Professional Documents
Culture Documents
دراسة ماكينزي عن الشركة المصرية للاتصالات
دراسة ماكينزي عن الشركة المصرية للاتصالات
| 1
operations as a 4th player in the market (assuming Egypt will have no more than 4 mobile players in the
long term), with a 3G play appearing attractive in the long-term, also enabling TE to position itself as a
market leading innovator. Short and medium-term financial attractiveness would directly depend on the
license award price, as well as assumed ARPU and market share uptake (need to achieve market
position at the very high end of the range for international 4th entrant examples), while rollout should be
carefully staged to ensure the EGP 4 Billion of Capex required for the 5,000 3G sites is gradually
committed.
In case TE is not able to act on either of the preferred scenarios within the next 6-12 months, it should
pursue alternative options to become a 4th mobile operator, to avoid its value being further depressed
and the viability of the mobile option becoming further reduced as the mobile market progressively
saturates.
3 Recommended next steps for TE to improve its long-term sustainability would consequently be: (a)
further enhancing/accelerating the ongoing profitability improvement program for TEs fixed line
business to protect current business to the degree possible, and (b) promptly engaging all
stakeholders with influence on the preferred mobile entry scenarios to present TEs case and
understand by mid 2010 which option could indeed be pursued within a short time frame
| 2
Presentation agenda
1 Current business situation of TE not sustainable in the mid term; need to enter into the mobile
2 After assessing several potential scenarios along financial, strategic, operational and feasibility
criteria, two alternative options emerge as preferable for TE: (a) acquiring control of an
established operator, Vodafone Egypt, or, should this not be possible, (b) setting up a new
green-field operator through a new 3G license, whose attractiveness would be directly
dependent on a few core underlying assumptions (cost of license, deployment Capex,
achievable market share and ARPU levels after initial ramp up, etc.). Should TE fail to proceed
successfully with either of the preferred options within 6-12 months, alternative suboptimal
options would have to be re-assessed and pursued.
3 Recommended next steps for TE to improve its long-term sustainability would consequently be:
(a) further enhancing/accelerating the ongoing profitability improvement program for TEs fixed
line business to protect current business to the degree possible, and (b) promptly engaging all
stakeholders with influence on the preferred mobile entry scenarios to present TEs case and
understand by mid 2010 which option could indeed be pursued within a short time frame
| 3
In the telecom industry value is shifting away from the fixed business
towards mobile example of OTE
Percent, Total EV in EUR Billion
Total Enterprise Value
100% =
15.4
9.1
10.7
29
CAGR EV/EBITDA
09E
-13%
4.1x
44
Domestic
Wireline
73
40
59
13%
5.4x
-5%
3.6x
Mobile
14
Rest1
13
16
12
Jun-2000
Feb-2005
Mar-2009
The contribution of
domestic wireline to
the overall enterprise
value of OTE Group
has been declining
| 4
2014
Competitive scenario
description
Wholesale revenue
Retail revenue
Non personnel cost
Personnel cost
EBITDA
EBIT
Low
Current fixed voice
erosion trends,
increasing BB, mobile
growth from
Vodafone holding
2nd and 3rd 3P
licenses are awarded
Mobile players active
on fixed broadband
Loss of 1 mobile
client in wholesale
Moderate
Mobile operators using
aggressive pricing tactics
further strengthening
FMS, with concurrent
expansion of mobile data
offerings
Mobile pressure on BB
taking advantage of 3P
licenses, with focus on
B2B and high end B2C
segments, while also
attacking youth segments
Intense
Mobile operators
using all out price
war tactics,
spearheading the
attack with flat
voice and mobile
data tariffs
Mobile players
further investing
in expanding their
broadband attack
in most segments
10.1
3.9
6.2
11.1
4.4
6.7
9.7
4.4
5.3
9.1
4.4
4.7
5.1
7.0
6.9
6.8
3.0
2.1
3.5
3.5
5.0
4.1
1.9
0.6
3.4
3.5
3.3
3.5
2.8
2.3
-0.6
-1.1
McKinsey & Company
| 5
2014
Low
Moderate
Intense
11.1
10.1
Access
2.0
2.0
9.7
1.9
2.5
Voice
9.1
1.8
1.6
1.2
2.2
1.8
1.7
3.0
1.2
Wholesale
3.9
4.4
4.4
4.4
39%
40%
45%
48%
9.61
9.8
9.4
9.1
0.4
1.8
1.4
1.2
% of total
# broadband lines
(mn)
| 6
2008
2014
2020
10.1
9.7
9.9
5.1
6.9
8.3
Revenue
Non personnel
Personnel cost
EBITDA
3.0
2.1
5.0
3.4
3.5
3.6
4.7
2.8
1.6
Income TE fixed
1.5
-0.6
-2.2
Income Vodafone
1.3
1.5
1.8
2.8
0.9
Net income
-0.4
Dividends received
by Government
Tax received by
Government
1.8
0.7
0.5
| 7
2008
2014
2020
10.1
9.1
9.2
Revenue
Non personnel
Personnel cost
EBITDA
3.0
2.1
5.0
8.2
6.8
5.1
3.3
3.5
3.5
4.7
2.3
1.0
Income TE fixed
1.5
-1.1
-2.7
Income Vodafone
1.3
1.3
1.3
Net income
2.8
0.2
-1.4
Dividends received
by Government
Tax received by
Government
1.8
0.2
0.5
Without Vodafones
dividends TE would become
net income negative by 2011
| 8
2008
2014
2020
10.1
11.0
11.5
5.1
7.3
Revenue
Non personnel
Personnel cost
3.0
2.1
3.8
3.5
8.8
4.1
4.7
5.0
3.4
1.9
Income TE fixed
1.5
0.3
-1.1
Income Vodafone
1.3
1.5
1.8
2.8
1.7
0.7
1.8
1.4
0.7
0.5
0.1
EBITDA
Net income
Dividends received
by Government
Tax received by
Government
| 9
2008
2014
2020
10.1
10.2
10.5
5.1
7.1
8.6
Revenue
Non personnel
Personnel cost
EBITDA
3.0
2.1
5.0
3.6
3.5
3.9
4.7
2.8
1.1
Income TE fixed
1.5
-0.2
-1.8
Income Vodafone
1.3
1.3
1.3
2.8
1.1
Net income
-0.5
Dividends received
by Government
Tax received by
Government
1.8
0.9
0.5
| 10
Telecom Egypt has to enter the mobile market: significant growth still
expected and market still fluid with high churn among players
Egyptian telecom market revenue distribution
2008, EGP millions
+29
2007-08 change
All
players
+80
+33
1,590
+5
20,953
5,185
+61
891
+38
Competitors
572
383
10,611
+72
5,185
TE/
1,018
Vodafone
TE Fixed Wholesale
4,146
3,493
10,342 2,249 2,800
+83
508
+19
+24
Mobile
data1
2005
Mobile voice
06
07
2008
Fixed voice3 Fixed
data2
| 11
Integrated operators
Mobile operators
7,3x
6,4x
Average: 5.5x
4,0x
Average: 5.0x
5,2x 5,4x
4,7x 4,9x 4,9x
3,9x 4,0x
4,7x
5,1x 5,2x
Zain
Mobinil
MTN
Orascom
Maroc
Telecom
Batelco
STC
Jordan
QTel
Omantel
Turk
Telecom
Etisalat
TE
| 12
Presentation agenda
1 Current business situation of TE not sustainable in the mid term; need to enter into the mobile
2 After assessing several potential scenarios along financial, strategic, operational and feasibility
criteria, two alternative options emerge as preferable for TE: (a) acquiring control of an
established operator, Vodafone Egypt, or, should this not be possible, (b) setting up a new
green-field operator through a new 3G license, whose attractiveness would be directly
dependent on a few core underlying assumptions (cost of license, deployment Capex,
achievable market share and ARPU levels after initial ramp up, etc.). Should TE fail to proceed
successfully with either of the preferred options within 6-12 months, alternative suboptimal
options would have to be re-assessed and pursued.
3 Recommended next steps for TE to improve its long-term sustainability would consequently be:
(a) further enhancing/accelerating the ongoing profitability improvement program for TEs fixed
line business to protect current business to the degree possible, and (b) promptly engaging all
stakeholders with influence on the preferred mobile entry scenarios to present TEs case and
understand by mid 2010 which option could indeed be pursued within a short time frame
| 13
Mobile entry scenarios were assessed for alignment with Telecom Egypts
business priorities along several key dimensions
1
Key business
parameters
3
Financial
considerations
Operational
requirements/
prerequisites
Strategic
objectives
Practicality
assessment
| 14
Buy
Description
Acquire
Vodafone 100%
Acquire
minority stake
in Mobinil
3G license
Acquire 3G license and start services into mobile data and 3G-only voice,
Virtual
Operator
Universal
license
As above, plus 2G capabilities and voice services launched from the start
All other mobile operators offered full fixed licenses (all 4 operators become
universal operators)
CDMA
Leverage existing network and expand it to offer mobile data and voice
CDMA/MVNO
Leverage existing CDMA network and expand it to offer mobile broadband only
Offer mobile voice (and data) through an MVNO deal with an existing operator
MVNO
Offer full mobile services leveraging 3rd party network, with some control on products
More likely to leverage Vodafones network
Leverage TE brand value to resell 3rd party operators products, with limited
Commercial
agreement
| 15
in Vodafone
Egypt
DCF model
calculates
total
enterprise
value of fixed
line business
and stake in
VE
Two core
elements are:
ILLUSTRATIVE
Discounts in a
potential sale
TE fixed-line
VE
TE
Non-control
Liquidity
TE (market)
Operational
Operational
cash flows
Financial
premiums/
discounts
Financial
Base case discount scenario: constant
dividend payout ratio expected, but no
control of cash flows (discount c.1030%). Discount could be up to c.30-40%
if dividends are in doubt and liquidity
concerns are high.
| 16
Options
to enter
Base Case
Low
competition
Moderate
competition
18.1
As is
Buy
stake
2 Mobile
market
entry for
Telecom
Egypt
31.8
Vodafone
Mobinil
stake
3G
Entry
to mobile
Green
Field
Universal
CDMA/
MVNO
CDMA
Virtual
Operator
MVNO
Comm
Moderate +
program
13.3 -4.8
24.4
Intense
competition
16.6 -1.5
Intense
+ program
11.6 -6.5
27.8
14.6 -3.5
20.6
23.6
13.7
11.1 -2.5
11.1 -2.5
9.0 -4.7
9.0 -4.7
35.5 19.6
15.9
40.1 4.5
31.8 18.1
31.8
13.7
33.3 1.5
33.3
30.3 19.4
10.9
32.6 2.3
32.6
23.9 13.0
23.9
Total Equity
10.9
26.9 3.0
26.9
9.0 -4.0
0.0
2.2 -0.8
19.91
Value
10.9
22.1
fixed
10.9
33.0 2.7
33.0
10.9 0.0
27.0 1.9 -0.8
-1.6
28.7 17.8creation
10.9 0.0
32.4 3.6 1.0
32.3 19.6
32.3
12.7
35.5 3.2
35.5
-1.6
28.3 18.1 Mobile
10.3 -2.4
32.1 3.8 0.6
32.3 19.6
12.7
33.0 0.7
30.3
23.4
vs.12.5
10.9
As
23.5is
-6.9
0.0
0.1 -2.2
Value
7.7 -5.3
10.9 0.0
vs.
20.1 1.5 -1.5
18.6
As
23.6 12.6 -7.0
10.9 0.0
25.6
vs. 2.0 -2.4
As
12.5
23.4is
is
-6.9
10.9 0.0
24.6 1.2 -1.5
entry
12.6 -7.0
20.9 option
8.2 -4.5
1.9 -1.2
22.8
| 17
3G license
Financial
+ Base case for value of
55% stake could be
EGP 18 Bn (20%
premium vs. DCF
value), total additional
value extracted EGP
6.2-8.5 Bn
+ Value creation even if
price is EGP 21.9 Bn
(implied by Mobinil
controlling stake
valuation)
Operational
Strategic
Practicality
+ All critical skills for
+ Most attractive market + Once deal decided,
mobile operations and
structure
no complex set-ups
distribution network
+ Full Fixed-Mobile
Willingness from
come ready-made
Collaboration (FMC)
Vodafones side to
+ Financial integration
potential
sell? (linked with their
(profit accretion) can + TE becomes mobile
future funding needs)
start immediately
operator with highest
High funding needs
+ Commercial and back- (revenue) market share
for TE
end integration can
+ Operator already well FMC cost synergies
commence at a later
positioned in high end,
also expected
stage without
potential to expand
through personnel
impeding cash flows
with no-frills brand
reduction
+ Full control of own
infrastructure
+
+
Existing infrastructure
(buildings, towers) to
be leveraged
No complex MVNO
agreement needed
Technologically simple
towards customer (vs.
CDMA solution) and
allows roaming
High CapEx required
to offer full coverage
and high capacity (but
can be staggered)
Scarce mobile
operator skills in TE
+
+
+
+
+
Simpler 4G roadmap
than alternative
technologies
Full FMC potential
TEs brand equity can
be fully leveraged
Full control of own
infrastructure
Full commercial
flexibility (capacity not
an issue vs.VNO)
Difficulty in capturing
voice market share in
the short-term only with
3G (handsets)
Realization of option
may depend on
license price
| 18
Highest
PRELIMINARY
Lowest
Possible permutations
Financial
Operational
Strategic
Practicality
Greenfield / Virtual
Operator: CDMA / MVNO
Greenfield: Universal
license
Virtual Operator: MVNO
Greenfield: CDMA
Virtual Operator: Reseller
Buy: Acquire minority
stake in Mobinil
N/A
McKinsey & Company
| 19
17,2
5,0x
5,2x
18,7
20,1
5,6x
6,0x
21,9
12,9
Value of 55% of
Vodafone Egypt
x EBITDA1
4,0x
6,5x
Vodafone stake at
DCF calculated value
is ~EGP 15,3 Bn
Equivalent
Mobinil share
price (EGP)
2082
222
245
273
Mobinil share
Premium (%)
18
31
8.6
10.0
11.5
13.2
Additional
funding
required3
4.3
7.9
| 20
Presentation agenda
1 Current business situation of TE not sustainable in the mid term; need to enter into the mobile
2 After assessing several potential scenarios along financial, strategic, operational and feasibility
criteria, two alternative options emerge as preferable for TE: (a) acquiring control of an
established operator, Vodafone Egypt, or, should this not be possible, (b) setting up a new
green-field operator through a new 3G license, whose attractiveness would be directly
dependent on a few core underlying assumptions (cost of license, deployment Capex,
achievable market share and ARPU levels after initial ramp up, etc.). Should TE fail to proceed
successfully with either of the preferred options within 6-12 months, alternative suboptimal
options would have to be re-assessed and pursued.
3 Recommended next steps for TE to improve its long-term sustainability would consequently be:
(a) further enhancing/accelerating the ongoing profitability improvement program for TEs fixed
line business to protect current business to the degree possible, and (b) promptly engaging all
stakeholders with influence on the preferred mobile entry scenarios to present TEs case and
understand by mid 2010 which option could indeed be pursued within a short time frame
| 21
Backup
| 22
2008
2014
2020
11.7
9.8
9.9
0.4
1.6
2.4
0.9
1.1
1.2
9.4
9.0
0.4
1.4
2.0
0.9
1.0
1.1
9.1
8.3
0.4
1.3
1.7
0.9
1.0
1.1
ALIS (million)
Low
competition
11.7
ALIS (million)
Moderate
competition
11.7
ALIS (million)
Intense
competition
| 23
2008
2014
2020
6.2
6.6
7.1
3.9
4.4
4.8
10.1
11.1
11.9
6.2
5.3
5.1
3.9
4.4
4.8
10.1
9.7
9.9
6.2
4.6
4.4
4.0
4.4
4.8
10.1
9.1
9.2
Retail
Low
competition
Wholesale
Total Revenues
Retail
Moderate
competition
Wholesale
Total Revenues
Retail
Intense
competition
Wholesale
Total Revenues
McKinsey & Company
| 24
Access Revenue
Low
competition
Access Revenue
Voice Revenue
Access Revenue
Intense
competition
2014
2020
2.0
2.0
2.0
3.0
2.5
2.6
1.2
2.1
2.6
2.0
1.9
1.8
3.0
1.6
1.5
1.2
1.8
1.8
2.0
1.8
1.7
3.0
1.2
1.1
1.2
1.6
1.6
Voice Revenue
Moderate
competition
2008
Voice Revenue
| 25
2008
2014
2020
44.9
56.3
59.7
36.4
38.3
38.3
74.1
70.3
62.3
44.9
56.3
56.6
36.4
37.5
37.5
74.1
60.2
44.3
44.9
52.1
52.7
36.4
34.5
34.5
74.1
57.0
41.9
ARPU
Low
competition
Broadband
ARPU
Moderate
competition
Broadband
ARPU
Intense
competition
Broadband
McKinsey & Company
| 26
Retail
broadband
market share
(%)
2008
2014
2020
60.0
55.0
55.0
60.0
60.0
60.0
45.0
47.0
48.0
45.0
56.0
57.0
3.0
3.0
4.0
4.0
Base case
w/ program
Delta
Base case
Retail ARPU
(EGP/mo)
w/ program
Delta
Base case
Advertising
costs as % of
revenue (%)
w/ program
Delta
1.0
1.0
| 27
Retail
broadband
market share
(%)
2008
2014
2020
60.0
50.0
50.0
60.0
55.0
55.0
45.0
43.0
44.0
45.0
52.0
53.0
3.0
3.0
4.0
4.0
Base case
w/ program
Delta
Base case
Retail ARPU
(EGP/mo)
w/ program
Delta
Base case
Advertising
costs as % of
revenue (%)
w/ program
Delta
1.0
1.0
| 28
2008
2014
2020
5.1
3.6
2.3
5.1
4.8
4.4
1.2
2.1
2.3
0.5
5.1
3.5
2.6
1.2
2.1
5.1
w/ personnel cost CAGR 9%
Moderate
competition
5.1
w/ personnel cost CAGR 9%
Intense
competition
5.1
w/ personnel cost CAGR 5%
Delta
1.9
3.1
-0.1
2.0
1.2
2.1
McKinsey & Company
| 29
2014
1.9
0.2
2020
-1.6
w/ personnel cost CAGR 5%
Delta
2008
1.9
1.4
0.4
1.2
2.1
-1.1
-3.3
1.9
1.9
0.1
-1.2
Delta
1.2
2.1
-1.5
-3.8
-0.3
-1.7
1.2
2.1
1.9
w/ personnel cost CAGR 9%
Intense
competition
1.9
w/ personnel cost CAGR 5%
Delta
| 30
2014
2020
10.1
8.6
9.3
Revenue
Low
competition
EBITDA
Net income
5.0
Revenue
EBITDA
Net income
5.0
Revenue
EBITDA
Net income
-0.1
-0.9
7.2
7.3
0.3
2.8
10.1
Intense
competition
0.8
2.8
10.1
Moderate
competition
1.7
TE would lose
more than
EGP 2bn in
domestic
transmission
and mobile to
international
wholesale
-1.0
-1.6
-3.0
6.6
6.6
-0.1
-1.6
-2.2
-4.0
5.0
2.8
| 31
Turkey
Access
lines
14,6
15,0
15,3
15,5
27,4
26,9
25,8
24,5
Personal
computers
2,5
3,5
6,5
9,3
7,2
9,2
13,4
22,5
Broadband
0,1
0,3
0,6
1,0
2.3
4.0
6.4
8.7
61,1
83,6
89,0
54,5
71,7
2008
2005
2006
2007
2008
Mobile
18,1
24,9
2005
2006
40,8
2007
| 32
30
Voice
Egypt
25
80
20
60
15
40
10
20
5
0
2004
05
06
07
2008
0
2004
05
06
07
2008
08
2009
25
Data
20
15
10
2
0
2004
05
06
07
2008
0
2005
06
07
| 33
Options
to enter
Base Case
Low
competition
Moderate
competition
18.1
As is
Buy
stake
2 Mobile
market
entry for
Telecom
Egypt
31.8
Vodafone
Mobinil
stake
3G
Entry
to mobile
Green
Field
Universal
CDMA/
MVNO
CDMA
Virtual
Operator
MVNO
Comm
Moderate +
program
13.3 -4.8
24.4
Intense
competition
16.6 -1.5
27.8
Intense
+ program
11.6 -6.5
20.6
14.6 -3.5
23.6
13.7
11.1 -2.5
11.1 -2.5
9.0 -4.7
9.0 -4.7
35.5 19.6
15.9
40.1 4.5
31.8 18.1
31.8
13.7
33.3 1.5
33.3
30.3 19.4
10.9
32.6 2.3
32.6
23.9 13.0
23.9
19.9
9.0 -4.0
10.9 0.0
22.1 2.2 -0.8
18.6
7.7 -5.3
10.9 0.0
20.1 1.5 -1.5
30.6 19.6
30.6
30.3 19.4
30.3
32.3 19.6
32.3
12.7
35.5 3.2
35.5
32.3 19.6
12.7
33.0 0.7
10.9
26.9 3.0
26.9
10.9
35.0 4.4
35.0
10.9
33.0 2.7
33.0
| 34
Retail revenue
Inputsfee
Access: connection
Subscriptions: subscription fee
Voice1: tariff, usage
Internet: BB subs, fee
Wholesale revenue
Domestic: tariffs, volumes
International: tariffs, volumes
Market data
Penetration (lines, BB)
Market share
Operating expenses
Personnel, operating costs
Interc. fees, G&A, S&D
CapEx and Working capital
Vodafone Egypt KPIs,
EBITDA and CapEx
1 Includes local calls, long distance, fixed to international and fixed to mobile
BACK UP
Output
| 35
TE-Vodafone
integrated
Expected
synergies
(EGP bn)
1 TE fixed
revenue
synergies (%)
N(A
1%
1.3
2 Market share
(%)
40%
45%
2.0
3 ARPU
(EGP/mo)
47
52
Rationale
3.5
In Spain (2008):
TEF: EUR 30.40
Orange: EUR 23.13
= 26%
4 Opex savings
(%)
0%
In Greece (2008):
Cosmote: EUR 23.60
Wind: EUR 18.12
= 30%
7%
4.0
In Netherleands (2008):
KPN: EUR 27.75
Orange: EUR 20.58
= 35%
| 36
BACKUP
ARPU: EGP 52
Revenue
EBITDA
Taxes
Capex
FCF
2010
2015
2020
14.7
6.8
1.0
2.8
21.9
10.9
1.7
3.2
27.0
14.3
2.2
2.7
3.0
6.7
9.4
Synergies assumptions
Market share: Vodafones standalone case assumes a flat market share, while for an integrated
operator we assume that market share will increase by 5% (bundles and cross-selling promotions)
ARPU: Todays ARPU of EGP 50 is expected to drop to EGP 47 in the standalone case base;
however, as an integrated operator TE will be able to better target high-end customers and keep or
increase the current level
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1.3
3.4
4.4
20
26
% of Etisalats
License cost1
Discount equivalent to
French 4th license
3G break-even curve:
40
30
20
10
0
20
25
30
35
40
45
50
55
60
65
70
ARPU
(EGP)
| 38
Population 64,1
Mobile penetration
million
End of year, percent, 2011
GDP/cap. 33.300
USD
+5% p.a.
Age profile
88 92 94 95 96
>14
18,6
78 83
73
69
64
<15-64 65
<65
CAGR
16,4
Mobile players
Market shares
End of year, percent, 2011
1
Orange
Other
2002 03 04 05 06 07 08 09 10 2011
44
43
43
36
36
35
34
34
34
34
33
16
17
17
17
17
17
17
17
17
2002 03
04
05
06
07
08
09
10
11
35
15
35
32.75
35.46
44
Outcome
44
48
45
49
47
50
SFF
Bouygues
Blended ARPU
USD, 2009
42.18
7
| 39
4th operator
Penetration in Egypt
High 50
45
Cosmote (Greece)
40
35
Idea (Poland)
30
Market
Shares
(2004)
Tele2 (Lithuania)
25
Orange (UK)
Amena (Spain)
20
Base (Belgium)
15
One (Austria)
Wind (Italy)
Orange (Switzerland)
DNA
(Finland)
Tele ring
(Austria)
10
Infoquest
(Greece)
Western wireless
(Slovenia)
Meteor (Ireland)
5
Low
0
0
Low
10
20
30
40
50
60
70
80
High
Penetration at launch
1 Gained market share through acquisition of Telia
SOURCE: EMC; McKinsey analysis
| 40
Fifth operators enjoy low market share and are usually consolidated by
4 Entrant
stronger players
th
5th Entrant
+5% p.a.
UK
85
91
T-Mobile
25
25
24
23
22
22
22
21
04
05
06
07
08
09
10
11
2002 03
04
05
15
14
24
25
3 (Hutchison)
2002 03 04 05
06
07 08 09 10 2011
2002 03
+14% p.a.
Mexico
26
37
30
45
54
65
73
78
84
88
Unefon
Nextel Intl
2002 03 04 05
06
07 08 09 10 2011
5
2
0
4
0
4
0
3
06
07
08
09
10
11
+6% p.a.
74
83
Netherlands
2002 03 04 05
06
07 08 09 10 2011
Ben
12
Orange
10
2002 03
11
04
14
12
05
15
27
27
26
26
25
07
08
09
10
11
12
06
A fifth entrant is usually able to enjoy only limited market share due to the already strong position of
other players and especially the first three ones
In many cases the entrance of a fifth player will lead to consolidation in the market mainly focused on
the fourth or the fifth entrant
| 41
CDMA
ARPU of EGP 62
EBITDA margin of 70%
Network roll-out x3 (additional 800
sites for a total of 1.200)
MVNO
Market share: increasing up to 10%
ARPU: from EGP 45 decreasing to
EGP 35
Wholesale contribution to MNO of
70%
SAC 6% of revenue (10% intl
benchmark, 4% o/w is handset)
Strategic considerations
| 42
MVNO
Margin of 70% (intl
benchmark), and 55%
to account for
increased value from
Vodafone
Overall market share
of 10%
CDMA
Subscribers reaching
750k-1,350k in 5
years, implying a
mobile broadband
penetration as % of
mobile of 8-15%
ARPU of EGP 62
Basic coverage 3x
and full blown
coverage 5x existing
infrastructure
4,2
5,3
4,7
Coverage 3x
6,6
7,1
7,7
750
1,050
1,350
Coverage 3x
| 43
Current
assumption
0.025
0.1
1.7
3.4
5.1
17.0
% of Etisalats
License cost
10
20
30
100
4,2
4,2
4,1
2,5
0,8
-0,9
4,7
4,7
4,6
3,0
-12,7
1,3
-0,4
5,3
5,3
5,3
-12,3
3,6
1,9
0,3
-11,7
| 44
BACK UP
MVNO
Market share:
increasing to 10%
ARPU: from EGP 45
decreasing to EGP 35
Wholesale
contribution to MNO:
70%
SAC: 6% of revenue
(10% intl benchmark,
4% o/w is handset)
CDMA
ARPU: EGP 62
EBITDA margin: 70%
Network roll-out x3
(additional 800 sites
for a total of 1.200)
2010
2015
2020
76
5
2
3
3.779
806
158
4
4.356
1.021
203
4
643
814
56
39
0
807
629
441
68
63
695
486
84
69
-768
310
333
150
950
1,050
MVNO
Revenue
EBITDA
Taxes
Capex
FCF
CDMA
Revenue
EBITDA
Taxes
Capex
FCF
CDMA Subs (000)
| 45