Assessment

Develop a 5-year Business plan for a telecom operator:

Market size 10 million subscribers growing at 20% a year and growth rate going down to 10% in last year

Market Share at end of year 0 = 10%

Share of net adds 15% going up to 30% in last year

Churn starting from 30% going down to 15% in last year

Subscriber acquisition cost US$ 5.00 going down to US$ 2.50 in last year

Marketing cost 10% of revenue going down to 7% of revenue

Interconnect cost is 3 cents per minute

License fee 1% of revenue less interconnect cost

Other OPEX 35% of revenue going down to 25% in last year

Revenue calculations

o Pricing 3 packages

Afixed cost US$ 5.00

Free minuteson net 50 off net 20

OG on net 5 cents/minOff net 7 cents/min

Bfixed cost US$ 7.50

Free minuteson net 75 off net 50

OG on net 3 cents/minOff net 5 cents/min

Cfixed cost US$ 10.00

Free minuteson net 100off net 75

OG on net 2 cents/minOff net 4 cents/min

o For all packages, below criteria applies:

Peak hours usage is 70% of usage

Off peak tariffs reduce by 25% from peak tariffs

On net is 65% of the traffic

Subscriber split is 50%, 30% and 20% on packages A B and C respectively

Average monthly usage per subscriber is 300 MOUs on Package A, 500 MOUs on Package B and 800 MOUs on Package C

For revenue projection, assume growth in usage of 5% per year with same call mix

Outputs Expected:

1. Revenue

2. Gross Profit

3. EBITDA

4. List of additional information/data points required to forecast Net Income