FINANCIAL ANALYSIS OF THE SWEDISH 3G LICENSEES
|
|
- Stephen Stevenson
- 8 years ago
- Views:
Transcription
1 Where are the profits? Version II Paper to be presented at the ITS 12 th European Regional Conference September 2-3, 2001 Dublin JOAKIM BJÖRKDAHL WITH ERIK BOHLIN DEPARTMENT OF INNOVATION ENGINEERING AND MANAGEMENT CHALMERS UNIVERSITY OF TECHNOLOGY S GÖTEBORG SWEDEN AUGUST 2001 CORRESPONDING AUTHUOR: ERIK BOHLIN TEL: ACKNOWLEDGEMENTS ANDERS BYSTRÖM WHO CONTRIBUTED SIGNIFICANTLY TO THE FIRST VERSION
2 ABSTRACT There are many different opinions on the prospects of UMTS or 3G mobile telephone systems. Our paper investigates the financial consequences of the implementation of UMTS on mobile operators. Our analysis is limited to the Swedish UMTS market. We analyse the Swedish 3G licensees with a financial model, which shows annual cash flows, net present values (NPV), breakevens, paybacks and sensitivity analyses. Our results suggest that there will be a substantial profit problem. One of the reasons for the lack of profitability is that the average revenue per user will not increase much more from today s level, but the operators costs will. This is a general finding for all the operators. Besides, more players result in increased competition and less market shares for the incumbents. The green field operators will have the greatest difficulty. However, the set-up costs will not be as large as predicted in the Swedish license applications due to co-operations and network sharing. Instead, the marketing and operational costs will be the largest part of the total cost during a fifteen-year period. Of the costs, content and marketing will increase with the introduction of UMTS, while the operational cost will be on the same level as for 2G. Future research needs concern fine-tuning of the model to conditions in the European markets. Important considerations there for the financial outcome relate, among others, to the levels of license fees demographic characteristics and likely strategies among the players
3 TABLE OF CONTENTS A. INTRODUCTION...4 B. BACKGROUND...5 B.1 REGULATORY CONTEXT...5 B.2 SWEDISH LICENSE FRAMEWORK...5 B.3 THE OUTCOME IN SWEDEN...6 C. METHOD AND ASSUMPTIONS...8 C.1 PROCEDURE AND METHOD...8 C.2 CASH FLOW MODEL...8 C.3 REVENUES...9 C.3.1. Revenues from subscribers...9 ARPU...9 MOBILE PENETRATION...10 MARKET SHARES...11 INHABITANTS...11 C.3.2. Roaming...11 C.3.3. M2M...11 C.3.4. MVNO...12 C.4 INVESTMENTS...12 C.4.1. Set-up cost...12 C.4.2. Capital cost...12 C.5 OPERATING COSTS...13 C.5.1. Operational cost...13 C.5.2. Marketing...14 C.5.3. Content...14 C.6 NET PRESENT VALUE...14 D. FINANCIAL ANALYSIS...15 D.1 COSTS...15 D.2 REVENUES...15 D.3 RESULTS OF THE ANALYSIS...16 D.3.1. Europolitan Vodafone...17 D.3.2. HI3G...17 D.3.3. Orange Sverige...18 D.3.4. Tele D.3.5. Telia...19 D.4 SENSITIVITY ANALYSES...20 D.4.1. ARPU...20 D.4.2. UMTS Penetration...20 E. CONCLUSION...22 APPENDIX 1 MOBILE PENETRATION...23 APPENDIX 2 SET-UP COST FOR THE LICENSEES...24 APPENDIX 3 NPV AND INTERNAL RATE OF RETURN
4 A. INTRODUCTION There are many different opinions whether UMTS (Universal Mobile Telephony Systems) or 3G (Third Generation Mobile System) will be successful. For example, there are experts that believe in a UMTS migration of 50% by the year 2005 and an average revenue per user (ARPU) above 110 per month. Others are much more pessimistic and believe that it will be delays, low UMTS penetration and an ARPU not much higher than today. At the same time 3G is expected to be a main force of economic growth in Europe. There are however rather few papers which analyses cash flow models of the financial consequences upon the operators. This paper makes a contribution by analysing the financial impacts of UMTS. The paper focuses on Sweden, and analyses each winning license applicant. The report presents the different analyses and assumptions that the results are based on. Furthermore, a sensitivity analysis is carried out to show the needed ARPU and market share for the licensees to get a satisfying business case. Accompanying the study is a business modelling tool, that can be used to create forecasts of the new mobile business. This model provides a consistent basis to examine the impact of how the market develops. With the model, we will analyse cash flows, net present values (NPV), breakevens, payback times and sensitivity analyses. This analysis will be conducted at this stage only on the licensees business in Sweden and costs and revenues generated from the UMTS business. Future work will expand the range of countries and conditions. The paper is structured as follows. First we provide an overview of the regulatory context in Sweden of 3G, including an overview of relevant actors. The main body of the paper follows next. Here we present the financial model, and conduct an in-depth analysis of the Swedish case on UMTS. Conclusions follow
5 B. BACKGROUND This part contains a brief summary of the process to implement UMTS services in Sweden, from the regulatory activity in the European Union and Sweden to the framework and the outcome of it. B.1 REGULATORY CONTEXT On 14 December 1998 the European Parliament and the Council of the European Union came up with the decision no 128/1999/EC 1 regarding the introduction of a third-generation mobile and wireless communication system in the Community. The purpose of the decision was to facilitate a rapid and a co-ordinated introduction of UMTS/IMT-2000 networks and services in the Community on the basis of the principle of the internal market and in accordance with the commercial demand. In accordance with the third article of the decision the Member States shall take all necessary measures to enable an introduction not later than 1 January The framework for general authorizations and individual licences in the field of telecommunications services is presented in the EU directive 97/13/EC 2. According to the 4 Telecommunications Ordinance (1993:598), the Swedish government authorized PTS to state the framework 3 for issuing licenses by virtue of 14 Telecommunications Act (1993:597). The interest of the Swedish regulatory authority (PTS 4 ) is to increase the competition in the telecommunications field. Earlier the Swedish network operators could decide which operator that should be able to use their networks and therefore changes in the law were required. The government wanted to force the network operators to offer the excess network capacity to other actors on the market, on terms adjusted to conditions on the market. This amendment entered into force on 1 May Furthermore, on 17 December 1999 PTS submitted a proposal to the Swedish government about the obligation for network operators to come to an agreement with national roaming, and this amendment entered into force on 1 July The Swedish decision on the choice of issuing process is derived from the Telecommunications Act, where it is described that the licenses permissions should be distributed on grounds of fact. According to the government bills 1992/93:200, 1994/1995:128 and 1996/97:61 auctions or lotteries are not regarded as issuing processes that distribute on grounds of fact and the Swedish Parliament agreed upon the meaning. During the fall 2000 one member of the Swedish Parliament submitted a bill, 2000/2001:FP104, to change the Telecommunication Act and enable auction as issuing process. However, the bill was rejected by the Standing Committee on Transport and Communications. In accordance with the Telecommunication Act, Sweden chose a Beauty Contest as the appropriate issuing process 5. B.2 SWEDISH LICENSE FRAMEWORK There are three incumbent network operators on the GSM market, Telia ( the orginal PTT), Tele 2 and Europolitan Vodafone, despite the fact that PTS issued four licenses. One licensee did not fulfil its engagement and the license was withdrawn. Partly because of that fact, PTS has failed to reach a satisfying level of competition on the GSM market. Therefore, PTS intends to increase the competition both regarding the UMTS and GSM market. Because of this, PTS wanted to issue as many licenses as possible to reach a high level of competition on the market. However, the UMTS services demand a PTSFS 2000:5. 4 The National Post and Telecom Agency Post och Telestyrelsen (PTS). 5 Telephone interview with Katarina Kämpe, Information Manager at PTS, &
6 certain bandwidth, which results in a limited number of licenses that can be issued. Thus, the frequency band was divided into four 2x15 MHz (FDD) + 5 MHz (TDD) to assure the quality of the services and in order not to give competitive advantages to some of the licensees. The selection of the UMTS licenses was carried out in two phases. The first phase evaluated four parts: 1. Financial capacity of the applicant 2. Technical plan for the UMTS network 3. Business and market plan 4. Experience and knowledge of fixed and mobile networks The applicants that fulfilled the four parts in phase 1 continued to phase 2, which was independent of the first phase. In phase 2 the applicants got certain points proportionately to how the application fulfilled the criteria that PTS evaluated. The criterions were: 1. The promised geographical coverage regarding surface area, population and diffusion in the country 2. The promises of when the rollout will be completed and when the services will be available After the valuation the applicants points were summarized and the applicants were placed in order of precedence. If two applicants would have had the same total points, the applicant that would have offered the most rapid rollout got the license. Each license applicant had to pay an administrative fee of 11,100 and the cost for the licenses are an annual fee of 0.15% of the turnover. The licenses last to , but can eventually be prolonged. The applicants did not need to be Swedish physical and legal persons to apply for the licenses. However, two companies that were regarded as affiliated could not both receive a license. Furthermore, if the licensees not fulfil their engagements, PTS has the possibility to use certain sanctions. B.3 THE OUTCOME IN SWEDEN Ten applicants applied for the UMTS licenses in Sweden, but only four UMTS licenses were issued. The operators that received licenses were Europolitan Vodafone, HI3G, Orange Sverige and Tele 2. Europolitan Vodafone and Tele 2 are both incumbent operators with GSM networks in Sweden. HI3G and Orange Sverige are however new entrants. HI3G is owned by Hutchison Whampoa and Investor while the major owner of Orange Sverige is Orange. This means that the major carrier, Telia partly owned by the Government, did not receive a license. This outcome was a surprise to the public. Telia, Reach Out Mobile and Telenordia appealed against PTS decision to the Country Administrative Court. However, the Country Administrative Court left the action without approval and considers that PTS made a correct decision, but criticise PTS on certain points 6. Both Telia and Telenordia have decided not to appeal against the decision 7. The outcome of the licensees engagements is that more than 99% of Sweden s surface area has to be covered by 31 December The licensees also have to run some part of the network before 1 January However, since the operators only have to build 30 % of the network by themselves, there will be co-operations between the operators. Firstly, Tele 2 announced that they would co-operate 6 PTS, Press release, Telia, Press release, & Telenordia, Press release,
7 with Telia. Despite Tele 2 received the license, Tele 2 and Telia have established a common company that will build and run the network. The agreement with Tele 2 does not involve any charges for Telia to take part of the license and the companies will compete on the market regarding the services. The first idea was to start a separate company with 50% interests each. The license is however tied to Tele 2 and cannot be transferred to another company, but this did not prevent Tele 2 to give a separate company the commission to build and run the network. However, the Antitrust Law will determine if Tele 2 and Telia will be allowed to share the license in this manner. Secondly, Europolitan and HI3G also declared that they would establish a joint venture to build and run the network 8. In this case the companies are tied to fulfil the engagements separately, i.e. each company has to build at least 30% of the network. Finally, Orange Sverige and HI3G/Europolitan wrote a letter of intent on 16 May 2001 regarding co-operation in the rollout. 8 Europolitan, Press Release,
8 C. METHOD AND ASSUMPTIONS In this part the method and all assumptions used for the financial analysis are presented. C.1 PROCEDURE AND METHOD To calculate the expected net present values (NPV), breakevens, payback times and sensitive analyses a model presented in C.2 is being used. First of all a base case scenario is determined, where specific data is taken into consideration. The data is from different sources and own estimates. In our opinion, this base case scenario is the most realistic development for the operators. Thereafter, the output is modulated with other input data to get satisfying business cases for the operators. To study the sensitivity of the business, results are also presented with other scenarios than the base case. C.2 CASH FLOW MODEL In the analysis, a cash flow model is used where expected revenues, investments and operating costs are used as input data. Figure 1 shows the structure of the cash flow analysis and the needed data. The revenues include subscriber revenues, roaming, M2M 9 and MVNOs 10. The costs include investments and operating costs. Investments are divided into costs from amortization on the set-up, interest costs and the set-up cost that is paid by equity. Operating costs includes operational and maintenance costs, marketing and content. Subscriber Revenues Revenues Roaming M2M Free Cash flow Investments Revenues from MVNOs Operating Costs Operational & Maintenance costs Marketing Figure 1: The cash flow structure. Content We will use this model in two ways. First we are looking at available cash flow from the corporate point of view. This means that we are assuming that all available cash flow is available for future investments. In other words, we are excluding dividends, and we are treating the 3G project without cash demands from the owners. Thus, management has full discretion to do what it wants with the potential dividends. In this case, however, we assume that management devotes all available cash and efforts into the 3G project. In so doing, the cash flow model is closely connected with accounting based financial statements that the firm would produce for the 3G project. In other words, the cash flow model is 9 Machine to machine (M2M) is communication between machines without human interaction. 10 Mobile Virtual Network Operators act as an operator by renting network capacity from the network operators
9 closely connected with the regular accounting based balance sheets and profit statements that the 3G project would produce. This will have the effect that our model is sensitive to the capital structure that the 3G project will have. In other words, choices about debt vs. equity matter here. These choices will be analysed further below, for each actor. The other sense in which our model will be used is for discounted cash flow analysis. Here we are only concerned about the economic return, and not about capital structure per se. We are only looking at the real side of the project and return earned on it, without explicit regard to capital structure. In a traditional fashion, we are separating capital structure from real investment decisions. The cash flows included in the NPV analysis are not affected by financial considerations. By implication, we will not be using the interest payments in our NPV analysis (these are modelled in the annual cash flow model). We do not need to do any so-called adjusted net present values 11. Instead, we will use a capital cost that will be charged to each relevant cash flow element. The capital cost will in turn be based on market valuations. In this case, we will use capital costs based on the WACC model, which implicitly takes into account aspects of the financial condition of the firm in question, see more below. C.3 REVENUES The revenues are generated from four sources; subscribers, roaming, M2M and MVNOs. C.3.1. Revenues from subscribers The subscriber revenues are estimated in three steps; firstly, the ARPU (Average Revenue Per User) is estimated for the operators, secondly the mobile penetration and UMTS penetration is evaluated and finally the operators market share is estimated, see Figure 2. Revenues from subscribers Inhabitants UMTS Mobile ARPU = x x x x Penetration Penetration Market Share Figure 2: Revenues from subscribers. ARPU The ARPU will increase with the UMTS business compared to the GSM business, due to more services and revenue streams. Today the operators almost only get revenues from voice and SMS. However, with UMTS the operators can get more revenues from data services, like telematics, M2M, multimedia, and business data. We can now also see a stabilization of the ARPU and price per minute for voice that have decreased for a couple of years. But the prices will probably continue to decrease when more actors enter the market. However, with a lower price the usages increases and the voice ARPU will not drop that much. Thus, the contribution from the data services will be a significant part of the operators revenues and will give an increased total ARPU. The level of the ARPU depends on the strategy chosen by each operator. In Figure 3 we show how the Swedish operators are likely to position. 11 See Brealey & Mayers, Principles of corporate finance
10 COMPETITIVE ADVANTAGE Differentiation Lower Cost COMPETITIVE SCOPE Broad Target Narrow Target Differentiation HI3G Telia Differentiation Focus Europolitan Cost Leadership Tele 2 Orange Cost Focus Figure 3: The network operators and their expected strategies in the UMTS business. Source: Authors estimates. Tele 2 has adopted the cost leader strategy on the GSM market and we predict that they will continue to use this strategy within the UMTS business. Tele 2 has a GSM network in Sweden with lower quality than the competitors and the company usually waits until the market gets mature before entering it. Tele 2 has less ARPU than the other network operators, which is a hallmark for an operator with a cost leader strategy. Due to this, Tele 2 s ARPU will be below the average and around Orange has used a similar strategy as Tele 2 when to enter the GSM market in Europe, but is more innovative. This is probably the strategy Orange will use when to enter the Swedish market too. Therefore, Orange will have an ARPU that is quite similar to Tele 2 s. In our judgment, Europolitan is likely to continue its differentiation strategy and its ARPU will continue to be high. Today Europolitan has an ARPU of 63 per month, which is almost three times more than Tele 2 s and two times more than Telia s. The reason for this is that Europolitan has a differentiation focus on business customers and that most of its customers are postpaid. We think that even if it will be more revenue streams within UMTS, it will be hard for Europolitan to keep its high ARPU and think that it will decrease to 56. Finally, HI3G and Telia are assumed to have almost the same ARPU, 44, because they probably will use a combination of Europolitan s and Tele 2 s strategy. Telia has this strategy today and for HI3G this strategy is our best estimate. Mobile penetration We make a difference between mobile penetration and UMTS penetration, the former including all types of mobile standards. There are different opinions about the future mobile penetration, see APPENDIX 1. However, we have used Arthur Andersen s estimates and believe that a saturation level around 90% is the most likely scenario for the mobile penetration. This because some children and elderly are unlikely to ever have a mobile phone. Concerning the UMTS penetration we have used BCG s estimates and believe that the penetration will increase until 2011 and thereafter decline due to the entrance of the fourth generation of mobile system 13, see Table = SEK Ericsson among others expect that 4G will be launched
11 UMTS Penetration 0% 4% 8% 13% 23% 38% 50% 65% 78% 86% 90% 88% 86% 83% 80% Mobil Penetration 70% 74% 78% 80% 82% 83% 83% 84% 84% 85% 85% 86% 86% 87% 87% Table 1: UMTS and mobile penetration during a period of fifteen years. Source: BCG, Arthur Andersen. Market shares With the introduction of UMTS, there will be more players on the Swedish market and the competition will increase. This will affect the dominant operators, Tele 2 and Telia, that today have over 80% of the Swedish market. However, Europolitan will not be affected that much. This because the company currently has a market share of 16% and that no other operator expects to adopt Europolitan s differentiation strategy. Concerning the green field operators, they expect to take a higher UMTS market share the first years than the incumbents. This because they will offer voice services through the UMTS network, while the incumbent operators probably will continue to offer voice services over the GSM network in the beginning. We expect that Orange takes a higher market share than HI3G due to its strategy, see Table Orange 0% 35% 33% 28% 22% 21% 20% 20% 19% 18% 18% 18% 17% 17% 17% HI3G 0% 30% 25% 20% 18% 17% 17% 16% 15% 15% 14% 14% 14% 14% 14% Europolitan 0% 10% 12% 12% 13% 13% 14% 14% 14% 14% 14% 14% 14% 13% 13% Tele2 0% 10% 10% 12% 15% 16% 16% 17% 17% 18% 19% 19% 19% 19% 19% Telia 0% 10% 13% 16% 17% 19% 20% 20% 22% 22% 22% 22% 23% 24% 24% MVNOS 0% 5% 7% 12% 15% 14% 13% 13% 13% 13% 13% 13% 13% 13% 13% Table 2: Estimated UMTS market shares during a period of fifteen years. Source: Authors estimates. In Table 3, the UMTS market shares of the total market are presented to understand the small market shares for the operators in the beginning Orange 0% 1,4% 2,6% 3,6% 5,1% 8,0% 10,0% 13,0% 14,8% 15,5% 16,2% 15,8% 14,6% 14,1% 13,6% HI3G 0% 1,2% 2,0% 2,6% 4,1% 6,5% 8,5% 10,4% 11,7% 12,9% 12,6% 12,3% 12,0% 11,6% 11,2% Europolitan 0% 0,4% 1,0% 1,6% 3,0% 4,9% 7,0% 9,1% 10,9% 12,0% 12,6% 12,3% 12,0% 10,8% 10,4% Tele2 0% 0,4% 0,8% 1,6% 3,5% 6,1% 8,0% 11,1% 13,3% 15,5% 17,1% 16,7% 16,3% 15,8% 15,2% Telia 0% 0,4% 1,0% 2,1% 3,9% 7,2% 10,0% 13,0% 17,2% 18,9% 19,8% 19,4% 19,8% 19,9% 19,2% MVNOS 0% 0,2% 0,6% 1,6% 3,5% 5,3% 6,5% 8,5% 10,1% 11,2% 11,7% 11,4% 11,2% 10,8% 10,4% Table 3: The UMTS market share for each network operator of the total mobile market, Source: Authors estimates. Inhabitants From the year 2001 the population is expected to increase with 0,35% per year. C.3.2. Roaming 14 The roaming revenues are estimated from the operators roaming revenues today and are expected to be 5% 15 of the annual revenues and increase with the UMTS penetration. C.3.3. M2M Except for the M2M (machine to machine) revenues generated from the mobile users with handsets there will be other types of machines that will communicate with each other. This revenue source is expected to be 5% of ARPU from the year 2003 and increase with the UMTS penetration Roaming is to use other operators network. 15 Interview with Europolitan Holdings,
12 C.3.4. MVNO The mobile virtual network operators are expected to get an ARPU of 39 per month and take a market share presented in Table 2 (slightly more than 10%). A share of the revenues generated from the MVNOs will go to the network operators, because the MVNOs hire net capacity from the network operators. The share that the network operator will get is expected to be 70% of its total revenue 17, and each network operator expects to take 20% of the MVNO market. C.4 INVESTMENTS The investment calculations are based on the amount of base stations mentioned in the UMTS applications and the planned co-operations between the operators. C.4.1. Set-up cost The calculations of the 3G set-up cost is based on following assumptions: Approximately 111,000 is the cost to build a new base station 18. Upgrading/rebuilding of existing sites and base stations for UMTS costs around 30% of the construction of a new site, i.e. around 33, An additional cost of approximately 10% will occur, e.g. to make the network faster in the future 20. Operator Base Stations Existing Sites Cooperation New Sites Cost, New Sites ( million) Cost, Rebuilding Sites ( million) Total cost ( million) Tele 2 10,186 2, % 2, Telia - 2, % 2, HI3G 20, % 11,101 1, ,348 Europolitan 20,000 1,200 70% 9,657 1, ,216 Orange 8, % 7, Table 4: Calculations of the investments for the UMTS network with co-operations. Source: Authors estimates. The distribution of the set-up cost is based on The Boston Consulting Group s estimates 21 and is presented in Table ,0% 38,5% 38,3% 0,4% 0,4% 0,4% 0,4% 0,4% 0,4% 0,4% 0,4% Table 5: The distribution of the set-up cost. Source: BCG. C.4.2. Capital cost In the calculations debt facilities for the set-up is derived from the statements in the applications for the UMTS licenses and utterances. Both Telia and the owners of HI3G are solid companies that not need to borrow money for the set-up investments. The investment that Telia will do is relatively small too. HI3G, on the other hand that will do a large investment is owned by Hutchison Whampoa, a big company from Hong Kong and one of Asia s most profitable, which had an equity of 21 billion at the 16 Authors estimates. 17 Interview with a management consultant company, Interview with Johan Ragnevad, Northstream, Interview with Johan Ragnevad, Northstream, Authors estimates. 21 BCG, UMTS Affärsanalys,
13 turn of the year and the investment company Investor. Tele 2 will pay the set-up investment through debt facilities, due to its solidity and an aggressive expansion in Europe. Both Europolitan and Orange Sverige are owned by multinational companies. However, Europolitan s owner Vodafone (72%) have bought UMTS licenses in Europe for billions. Orange is in the same situation, even if Orange Sverige consists of more companies. Tele 2 Telia HI3G Europolitan Orange Sverige Debt Facilities 100% 0% 0% 75% 50% Table 6: The expected debt facilities for the licensees. Source: Authors estimates. The companies interest rate is based on ratings from Moody s, except for Tele 2 that is based on its average interest rate 2001 and from own estimates. Each company rating corresponds to a certain bond rate, which is a judgment about firms financial and business prospects, see Table 7. Once Moody s rates a bond, the rating is not changed unless there is a significant shift in the company s financing or prospects. Since the companies recently have been downgraded due to the uncertainty in the business this is the expected interest rate that the companies can borrow money at. Tele 2 Telia HI3G Europolitan Orange Sverige Rating 22 - A1 - A2 23 A3 24 Rate 25 7,54 7,37-7,54 7,71 Table 7: Ratings and interest rate for the operators. Source: Moody s. In the cash flow the annual interest cost, annual installment and the share of the set-up that not is paid by debt facilities is paid by equity. C.5 OPERATING COSTS The operating costs are divided into three major parts; operational, marketing and content. The operating costs are based on the network operators costs today, from own assumptions and with help from different sources. Below follow the assumptions. C.5.1. Operational cost The operational cost includes costs from network operating, maintenance and personnel cost. In the beginning there are only small additional operational costs for the existing operators, due to the existing organization and small share for the UMTS business. Therefore, the operational costs are expected to grow with the same ratio of the UMTS penetration, i.e. 80% of the operational cost is derived from the UMTS business Tele 2 and Europolitan have a similar size of organizations and the green field operators are also expected to have a similar size. However, the operational cost for Europolitan and HI3G is expected to be higher than for Orange and Tele 2 due to their strategies. Telia has about twice as large organization compared to the others and an expensive one, which has the affect that its operational cost is very high in consideration to the others. The operational costs are derived from own estimates, Arthur Andersen and J.P. Morgan 26, BCG 27 and Northstream. 22 Richard Bloom, Moody s New York, The rating is for Vodafone, which owns 72% of Europolitan Vodafone. 24 The rating is for Orange plc, which owns 50% of Orange Sverige. 25 Moody s daily long term corporate yield, JP Morgan & Arthur Andersen, Wireless Data report, BCG, UMTS Affärsanalys,
14 C.5.2. Marketing The marketing cost includes fixed marketing cost, customer acquisition and handset subsidisation. The marketing cost will increase with UMTS because there will be more players on the market. Moreover marketing is expected to be higher for the green field operators than for the existing operators, because they are new in the game and have to market their brands more aggressively. After the year 2012 the marketing cost expects to decrease due to the introduction of 4G. The marketing costs are derived from own estimates, Arthur Andersen and J.P. Morgan 28, BCG 29 and Northstream. C.5.3. Content The content part, which will be very important in the UMTS business involves both product development and content acquisition. The content cost is probably the cost for the operators that will increase most compared to the 2G business. It will be more important to offer attracting services to the customers and the product development part will grow overall. Furthermore, the content will be bought from other actors on the market and this part will grow substantially. In the calculations the content costs are expected to be around 15% of the operating costs 30. However, the content cost will be less for HI3G, Orange Sverige and Europolitan Vodafone because they are partly owned by large international companies that will give them advantages like synergy effects. But the content cost also depends on which strategy the operator has. C.6 NET PRESENT VALUE The weighted average cost of capital (WACC) is the minimum risk-adjusted rate of return that operators must earn in order to be acceptable to shareholders and owners. The WACC will however not be equal for all operators, but depends on the cost of equity, cost of debt capital and the share from debt and equity. The interest rate paid to debt holders is less than the required rate of return on equity, because debt is less risky. Of course, this does not mean that it is advantageous to have 100% in debt, because of the bankruptcy costs. Thus, the optimal ratio of debt to equity is determined by taking on increasing amounts of debts until the marginal gain from leverage is equal to the marginal expected loss from bankruptcy costs. Another thing is that the cost of equity is higher for the green field operators, due to the fact that these companies enter a new market and are taking a higher risk. Things like these have to be taken into consideration when to estimate the WACC. The different WACC for the operators used in this report is presented in Table 8. Tele 2 Telia HI3G Europolitan Orange Sverige WACC 11% 11% 13% 12% 13% Table 8: The weighted average cost of capital. Source: Authors estimates. Cash flows are calculated until 2015, which is the year the licenses will expire. However, the licenses will probably be prolonged, which have the effect that it will be a value of the business after To estimate this horizontal value we assume that the annual cash flow decreases with 30% from the year JP Morgan & Arthur Andersen, Wireless Data report, BCG, UMTS Affärsanalys, JP Morgan & Arthur Andersen, Wireless Data report,
15 D. FINANCIAL ANALYSIS The financial analysis presents the licensees costs and revenues and the net present value (NPV), breakeven and payback time are calculated for each of them. Furthermore, a sensitivity analysis gives the needed ARPU and market share to get a positive NPV for those with a negative value. Sensitivity analyses with other scenarios than the base case are also presented. The planning horizon is fifteen years corresponding to the license condition. D.1 COSTS With the introduction of UMTS the costs will increase for the operators. It is the marketing and especially the content costs that will increase most. The operational costs on the other hand will not be changed appreciably. The marketing cost will increase because there will be more actors on the market, which results in an increased competition and the content due to more services. The difference between the costs for the incumbent and green field operators is that the incumbents will have less operational costs in the beginning when the UMTS penetration is low. This because the incumbents already have operations in Sweden, and that there will not require much more to run a UMTS network. However, when the penetration increases more of the operational costs will be in the UMTS business. The green field operators will also have higher marketing costs, especially in the beginning, due to the fact that they have not any customer base in Sweden and have to market their brands more aggressively. We are illustrating the effects of the cost elements for each year and operator in Table 9. Tele 2 Telia HI3G Europolitan Orange Sverige Annuity Costs (million ) Table 9: Annuity costs for the operators. Source: Authors estimates. As can be seen, the green fields will get higher annuity costs than the incumbents. This because of the operational costs that have not a large impact for the incumbents in the beginning. HI3G will invest more in the set-up than Orange and has a more costly strategy, and because of this a higher annuity cost. Concerning the incumbents, Tele 2 and Telia have set-up investments that are around three times less than Europolitan s. Tele 2 also has low costs overall, which results in less costs than the others. Telia on the other hand has a big organisation and due to this fact it is the incumbent with the highest annuity cost. D.2 REVENUES The green field operators have a disadvantage when it comes to the revenues. The incumbent operators have all the customers and the green fields have to offer either lower prices on the services, better services or a combination that is better than the incumbents. Otherwise, the customers have no reason to change operator and the green fields are made to fail. The green fields cannot expect to take higher UMTS market shares than Tele 2 and Telia in the long term due to their disadvantage, and because the market share has a great impact on the revenues the green fields will get less revenues than the incumbents in the long term. However, the first years the green fields will get higher revenues because they will offer voice services over the UMTS network in difference to the incumbents that will continue to use the GSM network
16 Annual Revenues million year Europolitan HI3G Orange Tele 2 Telia Figure 4: Annual revenues for the network operators during a period of fifteen years. Source: Authors estimates. Generally it can be said that the revenues will increase with UMTS, depending on an increased ARPU. Both Europolitan and Tele 2 will get higher revenues when the UMTS business will be mature, than they have today. However, Telia that will lose a great deal of its subscribers and will get less revenues when the UMTS penetration reaches its saturation level. Concerning the green fields, Orange will get higher revenues than HI3G due to a higher market share. D.3 RESULTS OF THE ANALYSIS In this part the cash flow, NPV, breakeven and the payback time are presented for each operator. Furthermore, sensitivity analyses are presented to show how much the ARPU and market shares have to increase to get positive net present values. The cash flow estimates are based upon the model in Figure 1, i.e. including assessments on financial structures. The NPV, however are only based on the real investments taken irrespective of financial strategy. The planning horizon is 15 years and taxes are not included. Note that if the licenses will not be prolonged after the year 2015 the NPV for the operators will be less than the presented in this part, see APPENDIX
17 D.3.1. Europolitan Vodafone In Figure 5, Europolitan s annual and aggregated cash flow is presented. Cash flow, Europolitan Vodafone million million Cashflow Aggr Cashflow Figure 5: Annual and aggregated cash flows for Europolitan during a period of fifteen years. Source: Authors estimates. Europolitan will reach breakeven 2007 and the payback time will be 11 years. Furthermore, Europolitan will get a negative net present value of 1 million, see Table 10. NPV (million ) Breakeven Payback Europolitan Table 10: Europolitan s results of the base case scenario. Source: Authors estimates. D.3.2. HI3G HI3G s annual and aggregated cash flow is presented in Figure 6. Cash flow, HI3G 500 million million Cashflow Aggr Cashflow Figure 6: Annual and aggregated cash flows for HI3G during a period of fifteen years. Source: Authors estimates. HI3G will reach breakeven during 2007, however the investment will not be paid off during fifteen years. In consequence to this HI3G will have a negative net present value of million, see Table
18 NPV (million ) Breakeven Payback HI3G Not within 15 years Table 11: HI3G s results of the base case scenario. Source: Authors estimates. HI3G has a negative net present value due to the large set-up investments and a low market share. To get a positive net present value, HI3G has to get an ARPU of 75 per month. In other words, HI3G has to increase its ARPU by 70% to get a positive net present value. Or if the ARPU is unchanged, HI3G has to get an average market share of 27% of the UMTS market. D.3.3. Orange Sverige The annual and aggregated cash flow for Orange is presented in Figure 7. Cash flow, Orange million million Cashflow Aggr Cashflow Figure 7: Annual and aggregated cash flows for Orange Sverige during a period of fifteen years. Source: Authors estimates. Orange will reach breakeven during 2007 and the payback time will be 13 years. Furthermore, 2015 will Orange have a negative net present value of 429 million, see Table 12. NPV (million ) Breakeven Payback Orange Sverige Table 12: Orange Sverige s results of the base case scenario. Source: Authors estimates. To get a positive net present value, Orange has to increase its ARPU from the calculated 39 per month to 48 per month or get an average market share of 19% of the UMTS market
19 D.3.4. Tele 2 In Figure 8, Tele 2 s annual and aggregated cash flow is presented. Cash flow, Tele 2 million million Cashflow Aggr Cashflow Figure 8: Annual and aggregated cash flows for Tele 2 during a period of fifteen years. Source: Authors estimates. Tele 2 will reach breakeven during 2006 and is the fastest operator to reach breakeven on the Swedish UMTS market. This through a combination of low set-up cost, annual costs and a fairly high market share. Tele 2 will have a net present value of 669 million. Tele 2 is also the operator that will have its investments back fastest, i.e. 2009, see Table 13. NPV (million ) Breakeven Payback Tele Table 13: Tele 2 s results of the base case scenario. Source: Authors estimates. Tele 2 has a great possibility to get a positive NPV even if the ARPU and market share should not be as high as the estimated. Tele 2 affords to only get 27 per month from their subscribers or can take an average market share of 12% and yet get a positive NPV. D.3.5. Telia In Figure 9, Telia s annual and aggregated cash flow is presented. Cash flow, Telia million million Cashflow Aggr Cashflow Figure 9: Annual and aggregated cash flows for Telia during a period of fifteen years. Source: Authors estimates. Telia will reach breakeven during 2007 and the payback time will be 12 years. Telia will have a positive net present value of 113 million, see Table 14. Telia is calculated to take the largest market share of all
20 the operators, but still not the most profitable. This is the result of the high costs that Telia has compared to the others. NPV (million ) Breakeven Payback Telia Table 14: Telia s results of the base case scenario Source: Authors estimates. Telia has not afford to get an ARPU and market share that is much lower than the estimated if it should get a positive net present value. D.4 SENSITIVITY ANALYSES There is a lot of uncertainty in the business and different opinions about the development of UMTS. There are no given answers, and therefore it is of interest to see how the results will be changed with different scenarios. However, these results are not as realistic as the results in the base case scenario, but shows how the business case will be affected. D.4.1. ARPU Due to the fact that the competition will increase, there is a risk that it will be price wars, which will affect the companies ARPU. This scenario is based on an ARPU that is 10 less than in the base case scenario. All costs are left unchanged, the only difference is the ARPU. The results are presented in Table 15. NPV (million ) Breakeven Payback Europolitan HI3G Not within 15 years Orange Sverige Not within 15 years Tele Telia Not within 15 years Table 15: The results of the scenario with a lower ARPU. Source: Authors estimates. As can be seen in Table 15, only Europolitan and Tele 2 will have its investment back before All companies will also have negative net present values. Since the value of the ARPU has a great impact on the operators profitability most of the companies have not afford to see a decreased ARPU from today s level. D.4.2. UMTS Penetration The adoption of UMTS might not be as high as in the base case scenario if there will be delays concerning the handsets and rollout. There are also substitutes like GSM/GPRS and WLAN that might steal market shares from UMTS. This scenario is based on a penetration that is half of the penetration in the base case scenario, see Table UMTS Penetration 0% 2% 4% 6% 12% 19% 25% 33% 39% 43% 45% 44% 43% 42% 40% Table 16: The UMTS penetration. Source: Authors estimates. With lower UMTS penetration the marketing costs will decrease for all the operators. For the incumbents the operational costs will also be reduced, because more of the operation will be in the GSM/GPRS business. However, the green fields have only the UMTS business and need to have a
21 certain size of the organization to run the business. Thus, this scenario is based on that the green fields not take a part of the GSM/GPRS market. The results are presented in Table 17. NPV (million ) Breakeven Payback Europolitan Not within 15 years HI3G No positive cash flow Not within 15 years Orange Sverige Not within 15 years Tele Telia Not within 15 years Table 17: The results of the scenario with lower UMTS penetration. Source: Authors estimates. This scenario is the operators nightmare, because of the high set-up costs paid by the operators. The UMTS penetration must reach a quite high level if it shall be profitable for them. With the penetration used in this scenario, only Tele 2 will have its money back before Because of the low penetration the incumbents not reach breakeven before For the green fields it is worse, HI3G will not get a positive cash flow at all. Orange on the other hand, will get a positive cash flow 2012, but in the year 2013 it will be negative due to a decreased UMTS penetration
22 E. CONCLUSION With the introduction of UMTS, several experts believe that the operators will increase their profitability substantially. However, our results suggest that this will not be the case. For instance Telia will be less profitable than today. One of the reasons for the lack of profitability is that the ARPU will not increase much more from today s level, but the operators costs will. This is a general finding for all the operators. Furthermore, Telia will lose market shares as there are more license holders. In Telia s case it is possible that the company will lose up to 50% of its customer base. In the calculations, Telia will not get the investments back before 2012 and the company will only have net present value of 113 million. We are more positive to the other incumbents, Europolitan and Tele 2. Tele 2 will also lose market shares, but because of its co-operation with Telia and the low cost overall the company has a great chance to increase its profitability. Moreover, Tele 2 will have the quickest payback of all the operators, i.e Europolitan has in our opinion a great chance to almost keep its market share, due to its differentiation focus, but because of its high set-up cost, there is a risk that Europolitan will be less profitable than today. However, Europolitan will get the investments back during 2011 and almost get a positive net present value. Concerning the green field operators, it will be even harder for them in the 3G business than for the incumbents, due to the fact that they have not any customer base in Sweden. However, Orange will get their investments back 2013, but HI3G will not get the investments back before 2015 and will lose money on the business. Both companies have also negative net present values, Orange 429 million and HI3G million. HI3G must for an example increase its ARPU to 75 per month, which is 70% more than the estimated, to get a positive net present value, which is in our opinion almost impossible. The set-up costs will not be as large as predicted in the license applications due to the co-operations and network sharing. Instead, the marketing and operational costs will be the largest part of the total cost during a fifteen-year period. Of these costs, content and marketing cost will increase with the introduction of UMTS, while operational cost will almost be the same as with 2G. If the UMTS technology will be successful with a high penetration it does not mean that it will be a success for the operators. It is very important to understand that Sweden only has a population of 9 million people and the GSM market only contained three network operators. Suddenly it will be five within the UMTS business, including Telia. Thus, with these conditions the operators will not earn significant profits. The next step in our research will be to fine-tune the model to conditions in the European markets. Important considerations there for the financial outcome relate, among others, to the levels of license fees demographic characteristics and likely strategies among the players
23 APPENDIX 1 MOBILE PENETRATION The mobile penetration used in this report is based on estimates from Arthur Andersen. Figure 10 presents three different sources on the mobile penetration to show different estimates. Penetration (%) Year Arthur Andersen CIT Publication Ovum Figure 40: Estimated mobile penetration, Source: Arthur Andersen, CIT publication and Ovum
24 APPENDIX 2 SET-UP COST FOR THE LICENSEES In Figure 11, the set-up cost is compared with the planned set-up cost and the investment mentioned in the applications. Set-up cost for the licensees million Tele 2 HI3G Europolitan Orange Investment according to the application Setup cost without co-operation Setup cost with co-operation Figure 51: The total investment according to the application, i.e. total investment until positive cash flow is shown in the left pile. The investment cost for the set-up without co-operation is the middle pile and with co-operation is the right pile. In Table 18, the cost savings due to the co-operations are presented. Licensee Tele 2 Europolitan HI3G Orange Sverige Cost Saving (%) 59.5% 47.8% 46.7% 11.9% Table 18: Cost saving for each operator. The cost savings only refer to the UMTS setup cost. Source: Authors estimates
Business Review. Customer-oriented High Quality Customer Service Better Returns to Shareholders. China Mobile (Hong Kong) Limited
18 Customer-oriented High Quality Customer Service Better Returns to Shareholders China Mobile (Hong Kong) Limited 19 The table below summarizes selected operating data of the Group for the period from
More informationThe Role of the Government in Facilitating Development of a Wireless Internet Infrastructure in Hong Kong M H Au Deputy Director-General of
The Role of the Government in Facilitating Development of a Wireless Internet Infrastructure in Hong Kong M H Au Deputy Director-General of Telecommunications 8 July 2002 1 Current Status of Market 11
More informationThe mobile telecommunications market in Sweden from a consumer and competition perspective The Mobile Telecommunications Market
The mobile telecommunications market in Sweden from a consumer and competition perspective The Mobile Telecommunications Market A report from the Swedish Post and Telecom Agency, Swedish Consumer Agency
More information3G MOBILE POLICY: THE CASE OF SWEDEN
3G MOBILE POLICY: THE CASE OF SWEDEN This study was prepared by Staffan Hultén (dsh@hhs.se), Associate Professor at the Department of Marketing, Distribution and Industry Dynamics at Stockholm School of
More informationIntro to telecom markets - From monopoly to oligopoly, de-regulation, liberalization
Prepared for IK 2514 Wireless Infrastructure Deployment & Economics Intro to telecom markets - From monopoly to oligopoly, de-regulation, liberalization 5 November 2014, 10-12 Bengt G Mölleryd, Ph.D. Swedish
More informationINCENTIVES FOR MOBILE CO-LOCATION PROVISION IN NEW ZEALAND
INCENTIVES FOR MOBILE CO-LOCATION PROVISION IN NEW ZEALAND 1. INTRODUCTION NZ Communications Limited (NZCL) has highlighted in its submissions that the incumbent mobile network owners, Vodafone and Telecom,
More informationCompetitor or Partner?
Manfred Schmitz, Patrick Hung Fai Ma Competitor or Partner? Equipment vendors are getting more and more involved into the telecom operators business via Managed Services Vendors are expanding their service
More informationTaiwan Mobile 4Q14 Results Conference Call January 29, 2015
Taiwan Mobile 4Q14 Results Conference Call January 29, 2015 Moderator: Good morning, good afternoon, ladies and gentlemen. Welcome to the conference call. The chairman today is Mr. James Jeng. Mr. Jeng,
More informationMobile in-market consolidation in Western Europe: impact of recent mergers on margins and market share
About Analysys Mason 1 Mobile in-market consolidation in Western Europe: impact of recent mergers on margins and market share August 2013 Pablo Iacopino Executive summary Mobile in-market consolidation
More informationTeliaSonera Interim Report January September 2015
January September January September Solid core business THIRD QUARTER SUMMARY Net sales increased 6.3 percent to SEK 27,029 million (25,417). Net sales in local currencies, excluding acquisitions and disposals,
More informationVODAFONE AGREES TO ACQUIRE CONTROL OF HUTCH ESSAR IN INDIA
11 February 2007 VODAFONE AGREES TO ACQUIRE CONTROL OF HUTCH ESSAR IN INDIA Vodafone announces today that it has agreed to acquire a controlling interest in Hutchison Essar Limited ( Hutch Essar ), a leading
More informationnet income 110 140-21.4% 407 505-19.4% organic cash flow 2 (guidance definition) 302 369-18.2% 833 851-2.1%
Current Report (53/) Orange Polska S.A., Warsaw, Poland October 21, Pursuant to art. 56, clause 1, item 1 of the Law of July 29, 2005 on public offering and the conditions for introducing financial instruments
More information900 MHz and 1800 MHz band refarming case study. Denmark. 24 November 2011
900 MHz and 1800 MHz band refarming case study Denmark 24 November 2011 1 1. Introduction 2. Executive summary 3. NITA discussing with licensees and other interested parties 2007-2010 4. NITA proposals
More informationTELE2 AB ANNOUNCES SIGNIFICANT CUSTOMER INTAKE DRIVING STRONG OPERATING RESULTS FOR THE 12 MONTHS ENDED DECEMBER 31, 2000
FOR IMMEDIATE RELEASE Tuesday, February 20, 2001 TELE2 AB ANNOUNCES SIGNIFICANT CUSTOMER INTAKE DRIVING STRONG OPERATING RESULTS FOR THE 12 MONTHS ENDED DECEMBER 31, 2000 53% Annualized increase in Group
More informationPlanes Smart para Celulares 3G sin radio. Perú
Planes Smart para Celulares 3G sin radio Perú In December 2013, the Company paid an interim dividend of Ch$ 150.0 per share, over profits as of September 30, 2013, totaling Ch$ 35.5 billion. On January
More informationE. V. Bulyatkin CAPITAL STRUCTURE
E. V. Bulyatkin Graduate Student Edinburgh University Business School CAPITAL STRUCTURE Abstract. This paper aims to analyze the current capital structure of Lufthansa in order to increase market value
More informationManaging mature markets
Managing mature markets Morten Karlsen Sørby Nordic 1 1 Agenda Nordic overview Manage long term cash effects of fixed migration in Norway Sustain margin and market share in Norwegian mobile Develop Danish
More informationTelenor Group Fourth Quarter 2015. Sigve Brekke, CEO
Telenor Group Fourth Quarter 2015 Sigve Brekke, CEO Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated
More informationSTUDENT CAN HAVE ONE LETTER SIZE FORMULA SHEET PREPARED BY STUDENT HIM/HERSELF. FINANCIAL CALCULATOR/TI-83 OR THEIR EQUIVALENCES ARE ALLOWED.
Test III-FINN3120-090 Fall 2009 (2.5 PTS PER QUESTION. MAX 100 PTS) Type A Name ID PRINT YOUR NAME AND ID ON THE TEST, ANSWER SHEET AND FORMULA SHEET. TURN IN THE TEST, OPSCAN ANSWER SHEET AND FORMULA
More informationFIRST QUARTER 2012 RESULTS PRESENTATION
FIRST QUARTER 202 RESULTS PRESENTATION 5 May 202 This presentation contains projections and forecasts. They express objectives based on the current assessments and estimates of the Group s senior management
More informationDigital dividend - The First Romanian Spectrum Auction
Digital dividend - The First Romanian Spectrum Auction for Mobile Electronic Communications ANCOM Budapest, January 2014 Decision of the WRC-07 5.316B In Region 1, the allocation to the mobile, except
More information3Q11 Earnings Conference Call. October 31, 2011
3Q11 Earnings Conference Call October 31, 2011 Presentation of Financial Information Historical financial and operating data in this presentation reflects the consolidated results of Leap, its subsidiaries
More informationInformation Memorandum. Annex D: Overview of the Danish telecoms market. March 2012
800 MHz Auction Auction of frequencies in the frequency bands 791-821 MHz and 832-862 MHz Information Memorandum Annex D: Overview of the Danish telecoms market March 2012 Issued by The Danish Business
More informationDEUTSCHE TELEKOM Q3/14 Results
DEUTSCHE TELEKOM Results DISCLAIMER This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forwardlooking
More informationFundamentals Level Skills Module, Paper F9
Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2008 Answers 1 (a) Calculation of weighted average cost of capital (WACC) Cost of equity Cost of equity using capital asset
More informationEtisalat Group. Aspire Forward. Q1 2014 Results Presentation 28 April 2014
Etisalat Group Aspire Forward Q1 2014 Results Presentation 28 April 2014 Disclaimer Emirates Telecommunications Corporation and its subsidiaries ( Etisalat or the Company ) have prepared this presentation
More informationCompany Fundamentals. THE CMC Markets Trading Smart Series
Company Fundamentals THE CMC Markets Trading Smart Series How to evaluate company growth potential At any given point in time, share prices tend to represent the sum of expectations about its value from
More informationFinding the Right Financing Mix: The Capital Structure Decision. Aswath Damodaran 1
Finding the Right Financing Mix: The Capital Structure Decision Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate
More informationEtisalat Group. Q4 2014 Results Presentation
Etisalat Group Q4 2014 Results Presentation 26 th February 2015 Disclaimer Emirates Telecommunications Corporation and its subsidiaries ( Etisalat or the Company ) have prepared this presentation ( Presentation
More informationBusiness feasibility analysis of use of TV WS for mobile broadband services taking into account spectrum pricing
Business feasibility analysis of use of TV WS for mobile broadband services taking into account spectrum pricing Jan Markendahl and Pamela Gonzalez Sanchez Wireless@KTH, Royal Institute of Technology (KTH)
More informationHSPA, LTE and beyond. HSPA going strong. PRESS INFORMATION February 11, 2011
HSPA, LTE and beyond The online multimedia world made possible by mobile broadband has changed people s perceptions of data speeds and network service quality. Regardless of where they are, consumers no
More informationSucceeding with mobile enterprise services
Whitepaper February 2005 Succeeding with mobile enterprise services Stronger operator involvement needed In the early days of mobile telephony, business users were among the first adopters of mobile service.
More informationMOBILE VIRTUAL NETWORK OPERATORS: CASE FINLAND
MOBILE VIRTUAL NETWORK OPERATORS: CASE FINLAND Annukka Kiiski, Heikki Hämmäinen Networking Laboratory Helsinki University of Technology P.O. Box 3000, FIN-02015 HUT, Finland {annukka.kiiski, heikki.hammainen}@hut.fi
More informationBAY OF PLENTY COUNCILS BROADBAND BUSINESS CASE STUDY SPECTRUM AUCTION REVIEW. April 2007
BAY OF PLENTY COUNCILS BROADBAND BUSINESS CASE STUDY SPECTRUM AUCTION REVIEW April 2007 GDI Ground Floor, 201 Wickham Terrace PO Box 782 Spring Hill, Qld 4004. Telephone: +61(7) 3832 1222 Facsimile: +61(7)
More informationHuawei Answer to ARCEP s public consultation on the challenges tied to new frequency bands for electronic communication services access networks
Huawei Answer to ARCEP s public consultation on the challenges tied to new frequency bands for electronic communication services access networks July 2007-26 September 2007 Question no. 1: What is your
More informationT-MOBILE USA REPORTS SECOND QUARTER OF 2011 RESULTS
T-MOBILE USA REPORTS SECOND QUARTER OF RESULTS Adjusted OIBDA of $1.3 billion in the second quarter of, up from $1.2 billion in the first quarter of but down from $1.4 billion in the second quarter of
More informationGuide from Raymond Benn & Co. Limited
Guide from Raymond Benn & Co. Limited Tel: 01892 545021/549754 Fax: 01892 548956 Email: brian@raymondbenn.co.uk Website: www.raymondbenn.co.uk 0BBudgeting No business can know exactly what the future holds.
More informationCourse Title : Financial Management. Teaching Hours : 42 hours (3 hours per week)
Course Title : Financial Management Course Code : BUS201 / BUS2201 No of Credits/Term : 3 Mode of Tuition : Sectional Approach Teaching Hours : 42 hours (3 hours per week) Category in major Programme :
More informationTD Securities Telecom & Media Forum
TD Securities Telecom & Media Forum June 14, 2012 George Cope President & CEO Safe harbour notice Certain statements made in the attached presentation, including, but not limited to, statements relating
More informationO2 Czech Republic January to September 2014 Financial Results
Interim report O2 Czech Republic January to September 2014 Financial Results November 12, 2014 O2 Czech Republic a. s. announces its unaudited financial results for January to September 2014. These results
More information6. Debt Valuation and the Cost of Capital
6. Debt Valuation and the Cost of Capital Introduction Firms rarely finance capital projects by equity alone. They utilise long and short term funds from a variety of sources at a variety of costs. No
More informationHutchison Telecommunications Hong Kong Holdings Limited (Stock Code: 215) 2012 Annual Results Presentation. 19 March 2013
Hutchison Telecommunications Hong Kong Holdings Limited (Stock Code: 215) 212 Annual Results Presentation 19 March 213 Disclaimer These materials have been prepared by Hutchison Telecommunications Hong
More informationDrillisch AG Company Presentation. August 2014
Drillisch AG Company Presentation August 2014 Part 1: A Successful H1-2014 Part 2: Drillisch MBA MVNO Agreement Part 3: Guidance and Outlook Page 2 Agenda Highlights H1-2014 Trends in the Mobile Communications
More informationDigital Dividend Making the broadband business successful
Digital Dividend Making the broadband business successful Achieving the highly desired ubiquitous broadband coverage is firmly on the agendas of governments and their subordinate agencies, telecommunication
More informationTRANSITIONING PCCW David Prince, Group CFO. CLSA Investors Forum Hong Kong - 15 May, 2001
TRANSITIONING PCCW David Prince, Group CFO CLSA Investors Forum Hong Kong - 15 May, 2001 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements that involve risks and uncertainties.
More informationTelecommunications and e-commerce
Telecommunications and e-commerce Hutchison Global Center integrates the world class connectivity of Global Crossing s fibre optic network with state-of-the-art data centre architecture and professional
More informationTelenor Group Third Quarter 2015. Sigve Brekke, CEO
Telenor Group Third Quarter 2015 Sigve Brekke, CEO Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (
More informationPBL: Financial Concepts. Competency: Financial Instruments and Institutions
Competency: Financial Instruments and Institutions 1. Describe the standard and unique features of the following securities: bills, notes, bonds, zeros, and muni s. 2. Demonstrate an understanding of negotiable
More informationRe-assigning the spectrum in the 1.9 2.2GHz band
Final report for OFCA Re-assigning the spectrum in the 1.9 2.2GHz band Impacts on service quality and customers of adopting a hybrid between administratively-assigned and market based approach PUBLIC VERSION
More informationKey Performance Indicators
Vodafone Performance Key Performance Indicators The Board and the Executive Committee monitor Group and regional performance against budgets and forecasts using financial and non-financial metrics. In
More informationThe First Romanian Spectrum Auction
The First Romanian Spectrum Auction for Mobile Electronic Communications Bogdan IANA ANCOM Director A Timely Needed Auction Expiring licences 2 GSM licences (900 + 1800 MHz) end-2012 1 GSM licence (900
More informationUNIVERSITY OF WAH Department of Management Sciences
BBA-330: FINANCIAL MANAGEMENT UNIVERSITY OF WAH COURSE DESCRIPTION/OBJECTIVES The module aims at building competence in corporate finance further by extending the coverage in Business Finance module to
More informationLIMITED (00941.HK) Global Investment Research Challenge 2008. BUY with Target Price HK$136.6. Amy Lee Andy Chau Angela Yuen
CHINA MOBILE 1 LIMITED (00941.HK) Global Investment Research Challenge 2008 BUY with Target Price HK$136.6 Hong Kong Baptist University Amy Lee Andy Chau Angela Yuen Sophia Zhang Overview of China Telecom
More informationTelenor Group Third Quarter 2014. Jon Fredrik Baksaas, CEO
Telenor Group Third Quarter 2014 Jon Fredrik Baksaas, CEO Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated
More informationFrance Telecom Orange investor day conquests 2015
France Telecom Orange investor day conquests 2015 adapt to conquer Stéphane Richard Chairman & CEO May 31 st, 2011 cautionary statement This presentation contains forward-looking statements about France
More informationDanish M-commerce Background
Danish M-commerce Background This is a part of the Danish country study found in the book: Dholakia, N., Rask, M. & Dholakia, R. R. (red.). (2005). M-Commerce: Global Experiences and Perspectives. Hershey
More information2014 CONSOLIDATED RESULTS
PRESS RELEASE Rabat, February 23, 2015 2014 CONSOLIDATED RESULTS Highlights: - Increase in the Group consolidated revenues (+2.1% at constant exchange rates over 2014) ; - Continued growth in customer
More informationRecord Wireless Gains, Double-Digit Growth in IP-Based Revenues, Strong Cash Flow Highlight AT&T's Third-Quarter Results
For more information, contact: McCall Butler Mobile: 917-209-5792 E-mail: mbutler@attnews.us Record Wireless Gains, Double-Digit Growth in IP-Based Revenues, Strong Cash Flow Highlight AT&T's Third-Quarter
More informationWHAT IS CAPITAL BUDGETING?
WHAT IS CAPITAL BUDGETING? Capital budgeting is a required managerial tool. One duty of a financial manager is to choose investments with satisfactory cash flows and rates of return. Therefore, a financial
More informationDEUTSCHE TELEKOM Q2/15 Results
DEUTSCHE TELEKOM Results DISCLAIMER This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking
More informationConditional Regulatory Clearance of the acquisition of E-Plus
Creating a Leading Digital Telco Conditional Regulatory Clearance of the acquisition of E-Plus July 2014 Disclaimer This document contains statements that constitute forward-looking statements and expectations
More informationPart 9. The Basics of Corporate Finance
Part 9. The Basics of Corporate Finance The essence of business is to raise money from investors to fund projects that will return more money to the investors. To do this, there are three financial questions
More informationVerizon Communications, Inc. (NYSE: VZ) Telecommunications. Krause Fund Research Spring 2014. April 17 th, 2014. Recommendation: BUY
Krause Fund Research Spring 2014 Telecommunications Recommendation: BUY Analysts Brock Tracey brock-tracey@uiowa.edu Eric Marth eric-marth@uiowa.edu Tanner Hawks tanner-hawks@uiowa.edu Jerry Studer jerald-studer@uiowa.edu
More informationOrange Polska reports strong commercial performance in mobile post-paid and satisfactory financial results in 2Q 2015 2Q 2015 highlights:
Current Report (38/) Orange Polska S.A., Warsaw, Poland July 27, Pursuant to art. 56, clause 1, item 1 of the Law of July 29, 2005 on public offering and the conditions for introducing financial instruments
More informationFinance 1 Coursework. Oracle Corporation: Credit Rating Report. Client: Steve Thomas (Lecturer) Analyst: Arif Harbott
Finance 1 Coursework Oracle Corporation: Credit Rating Report Client: Steve Thomas (Lecturer) Analyst: Arif Harbott EMBA September 2010 Date: 9th December 2010 Word Count: 1189 (excluding footnotes, tables
More informationT-Mobile USA Reports Third Quarter 2012 Financial Results Net Customer Growth in the Third Quarter; Continued Year-on-Year Churn Improvements
Reports Third Quarter Financial Results Net Customer Growth in the Third Quarter; Continued Year-on-Year Churn Improvements BELLEVUE, Wash., November 8, --, Inc. ( T-Mobile ) today reported its third quarter
More informationABG Sundal Collier. Profitability in the telecom industry. Analyst(s) Presentation, Teleforum 2015, 8 January. Investment Research
Investment Research ABG Sundal Collier Profitability in the telecom industry Presentation, Teleforum 2015, 8 January Analyst(s) Ole Petter Kjerkreit, +47 22 01 61 40 Kristofer Eriksson, +46 8 566 28 633
More informationLIVE BROADCAST CONTENT FOR SOUTH KOREAN IPTV SERVICE: WILL IT TAKE OFF? Asia Pacific Market Insights. By: Min Cho, Industry Analyst
2009 LIVE BROADCAST CONTENT FOR SOUTH KOREAN IPTV SERVICE: WILL IT TAKE OFF? By: Min Cho, Industry Analyst Asia Pacific s Frost & Sullivan s commentary on the Asia Pacific ICT industry, addressing opportunities,
More informationSunrise Communications Holdings S.A. Financial results Second quarter 2014
Sunrise Communications Holdings S.A. Financial results Second quarter 2014 1 Q2 Highlights Successful launch of new offers accelerates growth momentum Freedom new mobile portfolio: 150k new Freedom subscribers
More informationR A I S I N G F U N D S I N SWEDEN
R A I S I N G F U N D S I N SWEDEN Raising funds in Sweden Sweden can offer good opportunities and many ways to raise finance for businesses. The costs of establishing a Swedish limited company are low
More informationThe cost of capital. A reading prepared by Pamela Peterson Drake. 1. Introduction
The cost of capital A reading prepared by Pamela Peterson Drake O U T L I N E 1. Introduction... 1 2. Determining the proportions of each source of capital that will be raised... 3 3. Estimating the marginal
More informationOrange Spain: the alternative
Orange Spain: the alternative Belarmino Garcia Spain CEO agenda 1 2 3 4 5 market background our integrated strategy our strengths focus on value conclusion 2 the Spanish telecom market a buoyant market
More informationContribution 787 1,368 1,813 983. Taxable cash flow 682 1,253 1,688 858 Tax liabilities (205) (376) (506) (257)
Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2012 Answers 1 (a) Calculation of net present value (NPV) As nominal after-tax cash flows are to be discounted, the nominal
More informationTHIRD QUARTER OF 2004
THIRD QUARTER OF 2004 The third quarter of 2004 showed a growth in revenues excluding gains for the Telenor Group of 15.9% to NOK 15.6 billion compared to the third quarter of 2003. Profit before taxes
More informationCustomer Lifecycle Management How Infogix Helps Enterprises Manage Opportunity and Risk throughout the Customer Lifecycle
Customer Lifecycle Management How Infogix Helps Enterprises Manage Opportunity and Risk throughout the Customer Lifecycle Analytics can be a sustained competitive differentiator for any industry. Embedding
More informationNew Zealand - Mobile Communications - Statistics, Analysis and Major Operators
Brochure More information from http://www.researchandmarkets.com/reports/680168/ New Zealand - Mobile Communications - Statistics, Analysis and Major Operators Description: New Zealand's mobile market
More informationQ1 2011 Results Conference Call: First Quarter
Q1 2011 Results Conference Call May 6, 2011 at 15:00 CET Good afternoon, everybody, and welcome to Magyar Telekom s first quarter 2011 results conference call. I am Thilo Kusch, Magyar Telekom s Chief
More informationModified dividend payout ratio =
15 Modifying the model to include stock buybacks In recent years, firms in the United States have increasingly turned to stock buybacks as a way of returning cash to stockholders. Figure 13.3 presents
More informationA taste for action Tele2 in pole position
1Quarterly Report January March 23 A taste for action Tele2 in pole position Tele2 reports record cash flow of SEK 1.4bn before investments, with EBT increasing to MSEK 491, while adding 91, customers
More informationThe GSMA strongly support Denmark licensing the 790-821 / 832-862862 MHz band 2 in a manner that will accommodate future use of
IT- og Telestyrelsen Ministeriet for Videnskab Teknologi og Udvikling Holsteinsgade 63 2100 København Ø Denmark ftf@itst.dk London 24 June 2010 Dear Kristian Borten The GSM Association (GSMA) 1 welcomes
More informationHow To Calculate Financial Leverage Ratio
What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK
More informationLicensing Options for Internet Service Providers June 23, 2001 Updated September 25, 2002
Licensing Options for Internet Service Providers June 23, 2001 Updated September 25, 2002 Some countries require Internet Service Providers ( ISPs ) to obtain government- issued licenses before commencing
More informationCorporate Credit Analysis. Arnold Ziegel Mountain Mentors Associates
Corporate Credit Analysis Arnold Ziegel Mountain Mentors Associates I. Introduction The Goals and Nature of Credit Analysis II. Capital Structure and the Suppliers of Capital January, 2008 2008 Arnold
More informationThere was no evidence of time pressure in this exam and the majority of candidates were able to attempt all questions within the time limit.
Examiner s General Comments Performance on F3 in May was a distinct improvement over some previous diets. This improvement was evident in both home and overseas centres although there were significant
More informationChina Telecom Corporation Limited. Edited Transcript of 2014 Interim Results Investor Presentation
China Telecom Corporation Limited Edited Transcript of 2014 Interim Results Investor Presentation Speaker: Mr. Wang Xiaochu, Chairman and CEO Good afternoon, ladies and gentlemen. I am very pleased to
More informationSummary of Request for Applications to participate in a tender process for twenty year licenses together with the acquisition of the businesses of
Summary of Request for Applications to participate in a tender process for twenty year licenses together with the acquisition of the businesses of two existing mobile network operators Issued by the Telecommunications
More informationFiscal 1Q15 Results Conference Call
Fiscal 1Q15 Results Conference Call August 4 th, 2015 Cautionary Statement SAFE HARBOR This release includes forward-looking statements within the meaning of the securities laws. The words may, could,
More informationSOUTH EAST ASIA AND OCEANIA ERICSSON MOBILITY REPORT JUNE
SOUTH EAST ASIA AND OCEANIA ERICSSON MOBILITY REPORT JUNE Market Overview Key figures: South East Asia and Oceania 2021 CAGR 2021 Mobile subscriptions (million) 990 1,250 4% Smartphone subscriptions (million)
More informationValuation of Life Insurance Companies in India
Valuation of Life Insurance Companies in India By Sanket Kawatkar & Richard Holloway ABSTRACT In this paper, we provide a broad framework for valuing life insurance companies in India. We also discuss
More information33% increase in ADSL Free Cash Flow to 436 million. Successful integration of Alice with a positive contribution of 83 million to the Group s EBITDA
2010 ANNUAL RESULTS Paris, 9 March 2011 Record revenues of 2 billion Group EBITDA in excess of 39% of revenues 78% growth in net profit to 313 million 2G and 3G roaming deal signed with Orange 33% increase
More informationFirst Quarter 2014 Results
UTStarcom Holdings Corp. First Quarter 2014 Results Mr. William Wong, CEO Mr. Robert Pu, CFO Mr. Mike Earle, CEO of aiotv NASDAQ: UTSI May 15, 2014 1 Disclosure & Forward Looking Statements This investor
More informationTelenor Group Second Quarter 2013
Telenor Group Second Quarter 2013 Jon Fredrik Baksaas, CEO Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated
More informationChina Telecom Corporation Limited 中 国 电 信 股 份 有 限 公 司
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness
More informationManagement s Discussion
90 Management s Discussion and Analysis Management s Discussion Management s Discussion and Analysis/Operating and Financial Review and Prospects 91 and Analysis OPERATING AND FINANCIAL REVIEW AND PROSPECTS
More informationContact: Ken Bond Deborah Hellinger Oracle Investor Relations Oracle Corporate Communications 1.650.607.0349 1.212.508.7935
For Immediate Release Contact: Ken Bond Deborah Hellinger Oracle Investor Relations Oracle Corporate Communications 1.650.607.0349 1.212.508.7935 ken.bond@oracle.com deborah.hellinger@oracle.com ORACLE
More informationFinance 3130 Corporate Finiance Sample Final Exam Spring 2012
Finance 3130 Corporate Finiance Sample Final Exam Spring 2012 True/False Indicate whether the statement is true or falsewith A for true and B for false. 1. Interest paid by a corporation is a tax deduction
More informationSFR SFR Presentation
SFR SFR Presentation March 2011 1 AGENDA 1 Introducing SFR, an integrated operator with strong assets 2 2010 performance review 3 Capturing future opportunities 2 AGENDA 1 Introducing SFR, an integrated
More informationANNEX 1 TASK DESCRIPTION Regarding consulting services and auction software in connection with the 1800 MHz auction
ANNEX 1 TASK DESCRIPTION Regarding consulting services and auction software in connection with the 1800 MHz auction Table of contents 1. Introduction and background... 3 1.1 The 1800 MHz band... 3 1.2
More informationWireless Telecommunication Industry Overview
Wireless Telecommunication Industry Overview Columbia Graduate Consulting Club February 13, 2012 Pablo Prieto-Muñoz COLUMBIA UNIVERSITY Civil Engineering and Engineering Mechanics Global mobile phone subscribers
More informationIntroducing Analysys Mason. Expertise and experience in litigation support
Introducing Analysys Mason Expertise and experience in litigation support Analysys Mason expertise Analysys Mason has unrivalled sector expertise, which has generated an outstanding track record in litigation
More information