Company Presentation
SVP Advisors
Contents
Experience in Regulation
2
Experience in Economic Modelling
3
About Us
1
Experience in Business Strategy
4
Experience in Corporate Finance
5
3
SVP Advisors is an international management
consulting firm for the TMT sector
1,
with expertise in
regulation, economic modelling, business strategy
and corporate finance
Established by seasoned professionals in 2006, we
have earned over time a solid reputation within the
TMT sector thanks to our quantitative and practical
approach to problem solving
Our work combines various disciplines such as
economics,
econometrics,
finance,
accounting,
marketing and engineering
Who we are
Areas of Expertise
REGULATION
CORPORATE
FINANCE
ECONOMIC
MODELLING
BUSINESS
STRATEGY
Regulatory Strategy Competition & Market Analysis Policy Setting Transaction Support & Placement Due Diligence Valuation & Benchmarking Commercial Strategy Business Planning
Business & Product Development
Costing Systems
Pricing Models
Margin & Profitability Analysis
5
Approach
Partnership
We believe in the potential of effective teams
(designed as networks of value, to best serve the interests of our Clients)
Focus
Our services are built around our core competencies and experience
(so that we can have a tangible, positive impact on the results of our Clients)
Independence
We provide impartial and sound advice
(so that our Clients can take fully informed decisions)
Fact-driven
We use clear and measurable evidence to reach relevant conclusions
(using sound arguments and with the support of quantitative analytical tools)
Practicality
We conceive solutions for the real world
International Footprint
SVP Advisors Assignments (15 countries) Previous Team Experience (26 countries) Miami Madrid (HQ) Bangalore Associate office SVP Advisors Offices
7
We work with some of the world’s largest and
well-respected institutions and operators, and we are
often invited to present at international conferences and
workshops addressing the latest topics in the TMT sector
Our international client base includes:
Telecom Operators such as Telecom Italia, Telefónica
and Turkcell
Media and Internet Companies such as Babelgum
and BetonLive
Telecom Regulators such as AGCOM, CMT, CITC, EETT
and NITA
Int’l Organizations such as the European Commission
and the IADB
Financial Institutions such as Santander and Citibank
Clients
People
Dimitri Kallinis Partner Business Strategy Expert Julio Villalobos Partner Technology & Regulatory Expert Over 10 years experience in technology and regulation in the TMT sectorExtensive international track-record of modelling, regulatory and strategy consulting projects for fixed and mobile operators in several Countries worldwide. Former Team Leader of Technology Strategy at Telefónica
Areas of expertise: fixed and mobile networks, regulatory strategy, regulatory accounting and techno-economic modelling Over 10 years experience in
strategy advice and financing in the TMT sector
Telecoms financing expert, participated in over 10 large M&A transactions and in over 20 syndicated loan transactions over the last few years. He has actively participated in innovative ventures through an investment fund
Areas of expertise: new technology and media ventures, start-ups, innovation, financial transactions
Francisco Velázquez Partner
New Ventures & Financing Expert
Over 10 years experience in strategy advice and operations in the TMT sector
Has lead several international strategy consulting assignments. Former Head of Residential Unit at On Telecoms, a leading Greek 3Play Operator, responsible for Content, Pricing, Sales Strategy and MarkComms
Areas of expertise: broadband, MVNO, IPTV, business planning, commercial strategy and market analysis
Contents
Experience in Regulation
2
Experience in Economic Modelling
3
About Us
1
Experience in Business Strategy
4
Experience in Corporate Finance
5
Price Squeeze Analysis of Narrowband and Broadband Offers
Results & Benefits
Analysis of bundles fixed-line offers comprising narrowband and broadband services, using an ad hoc developed prize squeeze tool which calculated costs and revenue of a reasonably efficient operator
The tool takes into account a vast array of wholesale
services including narrowband origination and
termination, broadband bitstream access and LLU
Additionally to the analysis, we assisted the Regulator in drafting the methodology on margin squeeze
Allows the Regulator to assess whether an alternative operator can market its services profitably based on the wholesale inputs provided by the incumbent operator
Project Description
Note: chart has been altered for confidentiality purposes
Margins of a typical double-play offer considering economies of scale and technology choice
Client
NITA (Telecoms Regulator) - Denmark
11
Audit of the Regulatory Cost Accounts of a Mobile Operator
Results & Benefits
Audit of the cost accounts for the year 2007 of a mobile operator, prepared using the fully distributed cost
methodology under both the HCA and CCA1 standards.
The audit included the following main tasks:
Review of the methodology employed in the
preparation of the cost accounts
Reconciliation of financial and other relevant data
Review of the re-valuation of assets at current costs
Review of the full cost allocation process
We identified necessary and/or suggested amendments to the operator’s costing systems and quantified the impact of such changes on the cost of regulated services
Project Description
Schematic Overview of the Mobile Operator’s Regulatory Cost Accounting System
Client
AGCOM (Telecoms Regulator) - Italy
Allocation
Stage I Allocation Stage III Services Cost Centres Allocation Stage II Activities Inputs
CostAccounts Activities Cost Centres AGCOM Results Table 1 Internal Management System FAR Traffic Volumes Revenues AGCOM Results Table 2 Input Allocation Model Stages Output LEGEND
1 HCA: Historic Cost Accounting, CCA: Current Cost Accounting
0% 20% 40% 60% 80% 100%
CDMA 450 Copper wire GSM 800 UMTS 100 WiMAX ADSL
% P o p u la ti o n c o ve ra g e
Market efficiency frontier Market sustainability frontier Current coverage
Fixed telephony Mobile telephony Broadband
Assessment of the Telecommunications Policy in a Latam Country
Results & Benefits
Strategic review of the Mexican telecoms sector aimed at identifying areas where public intervention would be required. We established market boundaries for each of the services considered and assessed, among others:
Benefits and costs of several alternate technologies
Role of communications in low income & rural areas
The review took into consideration the current market situation and international best practices on technology developments and market structure/competition
Provided recommendations on several policy areas including regulation, social service, internet access programs, spectrum management and education
Project Description
Market efficiency gaps with different technologies
Client
COFETEL (Telecoms Regulator) - Mexico
13
Establishment of Regulated Wholesale Tariffs
Results & Benefits
Development of a Discount Cash Flow Model to support the establishment of regulated wholesale tariffs for broadband services based on a retail-minus methodology The DCF model was based on the typical operations of a fixed operator while also taking into account the specific market and operator conditions
Further support was provided to the client in carrying out a public consultation to ensure adequate reflection of the views of the different stakeholders and market realities
The results of the model were used by the Regulator in establishing the tariffs to be applied to the incumbent operator for its broadband services
Project Description Client
EETT (Telecoms Regulator) - Greece
Retail-Minus Calculation Model
Contents
Experience in Regulation
2
Experience in Economic Modelling
3
About Us
1
Experience in Business Strategy
4
Experience in Corporate Finance
5
15
Bottom-Up LRIC Model for determining the cost of Mobile Services
Results & Benefits
Development of a bottom-up LRIC model to calculate the cost of a range of mobile services including wholesale access, origination and call termination
Based on the pure-LRIC approach, the model takes into consideration several factors such as QoS, demand seasonality, technology choice (2G, 3G and LTE) and the different use of available spectrum (refarming)
The model's several applications include the calculation of the impact of network sharing on costs
The model built is highly flexible as it can provide results for any type of existing or hypothetical/efficient operator, depending on the inputs provided
Project Description
Calculation flow of the Bottom-up LRIC Model
Client
CMT (Telecoms Regulator) - Spain
Design of a Costing System
Results & Benefits
Design of a costing system aimed at fulfilling our client's regulatory and operational needs
Through a step-by-step process, the system allocated the company's actual costs to wholesale and retail services (voice, SMS, data, etc...)
In addition to actual financial information, additional inputs such as routing factors were used in allocating network, retail and common costs to cost centres and subsequently to services
The system allowed the operator to prove full compliance with regulatory obligations and to carry out a profitability analysis of its wholesale and retail tariffs
Project Description
General overview of the Costing System
Client
Turkcell (Mobile Operator) - Turkey
FIXED ASSET REGISTER P&L STATEMENT BALANCE SHEET
COST ALLOCATION PROCESS REVENUE ALLOCATION PROCESS
(DIRECT TO SERVICES) ACCOUNTING SEPARATION REPORTS -Internal reporting - Regulatory reporting
SPLIT BY CHANNEL SPLIT BY SEGMENT
SPLIT BY TARIFF STAGE 6.3 - CORP General corporate costs STAGE 3.2 – RET Retail activities Primary activities (customer related) Support activities COGS Taxes & Fees
STAGE 4.2 – RET Retail functions Sales - Acquisition Collections Front-End Rev Stim-Retention Product Management Back Office COGS Taxes & Fees
STAGE 2.3 – REST
Corporate Costs by Department Allocation to business units by type of costs
Allocation of common and joint costs to activities and network elements
Allocation of support activities to functional
blocks
Allocation to internal services
Allocation to services with transfer charges and
routing factors STAGE 2.1 – NW NW business unit Capital related costs by Asset Operating network costs Costs by Department Other External Costs STAGE 5.1 – NW Internal NW services Statements at wholesale markets Origination Termination Roaming Other
Internal retail services
STAGE 6.2 – RET
Retail services
Statements at retail markets
Voice & Video calls Messaging Data Roaming IN Roaming OUT Other STAGE 1 Stage 1.1 FAR Fixed Assets Stage 1.2 P&L Organization costs Personnel G&A COGS Interconnection Roaming Handsets SIM cards Other expenses
Sales & Marketing Other costs of sales (e.g. NW operating costs) External expenses Power Taxes Non-attributable to telecoms activity Stage 1.3 BS Working capital STAGE 2.2 – RET
Retail business unit
Costs by Department Retail costs by nature Non-op. Assets COGS Taxes & Fees
STAGE 3.1 –NW NW elements Primary plant Support equipment STAGE 4.1 – NW NW Functional Blocks Radio Link Backhaul Core Backbone IX DB & Platforms STAGE 6.1 - NW WH services Statements WH product 3rdparties
Voice & Video calls Messaging Data Roaming IN Roaming OUT Other STAGE 5.2 – RET
Internal retail services
Service-specific Service Group-specific Acquisition-driven Customer-driven Revenue-driven Churn-driven General & other
TC – TRANSFER CHARGES RF – ROUTING FACTORS
RF
DW TRAFFIC
DATA OPERATINGVARIABLES ROUTINGNW
FACTORS DW
SUBSCRIBER DATA
17
Calculation of the net cost of Universal Broadband Service
Results & Benefits
Development of a model to determine the net cost associated to the provision of broadband to every European household under several technological scenarios, including wireline and wireless technologies The calculation of the net cost was carried out at the Member State level and took into account several factors including the (possible) availability of spectrum from the Digital Dividend or a mandated minimum bandwidth in the broadband service provision
The outcome of the model was instrumental in the impact assessment of EU Policy options for the revision of the Universal Service provision
Project Description
Average net cost per capita of universal broadband service, by EU Member State
Client
EU Commission - EU
Key words: cost models, universal service, broadband 0 5 10 15 20 25 30 35 40 45 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 5 Y N E T C O S T P E R C A P IT A E U R
DEMAND NETWORK DIMENSIONING OUTPUTS MAPPING TO DRIVERS MAPPING TO ACTIVITIES COSTING AND ALLOCATION Resources by activity By resource By cost category By activity By service By service By geo-type List of services List of geo-types List of ext. Factors
List of service groups List of drivers List of activities
List of resources
List of Routes List of cost types
EXTERNAL FACTORS By geo-type
PROCESSES By service
1. INPUTS 2. ALLOCATION 3. DIMENSIONING 5. OUTPUTS MATRIXES 4. COSTING (ALLOCATION TO SERVICES) UNIT COSTS By resource GEO-MODEL By route CHARTS LRIC analysis Graphs KPIs SCENARIO ANALYSIS Sensitivity
Bottom-Up Model for determining the Cost of Postal Services
Results & Benefits
Development of a bottom-up LRIC model covering all services and activities of Cyprus Post in the postal value chain: collection, sorting, transport and delivery
The model took into the account cost efficiencies achieved in certain processes, variations in costs due to different service parameters and geographical specifics The model provided the following outputs: unitary cost by service, cost by activity, cost by category, cost by resource employed
The model was instrumental in the assessment of the pricing policy of Cyprus Post, including compliance with regulatory obligations and competition principles
Project Description
Calculation flow of the Bottom-up costing model
Client
OCECPR (Telecoms Regulator) - Cyprus
Contents
Experience in Regulation
2
Experience in Economic Modelling
3
About Us
1
Experience in Business Strategy
4
Experience in Corporate Finance
5
Assessment of MVNO Business Models
Results & Benefits
Development of a tool for determining the economics of different MVNO business models to be potentially hosted in our client´s network
For each MVNO business model, the tool provided financial accounts (P&L, CF statement) and KPIs (subscribers, ARPU, MoU, etc.) over a 5-year period The modelling tasks were preceded by the definition of the different MVNO business models, in terms of MVNO type, business proposition and target market segment
The tool was instrumental in assessing the viability of different MVNO business models under different market penetration scenarios and cost structures
Project Description
Schematic Overview of the MVNO tool
Client
Private Client (Mobile Operator)– Eastern Europe
21
Study of Mobile Infrastructure Sharing Options
Results & Benefits
Review of mobile infrastructure sharing in EU25 countries covering different types of agreements ranging from site sharing to national roaming, taking into account regulatory and commercial aspects, and identifying the best practices in different countries
This study was followed by the development of a business case for calculating the financial gains/losses at the wholesale and retail level associated with the nation-wide provision of 2G national roaming
The results of this study were used by our client in shaping the most appropriate strategy and commercial approach with regards to infrastructure sharing
Project Description
Overview of alternate options of mobile infrastructure sharing
Client
Private Client (Mobile Operator)– Eastern Europe
Increasingdepthofnetworksharing
MNOs share the same physical compound but install separate masts and mobile equipment (e.g. antennas)
Site Sharing
MNOs share the same mast or other structures (e.g. rooftops)
Masts Sharing
MNOs share all access network equipment, but use their own software and assigned frequencies
RAN Sharing
A host MNO provides mobile services to the users of the roaming MNO in areas not covered by its network
National Roaming Site sharing Masts sharing Radio Access Network sharing National roaming
Development of a business plan for an international betting company for a “real” live interactive football betting application, provided over the Internet
As part of our work, we assessed and provided inputs on the business model selected for the new application
Following that, we identified and analysed national markets showing greater potential for the application based on the broadband penetration, average spend per user and features of multiservice platforms
Year 1 Year 2 Year 3
Addressable market (Units) 000 4,000.0 4,800.0 5,600.0 Active users 000 86.4 178.6 282.2 Penetration % 2.2% 3.7% 5.0% Net ARPU (mth) € 4.7 4.6 4.4 Total net revenue € 000 4,915.0 7,282.6 12,048.6 Total recurring costs € 000 1,161.7 2,228.1 3,635.1 Total one-off costs € 000 798.1 1,040.0 1,388.4 Gross Margin € 000 2,955.2 4,014.5 7,025.0 Gross Margin % % 60% 55% 58%
Business Plan for an Internet Content Provider
Results & Benefits
The model produced a full range of financials based on different scenarios, and was instrumental in the definition of our client’s markets entry strategy
Project Description
Overview of the key economics of the Business Plan
Client
Private Client (Internet Company) - UK
Key words: interactive services, business planning
23 100% 60% 25% 15% 7% 100% 60% 15% 10% 5% 100% 60% 8% 5% 3% Hypothesis Licensing / upfront payment
Phase I-II Phase III Market Authorization
BEST BASE WORST
Business Plan for a Biotech Company
Results & Benefits
Development of a business plan reflecting the new enhanced operations of our client, a biotech company generating medicinal products through an innovative Internet-based technology platform
In addition to opex and capex, the model calculated revenue and costs for each single product in the company’s pipeline based on the development lifecycle and discounting the probabilities of success in each clinical phase up to market authorization
The business plan was instrumental in successful capital increase round made by our Client for financing its future planned operations
Project Description
Illustrative graph of % of products achieving milestones under different scenarios
Client
Private Client (Biotech Company) - Switzerland
Contents
Experience in Regulation
2
Experience in Economic Modelling
3
About Us
1
Experience in Business Strategy
4
Experience in Corporate Finance
5
25
Due Diligence of a Mobile Operator
Results & Benefits
Technical and market due diligence of a mobile operator undergoing a round of re-financing through a $600 million syndicated loan
We reviewed the operator’s business plan, focussing on revenue, opex and capex forecasts, using market information and int’l benchmarks as appropriate
The assignment included on-site visits to perform management interviews, on the ground market analysis as well as network and operational facilities’ monitoring
We produced a due diligence report and a revised business case based on our recommended values for some sensible hypotheses and parameters
Project Description
Illustrative example of the analysis carried out during the Due Diligence process
Client
Inter-American Development Bank - Colombia
Argentina Colombia Chile Ecuador Peru Venezuela Brazil Mexico Argentina Colombia Chile Ecuador Peru Brazil Mexico Company A Company B 0% 10% 20% 30% 40% 50% 60% 0% 20% 40% 60% 80% EBIT D A m a rg in market share
Content Target market Niche / Specialist Professionally-generated User-generated Mainstream / Hit
Transaction Support in the Sale of an Online Video Company
Results & Benefits
SVP Advisors acted as financial advisor in the sale of an integrated web and mobile video platform providing innovative, professionally produced and curated content to a global audience
From preparation to execution, we supported the company throughout the transaction process
Our activities included drafting due diligence material, identifying and contacting potential buyers, and setting up meetings and negotiations rounds
Based on an assessment of the company’s market value and potential, we defined a clear sale strategy and provided a narrowed-down list of potential investors
Project Description
Competition Map – US Online Video Market
Client
Private Client (Media Company) - USA
Note: Size of the bubbles indicates Monthly Unique Users in the US
