Presentation on theme: "By Mr. Tanawat Ruangteprat and Mr.Nakachin Wiboonprasong"— Presentation transcript:
1By Mr. Tanawat Ruangteprat and Mr.Nakachin Wiboonprasong The Comparative Study of Internet Infrastructure Investment between WiMAX and 3G to support incoming growth of eLearning in Thailand.By Mr. Tanawat Ruangteprat andMr.Nakachin Wiboonprasong
2Research Objective and Methodology Conclusion and Recommendation AgendasIntroduction1Literature Review2Research Objective and Methodology3Feasibility Study4Conclusion and Recommendation5
3IntroductionsCurrently the most popular issue in Thailand Telecommunication industry is new technologies which are 3G mobile phone and WiMAX.What technology will be come a killer technology for high speed communication network in next decade.Every Mobile Network Operators and Internet Service Provider (ISP) in Thailand are keeping their eyes on 3G and WiMAX technology in order to evaluate which technology is most valuable for investment.This study investigates the financial (Economic Feasibility) consequences of the implementation of 3G mobile phone and WiMAX technology in providing data service.
4Mobile Phone Industry Background The total amount of mobile subscribers reached 61 million by the year end 2008, representing a 15% increase from 53 million in 2007, pushing mobile market penetration to 94%.
5Industry backgroundAs a high competition in mobile market every operator try differentiate themselves form other and avoid price war by launching new value added service (VAS).The number of VAS and revenue especially in Data service are increase continuously. This information may imply that voice service is saturated and non-voice service is in growth stage. The non-voice service will become the new cash cow for mobile operator in making revenue.
6Internet Industry Background The current International bandwidth for the whole country is 11Gbps. The domestic exchange total bandwidth is close to 100Gbps.This results in the green curve in the graph below, with the number of Internet users in Thailand in 2007 to be around13.15 million people (Nectec).
7Industry backgroundThe main service providers in Thailand are United Broadband Technology (UBT), Q-Net by Samart, CS Loxinfo, TOT, TT&T, Advance Datanetwork Communication (ADC) and True CorporationIn Thailand has population around 63 millions user but the number of internet user is around 13.5 million so, it may imply that market still has potential in growing.
8Literature Review 3G Technology The 3rd generation (3G) technologies are designed to provide high-speed wireless data and enhanced voice capacity. CDMA2000 and WCDMA 3G technologies based commercial networks are now providing service to tens of millions of paying subscribers (Yaliapragada and Naidu, 2005).The new enhancements in WCDMA standards include significantly improved data capabilities for the downlink communications using the HSDPA mode. HSDPA offers downlink peak data rates of up to 10 Mbps is mainly aimed at providing data applications with enhanced end-user experience with shorter connection and response times (Yaliapragada and Naidu, 2005).
10Literature Review WiMAX technology WiMAX is one such technology and it is said to be a broadband wireless access technology, offering an alternative to infrastructure dependent telecommunications technologies such as DSL (Digital Subscriber Line) or fiber (Tan, 2006).Comply with IEEE standard, data transfer rate from 10 to 100Mbps.works in the licensed 2 to 6GHz spectrum
11Literature ReviewThe feasibility study is concerned with the first four phases of capital budgeting, viz., planning, analysis, selection (evaluation), and financing, and involves market, technical, financial, economic, and ecological analysis (Prasanna, 2007).
12Research Objectives and Research Methodology Marketing Feasibility:Marketing analysisDemand forecastFinancial Feasibility:Revenue Module (ARPU model)CAPEX ModuleOPEX ModuleAccounting Module which is profit and loss , and cash flow modelRisk analysisScenario analysisResearch Objectives:To study 3G and WiMAX technology.To investigate economic feasibility study of investing 3G or WiMAX technology.To compare between 3G and WiMAX technology in term of economic
13Cash Flow Model (project 25 years) Cash Flow Model (project 25 years) Economic feasibility3G TechnologyWiMAX TechnologyMarketing analysis:Five force modelMarketing 4psConceptual MappingCustomer AnalysisDemand forecastMoving Average &Trend Analysis MethodCash Flow Model (project 25 years)Risk analysis model:Scenario analysisBest ScenarioNormal ScenarioWorst ScenarioMarketing analysis:Five force modelMarketing 4psConceptual MappingCustomer AnalysisDemand forecastMoving Average &Trend Analysis MethodCash Flow Model (project 25 years)Risk analysis model:Scenario analysisBest ScenarioNormal ScenarioWorst ScenarioEvaluating-Net Present Value (NPV )-Return On Investment(ROI)-Payback Period (PB)
14Feasibility Study Remote Environment Analysis Economic factor The Fiscal Policy Office (FPO), Ministry of Finance, announced that the growth of the Thai economy for year’s 2009 is forecasted to grow at 1.0 percent per year (with the range of percent per year) attributed to the slow recovery in private expenditures.World economic crisisImpact to investor:Pros: get some benefit from government; tax exemption, and low cost source of fund to stimulate economic.Cons: Low purchasing power
15Feasibility Study Social factor The life styles of people are changing a lot they have less time to do personal business everything seems to rush.From the high competition in every business units every minute has important so, the speed of information and accuracy are crucial for business user in running business.Impact to investor:Pros: Customer have good perception toward new technologyCons: Customer expect more about feature of new technology, Negative perception; Porn film in internet
16Feasibility Study Political factor The political situation is quite stable now even some group of people still against government (Red shirt group).In some industry face about unclear direction of government policy for example the communication industry is still face about unclear policy of National Telecommunication Commissioner (NTC) in issuing 3G and WiMAX license to service providerImpact to investor:Pros: Political stability than two years agoCons: Corruption problem
17Feasibility Study Ecological factor Nowadays most of people concerned much environment because they face a lot of effect from global warming.Most people will focus on how to reduce the global warming effect.Impact to investor:Pros: 3G and WiMACX both support remote workingCons: Technology it self can harm environment also such as battery.
18Feasibility Study SWOT Analysis for 3G Strengths ▪ 3G Technology is the combining of service to get variety information that is fit to this circumstance (Voice, Data, and VDO)▪ 3G Technology standardization has been accept in world wide level▪ 3G Technology is easy to begin from existing network infrastructure and plenty number of existing handsetShort learning curve in providing after sale serviceWeaknesses▪ The mobile internet is not yet mass market require a lot of marketing budget.▪ Cost of device is still expensive; handset and modem▪ Network is sharing not dedicate▪ Require huge investment in enhancing exiting technologyThreats▪ Upcoming 3.5G and 4G threatens to entry before 3G is fully deployed▪ WiMax▪ 2G and 2.5G are still in the market placeOpportunities▪ Strategic alliance opportunities with traditional non-telecommunication▪ Expand to other business such as business data service▪ The experience of using the internet to go online is getting more agreeable all the time due to better technology
19Feasibility Study SWOT Analysis for WiMAX Strengths Weaknesses ▪ WiMAX Technology has a large coverage and capacity▪ Short learning curve for customer (Wifi User)▪ WiMAX can support in the area that normal telecommunication wire can not reachWork on licensed and unlicensed bands respectively▪ Some frequency range only supports line-of-sight▪ Number of equipments is very low and cost is quite high▪ The lack of available uniform and harmonized spectrum. This may become a barrier for international roaming▪ Cost of network equipment still very high and vendor lack of experience in implementingWeaknesses▪ Limited WLAN wireless coverage▪ Strong promotion from industry chip equipment and network solution support▪ The experience of using the internet to go online is getting more agreeable all the time due to better technologyThreats▪ Upcoming 3.5G and 4G▪ DSL/ADSL technologies widely deployed in urban and suburban areas▪The standard of WiMAX is uncertainOpportunities
20Industry Analysis by Porter’s 5 Forces model 3G TechnologyHigh Threat of Substitution▪ 2.75G mobile phone, Broadband internet, WIFI, and WiMAX are plenty in the marketLow Threat of New Entrants▪ Required license and huge investmentThe potential competitor can be existing mobile operator or internet service providerHigh Intensity of RivalryMany operators; AIS, DTAC, TruemoveHigh competition because market is on maturity stage. (Protecting market share)Low Bargaining Power of SupplierPlenty of suppliersProducts are not much differentiatedModerate Bargaining Power of Customers▪ Customers price concernAll operator use price as fist a priority in competing each other
21Industry Analysis by Porter’s 5 Forces model WiMAX TechnologyHigh Threat of Substitution▪ 3G, 2.75G mobile phone, Broadband internet, and WIFI, are plenty in the marketLow Threat of New Entrants▪ Required license and huge investmentThe potential competitor can be existing internet service providerMany ISP; True, UIH, CAT,TOT, and TT&THigh competition because market is on maturity stage. (Acquiring more market share)Market is in growth stageHigh Intensity of RivalryLow Bargaining Power of SupplierPlenty of suppliersProducts are not much differentiatedModerate Bargaining Power of Customers▪ Customers price concernSwitching cost of customer
22Summarized Marketing Feasibility Technology value grid
23Internet user forecast With trend analysis technique the total internet penetration rate will reach to 70% in year 2030 and approximate to million people
24WiMAX Demand ForecastIn year’s 2015 the growth rate increase a lot due to number of equipment is launch a lot and standard of technology on stable level. The forecast user will reach 43 million (80% of total internet user) in year’s 2030.
253G Demand ForecastThe growth rate of 3G user is very huge at the beginning (Average growth rate is 53% in first 3 years) due to number of equipment which support 3G technology is plenty in the market. The growth rate will be reach to maximum penetration rate at 80% of internet forecast user since year’s 2014.
26WiMAX Revenue Forecast Average monthly fee per month is 590 Baht (Threshold market price for Internet service) for both 3G and WiMAX
33Demand of WiMAX and 3 G is the same (Use 3G moderate case demand as a based)
34Investment CriteriaCash flow is positive every years and NPV also positive. ROI is also high in every scenario in both 3G and WiMAX technology.In reverse 3G make it better in Pay Back PeriodThe WiMAX has a disadvantage in amount of loan because it is quite new when compare to 3G so, it need some time in gaining new user and cost of equipment still highThe main factor which effect to all financial calculation is number of demand forecasting in both 3G and WiMAX.
35Recommendations1The most suitable to invest is 3G technology because it require amount of loan lowest than WiMAX and pay back period is not take so long even in worse case scenario2In reverse if demand is the same between 3G and WiMAX as shown in scenario 2 WiMAX is attractive to invest also3The main criteria which should consider before choose between 3G and WiMAX is number of forecasting of potential user
37Assumption in Demand forecasting The fluctuation of exchange rate will not included in this modelUniversal Service Obligation charge 10% of total revenue (same between 3G and WiMAX)Initial cost for licensing is 3,000 Million baht (up front)Source of investment will come from financial intuitionThe duration of license is 25 years both 3G and WiMAXThe revenue from voice service will not included in this modelThe useful life of equipment is 10 yearsMarket structure will base on historical data (5 years later from now) of internet data service
38Assumption in Demand forecasting Thai population prediction is performed until Year 2020 which refer from National Economic and Social Development Board. After Year 2020, trend projection method will be used.Moving average and trend analysis technique will apply for demand forecastingThe maximum penetration rate of internet user is 75% of total population base on Korea and Japan penetration rate (Maturity stage) (http://www.internetworldstats.com/asia/)The maximum penetration rate of each technology is 80% of total Internet userNetwork will cover all area in 11 years (since begin project) for 3G but WiMAX need 7 yearsAverage revenue per user will base on 590 Baht (as a minimum charge) base on current rate of internet speed at 1 Mbps
39Assumption in Demand forecasting For number of WiMAX user in first year will assume from number of true internet user because customer profile quite similarFor number of WiMAX user use Moving Average technique in forecasting by base on true internet growth rate structureFor number of 3G user in first year will assume from number of AIS data (EDGE and GPRS) user because customer profile is quite similarFor number of 3G user use Moving Average technique in forecasting by base on Singapore 3G market growth rate structureCAPEX forecast will base on Base station section only not included core networkInterest will base at 6.50% BBL rate (Jan, 2009)CAPEX investment will invest in bi-yearly basis