SW-2001-03-22-CLS-Presentation-MATAVImprovingCapexManagementofIncumbentTelcosImprovingCapexManagementofIncumbentTelcosWorkshopwith......,September2001Workshopwith......,September2001ConfidentialConfidentialSW-2001-03-22-CLS-Presentation-MATAV1.RoleofCAPEXintheoverallnetworkproductivity2.OverallapproachtoCapexoptimization3.ApproachforRecurrentInvestments:MarketDrivenInvestmentintheAccessNetwork(MDIA)4.ApproachforNonRecurrentInvestments:theInvestmentProcess(IP)5.SampleProjectPlanandEndProductsContentsSW-2001-03-22-CLS-Presentation-MATAVNetvaluedestruction50-7050-70CurrentvalueDISGUISEDEUEXAMPLE100NewpotentialvalueNewpotentialvalue135–250Regulatorymgmt30-5030-50ProductivitygainProductivitygain40-70AdditionalgrowthAdditionalgrowth15–2015–2010-2010-20ImprovedcustomerserviceImprovedcustomerserviceM&A10–4010–40Valuecreationforincumbent'swirelinebusinessPercentofcurrentvalue,3yearsperspectiveNetworkrationalization/front-lineexcellence•CAPEX•OPEXNetworkrationalization/front-lineexcellence•CAPEX•OPEXNetworkmigrationasenablingfactorNetworkmigrationasenablingfactorSW-2001-03-22-CLS-Presentation-MATAVRevenuesRevenues100100I&MpersonnelrelatedcostI&MpersonnelrelatedcostNetcashflowNetcashflow5–155–1560–6560–65OPEXOPEX60%CAPEXCAPEX25–3025–3080%35PersonnelcostPersonnelcostNetworkCapexNetworkCapexNetworkKeyleversforimprovingcashflowsPercentSW-2001-03-22-CLS-Presentation-MATAV3.Servicedelivery•Significantpotentialimpactonservicelevels•Tightlinkswithfront-linecoreprocesses1.Costposition•20-30%ofcashflows•Moreover:driverofkeylabor-intensiveprocessesCapitalexpenditures2.Productstrategy/innovation•Fundamentalroleofinnovationforfuturecompetitiveposition•Technological“bets”CentralroleofCapexforTelcosSW-2001-03-22-CLS-Presentation-MATAV1.RoleofCAPEXintheoverallnetworkproductivity2.OverallapproachtoCapexoptimization3.ApproachforRecurrentInvestments:MarketDrivenInvestmentintheAccessNetwork(MDIA)4.ApproachforNonRecurrentInvestments:theInvestmentProcess(IP)5.SampleProjectPlanandEndProductsContentsSW-2001-03-22-CLS-Presentation-MATAVTimeInvestmentsNon-recurrentRecurrentNon-recurrentinvestments•Modernization/technologyshifts•Newservices/functionsandinnovations•Multi-yearprograms•Examples:Switchdigitalization,introductionofSDH,ATM,etc.•IncludesvastlyincreasingITNetworkinvestmentsStrategy-drivenGo/No-godecisionsRecurrentinvestments•Assetrenewal/replacement•Incrementalgrowth•Yearlybudgetpositions•Examples:Lines(cable,canalizations),replacement/growthinlinecardsOperationallydrivenDecentralizedincrementaldecisionsTwoverydifferenttypesofinvestmentSW-2001-03-22-CLS-Presentation-MATAVExamplesofrecurrentandnon-recurrentCapexpositionsCoreNon-core(e.g.,IT,MIS,RITL,etc.)~90%Accessnetwork•NetworkfromtheHOST(linecards)tothecustomer•DrivenbythenumberoflinesTransportnetwork•NetworkabovetheHOST(CPU)•Drivenbythevolumeoftraffic•ISDN•Canalization•Fibreoptics•Copper•Infrastructure/other•Otherinvestments•Radiocom•PDH•Networkmanagement•Infrastructure/other•Canalization•Fibreoptics•Radiocom•Buildings•Digitalization•SS7/+•Canalization•Fibreoptics•Citycore/citylink•SDH•Intelligentnetwork•Platformservice–numbers•Networkmanagement•Climatization/electricityMainCAPEXareasInvestmentprogramsandclassificationsRecurrentNon-recurrent____________________________________________...
