubiem Grouprubiem Group

rubiemSolutionsrubiem

Solutionsrubiem Training

Instituterubiem Training

InstituteComfix (Pvt) LtdComfix (Pvt) Ltd

High-Value

Business & Technical

Consultancy

Services

Training and

HR DevelopmentNetwork

Installations and

Commissioning

The rubiem Group Comprises of 3 Different Companies

Page 9: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

How

What we do

Who we are

Positioning

Vision

Mission

Corporate values

Objectives &

Targets

Marketing Strategy

Products &

servicesPricing

Sales &

distribution

Communi-

cations

Segment-specific Value Propositions

Growth &

value

strategy

Differen-

tiators

Market

segmentation

Corporate

Strategy

Strategy Pyramid

• There has to be a clear strategic objective

Go-to-Market Strategy

Strategy Mapping

Page 10: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Broadband Market Analysis

Broadband Internet Access is the Fastest Growing Service in Communications

The Only Thing Growing Faster than the Internet are Internet Statistics – Meaningless Statistics

Page 11: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Broadband Penetration Forecasts

0.0

50.0

100.0

150.0

200.0

2005 2006 2007 2008 2009 2010 2011

Pe

ne

tra

tio

n R

ate

Mobile Subscriptions per Capita

Africa

Arab States

Asia & Pacific

CIS

Europe

Americas

0

0.2

0.4

0.6

2005 2006 2007 2008 2009 2010 2011

Pe

rce

nt

Mobile Broadband Penetration

Africa

Arab States

Asia & Pacific

CIS

Europe

0.0%

10.0%

20.0%

30.0%

2005 2006 2007 2008 2009 2010 2011

Pe

rce

nt

Fixed Line Penetration

Africa

Arab States

Asia & Pacific

CIS

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Africa Arab

States

Asia &

Pacific

CIS Europe Americas

Mobile Subscriptions (CAGR)

0.0%

100.0%

200.0%

300.0%

Africa Arab

States

Asia &

Pacific

CIS Europe Americas

Mobile Broadband Subscriptions (CAGR)

0.0%

50.0%

100.0%

Africa Arab

States

Asia &

Pacific

CIS Europe Americas

Fixed Line Broadband Subscriptions (CAGR)

Page 12: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Telecoms

Network

Social Networks

IP/IT Networks

Communications

Networks

The Exploding Network Edge

• How much engineering and QoS

is done on the EDGE and who takes

Responsibility?

• Who provides NoC and Call Center?

• Who owns this EDGE business and can

It be Listed on the Stock Exchange?

LTE

an

d W

iFic

an

Un

ock

this

Va

lue

fo

r F

ixe

d L

ine

Op

era

tors

Page 13: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title The availability of fast cheaper broadband allows several new markets to develop

around the peripherals of fixed and mobile networks.

The new markets are increasingly free from the traditional geographic boundaries that provided

operators with some barriers to entry as protection against new entrants

The Exploding Network Edge

A lot of these businesses

are concerned about

Content and Apps.

There is little to do with

the network itself

LTE

an

d W

iFic

an

Un

ock

this

Va

lue

fo

r F

ixe

d L

ine

Op

era

tors

Page 14: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operators Look to New Areas for Revenue Drivers

Sources: Regions situation analysis, Ericsson cloud program, Ericsson M2M program

Smart phones and having more devices connected to the internet all the time has also opened

up new opportunities for niche market value applications

M2M

Verticals

Operators are announcing cloud services

but most are still evaluating options and

have not made any aggressive moves yet

Advanced operators are taking larger roles such as

Building M2M divisions, Partnering

Most targeted segments are Automotive, Metering

& grid, POS terminals, Tele- health

Operators deployment of vertical services

accelerating in the past years, however

there is still a long way to go, most

advanced offerings for financial services,

healthcare and logistics

Cloud

The Telcoms Comfort Zone

• Walled Garden

• Tightly Coupled Value Chain

• Inefficient Business Processes Protected by Margins

LTE

an

d W

iFic

an

Un

ock

this

Va

lue

fo

r F

ixe

d L

ine

Op

era

tors

Page 15: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

These OTT products are rapidly replacing bundled operator services, fuelled by the

proliferation of smart phones and high speed mobile broadband connections.

Voice is also shifting onto Apps and the Internet - OTT

Business case liked by Telcos Business case less understood by Telcos

LTE

an

d W

iFic

an

Un

ock

this

Va

lue

fo

r F

ixe

d L

ine

Op

era

tors

Page 16: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title Who owns the customer and which is the

dominant brand – the Network or Website

Powerful Content Providers in the Value Chain

LTE

/ 4

G B

ran

d C

an

t P

ut

Aga

inst

th

ese

Bra

nd

s

LTE

an

d W

iFic

an

Un

ock

this

Va

lue

fo

r F

ixe

d L

ine

Op

era

tors

Page 17: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Increasing Data per User Driven Mainly by Video

Sources: Ericsson Strategic Forecast, regions situation analysis,

Ericsson traffic & market data report,

0

1

2

3

4

5

6

7

GB per month

201620152014201320122011201020092008

PC’s

Tablets

High traffic Smartphone

Monthly usage device-type Global mobile data traffic by application

16% 19% 18%

7%

SmartphoneTabletLaptop

2%4%

3%

29%

34%

4%

11%

2%

6%

23%

31%

3%

5%

10%1%3%

24%

40%

1%

6%

100% 100% 100%

SW download/ update

other

file sharing

social networking

email

web browsing

online video

online audio

PC/Laptops continue to be the biggest data traffic devices, while video remains the

largest application type, with Youtube as the biggest contributor.

Page 18: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

What is the Problem with all of this - Monitization ?

The problem is the believe that “smart platforms” will provide operators with the chance to

monetise the traditional telephony services.

The reality is that people value

and want the following:

• COVERAGE

• QUALITY VOICE

• SMART PHONES

• CHEAP HIGH SPEED BROADBAND

(fixed and/or mobile).

The reality is also that unless all operators do the same things at the same time such that

services are available on all devices, that interoperability will never be what can be done on the

internet and provided to end users FOR FREE.

Page 19: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operating Model Imperatives – LTE and WiFi

• The basic business model is the telecommunication

services model .

• LTE Service business Model Developed than WiFi

• An Extension of the Existing Industry

• High Barriers to Entry for vendors & Service Providers

• Use licensed spectrum.

• Business model was selling boxes to customers.

• A New Business and Service Model required.

• Low Barriers to Entry for vendors & Service Providers

• Uses unlicensed shared spectrum.

• Emerges from data communications industry ( LANs)

• Its a bi-product of the computer industry.

LTEWiFi

Page 20: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operating Model – WiFi and LTE

The Mass Market (Mid to Low End)

– The 2G/3G are Mass Market Technologies

• Make and Sell Airtime at Lowest cost and Maximum Reach

– How do we take WiFi to the Mass Market?

– How do we take LTE to the Mass market?

– When will LTE and WiFi become Mass Market Technologies?

Currently only 10% of GSM Subscribers are on 3G

Currently only 8% of Fixed Line Customers are on ADSL

Although 3G and ADSL are Mass Market Products, their Uptake is Relatively Low

Page 21: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

9 x

Growth

Rate

Time

Data Revenue

Data Traffic

• Mobile Network Operator : High Traffic = High CAPEX in a High Margin Business

• WiFi Operator : High Traffic = High Sales Volume in a Low Margin Business

• Fixed Line Operator : High Traffic = High Sales Volume in Wholesale Business

• Facility / Premises Owner : High Traffic = High “Freebies” and diversion from core business

Operating Model - WiFi and LTE

Is your business plan a Traffic Business

Plan or Revenue Business Plan?

Network Operators are chasing Traffic

and Service Providers Revenue

Page 22: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operating Model - LTE

Which Technology are We Replacing ?

– Are we Replacing Copper with LTE?

• Why buy an Entire eNode B, MME, HSS Just to replace a copper wire?

• Do we stop buying more MSANs or we Decommission MSAN?

• Is there a Business Case to Replace Copper with LTE

– Are we Replacing CDMA with LTE?

– Are we Replacing Fiber with LTE

– Are we building a New Mobile Network Based on LTE

– Long Term Evolution (LTE) – Does Copper Evolve to Mobile

The answer varies from one operator to another, but we must address these in the business plan

Page 23: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title Who Owns the Customer?

– Device Vendor (Handset, Tablet)

– Mobile Network Operator (SIM Card)

– The Internet Service Provider (ISP)

– The Hotspot Facility / Business Owner

– Telecoms Network Operator (Fiber/ADSL)

Operating Model Imperatives - WiFi

In Classic Business, Who Owns the Customer Bills the Customer

Page 24: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operating Model Imperatives - WiFi

The “Free of Charge” Stigma?

– Free WiFi at Restaurants

– Free WiFi at Hotels

– Free WiFi at Airports

– Free WiFi at Work

– Free WiFi at Shopping Malls

– Free WiFi at Home from Uncapped ADSL

How do Telcos Create a Business Model Out of a Service Perceived to be “Free” Charge?

Where is the Spectrum License Fees?

Page 25: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Operating Model - WiFi

Fragmented and Emerging CAPEX and OPEX Model

– How much is the marginal CAPEX per Subscriber?

– How much is the marginal CAPEX per MB?

– How much is the OPEX per subscriber?

– How Much is the Total Cost of Ownership (TCO) for WiFi

Network?

– The WiFi CAPEX and OPEX Models are emerging / New

Page 26: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Fixed Line Operator

Hotspot /Business Owner

Data Service Provider Data Service Provider

Internet Reseller

SIM /Device

Internet Service Provider

TelecomNetwork

Marketing and Sales

Devices /SIM

OperationsBillingWiFi

Access Network

Internet& Network

Facility/Premises

1% CAPEX45% 0%30% 4%0%10%5%

5% Profit14% 25%40% 5%1%5%5%

5% OPEX35% 20%25% 5%1%4%5%

The WiFi Value Chain Analysis

Page 27: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Fixed Line Operator

TelecomNetwork

Marketing and Sales

Devices /SIM

OperationsBillingWiFi

Access Network

Internet& Network

Facility/Premises

1% CAPEX45% 0%30% 4%0%10%5%

5% Profit14% 25%40% 5%1%5%5%

1% OPEX35% 20%25% 15%1%4%3%

The WiFi Value Chain Analysis

• Use OTT to Own the Device (Don’t focus on owning the customer )

• For Fixed Line Operator, use IMS to integrate OTT into the “walled garden”

• To Control Value Chain, Control Internet, Marketing and Sales is Service Focused

• Operations Should Outsourced

Page 28: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

The Business Plan

1. Is there a Viable Standalone LTE Business Plan?

2. Or is LTE only viable if Integrated into 2G/3G or Fixed Line

1. What are the key drivers to a WiFi Business Plan

2. Why are Operators Investing too Much in LTE and too Little in WiFi

3. Can a Bank Finance a WiFi Project?

Page 29: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Business Plan Development Model

Revenue

Model

Subscribers/Usage

• LTE

• WiFI

• Download/User/product

• Uploadl/User/product

Tariffs/Prices

• LTE

• WiFi

Product/Services

• LTE

• WiFi

1

OPEX

Model

Organizational

Technology

• LTE

• WiFi

System/Process

• LTE

• WiFi

3

CAPEX

Model

2

Technology

• LTE

• WiFiFunding

Systems

2015

Budget

2018 Forecast

2016 Forecast

2017 Forecast

Business Plan

Base

Case 1

4

2

Page 30: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title Population

Internet/Broadband Penetration Telecoms – Fixed and Mobile Penetration

Addressable Market

Device Penetration – Smartphone / Tablet/ PC LTE Saturation Levels

Target Market

Segments Segments

Operating Model

Strategic Objective for Investment Strategic Objective for Investment

Products/Services

Uptake per Product per Segment Uptake per Product per Segment

Traffic/Usage

Traffic per Product per Segment Traffic per Product per Segment

Tariffs/Price

Tariffs per Product per Segment Tariffs per Product per Segment

LTEWiFi

Revenue Model Components

Page 31: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

LTE Revenue Model Map

Population Data MarketAddressable

MarketLTE Saturation Market

Shares

Market

Analysis

11

1.11.1 1.21.2 1.31.3 1.41.4 1.51.5

SegmentationGross

AdditionsChurn

Value

PropositionsProducts/

ServicesCustomers

22

2.12.1 2.22.2 2.32.3 2.42.4 2.52.5

Data Usage

Per Segment

per pruduct

SeasonalityBillable/

UnbillableDiscounts Commission

Traffic &

Pricing

33

3.13.1 3.23.2 3.33.3 3.43.4 3.53.5

DevicesCost of

Data

Dealer

CommissionVouchers SIM Cards

Cost of

Sales

44

4.14.1 4.24.2 4.34.3 4.44.4 4.54.5

Gross

Margin

Page 32: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

WiFi Revenue Model Map

Telecoms

Market Fixed & Mobile

Addressable

Market

Broadband

Penetration

Smartphones

Tablets / PC

Market

Shares CustomersMarket

Analysis

11

1.11.1 1.21.2 1.31.3 1.41.4 1.51.5

SegmentationGross

AdditionsChurn

Location and

Nomadic Products/

ServicesCustomers

22

2.12.1 2.22.2 2.32.3 2.42.4 2.52.5

Operating

Model

Data Usage

per customer

Billable/

UnbillableLocations Promotions

Traffic &

Pricing

33

3.13.1 3.23.2 3.33.3 3.43.4 3.53.5

Devices / CPECost of

data

Dealer

CommissionVouchers

Infrastructure

And facilities

Cost of

Sales

44

4.14.1 4.24.2 4.34.3 4.44.4 4.54.5

Gross

Margin

Page 33: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title Coverage

Hotspots Regions /Areas

Capacity – Network

x Traffic Model per User

LTEWiFi

CAPEX and Funding Model Consideration

Capacity – Systems

x Cost per Subscriber

Funding

Revenue Share, Service Provider/Operator Banks, Vendor, Service Provider/Operator

Page 34: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

CAPEX Model - LTE

Legacy Investment

– Legacy is something that works

– How much is the marginal CAPEX per Subscriber?

– Compare the LTE Marginal Capex per Sub with Copper

– How much is the marginal CAPEX per MB?

– Compare the LTE Marginal CAPEX per MB with Copper

– How much is the OPEX per subscriber?

Interoperability

– Where are we with backward Interoperability

– Where are we with standardization GSM / WiFi

Page 35: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title » Profitability Analysis� ARPU

a. Average ARPU US$8 (Down 12% from 2007)

� General Decline is 10-20% per Year

b. ARPU is a good Measure of Bottom-line Performance

� For ARPU Above US$10, the EBITDA is About 45%

� For ARPU Below US$10, EBITDA is 0-45%

� EBITDA

a. The Median is 43% (Excluding 3rd Entrant) and 25% incl 3rd Entrant

b. Big Players Margin 50% to 60%

c. Churn is 8-10% per Month

Africa Mobile Business Highlights – Voice & Data

Page 36: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Business Case – Best Practice

①①①① ARPU

– 2G ARPU is US$5 - US$8 /Month

– 3G ARPU is US$15-US$50/Month

– 4G (LTE) ARPU is US$ 30 – US$ 150 / Month

②②②② CAPEX

– A Greenfield Node B (3G BTS) is 20% more than 2G

– A Greenfield eNode B (LTE BTS) is 50% more than 3G

– The Marginal Capex per Subscriber for 2G/3G is US$100

– The Marginal Capex per Subscriber for 4G US$200

– The Marginal Capex per Subscriber for WiFi les than US$20

③③③③ OPEX

– 2G OPEX is $3-10 per month per Subscriber

– 3G OPEX is US$15-US$50 per Month per Subscriber

– 4G (LTE) OPEX is about US$50 per month

Page 37: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Business Case – Best Practice

1. WiFi Breakeven is Less than 18 Months

1. WiFi Profitability is Higher Fixed and Can be Higher than Mobile

– Expect EBIDTA of 45%

1. WiFi is Still an Urban / Upmarket Service

2. The Marginal CAPEX per Subscriber is around US$20

3. The WiFi OPEX per Subscriber is about US$3.00

Page 38: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Business Case – Best Practice

1. The LTE Business Case Depends on the Deployment Objectives

– 2G/3G Mobile Data Evolution

– Fixed Line Services

– Nomadic High Bandwidth Service – Hot Patches (WiFi is for Hot spots)

Page 39: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

Products and Services

Page 40: Bankable WiFi and LTE Business Case V11 - sata-sec.netsata-sec.net/downloads/sno/SNO 2014/Bankable WiFi... · Commissioning The rubiem Group Comprises of 3 Different Companies. Title

Title

4G – LTE Value Proposition

• Target Customers - Consumers in terms of Devices

– Dongle (PC) Users

– Tablet Users

– Handset Users (LTE)

– Handset Users (Smart Phones)

– Fixed Line (Backhaul)

• Target Customers – Corporates

– Connectivity

– Internet Access

– VoLTE

• Hotspots

– Backhaul

• Business Model

– Brand positioning

– Future IP Centric Telco

– Mobile and Wireless Services

• Business Case

– 3G Penetration is less than 10% of Mobile

– Minimum of 28% penetration required

– LTE Business Case if not mature

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Title

Broadband Pricing for Fixed Line and Internet

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Title

LTE and WiFi Relative Pricing Points

WiFi Price

WiFi

Price Point

3G Price

US$0.02 / MB

3G

Off-Load

US$0.01 / MB

Fixed Line

ADSL/Fiber

Wireless

Access

4G Price

4G

Off-Load

+/-US$0.10 / MB

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Title The following diagram outlines six different strategies for maximising the monetisation

potential of broadband within the context of serving needs of different market segments. ------------------------------------------------------------------------------------------------

This model could be applied to fixed, mobile, and converged offerings

------------------------------------------------------------------------------------------------

Basic Data TransferPay per Use

(different bundle sizes)

Pay per QoS(different throughputs)

Service Bundles(e.g. IPTV services)

Performance Based SLA (managed services)

Wholesale Traffic(reverse billed)

Volume

Quality

Content

Mechanism Differentiation

Further levels of price optimisation and differentiation can be achieved through bundling Voice,

Value Added Services, and Content, through Dual, Triple and Quad Play offerings

Pricing Strategy - Broadband Monetization Options

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Title • Telecommunications operations have to design products and services to gain revenue from OTT

• If a Telecoms Operator ignores OTT, they will become a cheap pipe provider

– Pipe Provider means high traffic and low revenue

Over-the-Top Applications (OTT)

Go-to-Market Strategy

– Products • Whatsapp/Facebook/Linked-In Bundle or package or product (postpaid with device)

• Skype /Instant Messaging Bundle

– Pricing • Monthly subscription or a voucher (the monthly subscription is cheaper than voucher)

• The subscription of voucher is cheaper than normal internet access

– Marketing • Target the mass market and social media users. Position the company for an OTT (Telco.2) business model

– Business Case • 5% profit increase

• Insignificant marginal capex

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Title

WiFi

• Fastest growing access network low cost and device agnostic

• Can be used for mobile (3G/4G) Off-load

• Operators deploying extensive networks – in all hotspots

• Balance cannibalization of 3G in High population areas with usage increase

• Which Business Model to Use

– Wholesale (Backbone) or Retail

– Off-load 3G/4G Traffic

Go-to-Market Strategy

– Products • Public Internet Access, Private Internet Access

• Last Mile Access for LTE and Fiber

– Pricing • Priced higher (about 30%) than Fixed but lower (about 30%) than mobile

• Subscription for all Postpaid customer and Vouchers for all prepaid

– Marketing • Billboards and Hotspot Signage as a Technology (WiFi or 4G) or in mature markets as a service (Wireless Broadband)

– Business Case • 10% Revenue/Service Increase

• About $20/Subscriber marginal capex

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Title Computer Backup

• The Enterprise workforce is very mobile with more and more device being connected to the LAN. The risk to enterprise

information being lost or accidentally deleted has increased.

• The Computer Backup solution is a simple, secure, automated and Internet-based backup service that protects your data from

accidental deletion or computer failure. The services offers storage of information on the computer. The service can be accessed

from any device and anywhere through an intuitive web portal for easy file sharing.

• The backup can be based on time or events. The information to be backed up is also configurable.

• There is built-in security to protect your files all the time.

Benefits

• Information security and storage at a lower cost.

• Business efficiency

Billing

- Monthly subscription per user with the capability for top-up using a Voucher, Credit card, ATM

- Usage based payment e.g Per GB Data downloaded

- A Once-Off Activation Fee required per User Setup to cater for different device requirements

Sales - Order Via the Website , Shop, IVR and Telesales

Go-to-Market

– Launched as Promotion to Determine Uptake and Price-point and later on. A 30 Day Trial Recommended before Signup

• Can be Added to an FMC product

• Can be launched as a Separate Service

Computer Backup

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Title Safe Family Internet

• The family is connecting more and more devices onto the internet. The risk of internet attacks on your laptops and desktops is

high and increasing. In addition, the risk of family members landing on undesired websites is increasing.

• Virus & Spyware Protection

• Receive world-Wide updates on virus profiles for early prevention. Scans and detect infected files for quarantine and repair

Internet Firewall Everywhere

• Desktop firewall to protect your PCs in various networks from unauthorized intrusions - even outside office environments.

Anti-Spam Control

• The Plug-in Outlook module automatically clears spam based on user-defined filtering rules.

Online Management Portal

• The network administrator account allows license management, network security reports, remote configuration, access central

monitoring, and update and install remotely.

Benefits

• Cost Savings

• Basic Internet security protections on their workstations

Billing - Monthly subscription per user with the capability for top-up using a Voucher, Credit card, ATM

Go-to-Market

– Launched as Promotion to Determine Uptake and Price-point and later on. A 30 Day Trial Recommended before Signup

• Can be Added to an FMC product

• Can be launched as a Separate Service

Safe Family Internet

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Title MiCloud

• The Family Cloud enables the user to configure the Cloud for various services such storage for music, videos, photos and

documents

• The user can retrieve and update the Family Cloud with any device, anytime and anywhere

• The system provides adequate security for information safe keeping and transit via the internet

• The Personal Cloud allows family members to setup their own space within the family cloud

Benefits

• Cost Savings

• Quick, Safe and Convenient Storage

Billing

- Prepaid or Monthly subscription . Top-up using a Voucher, Credit card, ATM

- Usage based payment e.g Per GB Data downloaded

- A Once-Off Activation Fee required per User Setup to cater for different device

Sales - Order Via the Website , Shop, IVR and Telesales

Go-to-Market

– Launched as Promotion to Determine Uptake and Price-point and later on.

• Can be Added to an FMC product

• Can be launched as a Separate Service

The Family and Personal Cloud

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Title WiFi

1. There is a Business Case for WiFi for a Fixed Line Operator … there is an opportunity

2. Use Unique Strength (Copper/Fiber ) to deliver WiFi and be Number 1 in Broadband

3. WiFi Enables Fixed Line to Access the Mobile Customer Base – Own the Service

4. The WiFi Equipment – Hybrid Teclo and IP Grade

5. The Critical Success Factor are

• The Operating Model

• The Go-to-Market

• WiFi is not Fixed Line, Its Mobile Business – it’s a new business model

Implementation – Best Practice

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Title

Implementation – Best Practice

LTE

1. The LTE Business Case as a Carefully Optimised Mix between

• 3G

• Copper / Fiber

• WiFi

1. The Champions in Telecoms – Pan African Operators, Equipment and Device Vendors are still

recouping Investment in 3G and haven’t put 100% effort on LTE Business Case

1. LTE is currently a Brand positioning deal - “ in Formula 1 its called Track positioning”

2. While the Mobile Operators are Frosty about LTE, the Fixed Line should move quickly to Occupy

the Space

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Title

Africa is covered by the people who know Africa

Asante

“Results Don’t Lie” No Matter How Intelligent an Explanation is, It

can never replace a result – D Magaya