4g business case model

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TEAFamily of Business Case Analysis of Tools

www.4gbusinesscase.com

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Contents

Overview

Market analysis

Technical analysis

Economic & financial analysis

Sensitivity analysis

Comprehensive report

Default parameters

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Overview

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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

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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

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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

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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

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Market analysis

High-level work flow

Market data

Technical data

Economic & financial data

Technical analysis


ModuleInputs Outputs

Market and revenues forecast

Bill of quantities

Economic & financial

projections and indicators


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Market analysis

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Introduction

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

Estimating the potential market and revenues for 4G services:

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Territorial analysis

Work flow

Territory & demography

Target percentages

Service profile

Service profiles characterization

Service profiles distribution

Market forecast

Penetration and churn rates

Other revenues

RevenuesMarket forecast

Revenues forecast


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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

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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

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Market forecast

The market size per each year, each area and each market segment is evaluated by taking

into account:

• Penetration rate

• Churn rate

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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.

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Technical analysis

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Introduction

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

Dimensioning the network infrastructure to derive the required bill of quantities:

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Technology

Work flow

Frequency

Channel bandwidth

Equipment

BTS/eNodeBconfiguration

User equipment configuration

MCS & SNIR

Performance

Capacity demand


Bill of quantities

Market forecast

Margins Path loss model

Network dimensioning

Roll-out Roll-out function

Service profile characterization and distribution Target area

Cell overlapping factor

EPC characterization

Backhaul characterization

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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

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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

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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

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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

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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)

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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

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Introduction

CAPEX & OPEX

Depreciations

Interest rate on borrowings, tax rate, discount rate

Financing

Equity

Perpetual growth

Calculating all key economic & financial projections and indicators to assess the

feasibility of the initiative:

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COS

Work flow

Bill of quantities

COS items


CAPEX

Market forecast

Bill of quantities

CAPEX items

Market forecast

D&A

Years to depreciate

TCO

Personnel

Head count Salaries & benefits

Statements

Economic & financial

projections and indicators

Market and revenues forecast

SG&A

SG&A items

Revenues forecast

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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

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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

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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

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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

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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

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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

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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

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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


• Site acquisition, logical sector cost, user equipment cost, wireless backhaul equipment

cost, spectrum license

• Site lease and utilities, wired backhaul, customer acquisition

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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

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Default parameters

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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

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WiTech Spa

Via Giuntini 25

56023 Cascina

Loc. Navacchio

PISA - Italy

www.witech.it

www.wropcloud.com

www.4gbusinesscase.com

Phone: +39 050 775 056

Fax: +39 050 75 47 22

E-mail: [email protected]

Thank you for your attention!

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