Pro Sim By Ujwal Tamminedi (1)


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An original idea for Indian Telecom industry. Published weeks before the telecom tariff war.

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Pro Sim By Ujwal Tamminedi (1)

  1. 1. Project Pro-SIM Evolution of Indian GSM carriers to programmable SIM cards
  2. 2. What Indian GSM industry doesn’t want you to know!!! <ul><li>Current EBITDA margins of industry nearly 40% versus 15% in year 2000 </li></ul><ul><li>Margin higher than in countries like the US, UK, Japan, Korea and Hong Kong </li></ul><ul><li>Major growth sustainability through roaming charges </li></ul><ul><li>Nearly 75% margins on incoming and outgoing roaming calls </li></ul><ul><li>Roaming SMS not an extra cost to carrier but price unregulated by TRAI and hence highly expensive </li></ul>
  3. 3. Industry stats and leaders <ul><li>Total subscriber base for GSM around 320 mn </li></ul><ul><li>Expected annual growth rate of 30% in subscriber base </li></ul><ul><li>Bharti Airtel is the leader with over 100 mn subscribers </li></ul><ul><li>Vodafone has second highest subscriber base of around 80 mn </li></ul><ul><li>Growth industry with potential for subscriber cost based competitiveness </li></ul><ul><li>High barrier to entry without a disruptive technology idea </li></ul>
  4. 4. Why roaming is expensive? <ul><li>Your mobile connection carrier (say Vodafone) may have to pay another carrier (say Airtel) for its network when you are out of your home network </li></ul><ul><li>For instance you own a Vodafone connection in Delhi (your home network) and travel to Mumbai. Hutch may have to pay Airtel money for using Airtel’s network when you receive or make a call to Delhi. </li></ul><ul><li>Fixed landline networks (BSNL, MTNL) charge mobile carriers in the form of carriage costs and access deficit charges </li></ul>
  5. 5. Is there a solution for the consumer? Yes….Project Pro-SIM <ul><li>Programmable SIM cards are the solution. </li></ul><ul><li>How ? </li></ul><ul><ul><li>Programmable SIM cards as a technology exist even now </li></ul></ul><ul><ul><li>However at present they are inconvenient for the user </li></ul></ul><ul><ul><li>I propose a technology idea I am working on for a patent </li></ul></ul><ul><ul><li>It takes programmable SIM cards to the next level with ease of use for consumer </li></ul></ul><ul><li>Mission statement </li></ul><ul><ul><li>To provide affordable use of mobile telephones for domestic and international commuting for consumers </li></ul></ul>
  6. 6. What’s the idea? <ul><li>Programmable SIM is a card which can take be assigned numbers dynamically based on your location </li></ul><ul><li>With this you will have multiple numbers assigned to the same SIM card </li></ul><ul><li>Hence you can have a local number in your foreign network (Mumbai in the previous example) and do not have to bear roaming charges </li></ul><ul><li>The patent makes switching automatic without the manual intervention required now </li></ul><ul><li>With the patent this will become prevalent and company to take it up first will have the first movers advantage </li></ul>
  7. 7. Business Plan <ul><li>Phase 1 </li></ul><ul><ul><li>To complete the patent before end of year </li></ul></ul><ul><li>Phase 2 </li></ul><ul><ul><li>Make a workable prototype and try out its efficacy in 9 months </li></ul></ul><ul><li>Phase 3 </li></ul><ul><ul><li>Look for a production outsourcing partner with an opportunity to exit at this stage by an acquisition </li></ul></ul><ul><li>Phase4 </li></ul><ul><ul><li>Production starts in 1 yr after Phase 3 </li></ul></ul>
  8. 8. Financials <ul><li>Patenting cost (Inclusive of cost of hired telecom expert) </li></ul><ul><ul><li>Rs 300,000 </li></ul></ul><ul><li>Workable prototype development </li></ul><ul><ul><li>Rs 500,000 </li></ul></ul><ul><li>Approximate additional production cost per handset </li></ul><ul><ul><li>Rs 180 </li></ul></ul><ul><li>Production facility in case of non-exit to be outsourced (Cost = 0) </li></ul><ul><li>Operating and promotional cost till breakeven </li></ul><ul><ul><li>Rs 24,000,000 </li></ul></ul><ul><li>Breakeven in 2013 Q1 </li></ul>
  9. 9. Competitive Advantages <ul><li>Blue ocean strategy by creating a new market and making competition irrelevant. </li></ul><ul><li>The competitors will have to cut roaming charges and hence growth opportunities </li></ul><ul><li>Perceived value to customer is having minimal communication costs during travel periods </li></ul><ul><li>Normal subscription charges or slightly above competitors based on then market with superior roaming pricing </li></ul>
  10. 10. SWOT <ul><li>Threats </li></ul><ul><li>High barrier to entry (mitigated by being a potential MVNO player) </li></ul><ul><li>Gaining acceptance of CDMA mobiles </li></ul><ul><li>Opportunities </li></ul><ul><li>Growth market for the industry </li></ul><ul><li>Still large consumer base untapped </li></ul><ul><li>Weaknesses </li></ul><ul><li>Disruptive technology requires primary market research </li></ul><ul><li>Patent period limited after which bigger players may capture market share </li></ul><ul><li>Strengths </li></ul><ul><li>Patented technology </li></ul><ul><li>Customer value created with cost advantage during travel </li></ul>
  11. 11. IT - Factor <ul><li>The idea based on patent in integrated circuits </li></ul><ul><li>Programmable SIM uses existing technology of PROM </li></ul><ul><li>Disruptive technology used as basis of the startup </li></ul>
  12. 12. Marketing <ul><li>After prototype development in 2010 Q3 </li></ul><ul><li>It is an important part of the exercise with an opportunity to exit at this level with a buy out </li></ul><ul><li>With the patent the acquirer will have first mover advantage and market monopoly till the patent expires </li></ul><ul><li>In case buy out option is not exercised the production will have to be outsourced to keep costs of handset competitive. </li></ul><ul><li>Also in case of non exit the company will operate as a MVNO (Mobile Virtual Network Operator) with leased infrastructure and spectrum </li></ul>
  13. 13. <ul><li>THANK YOU </li></ul>