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Diesel generator rent service (long term) for Telecom Operator

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Diesel generator rent service (long term) for Telecom Operator

  1. 1. DIESEL GENERATOR SERVICE for TELECOM OPERATOR Otgontugs U.
  2. 2. Assumption • Average annual hours : 250h • Rental Contract duration: 5 years + (5 years) • USD rate: 1USD = 1900MNT • Diesel fuel cost: 1L = 2000 MNT • Electricity cost: 1kWh = 124 MNT • Data package: 1Gb = 10,000MNT • First year: 10 pcs triple operator site, 20 pcs double operator site • Annual increase : 3 pcs triple site, 7 pcs double site
  3. 3. Operator situation Operator Mobicom Skytel Unitel Netcom Gmobile # of site 373 395 390 330 3G / 2G 74 / 299 362 / 256 390 # of gensets 200+ 45 50? # of portable gensets 100+ 82 100? # of person 10 6-8 6-8 30 more Type of genset Olympian, aska, fgwilson honda Aska, Olympian, fgwilson honda Chinese, CAT, honda Aksa, Kipor, Volvo, Koop, Russian Honda Kipor, buy gensets directly from Chinese. Procurement Genset 14/15 24 + 15 10 + 2 30 + 15 2 + 29 ? Portable 14/15 40 + 40 13 ?
  4. 4. Netcom’s tender opening March 27, 2015 Company name Quotation MNT Discount MOST IRRADIANS Monhorus WAE
  5. 5. Operator’s monthly cost on genset Cost Portable 6k 9.5kVA 13.5kVA 22kVA 33kVA Generator 300,000 293,000 360,000 422,000 492,000 Installation* 30,000 98,000 98,000 98,000 98,000 Gen Room - 50,000 50,000 50,000 50,000 Guard salary 80,000 80,000 80,000 80,000 80,000 Fuel cost 25h 125,000 130,000 185,000 265,000 350,000 PM** - 100,000 110,000 120,000 135,000 Electricity*** 15,000 15,000 15,000 15,000 CM mod data CM service Cost per kWh 4,460 4,506 3,592 2,625 2,033 Total MNT 535,000 766,000 898,000 1,050,000 1,220,000 * - install location 500km ** - include Technical Labor, *** - for battery charger& JWH
  6. 6. Current Problem for Operators At Any site, any Soum center, any Aimag center Mobicom 22kVA Unitel 13.5kVA Netcom 33kVASkytel 9.5kVA Gmobile 6.5kVA Different product, different service quality, difficult to maintain multi vendor gensets.
  7. 7. WAE solution Mobicom 22kVA Unitel 13.5kVA Netcom 33kVA Skytel 9.5kVA Gmobile 6.5kVA WAE 88kVA WAE install diesel generator, operate, maintenance, rent it for telecom operators, 5years duration get monthly rent fee and working hours fuel fee
  8. 8. Condition Monitoring Service
  9. 9. WAE monthly cost on genset Site Double 22kVA Double 33kVA Triple 55kVA Quad 88kVA Generator 422,000 492,000 550,000 670,000 Installation 98,000 98,000 110,000 120,000 Room 50,000 50,000 50,000 50,000 Guard salary 80,000 80,000 80,000 80,000 Diesel fuel 25h 265,000 350,000 785,000 900,000 PM* 120,000 135,000 150,000 165,000 Electricity** 15,000 15,000 20,000 20,000 CM modem 50,000 50,000 50,000 50,000 CM service&data 60,000 60,000 60,000 60,000 Cost per kWh 2,900 2,217 1,855 1,322 Total MNT 1,160,000 1,330,000 1,855,000 2,115,000 Operators cost 1,664,000 1,948,000 1,714,000 3,896,000
  10. 10. 6W2H • Who: Mobicom, Skytel, Unitel, Netcom, Gmobile • What: Supply diesel generator service • When: 5 years Contract duration + 5years • Where: at any site, with 2 or 3 operators • Whom: May cooperate with Netcom • How (many): 10 pcs triple operator site, 20 pcs double operator site at first year. Then add 3 pcs triple, 6 pcs double, 1pc quad site every year. • How (operate):WAE install diesel generators, own, operate, maintenance, and get monthly rent fee and fuel fee of additional working hours.
  11. 11. SWOT analysis STRENTH High Quality product and service 4 years of warranty Professional technicians team New source of income WEAKNESS High service cost Retail CAT generator costs high OPPORTUNITY CAT Condition monitoring service Avoid price competition from low-end Genset network whole Mongolia Utilize gensets in WAE stock THREAT Economic crisis Exchange rate Competitor may do same as WAE Layoffed employee will go to competitor
  12. 12. CROSS SWOT (O) Condition monitoring / (W) High service cost Condition monitoring help to control un-neccessary service cost. (T) Economic crisis / (S) High quality service Operators needn’t own gensets, get high-qualified service at same costs, they owned. (S) 4 years of warranty / (O) Standardized service quality WAE will become beneficiaries of 4 years service warranty (O) Utilize WAE stock / (S) New source of income Using gensets of WAE stock, get new source of income for company (O) Genset network whole Mongolia / (S) High quality of product and service Create service driven sales opportunity
  13. 13. Value to Customers • No need High cost Initial investment • No need worry on operation & maintenance • Get high quality service from WAE • Monthly fee as same as pay now on own gensets • Free from multi vendor’s head-ache.
  14. 14. Critical Success Factor (CSF) Site Double 22kVA Double 33kVA Triple 55kVA Quad 88kVA Cost per kWh 2,900 2,217 1,855 1,322 Total MNT 1,160,000 1,330,000 1,855,000 2,115,000 Operator need 9.5 + 13.5 kVA 13.5 + 22 kVA 9.5+13.5+ 22 2X13.5 + 2X22 Operators cost 1,664,000 1,948,000 2,714,000 3,896,000 Difference MNT 474,000 578,000 859,000 1,631,000 Difference % 30% 32% 32% 45% Difference is what WAE want to earn monthly
  15. 15. Service price structure • (A) Monthly fee include 25h fuel cost + additional hours fuel cost • (B) Monthly fee not include fuel cost + Cost/kWh * total KW (powermeter) • (C) No monthly fee, only Cost/kWh * total KW (powermeter) * - In service price calculation, fuel cost 1L = 3000MNT
  16. 16. • Monthly fee include 25h fuel cost + additional hours fuel cost Service price structure (A) Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW Monthly fee 766,000 898,000 1,050,000 1,220,000 Fuel consumption L 2.6 3 5.3 7 Additional hours fuel cost per hour 7,800 11,100 15,900 21,000 Advantages Disadvantages Monthly fee is high
  17. 17. • Monthly fee not include fuel cost + cost / kWh * total kW (powermeter) Service price structure (B) Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW Monthly fee 630,000 710,000 790,000 870,000 Cost per kWh 1,000 1,000 1,000 1,000 Advantages Disadvantages Most feasible price structure Pay as use Service price structure (B) used for further calculation
  18. 18. • No monthly fee, Cost/kWh * total KW (powermeter) only. Service price structure (C) Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW Monthly fee Cost per kWh 4,400 3,390 2,450 1,900 Advantages Disadvantages Low operating hours, drive loss to WAE High cost per kWh
  19. 19. Product / Service Forecast Fiscal year 2016 2017 2018 2019 2020 Total year 1 2 3 4 5 Double 22kVA 10 3 3 3 3 22 Double 33kVA 10 3 3 3 3 22 Triple 55kVA 10 3 3 3 3 22 Quad 88kVA 1 1 1 1 4 Total 30 10 10 10 10 70 Operator’s Equivalent 70 25 25 25 25 170 SERVICE
  20. 20. Cost Analysis • Initial investment: 1,242,000,000 MNT • 30 pcs gensets, include DE55E2, DE33E2, and DE22E3 • Annual income: 817,320,000 MNT, annual cost: 467,080,000 MNT • Profit in Cash (for 5 years): 2,544,480,000 MNT • ROI (for 5 years): 204.87%
  21. 21. Financial Projection (initial investment of 2016) year 1 year2 year3 year 4 year5 Investment 1,242,000,000.00 Equity 1,242,000,000.00 Debt 0.00 Income 817,320,000.00 817,320,000.00 817,320,000.00 817,320,000.00 817,320,000.00 Yearly fee 598,200,000.00 598,200,000.00 598,200,000.00 598,200,000.00 598,200,000.00 Fuel 219,120,000.00 219,120,000.00 219,120,000.00 219,120,000.00 219,120,000.00 Cost 467,080,000.00 467,080,000.00 467,080,000.00 467,080,000.00 467,080,000.00 Guard salary 28,800,000.00 28,800,000.00 28,800,000.00 28,800,000.00 28,800,000.00 Fuel 168,000,000.00 168,000,000.00 168,000,000.00 168,000,000.00 168,000,000.00 PM 49,000,000.00 49,000,000.00 49,000,000.00 49,000,000.00 49,000,000.00 Electricity 6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00 CM service and data 21,600,000.00 21,600,000.00 21,600,000.00 21,600,000.00 21,600,000.00 Interest 8.00% 0.00 0.00 0.00 0.00 0.00 Depriciation 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 profit before tax 350,240,000.00 350,240,000.00 350,240,000.00 350,240,000.00 350,240,000.00 Tax 35,024,000.00 35,024,000.00 35,024,000.00 35,024,000.00 35,024,000.00 Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 Cash Flow Cash income 508,896,000.00 508,896,000.00 508,896,000.00 508,896,000.00 508,896,000.00 Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 Depriciation 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 Cash cost 1,242,000,000.00 0.00 0.00 0.00 0.00 0.00 Investemnt 1,242,000,000.00 repayment 0.00 0.00 0.00 0.00 0.00 Profit in Cash 508,896,000.00 1,017,792,000.00 1,526,688,000.00 2,035,584,000.00 2,544,480,000.00 Debt 0.00 repayment 0.00 0.00 0.00 0.00 0.00 expectation 0.00 0.00 0.00 0.00 0.00 0.00
  22. 22. Financial Projection (investment of 2017-2020) year 1 year2 year3 year 4 year5 Investment 426,000,000.00 Equity 426,000,000.00 Debt 0.00 Income 289,560,000.00 289,560,000.00 289,560,000.00 289,560,000.00 289,560,000.00 Yearly fee 211,680,000.00 211,680,000.00 211,680,000.00 211,680,000.00 211,680,000.00 Fuel 77,880,000.00 77,880,000.00 77,880,000.00 77,880,000.00 77,880,000.00 Cost 162,384,000.00 162,384,000.00 162,384,000.00 162,384,000.00 162,384,000.00 Guard salary 9,600,000.00 9,600,000.00 9,600,000.00 9,600,000.00 9,600,000.00 Fuel 61,200,000.00 61,200,000.00 61,200,000.00 61,200,000.00 61,200,000.00 PM 15,600,000.00 15,600,000.00 15,600,000.00 15,600,000.00 15,600,000.00 Electricity 2,040,000.00 2,040,000.00 2,040,000.00 2,040,000.00 2,040,000.00 CM service and data 7,200,000.00 7,200,000.00 7,200,000.00 7,200,000.00 7,200,000.00 Interest 8.00% 0.00 0.00 0.00 0.00 0.00 Depriciation 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 profit before tax 127,176,000.00 127,176,000.00 127,176,000.00 127,176,000.00 127,176,000.00 Tax 12,717,600.00 12,717,600.00 12,717,600.00 12,717,600.00 12,717,600.00 Profit after tax 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 Cash Flow Cash income 426,000,000.00 181,202,400.00 181,202,400.00 181,202,400.00 181,202,400.00 181,202,400.00 Profit after tax 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 Depriciation 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 Cash cost 426,000,000.00 0.00 0.00 0.00 0.00 0.00 Investemnt 426,000,000.00 repayment 0.00 0.00 0.00 0.00 0.00 Profit in Cash 181,202,400.00 362,404,800.00 543,607,200.00 724,809,600.00 906,012,000.00 Debt 0.00 repayment 0.00 0.00 0.00 0.00 0.00 expectation 0.00 0.00 0.00 0.00 0.00 0.00
  23. 23. Financial Projection (Cumulative) 2015 2016 2017 2018 2019 2020 Investment 1,242,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 Equity 1,242,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 Debt 0.00 0.00 0.00 0.00 0.00 0.00 Income 817,320,000.00 1,106,880,000.00 1,396,440,000.00 1,686,000,000.00 1,975,560,000.00 Yearly fee Fuel Cost 467,080,000.00 629,464,000.00 791,848,000.00 954,232,000.00 1,116,616,000.00 Guard salary Fuel PM Electricity CM service and data Interest Depriciation profit before tax 350,240,000.00 477,416,000.00 604,592,000.00 731,768,000.00 858,944,000.00 Tax 35,024,000.00 47,741,600.00 60,459,200.00 73,176,800.00 85,894,400.00 Profit after tax 315,216,000.00 429,674,400.00 544,132,800.00 658,591,200.00 773,049,600.00 Cash Flow Cash income 508,896,000.00 690,098,400.00 871,300,800.00 1,052,503,200.00 1,233,705,600.00 Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 Depriciation 193,680,000.00 260,424,000.00 327,168,000.00 393,912,000.00 460,656,000.00 Cash cost 0.00 0.00 0.00 0.00 0.00 Investemnt repayment 0.00 0.00 0.00 0.00 0.00 Profit in Cash 508,896,000.00 1,198,994,400.00 2,070,295,200.00 3,122,798,400.00 4,356,504,000.00 Debt 0.00 repayment 0.00 0.00 0.00 0.00 0.00 expectation 0.00 0.00 0.00 0.00 0.00 0.00
  24. 24. Conclusion • Win-win solution for WAE and telecom operators • Need to work closely with operators • WAE have financial capability to provide such service. • This is preliminary financial projection. Need to do more for correct financial calculation. • Thank you for your attention.
  25. 25. WAE DIESEL GENERATOR NETWORK

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