The document discusses the process of financial modeling for a network operator. It involves 4 steps: 1) determining network architecture and capital expenses, 2) determining operational expenses, 3) determining market assumptions and revenue drivers, and 4) outputting annual revenue, cash flows, and key metrics. Telesystem Innovations provides expertise in financial modeling to help operators accurately assess business cases and make reliable decisions.

1. Financial Modeling:
Network Operator
Business Case
Telesystem Innovations
Making Broadband Wireless Reality
TSI Proprietary & Confidential 1

2. Overview of Financial Modeling
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3. The Process for Financial Modeling – Step 1
> Network Architecture
– Number of Sites/Cells
> Coverage constraints (link budget, propagation model)
> Capacity constraints (subscriber profile and distribution, traffic
model)
– Site configuration
> Omni, sectored
> Frequency plan
– Backhaul and Backbone Connection
> Backhaul from sites to central office
> Connection to communication backbones
Result: Determine main components of capital expenses incurred by an
operator – i.e. Capex Model
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4. The Process for Financial Modeling – Step 2
> Operational Assumptions
– Staffing Requirements
– Peering bandwidth, backhaul expenses
– Site leasing expenses (antenna & leasehold space)
– Equipment maintenance costs
– Spectrum license expenses
– Billing expenses
– Marketing expenses
– Other expenses
Result: Determine main components of operational expenses – i.e.
Opex Model
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5. The Process for Financial Modeling – Step 3
> Market Assumptions
– Total Addressable Market (TAM)
> Adoption rate of new technology
> Ability of operator to sign-up new clients
– Subscriber Profile
> Business vs. residential
> Voice vs. data
> Usage rates
– Pricing
Result: Determine main revenue drivers – i.e. Revenue Model
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6. The Process for Financial Modeling – Step 4
> Output
– Annual revenue (revenue model)
– Annual cash flows (revenue, opex and capex models)
– Net present value
– Breakeven period
– Ratio analysis – key metrics of profitability
> Scenario Analysis
– What-if…?
> Sensitivity Analysis
– Stress-test key assumptions
– Monte-Carlo simulation for statistical analysis of output
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7. TSI Advantage
> Experience Equipment Description Cost Comment
Backhaul Equipment $ 10,500 Data Backhaul from POP to Super POP
– Years of Service Provider 802.16 Cell Site $ 64,500 6-Sector cell at $10,000/sector + $4500 Aggregation switch
experience in international Equipment Installation
Peering Point Routers
$ 5,000
$ 19,500
Installation cost per POP and Super POP
1 PPR required at Super POP
markets - familiarity with actual Aggregation Switch $ 4,500 1 Aggregation switch required at super POP
operational challenges and cost Backbone Switch
Capital Expenditure
Network Mgt. System
$ 10,000
$250,000
Year 1
1 Backbone switch required at super POP
1 NMS required for network Year 4
Year 2 Year 3 Year 5
models Total Annual CPE Cost $
Total Annual POP/Super POP $
3,920,000 $
1,098,500 $
3,528,000 $
- $
3,616,200 $
483,500 $
1,926,846 $
127,500 $
1,051,584
120,000
– Vendor experience – developed Equipment Cost
Total CAPEX $ 5,018,500 $ 3,528,000 $ 4,099,700 $ 2,054,346 $ 1,171,584
4G base stations, UEs/CPEs, Operational Costs
NOC Costs
Year 1
200,740
Year 2
205,759
Year 3
210,902
Year 4
216,175
Year 5
221,579
ASN/Gateways and designed Roof Rights 72,000 72,000 86,400 100,800 115,200
complete end-to-end networks Peering bandwidth
Backhaul bandwidth
505,774
611,520
1,036,837
705,600
2,125,516
1,128,960
2,995,649
2,069,760
3,628,820
2,352,000
Operating Budget 3,294,840 3,385,172 4,352,042 4,768,722 5,128,323
> Accuracy Total OPEX
Total OPEX as % of Net Revenue
4,684,874
62%
5,405,367
30%
7,903,820
21%
10,151,106
20%
11,445,922
19%
– Integration of advanced
technical (link budgets, capacity
plans) and financial models to
generate accurate business $70,000,000
cases $60,000,000
$50,000,000
> Reliability
Dollars ($)
$40,000,000
– Experience and accuracy allows $30,000,000
TSI to provide reliable solutions $20,000,000
which enables our customers to $10,000,000
make the right decisions $-
$(10,000,000)
1 2 3 4 5
Year of Operation
Revenue Operating Profit Cash Flow
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8. Telesystem Innovations
the leading
Broadband
Wireless
solution experts
Contact Us:
Sales@tsiwireless.com
www.tsiwireless.com
+1 613.600.4400
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