波士顿-某电信企业战略咨询报告-2.ppt

波士顿-某电信企业战略咨询报告-2.ppt

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,CONTENT,KeystrategicprinciplesRegulatoryoverviewMarketoverviewCompetitionoverviewBusinessmodelsNextsteps,AGENDA,BusinessModelsDomesticandinternationallong-distancevoiceWholesale/carrierEnterprisesolutionsIssuesgoingforward,Economicmodeling,Choiceofbusinessmodelstopursueandtiming,RoadmapforpursuingbusinessmodelsandexpectedfinancialperformanceIntegratedapproachtoCNCbusinessplan,Majorissues,Expectedoutput,HowdothemarketsizingandshareassumptionstranslateintooveralltoplinerevenueforCNC?

Whatcapitalinvestmentswillbenecessarytobuildoutmetroandlonghaulfibernetworks?

Predictedcashflowprofilebybusinessmodelandselectedscenarios,Assessmentofmarketopportunities,HowwillChinadatacommarketdevelop?

Howlargeistheoverallopportunityforanewentrant?

Overallmarketsizingandrevenueforecastbyproductarea,Regulatoryandcompetitiveanalysis,WhattypeofregulatoryenvironmentwillevolveinChina?

Willequalaccessforvoiceanddatabegrantedandwhen?

WhateffectwillWTOhave?

RegulatorymappingandCNCsharepredictionsacrossscenarios,Strategicimplicationsandcapabilitiesassessment,METHODOLOGYBEINGUSEDTODEVELOPBUSINESSMODELSANDOVERALLSTRATEGY,-Currentareasoffocus,CNCATACRITICALSTRATEGICCROSSROADS,PreliminaryConclusions,Recommendations/DecisionstobeMade,OffnetVOIPpredictedtogeneratetoprovidebreakeveneconomicsforbuildingbackbone1WholesalerevenueprovidessignificantupsidepotentialMajorityofwholesalerevenuereliesonaccesstomobilecarriersEnterprisesolutionseconomicsveryattractive,butsubstantialcomplexityandresourcesinvolvedHigh-bandwidthinternationalgatewaycriticaltosuccessinbothwholesaleandenterpriseEconomicpredictionshighlysensitivetoasetofkeyassumptions,Acceleratevendorselectionandbackboneconstruction;timetomarketcriticalCommitmenttoutilizingIP/DWDMinvlolvesrisktomobilecarrierbusinessRFPtovendorsshouldbebasedonproductrequirementsvs.technologyStagingofinvestmentsandservicelaunchmustconsidertradeoffbetweenqualityofserviceandcoveragePreliminarytalkswithinternationalcarriersshouldbeginASAPScenariomodelingwillhelpusdecidewheretofocus,Overarchingquestion:

CanCNCsuccessfullypursueallopportunitiesoutlinedintheshort/mediumterm?

（1）Assumingsettlementfeesof10%ofrevenue,OverallapproachWhereHow,BUSINESSMODELSSUMMARY:

THREECOREELEMENTS,EnterpriseSolutions,Capturedatacomgrowthinkeybusinesscenterswithleading-edgeproductsandsuperiorcustomerserviceTopbusinessdistrictsinmajorurbanareas;onlythemostdenseareasinshorttermFocusedDeploymentLeverageexistingconduitstolayinmajorurbanareasSuperiorserviceandbandwidthTargetCTsweaknessinserviceandbandwidthUtilizeLMDSinintermediatecitiesandareaswheretimetomarketiscritical,Wholesale/Carrier,TargetmobilecarriersandISPswithbackbonetransport;considersupplyingfixed-lineincumbentsCoverPOPsinallmajorcallingzones;developlocalleasedlinesnetworkinkeylocationsAggressivedeploymentofbackboneinfrastructuretoprovideunparalleledbandwidthEstablishhighbandwidthinternationalgatewaytodifferentiateinternetaccessSuperiorservicewithclearpositioning“TheclearalternativetoCT”,Longdistancevoice,CaptureearlyrevenuefromtofunddevelopmentofsubsequentbusinessmodelsTop60POPsbyendofyear2000utilizingmixofleasedlinesfromCTandCNCnetworkPositionoffnetvoiceasfirstproductfrom“Chinasfirstdatacomcarrier”DonotoverextendresourcesinVOIPasitdoesnotfitCNCslongtermstrategyCreate“dial-around”solutionsforbusinessandinterconnectterms,-17930-,Enterprisesolutions,POTENTIALBUSINESSMODELSCOVERWIDERANGEOFPRODUCT/MARKETALTERNATIVES,Opportunityforgrowth,Currentmarketsize,Wholesale/carrier,ConsumerISP?

DomesticandInternationalLongDistanceVoice,Residential,Med/largeenterprisecustomers,Carriers,Potentialtrafficperconsumer,Products,Emergingdatacom,Data,Voice,Emergingdataniche,AGENDA,BusinessModelsDomesticandinternationallong-distancevoiceWholesale/carrierEnterprisesolutionsIssuesgoingforward,APPROACHTODOMESTICANDINTERNATIONALVOICEBUSINESSMODEL,Objectives,HypothesizedApproach,CaptureearlyrevenuefromlaunchofprepaidIPcallingcards“Cashcow”forfundingotherbusinessmodeldevelopmentPursueprefixandequalaccesslongdistanceforbusinesscustomersassoonaspossibletobeginestablishingrelationshipsManagepricingandproductlifecycleeffectivelytomaximizetotalmarginandavoidinvestingindecliningproductsDonotoverextendourselvesnorblurour“datacom”image,FighttheregulatorybattletoensurefavorableapproachestoequalaccessandinterconnectMarketcallingcardstobusinesscustomersintheshorttermfortravellingpersonnelEmphasizequalityimage/brandtodistinguishfromCTandUnicom-positioncallingcardasfirststepinbecominganextgenerationfullservicesproviderEstablishmechanismstolinkmarketingexpenditureswithrevenueandmargingrowthbyproducttoensureeffectiveinvestmentEmphasizelowcosttargetedmarketingandloyaltyprogramsDonotoverextendAlwaysemphasizeadvancedtechnologyandevolutiontofullservicesprovision,DOMESTICANDINTERNATIONALVOICESUMMARY,PreliminaryEconomics,PhaseICapEx（2000,2001）:

3.8BRMBFiber/construction:

2.4BRMBIP/DWDMequipment:

720MRMBPOP/VOIP:

530MRMBOSS/Networkmanagementsystem:

100MRMBOpExexpectedtobe30%ofrevenueby2002Marketshareandrevenueestimates-2002OffnetDLD:

30%OffnetILD:

30%$2BRMBIPIntl.termination:

27%5yearNPV:

Essentiallybreakevenconsideringoffnetvoicealone1,KeyIssuestobeAddressed,InterconnectagreementswithlocalPTAs;attempttoobtainblanketpolicyfromMIIInternationalgatewaylicenseandconnectivitySettlementchargescommensuratewithVOIPpricingDevelopmentofbusinessoffnetstrategyScalable“dial-around”solutionsinshorttermEqualaccesslongertermQualityofserviceforvoice,mustapproachswitchedqualityrapidlyPointofdiminishingreturnsforaddingVOIPgatewaysvs.strategicvalueofprovidingcoverage,

（1）Highlysensitivetosettlementfees,LARGEMARKETWITHPOTENTIALTOGAINSHAREQUICKLY,Newentrantstypicallygainsharequickly,Example:

IDDandDLDservices,Marketsizeable-off-nettrafficaccountsfor15%oftotalDLD/ILDrevenueby2004,Source:

ChinaTelecomannualreports;CNCsteaminputs;BCGsurveys,analysis&benchmarking,Yearafterentry,Optus（DLD）,Tele2（DLD）,Mercury（DLD）,HongKong（IDD）,Japan（IDD）,US（IDD）,（RMBBN）,DLDOn-Net,DLDOff-Net,ILDOn-Net,ILDOff-Net,（%）,CAREFULMANAGEMENTOFPRE-PAIDCALLINGCARDBUSINESSNECESSARYTOALIGNWITHLONGTERMSTRATEGY,PrepaidcallingcardscallfordifferentcapabilitysetandtargetcustomersthanlongertermbusinessmodelsFocusonconsumerswillnotcomplementlongtermvisionofprovidingenterprisesolutionsMassadvertisingandmarketingaroundalow-costpositionmaynotfitimagerequiredforfutureneedsThreefactorsimportanttoconsiderinmanagingprepaidcallingcardbusinessAttempttopositioncardsinmarketingmessagesasthefirstproductfromacompanythatisbuildingthemostadvancednetworkinPRCConsidersellingcardstobusinessesfortheirtravelingpersonneltobeginestablishingenterpriserelationshipsCarefullymanageproductlifecycletobeginpullingbackmarketinginvestmentaswholesaleandenterprisebusinessmodelsgrow,CNCVOIPREVENUEANDMARKETSHAREEXPECTATIONS,Source:

CNCsteaminputs;variousbenchmarks;BCGanalysis,Voicerevenue,Shareassumptions,CNCRevenue（RMBBN）,Off-NetDLD,%oftotalCNCrevenue,100%,76%,37%,30%,23%,16%,Off-NetILD,InternationalTermination,19993%80%1%3%80%1%5%80%0%,Off-NetDLDOff-netshareoftotalDLDGeographiccoverageofCNCCNCsharewithincoverageOff-NetILDOff-netshareoftotalILDGeographiccoverageofCNCCNCsharewithincoverageInternationalTerminationIPshareoftotalGeographiccoverageofCNCCNCsharewithincoverage,200010%60%25%11%60%25%11%60%20%,200117%75%29%18%75%29%18%75%25%,200223%90%33%26%90%33%24%90%30%,200330%100%30%33%100%30%30%100%30%,200432%100%28%35%100%28%35%100%31%,PRELIMINARYECONOMICSFORLONGDISTANCEVOICEMODEL（PHASEIBUILDOUT）VOIPRevenueAloneJustifiesBuildingBackbone,5yearPV

（1）（MRMB）,CapEX,OpEx,Revenue,5yearNPV15%:

-500MRMB,5yearIRR:

12%,EssentiallybreakeveneconomicsforoperatingbackboneforVOIPonly,VOIP

（2）,Backboneconstruction,Backbone,InternationalterminationIDDDLD,IPPOP/AccessplatformOSS,Presentvalueofcashflows,

（1）Assuming15%costofcapital

（2）Includingsettlementchargesestimatedat10%ofVOIPrevenue,andmarketing/salesat10%ofrevenue（3）BackboneOpExchargesallocated1/3eachtoVOIP,wholesale,andenterprisebusinessmodeleconomicsSource:

BCGbenchmarkdatabase;industryinterviews;BCGanalysis,AGENDA,BusinessModelsDomesticandinternationallong-distancevoiceWholesale/carrierEnterprisesolutionsIssuesgoingforward,APPROACHTOWHOLESALE/CARRIERBUSINESSMODEL,Objectives,HypothesizedApproach,DevelopwholesalebusinessastrafficgeneratortoimproveeconomicsofbackbonethroughhigherutilizationBecomethewholesalecarrierofchoicewithtechnologicallysuperiorserviceofferingsincludinghighbandwidthinternationalgatewayconnectivityConsiderwholesalingaccesstoCT,Unicom,andJitongdependingoncompetitiveimplicationsSuperiorcustomerservicewithclearpositioning“TheclearalternativetoCT”,AggressivedeploymentofbackboneinfrastructureConnectingtop15citiesbyendof2000andexpandingtotop50citiesby2002Seekpartnershipstoestablishhighbandwidthinternationalgatewayconnectivity-absolutelyessentialfordifferentiatingCNCofferingDevelopinterconnectioncapabilitiesinallmajorPOPsandmobilebasestationsinkeygeographicallocationsWholesaleaccesstoincumbentproviderswherefeasible,bu