4G Business Case Model


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* Analysis of all critical aspects (market, technical, economic and financial) ensuring the best possible alignment between business and technology strategies
* Integrated and iterative approach to carry out a sound and reliable business case
* Tailored for the specific needs of players in the 4G ecosystem (operators, vendors, analysts and consultants, investors, regulators)
* Compliant with WiMAX and LTE technical specifications

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4G Business Case Model

  1. 1. TEAFamily of Business Case Analysis of Tools www.4gbusinesscase.com 1
  2. 2. Contents Overview Market analysis Technical analysis Economic & financial analysis Sensitivity analysis Comprehensive report Default parameters 2
  3. 3. Overview 3
  4. 4. TEA|WiMAX and TEA|LTE  Empowering 4G players with an effective business case analysis tools to set a solid foundation for a successful initiative  Unique and integrated applications  Built over six years of extensive industry experience with strategic assignments and projects for major operators and equipment suppliers 4
  5. 5. Key characteristics (1/2)  Analyzing the business case for a WiMAX and LTE initiative with a holistic approach, in an integrated and iterative way, taking into account all critical aspects  Supporting a fast and simplified configuration of more than 500 input parms with a number of them pre-set to typical/recommended values in the technical part  Enabling the user to view results instantly in an animated graphical format through a dashboard-styled and very easy-to-use GUI 5
  6. 6. Key characteristics (2/2)  Compliant with: • IEEE 802.16e/d/m standards and the WiMAX Forum Fixed/Mobile Profiles (TEA|WiMAX) • The latest version (Release 10) of the LTE standard (TEA|LTE)  Allowing the definition of custom profiles and bands  Allowing the manual setting of the number of Users, BS/eNB, Logical Sectors, Radio Links, MME, S-GW, P-GW to take into account the outcome of external/additional calculations/dimensioning 6
  7. 7. Four main integrated analyses  Market analysis • Estimating the potential market and revenues for 4G services  Technical analysis • Dimensioning the network infrastructure to derive the required bill of quantities  Economic and financial analysis • Calculating all key economic & financial projections and indicators  Scenario and sensitivity analysis • Analyzing the influence of parameter and boundary condition changes 7
  8. 8. High-level work flow Market data Market analysis Market and revenues forecast Economic & financial data Economic and financial analysis Technical data Technical analysis Bill of quantities Economic & financial Scenario and projections and sensitivity analysis indicators Inputs Module Outputs 8
  9. 9. Market analysis 9
  10. 10. Introduction Estimating the potential market and revenues for 4G services:  Extension of the geographical areas (up to 5) to be served and their specific scenario distribution  Market segments (up to 6) to be addressed  Service profiles (up to 6) to be offered  Market segment penetration per year  Impact of churn 10
  11. 11. Work flow Territory & demography Territorial analysis Penetration and churn rates Target percentages Market forecast Other revenues Service profiles characterization Market forecast Revenues Service profile Service profiles distribution Revenues forecast Inputs Module Outputs 11
  12. 12. Territorial analysis  Each geographical area of interest is characterized considering key territorial parameters: • Total extension of each geographical area • Percentage of dense urban, urban, suburban and rural scenarios • Target percentage to be covered  As for main demographic data, they are: • Number of inhabitants, households and micro/small/medium/large located in each geographical area • Percentage of distribution of each market segment among the different scenarios • Target percentage to be served 12
  13. 13. Service profile  The portfolio of service profiles to be offered is defined considering: • Technical features  Internet access: PIR and CIR in down and up link  VoIP: number of VoIP lines per users, coding algorithm • Pricing policies  Monthly service fee, one-time activation fee, monthly lease fee • Distribution of services profiles per each market segment • Distribution of user equipments related to the selected service profile per each market segment 13
  14. 14. Market forecast  The market size per each year, each area and each market segment is evaluated by taking into account: • Penetration rate • Churn rate 14
  15. 15. Revenues  The revenues for the 4G services to be offered are estimated depending on: • Service profile characterization • Market forecast  In addition, it is possible to take into account other revenues, i.e. other possible total annual incomes related to the network operation such as: • Revenues due from for example sale of end user devices • Revenues due from end user accessories • Revenues due from other business units • Etc. 15
  16. 16. Technical analysis 16
  17. 17. Introduction Dimensioning the network infrastructure to derive the required bill of quantities:  Technology characterization  Type of BS/eNB (up to 3) and UT/UE (up to 6)  Path loss model for the link budget analysis  Down and up link capacity demand per year  Existing backbone infrastructures  Wireless backhaul technology distribution 17
  18. 18. Work flow Service profile Market forecast characterization Frequency and distribution Target area Channel Cell overlapping Technology bandwidth factor Capacity demand MCS & SNIR EPC characterization Performance Network dimensioning Backhaul BTS/eNodeB characterization configuration EquipmentUser equipment Roll-out Roll-out function configuration Margins Path loss model Bill of quantities Inputs Module Outputs 18
  19. 19. Technology  The 4G technology is characterized according to the standard certification profiles defined by either WiMAX Forum (WiMAX) or 3GPP (LTE). In detail the following parameters are specified: • Frequency • Channel bandwidth • Duplexing format • Modulation and coding scheme • SNIR  Custom profiles can be defined to completely customize the use of the 4G technology in terms of: • Frequency • Channel bandwidth • Duplexing format 19
  20. 20. Equipment  In order to perform the link budget analysis, equipments (BTS/eNodeB and user equipments) are characterized in terms of : • Antenna gain • Cable losses • Feeder losses • Transmit power • Noise figure • LNA gain • Penetration loss • Body loss • Number of sectors • Number of antenna elements in transmission and reception 20
  21. 21. Performance  The maximum path loss on the basis of a relevant number of parameters: • Equipment characterization (BTS/eNodeB and user equipment) • Margins  Cell edge coverage probability, lognormal shadowing standard deviation, fast fading margin, interference margin (in down and up link)  The coverage predictions of the median path loss related to each scenario are calculated on the basis of the selected path loss model (Cost-231, SUI, ECC-33, Log- normal with/without shadowing, Free Space)  The capacity provided by each BTS/eNodeB is evaluated on the basis of: • Supported MCS • Distribution of MCS • Number of carrier per sector • Number of sectors per BTS/eNodeB 21
  22. 22. Capacity demand  To evaluate the feasibility of the services to be offered and to perform the dimensioning of the network infrastructure correctly, the capacity demand is estimated  The capacity demand denotes the capacity required in down and up link by the users located in each area to be served and it is estimated depending on relevant parameters: • Market forecast • Service profiles • Overbooking factor • Peak busy hour activity factor 22
  23. 23. Network dimensioning  The network dimensioning aims at estimating: • Number of BTS/eNodeB on the basis of coverage and capacity requirements • Number of radio links per each technology (SDH, PDH, IP Ethernet, etc.) • Number of ASN-GW (WiMAX) or MME, S-GW, P-GW (LTE)  This network dimensioning is performed by taking into account: • Coverage requirements • Cell overlapping factor • Characterization of ASN-GW/EPC • Percentage of BTS/eNodeB with wireless backhaul and multihop factor • Distribution of radio links among the various technologies (SDH, PDH, IP Ethernet, etc.) • Legacy network (existing BTS/eNodeB and radio links) 23
  24. 24. Roll-out  The network roll-out is evaluated on the basis of the roll-out function, that denotes the percentage of year-on-year deployed infrastructure.  The annual bill of quantities is estimated in terms of: • BTS/eNodeB • Logical sectors • Radio links • ASN-GW / MME, S-GW, P-GW 24
  25. 25. Economic and financial analysis 25
  26. 26. Introduction Calculating all key economic & financial projections and indicators to assess the feasibility of the initiative:  CAPEX & OPEX  Depreciations  Interest rate on borrowings, tax rate, discount rate  Financing  Equity  Perpetual growth 26
  27. 27. Work flowBill of quantities Head count Salaries & benefits Market and revenues forecastMarket forecast Personnel SG&A items COS items SG&A COS TCOBill of quantities D&A Statements Revenues forecastMarket forecast CAPEX Economic & financial Years to depreciate projections and CAPEX items indicators Inputs Module Outputs 27
  28. 28. Personnel  The personnel costs are analyzed considering all the typical roles in a telecommunication operator: • Executive staff • Technical ops • Sales • Other (marketing, general & administrative people)  and defining: • Their salary • Their benefits 28
  29. 29. CAPEX To forecast capital expenditures, all main CAPEX figures for the 4G initiatives are defined and calculated, such as network and system equipments costs: • BTS/eNodeB • User equipment • Backhauling (wireless and wired) • Core network • Spectrum license • Other possible CAPEX 29
  30. 30. D&A On the basis of CAPEX, the depreciation and amortization breakdown is evaluated In particular, for each CAPEX item years to depreciate and amortize are defined 30
  31. 31. COS To forecast the cost of services, all main COS figures for the 4G initiatives are defined and calculated, such as: • BTS/eNodeB • User equipment • Backhauling (wireless and wired) • Core network • Spectrum license • VoIP • Technical staff • Other possible COS 31
  32. 32. SG&A To forecast costs of SG&A, all main SG&A figures for the 4G initiatives are defined and calculated, such as: • General & Administrative • Marketing • Sales • Customer acquisition • Customer care • Billing • Bad debts and churn • Other possible SG&A 32
  33. 33. Statements  To understand whether the 4G initiatives make or not a positive net income during the analysis period • The following statements are produced: Profit & Loss, Cash Flow, Balance Sheet • The following indicators are estimated: IRR, NPV, PBP, Enterprise value  The statements are carried out on the basis of: • Revenues • CAPEX & OPEX • Depreciations • Interest rate on borrowings, tax rate, discount rate • Financing & Equity • Perpetual growth 33
  34. 34. Scenario and sensitivity analysis 34
  35. 35. Introduction  Analyzing the influence of parameter and boundary condition changes, to identify the most critical factors for the success of the initiative  Allowing a fast and iterative fine-tuning of the business case, in real-time and total privacy  Presenting the results in an animated graphical format instantly from the different Market, Technical, Economic & Financial perspectives 35
  36. 36. Critical factors  Market analysis • Users target percentage, pricing policies, distribution rates, penetration rates  Technical analysis • Frequency, channel bandwidth, duplexing, BTS/eNodeB choice, MIMO, cell overlapping percentage of BTS/eNodeB with wireless backhaul, roll-out rate  Economic and financial analysis • Site acquisition, logical sector cost, user equipment cost, wireless backhaul equipment cost, spectrum license • Site lease and utilities, wired backhaul, customer acquisition 36
  37. 37. Comprehensive report 37
  38. 38. Comprehensive report  Automatically compiled and published in editable and PDF formats  Containing a complete summary (with tables, diagrams and charts) of: • All inputs and assumptions • All results of the market analysis • All outcome of the technical modelling • All economic and financial statements for up to ten years 38
  39. 39. Default parameters 39
  40. 40. Default parameters  To help configuring the technical part, a number of relevant parameters are, by default, pre-set to typical/recommended values: • Technology characterization • BTS/eNodeB characterization • User equipment characterization • Multiple antenna system gain • Margins • EPC characterization  These values can be changed at any time during the analysis 40
  41. 41. Thank you for your attention! WiTech Spa Via Giuntini 25 56023 CascinaFor more information, please visit our web site, call us Loc. Navacchio PISA - Italyor send us an e-mail. www.witech.it www.wropcloud.com www.4gbusinesscase.com Phone: +39 050 775 056 Fax: +39 050 75 47 22 E-mail: info@witech.it 41