Singtel optus presentation-slide share

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Risk Mapping

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Singtel optus presentation-slide share

  1. 1. Team D
  2. 2. Company Profile Optus is the second largest telecommunications company in Australia. Acquired by SingTel in 2001 Provides a broad range of communications services including mobile, national and long distance services, local telephony, international telephony, business network services, internet and satellite services and subscription TV. Divided into five major business areas comprising Mobile, Business, Small Business, Wholesale and Consumer & Multimedia. As at 2007, the company has a total of almost 10,000 employees.
  3. 3. PerformanceTable 2 : Operating Revenue by Division from 2003 – 2007 (Financial Year) Year 2003 2004 2005 2006 2007* 2008^Mobile 2.92 3.45 3.81 3.97 4.18 3.27Business 0.97 1.03 1.14 1.29 1.13 0.93Wholesale 0.45 0.49 0.48 0.44 0.60 0.47Consumer and 1.27 1.49 1.53 1.54 1.60 1.18Multimedia* In 2007, owing to change of strategy, the divisions were recategorised to Mobile, Business Fixed, Wholesale Fixed and Consumer and SMB Fixed. The revenue figures indicated could therefore not be compared directly to previous years.^As on Dec 2007
  4. 4. PerformanceTable 1 : Operating Revenue and Net Profits from 2003 – 2007 (Financial Year) Year 2003 2004 2005 2006 2007 2008* Revenue 5.55 6.36 6.92 7.19 7.47 5.83 (AUD) Y-O-Y increase - 15% 4.7% 3.9% 3.9% - Profit (AUD) 0.34 0.44 1.08 0.60 0.80 0.39 Y-O-Y increase *As on Dec 2007 - 32% 143% -49% 35% -
  5. 5. Performance Table 3 : Operating Expenses (in Aud bn) from 2003 – 2007 (Financial Year) Year 2003 2004 2005 2006 2007 2008^Traffic expenses 1.36 1.42 1.54 1.66 1.69 1.17 (25%) (22%) (22%) (23%) (23%) (20%)Selling & 1.37 1.46 1.46 1.52 1.63 1.54administrative (25%) (23%) (21%) (21%) (22%) (26%)Staff costs 0.75 0.84 0.88 0.94 0.97 0.81 (13%) (13%) (13%) (13%) (13%) (14%)Cost of sales 0.66 0.99 0.90 1.06 1.19 0.83 (12%) (12%) (13%) (14%) (16%) (14%)Capitalisation of costs¹ (0.095) (0.11) (0.13) (0.14) (0.13) (0.11) (-3%) (-2%) (-2%) (-2%) (-2%) (-2%)Repair & maintenance 0.15 0.14 0.14 0.15 0.18 0.14& others (3%) (2%) (2%) (2%) (2%) (2%)Total 4.2 4.74 4.79 5.19 5.54 4.38 (76%) (71%) (69%) (72%) (74%) (75%) ¹ The bulk of the capitalisation relates to staff cost. ^As on Dec 2007 (%) shows each expense as a percentage of operating revenue
  6. 6. PerformanceTable 4 : Staff Statistics from 2003 – 2007 (Financial Year) Year 2003 2004 2005 2006 2007 2008^ Average 8,436 8,728 9,295 9,874 9,973 10,100 number of Employees Revenue per 655 728 744 728 750 577 Employee (in ‘000) ^As on Dec 2007
  7. 7. Key Contributing Factors Maintaining operating expenses at no more than 75% of operating revenue consistently over the years. Generating higher revenue per employee (value-added) progressively. Investing in infrastructure to achieve a technological edge. Competitive pricing as well as launching of new products. Consolidating products and services. Leveraging major brands.
  8. 8. Impact of Factors on Profitability Factor Impact ReasonMaintaining operating High Making a profit is essentially a simple formula of revenueexpenses at no more than minus expense. Once operating expenses go up, ceterus75% of operating revenue paribus, profit will drop.Generating higher revenue per High Employee value adding is critical to generate profit. As theemployee company expands, it is likely that employee numbers might go up and employee productivity has to be sustained.Investing in infrastructure High High quality infrastructure is necessary for Optus to compete with other telcos such as Telstra. Given the size of Australia, a wide reach is necessary for growth.Competitive pricing and High Telecommunications market is fully commoditized andlaunching of new products consumers have a wide range of choices. Without competitive pricing and product/service refresh, consumers will flock to other providers.Consolidating products and Medium Given the changing market (eg, fixed line subscriptionservices reduction) consolidation is necessary. However, it is necessary for the company to keep a mix of products and service for effective competition.Leveraging major brands Low Bells and whistles might appeal to a small segment of the market but in general consumers will prefer basic services and functions.
  9. 9. Potential Events that affect Factors To distil the potential events, the following was done:  5 Forces  PEST  Economic Activity Forecast  Industry Forecast  Mobile  Broadband  Fixedline
  10. 10. Economic Activity – Historical Data And Forecasts 2005 2006e 2007f 2008f 2009f 2010f 2011fPopulation 20.2 20.4 20.6 20.8 21 21.2 21.4(mn)Nominal GDP (US$ ) 711 753.7 876.5 908 908 904.2 914.2GDP per capita (US$) 35,277 37,006 45,598 43,686 43,251 42,647 42,703Real GDP growth 2.8 2.7 3.9 3.4 3.5 3.5 3.4(% y/y)Manufacturing output (% 1.1 0 3.5 2.8 2.5 2.6 2.3y/y)Unemployment rate (%) 5.1 4.9 4.4 4.6 2.5 2.6 5.9
  11. 11. Potential Events that affect Factors A highly mature and competitive telecoms sector. Greater take-up of 3G services (forecast – 27% in 2007 to 75% in 2012). High levels of broadband take-up remain in place (forecast – 29% in 2007 to 69% in 2012). The fixed-line sector is in disarray, with the number of lines in service set to drop over the next five years (forecast – 9.7m in 2007 to 8.8m in 2012). FDI is perceived as being hamstrung by excessive taxes and bureaucracy. The government is considering reducing corporate tax levels.
  12. 12. 2 5 Risk MapLikelihood 3 5 6High 7 4 2Moderate 1 1. Operating Expenses 2. Employee Productivity 3. Infrastructure Investment 4. Competitive PricingLow 5. New Products and Services 8 6. Consolidate Products and Services 7. Leverage Major Brands Low Medium High 8. FDI Severity of Impact to Profits
  13. 13. Type and Source of BI to minimizeHigh Risk Events/Factors
  14. 14. Operating Expenses Maintaining operating expenses at no more than 75% of operating revenue Type of BI Source of BI Profit/loss/revenue data  Annual reports Stock market standing  Bloomberg/Reuters Sales profile reports Advertising spending and  Telecomm Budget strategy Cost structure Market Shares
  15. 15. Employee Productivity Generating higher revenue per employee Type of BI Source of BI Labour costs  Government labour Demographic information department report Organization structure  Census report  Trade associations  Meetings/Discussions
  16. 16. Infrastructure Investment Investing in the company infrastructure Type of BI Source of BI Regulatory Issues  Audit reports Distribution system  Government rules & Environmental Issues regulations Market Value  Regional laws  Commercials
  17. 17. Competitive Pricing Competitive pricing and launching of new products Type of BI Source of BI Competitors pricing  Surveys/Interviews strategy  Ghost shopping Consumer preferences  Research, analyst reports Buying behavior  Sales force meetings R&D spending of  Observation at shops competitors  Consumer groups Patents filed  Academics who interface with or advise target company 
  18. 18. Thank YouNaikal AppasahebAng Pow ChewChen YulingRujuta KelkarVarun Jain

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