Zapp Case Study. Victor Stan / CTO Telemobil

Transcription

1 Zapp Case Study Victor Stan / CTO Telemobil

2 Past & Future Milestones December 2001 launching the world first CDMA450 network based on Lucent s 3G1x products portfolio. July 2002 re-launching the CDMA450 products & services focusing on business market segment. March 2003 reaching first 100,000 subscribers. April 2004 launching first BREW enabled handset and ZappMe services. Q4/2004 launching first EV-DO data services. Q1/2005 launching first PTT handset and services.

3 Based on the Free Space Loss calculations, 450 offers larger coverage footprints comparing to 900 using the same technology enabling less cell sites count in open areas. CDMA2000 RF capacity operating 3 CDMA carriers (3.75MHz) is higher than GSM RF capacity operating 62 GSM channels (12.5MHz) enabling less cell sites count in urban areas. CDMA link budget is better than GSM even for the same band enabling the HSPD margins. Packet based encapsulation for Voice & Data provides better system efficiency - enabling cost effective transport and services. Resulting network CAPEX and OPEX are much lower than equivalent GSM figures enabling competitive positioning for buying the marketshare from existing GSM operators. Key enablers 900 MHz 450 MHz

4 CDMA2000 can operate in multiple bands Strategic considerations CDMA needs only 1.8 MHz of spectrum for the first carrier (1.25 MHz plus the guard bands) while 450 MHZ spectrum can host up to four CDMA carriers Based on its cost efficiency, CDMA2000/450 can cover and serve all the NICHE markets left underserved by GSM due to its capacity and/or coverage limitations (on both mobile voice & data markets). Due to the poor fixed infrastructure available in Romania & CEE countries, CDMA2000/450 can provide the most cost effective solution for the Universal Service initiative. Broadband data capability allows CDMA2000/450 to substitute equivalent fixed data solutions (ISDN, CATV, xdsl etc) where these are unavailable.

5 Network Rollout

6 PHASE 1 PHASE I BTS: 180 DCS: 3 Pop Coverage: 40% (Indoor level of Service) Geo Coverage: 27% (Outdoor level of Service) 60% Urban Pop covered (34 cities) 2000 km roads

7 PHASE 2 PHASE II BTS: 305 DCS: 4 Pop Coverage: 60% (Indoor level of Service) Geo Coverage: 55% (Outdoor level of Service) 80% Urban Pop covered (135 cities) 4000 km roads

8 PHASE 3 PHASE III BTS: 430 DCS: 5 Pop Coverage: 80% (Indoor level of Service) Geo Coverage: 70% (Outdoor level of Service) 97% Urban Pop covered (220 cities) 5500 km roads

9 PHASE 4 PHASE IV BTS: 580/150 DO DCS: 5 Pop Coverage: 90% (Indoor level of Service) Geo Coverage: 80% (Outdoor level of Service) 100% Urban Pop covered (255 cities) 6300 km roads

10 1xEV-DO Coverage (2004)

11 Drive Test & Prediction Results 3-Sectors Omni Configuration Drive Test Coverage Legend LEVEL OF SERVICE DEEP INDO O R INDOOR INCAR OUTDOOR EXT ANTENNA NO CO VERAGE

12 Traffic & Performance

13 Subscribers Subscribers 250, , , ,000 50,000 0 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

14 Minutes Of Usage 100,000,000 Minutes of Usage Voice Data 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

15 Traffic/Subscriber - Voice & Data Traffic per Subscriber [me] Voice Radio Traffic per Subscriber - voice BH Data Radio Traffic per Subscriber - data BH Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

16 Call Performance Call Success & Handoff Success Rate [%] Voice Handoff Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

17 Drop Call Rate 2.00 Drop Call Rate [%] Voice Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04

18 Voice Traffic per Destination Traffic Distribution Mobile to Mobile 53% to Mobifon 14% to Mobilrom 13% to PSTN TZE 4% to International 2% to Voice Mail 1% to Cosmorom 0% Incoming External to MT 13%

19 ZAPP Minutes of Usage per Subscriber ZAPP Minutes of Usage per Subscriber Jul-03 Aug-03 Sep-03 Oct-03 nov-02 Dec-03 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 nov-03 Dec-03 Jan-04 Feb-04 Mar-04 MOU - data Mobile to Mobile traffic to GSM from GSM to PSTN from PSTN to International from International to Voice Mail Jun-03 May-03

20 Market Status & Trends

21 Romanian Mobile Phone Market 12,000,000 10,000,000 8,000,000 6,000,000 67% 70% 70% 4,000,000 2,000, % 65% 60% 55% 30% 33% 30% 45% 40% 35% 35% Postpaid Prepaid

22 Mobile Phone Penetration 60% 50% 40% 30% 20% 10% 0% Penetration Rate

23 Subscribers: 4 million (June 04) Competitors Tariff Plans: 63% prepaid vs 37% postpaid Coverage: population: 97% geographic: 77% Roaming: 97 countries Distribution: 11 own shops 600 dealers 3500 POS for prepaid Total revenues (USD in millions)

24 Competitors Subscribers: 3,9 million (June 04) Tariff Plans: 65% prepaid vs 35% postpaid Coverage: population: 96% geographic: 77,7% Roaming: 107 countries Distribution: 17 own shops 700 dealers 7000 POS for prepaid Total revenues (USD in millions)

25 Competitors Subscribers: 85,169 (June 04) Tariff Plans: 63% prepaid vs 37% postpaid Coverage: population: 69% geographic: 55% Roaming: 43 countries Distribution: 3 own shops 48 dealers

26 Competitors Subscribers: 4,3 million phone lines Coverage: population: 20% Roaming: - Distribution: Postal Offices Total revenues (USD in millions)

27 Target Group Market Segments Number Needs Opportunities for Zapp Corporate >200 employees Cheap offer Segment occupied by GSM operators with extremely low prices. Due to high interconnection fees, Zapp is not competitive. Niche for Mobile Data Medium size companies employees Small size companies 6-50 employees Home offices < 6 employees Dedicated tariff plan with CUG Cheaper prices than Residential High potential for Zapp since GSM operators focus on Residential and large Corporates Mobile & Fixed Data potential Residential No monthly fee (90% prepaid) Segment occupied by prepaid offer of GSM operators. Niche for Fixed Broadband Data Source: Romanian Government

28 Sales by Segments 2003 Corporate (12906) 9 % 9 % 21% Residential (29477) 8% 8% Corporate Medium (11545) 62% Corporate Small (87027)

29 Mobile Market Subscribers Growth in Customer Base (Postpaid+Prepaid) + 40% 3,749,921 2, ,209 1,637,000 4,029,999 17, ,700 1,719,000 4,306,306 21,114 91,192 1,857,000 4,614,739 37,038 95,201 2,020,000 5,014,560 5,243,470 68, ,671 93,099 99,362 2,211,000 2,377,000 7,017,418 6,027,214 5,547, , , ,918 79,500 84,332 3,300,000 83,500 2,878,000 2,590,000 2,003,600 2,180,500 2,337,000 2,462,500 2,635,300 2,672,700 2,746,100 2,911,700 3,457,000 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Connex Orange Cosmorom Telemobil Source: TIW, ORANGE and OTE quarterly financial reports

30 Voice versus Data 17% 20% 19% 17% 10% 10% 12% 21% 22% 15% 7% 16% 15% 12% 10% 10% Feb'03 Mar'03 Apr'03 May'03 Jun'03 Jul'03 Aug'03 Sep'03 Oct'03 Nov'03 Dec'03 Jan'04 Feb'04 Mar'04 Apr'04 Jan'03

31 Challenges during Startup

32 Coverage, Handsets and Roaming issues Most visible issues, blocking the late-entrants CDMA450 operators to grow as fast as GSM, is the lack of competitive coverage and terminals (including second-hand market) these also prevents them to enter the residential market segment which is the largest one in all emerging markets. The lack of the roaming enabled devices is also captured into both of the above issues since roaming is just another coverage enhancing tool while multimode/multi-band terminals are required to enable it. Some business case models for CDMA450 are scheduling the coverage expansion following a certain subscriber growth in order to prove some success into the market place. Missing point here is that competitive COVERAGE is a mandatory pre-requisite for any wireless business and it should be addressed first, prior to any sales expectations. Workaround solutions to avoid these challenges during startup like focusing on down-sized/specialized market segments with less coverage requirements or focusing on do-not-care about terminals target groups are lowering the perceived service value while the operator have to pay the price to compensate.

33 Churn - Operator Quality Strength (1) How satisfied are you with the following aspects? Sales person/dealer when subscribing Network Coverage Calls Quality Company Reputation Tariffs for voice services Tariffs for Internet/Data services Internet Access on obile phone Internet Access for your computer/laptop using mobile Range of services Extremely Satisfied Not at all satisfied *Source: The Gallup Organization Average Values Zapp Connex Orange

34 Churn - Operator Quality Strength (2) How satisfied are you with the following aspects? Extremely Sarisfied 5 Average Values Variety of handsets Design of handsets Quality if handsets Handset Brands offered Invoicing Customer Care-hotline Customer Care-shop Customer Care-dealer Customer Care-sales person Customer Care-after sales support Loyalty programs Marketing Material The Advertising Not at all satisfied Zapp Connex Orange *Source: The Gallup Organization

35 Terminals in 2004 GSM Zapp High - end Medium - end Low-end

36 Critical Mass issue The subscribers relative count unbalance translates into the interconnect traffic unbalance, turning into expensive royalties paid to the dominant GSM players. This is the main show-stopper to make CDMA tariff plans competitive against GSM since going below the interconnect fee is forbidden to the smaller/new operators while it is doable with profit margins for the larger ones. The most effective incentive to attract the incoming traffic, thus balancing the interconnect traffic and revenues, remains by targeting an equal marketshare with GSM (comparable amount of subscribers) this is achievable by competing on the residential market which is dominated by prepaid.

37 Thank you