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Client logo
Overview
Overview Attrition
Churn
Rate
Expansion Risks
Hypothesis : By fostering a client and employee focused
business model and expanding operations in Latin America,
Telecom will achieve its desired 2018 revenue target and reduce
attrition and churn rates.
Problem Statement : Developing a strategy to reverse trend in
falling customer and employee base while finding an alternative
to underperforming third party IT vendor
Mentorship
Program
Renegotiate
with ITCo.
Mobile
Banking in
Mexico
Exit US and
enter Brazil
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Employees leave the
company to go to other
competitors
Outsourcing IT to
third party vendor
High churn rate
High employee
turnover
Poor service quality,
especially in Mexico
Lack of scope in the
US market
Create
Interdepartmental
Collaboration
Environment
Reorganize office
space to encourage
communication
Standardize
Applications
Increase
maintenance, data
and server uptime
Renegotiate SLAs
with ITCo
Situation
Complication
Answer
Human Capital Technology Strategy
Executive Summary
Divest US
Operations
Expand into
Brazil
Markets
Enter Mobile
Payments Market
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Why Employee Happiness Matters?
Save on Recruitment and Training costs
Lower Turnover Rate Fewer absent days
Loss of productivity due to employee dissatisfactions costs the US $300B
Increase productivity Higher Sales figures
Happier workers are 20% more productive
Better networking and social
support
Happy employees make make
happy customers
Overview Attrition
Churn
Rate
Expansion Risks
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Interdepartmental Collaboration
Managers and
staff feel like
teamwork is
undervalued
Staff want a clear
career
progression
Mentorship
Program and
working
alongside team
members from
different
departments
Redesign
office spaces
to encourage
communication
Overview Attrition
Churn
Rate
Expansion Risks
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Invest in experience
With our churn rate we lose $80M
annually
A 5% increase in customer retention has
been shown to translate into between a
25% and 55% increase in profitability.
A report estimated that reducing churn
could increase earnings of a typical US
wireless carrier by as much as 9.9
percent.Overview Attrition
Churn
Rate
Expansion Risks
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Improve Customer Care to Retain Customers
Client Centered Business Model
Improve IT services
-$13M loss due to poor IT
services
-Renegotiate terms with
ITCo
-Phase out ITCo if it does not
improve service
-Look into more proficient
companies like MAESTRO
Reward for purchases &
referrals to new customers
-Lock in customers, create
switching costs
-Offer deals and promotion
schemes for valuable
customers
-Customer review system
tied to bonuses for managers
Overview Attrition
Churn
Rate
Expansion Risks
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Telecoms retail revenue in Latin America will increase from USD142
billion in 2012 to USD167 billion in 2017 and the main areas of growth
will be mobile handset data and broadband
Growth In Latin America
Source: www.analysysmason.com
Overview Attrition
Churn
Rate
Expansion Risks
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Mobile Banking
Overview Attrition
Churn
Rate
Expansion Risks
Revenue in millions
Bank Rev/customer $100
Telecom Rev/Customer $5
% of subscribers for MB 20%
# subscribers for MB 16
Telecom Rev from MB $90
Increases total
revenue by 15% in
2014 itself.
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TELECOM CO’s US divestiture
Deal Estimation
Metro PCs Deal in 2013
Market Share: 2.9%
Transaction Value:
$1.5 Billion
Telecom CO
Market share: 1.6%
Transaction Value
$750m – $800m
AT&T, Verizon, Sprint, T-Mobile
have 97% of US Market
- no room for growth
- High switching costs
US cellular companies are trying
compete to acquire more
spectrum to improve their service.
Past Deal Value
Overview Attrition
Churn
Rate
Expansion Risks
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Moving into Brazil
Why Brazil?
Large Market
Tim (27% market share) exiting
Positioned to grow 30% over the next
5 years
Government Liberalization and
deregulation
Political Stability
Overview Attrition
Churn
Rate
Expansion Risks
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Risks associated with the recommendations
Risks Solutions
1. Telecom Co can use that as
leverage to negotiate high bids for
their US segment
2. Government would like to
improve the telecommunication
service so as long as Telecom Co
solve the service issue, it is a low
risk with high growth rate business
3. The Brazilian government is
keen to add FDI and develop
infrastructure through
telecommunications.
1. Low acquisition bids for US
segment may affect company cash
flow
2. Argentina government may
nationalize the
telecommunications industry
3. Brazil government is not on
good terms with the US
government
Overview Attrition
Churn
Rate
Expansion Risks
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Employees leave the
company to other
competitors
Outsourcing IT to
third party vendor
High churn rate
High employee
turnover
Poor service quality,
especially in Mexico
Lack of scope in the
US market
Create
Interdepartmental
Collaboration
Environment
Reorganize office
space to encourage
communication
Standardize
Applications
Increase
maintenance, data
and server uptime
Renegotiate SLAs
with ITCo
Situation
Complication
Answer
Human Capital Technology Strategy
Executive Summary
Divest US
Operations
Expand into
Brazil
Markets
Enter Mobile
Payments Market
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Brazil Markey Entry Financials
Costs in millions
Spectrum $300.00
Rent $50.00
Wages $50.00
licensing $20.00
Advertising $50.00
Total $470.00
Year 2014 2015 2016 2017 2018 2019 2020
Cash Flow (mm) (480.00)$ 93.63$ 105.90$ 119.44$ 134.36$ 143.76$ 153.82$
Brazil Market Size Calculation
US ARPU 145$
Brazil # users 263mm
Brazil ARPU 95$
Brazil Size (bil) 25$
NPV (mm) $79.48
IRR 13%
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Mexico Mobile Banking Financials
Costs in millions
Software and Server $5
Personnel $3
Advertising $2
Total $10
Revenue in millions
Bank Rev/customer $100
Telecom Rev/Customer $5
% of subscribers for MB 20%
# subscribers for MB 16
Telecom Rev from MB $90
