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New Seminar on Business Planning and Entrepreneurship

Investaura is pleased to announce the launch of its new seminar on ‘Business Planning and Entrepreneurship’. This is a 5-day event that can be booked by business customers and training institutes anywhere in the world, for groups of up to 15 people.

The seminar is lead by one of the Investaura Managing Consultants acting as coach to help participants develop ‘best-in-class’ business planning skills. Up to 5 case studies are included and discussed with the participants in a highly interactive manner. In addition, the consultant will help participants get started with their own business plan.

01 Sep

Business Planning, Budgeting and Costing in a box: the first end-to-end solution for telecoms service providers

Posted by INVESTAURA in Investaura Solutions

Investaura Management Consultants, the telecoms consultancy specialized in Business Intelligence and Performance Management, are pleased to announce the launch of the first end-to-end Business Planning, Budgeting and Activity-Based Costing (ABC) solution for telecoms service providers. The solution was built on the Adaptive Planning platform from Adaptive Insights Inc, the world leader in Budgeting, Forecasting and Reporting. The solution combines the power of Adaptive Insights ‘Software as a Service’ platform with Investaura’s unique understanding of the needs of telecoms operators in both developing and mature markets.

To demonstrate how telecom service providers can use Adaptive Planning, Investaura has developed a fully functioning application that contains all the building blocks found in Budgeting solutions used by telecom operators. The application can easily be customized for service providers of any size, including mobile, fixed, and cable TV operators. It requires next to no IT support for its roll-out within our customers’ organizations.

11 Aug

Investaura gives a hand up to entrepreneurs

Posted by INVESTAURA in CSR

Investaura Management Consultants is pleased to support Kiva, a charitable, non-profit organization that works with microfinance institutions on five continents to provide loans to people without access to traditional banking systems.

We believe that providing safe, affordable access to capital to those in need helps people create better lives for themselves and their families.

We strongly encourage you to join us and help alleviate poverty around the world.

www.kiva.org

31 Jul

Debt is good, not bad!

Posted by INVESTAURA in Thoughts

There is currently a lot of heat on the market and in the news, and this article might be controversial.

Most people think negatively and wrongly about debt, and reading the press would let you believe that in the best of all possible worlds, people, companies and governments should be debt free. Wrong!

Debt is, up to a point, good, not bad.

At the private level, most people who buy property in their lifetime will have to borrow money (debt!) because they don’t want to wait another 10-15 years until they have the capital to buy their dream property in cash. So good news! You can now live, say, in a nice and comfortable house with your beloved ones, and your new home will provide quality time to you, your family and your friends for many years to come.

30 Jun

Vietnam’s failed telecom privatisation

Posted by INVESTAURA in Market news

Vietnam is an interesting country for telecoms. In the mobile space, it counts seven (yes, 7!) operators:

the three giants ‘Viettel’ (controlled by the Ministry of Defense), Mobifone and vinaphone (both controlled by incumbent fixed line operator VNPT);
the four ‘battling’ challengers S-Fone (controlled by Saigon Postel, now that SK Telecom has pulled out of the market), EVN Telecom (controlled by the Electricity of Vietnam EVN), and Vietnamobile (majority controlled by Hanoi Telecom) and Beeline (majority controlled by GTel); the later two are joint ventures with foreign companies Hutchison and VimpelCom, and seem to be struggling.

Source: INVESTAURA, 2010

So in short: 5 out of 7 operators are directly controlled by state companies. Does this have to be? OK, private companies in Vietnam were only introduced in 2001, but still, does the government needs to control, directly or indirectly, 5 out of 7 mobile operators?

30 May

Seeing things with the right perspective: the truth about the Greek crisis

Posted by INVESTAURA in Thoughts

It belongs to the quality of any good manager to be able to see things with the right perspective. To see the big picture and avoid getting confused by irrelevant details. And to take the right decision – however painful that decision might be in the short-term.

Take Greece. There is a lot of rubbish written by journalists about Greece these days. There is no denying that the Greek population is currently under great distress – and the medium-term future of Greece does not look particularly rosy.

But for the future of the Euro, for the overall European economy, for the European and world stock markets: the truth is that whatever happens in Greece, the impact on the world will be negligible. Whatever the outcome of the crisis is – a bankrupt Greece in default and potentially without the Euro, or a Greece assisted by its neighbours in a less painful transition phase – the impact on the rest of Europe will be small. So don’t worry, things will be all right in the end.

Bluntly speaking, Greece does not matter because Greece is a small country population wise, and its economy only represents about 1.5% of the total European GDP of €14 trillion per annum. So does 1.5% more or less GDP in Europe matter much? At the level of Greece, it does. But not at the level of Europe.

30 Apr

Call it a great job, not work

Posted by INVESTAURA in Thoughts

Reproduced from an article by Jack and Suzy Welch published in Gulf News on November 9th, 2009. From The New York Times News Services.

“It’s said that you can only live life forward and understand it backward. The exact same thing is true about careers.

While it’s virtually impossible to know where any given job will take you, most jobs send out signals about how right they are for you – or not. No matter what the job, you should look for those signals: You might be right out of school, a middle manager trying to move up or a senior executive looking for a top job – whatever your situation, it’s important to take a close look at job fit.

People

Everything else about a job can be perfect, but if you do not enjoy working with you colleagues on a day-to-day basis, work can be torture. Look for a job where you share the organisation’s overall sensitivities. By that, I mean a range of values and personality traits and behaviours, from how candid they are about performance to how much they laugh at meetings. If you join a company where your sensibilities don’t match those of your co-workers, you’ll find yourself putting on a persona just to get along. What a career killer – to fake who you are every day.

31 Mar

Are Vodafone, France Telecom and Deutsche Telekom stocks underpriced?

Posted by INVESTAURA in Stock valuation

This article is the follow-up to a previous article entitled „Time to dump your European service provider stocks?“

Over the period 2004-2010, we have seen that a number of big European stocks have been down a bit or a lot. This includes three big names in the market: Vodafone, France Telecom (Orange) and Deutsche Telekom. If these stocks have gone down over the last 7 years, does that mean that they are underpriced now?

Those who believe that the market is fully efficient will say that this question is absurd because the market is always at the right price. But firstly, there is considerable amount of evidence that the market is not fully efficient. And secondly it can be very useful to better understand what you have to believe about the future for stocks to be priced at their current level. If your beliefs are not what the market believes, then there is an opportunity to put a bet on what’s going to happen in the years to come.

How do you know whether a stock is underpriced for a start? If you have ever bought or sold stocks, we bet that in 95% of the cases you have not done any detailed analysis but relied on sentiment, gut feeling, what you read on the Internet or what your financial advisor has told you. But you should do the check yourself. This will take you a bit of time, but might avoid some costly mistakes. And in many cases, you will be surprised by the results. In all cases, you will learn something about the stocks that you contemplate buying or selling, and this is great news!

21 Feb

Winning the war against churn: how to use churn prediction techniques to improve customer retention

Posted by INVESTAURA in Insights, Investaura Solutions

There is no question that churn is the plague of the telecom industry. In the mobile business, annual churn rate of 20%-30% are standard. In developing countries, churn can be as high as 60% per annum. Do you know any other industry where companies lose 20%-60% of their customers between the 1^st of January and the 31^st of December?

High levels of churn are the results of both the supply-side and demand-side peculiarities of telecom service providers. On the supply side, operators engage in intense marketing activities, launching new tariffs, handsets and promotions on a continuous basis to lure end-users to their own service offering. On the demand side, barriers to switch are very low: SIM cards are mostly free, prepaid customers usually do not have to provide much information, and in countries where Mobile Number Portability has been implemented, customers can take their phone number with them to their new service provider.

But if churn is the plague, you don’t have to be fatalistic. Tomorrow’s winners will be service providers that better understand what customers want and better anticipate how customers will behave. This applies to churn as well and raises questions such as: can we forecast which customers are likely to churn in the near future? Can we explain churn? Can we retain customers who are about to churn?

Yes, we can. Churn can be reduced, and should.

Impact of Churn prediction and Micro-campaigning (Source: Investaura, Lumata)

11 Feb

Are you calculating the Customer Lifetime Value (CLV) correctly?

Posted by INVESTAURA in Investaura Analysis

There are two main mistakes that people do when they calculate the CLV. The first one is to simply multiply the customer ARPU by the EBIT margin of the company to estimate the customer profitability in a given month. This is quite bad, but the second mistake is a lot more worse: some people forget about customer churn i.e. they assume that the customer will remain a customer until the end of time. Or if they do assume customer churn, they assume that the probability that a customer churn is constant over time (and independent of the customer); in essence, they use a model of customer lifecycle and customer churn that is totally inappropriate for telecom service providers in a competitive environment. If you want to do better than most, then keep reading until the end of this article.

07 Feb

What does service costing bring to pricing?

Posted by INVESTAURA in Investaura Analysis

Comparing prices with costs is a most enlightening exercice. Unfortunately, service costing being as much an art as a science, many telecom service providers don’t do much service costing; and as a result, they don’t understand their service costs and their sources of profitability well enough.

In many cases, prices for telecom services are set too low by the marketing team. Under pressure to gain new customers and increase market share, setting low prices is certainly one of the easiest strategy to implement for new entrants. The thinking is the following: “in our business, almost all costs are fixed, so we need to build up market share quickly to reach profitability” (true) and “we have to be cheaper than the competition” (false) as well as “the marginal cost of our services is zero, so we can price our services very low” (false).

In the telecom service provider business, more than in any other business, most costs are fixed in the short-term. However all costs are variable in the long-term. If most costs are fixed in the short-term, this does not mean that the marginal costs of services are zero. In particular, for prepaid customers, commissions have to be paid to the sales channels (e.g. dealers) typically as a percentage of scratch card value. Also, off-nets call lead to interconnection charges.

02 Feb

Stop using the IRR!

Posted by INVESTAURA in Finance templates

It’s funny that the IRR – the Internal Rate of Return – is still in use with finance professionals. Actually it is not funny, it is sad, especially when you consider the many flaws that the IRR has. But it is human after all: the IRR looks like a wonderfully simple selection criteria. If a project delivers 15% IRR and my cost of capital is only 10%, then I should invest in this project! And if another project delivers 20% IRR, then I should invest in that one instead! Unfortunately, things are not that simple.

But what is the IRR? It is really hard to find anyone who can explain it in terms that make sense. No surprise there: the IRR is a mathematically defined percentage and most people hate mathematics. By the way: do you know that the IRR is so fuzzy that it can only be calculated by computers (and Excel) using iterative methods i.e. you can simply calculate IRR as a simple sum or ratio of other things. Unlike your beloved NPV, ROIC and the likes.

20 Jan

Outsourcing: To outsource, or be outsourced? That is the question

Posted by INVESTAURA in Insights

For telecom service providers, outsourcing has always been a tough decision. In the past, the most common processes that have been outsourced fall into three broad categories:

Call centre / contact centre / CRM
IT services, whether relating to the enterprise internal needs (e.g. desktop services, Data Centre Services, ERP) or to end-user applications (VAS, application hosting)
Network operations: plan, build, operate, maintain

Other areas of service providers business have long been outsourced, including fulfilment logistics and in most countries distribution and sales – retailers Points of Sales to complement the service provider’s own direct sales force and PoS.

But let us step back. From a big-picture perspective, the key issue is: when does it make sense to outsource a particular activity?

19 Jan

Time to dump your European telecom stocks?

Posted by INVESTAURA in Stock valuation

This column might be unpopular. But if you are honest with yourself, you know that the truth often hurts.

Check a couple of big European service provider stocks on Yahoo Finance or your preferred financial web site. Look at the last 2 years, 5 and 7 years – take 7 years rather than 10 to hide the 2000-2002 dot.com crash, which was truly exceptional. What do you see?

We have done the check for you, for the following European service providers: BT, Deutsche Telekom, France Telecom (Orange), Telecom Italia, Telefonica, Vodafone. And added the Euro Stoxx 600 index on top as benchmark.

31 Dec

The American spirit

Posted by INVESTAURA in Thoughts

There is a common trait among human beings: the belief that our problems have never been worse than today, and that they are insurmountable.

But let us face it: every decade has had its own challenges. Ask your parents, and they will tell you that the 60s were scary, the 70s even more scary, the 80s also very scary. As for yourself, you will certainly remember how scary the 90s were, as well as the 2000s?

The problem is compounded by the press and media. Newspapers live from events and sensational announcements, and the end of the world is certainly a good one. So we should all be terrified. And mortified.

Take our debt: how awful!

Take unemployment and job off-shoring to India and China: scary!

Take our lack of growth: very scary!

Take the American, UK and Spanish property market crashes! Scary!

Take Greece, Ireland, Island: not less scary!

22 Nov

So you want to be MVNO. You too?

Posted by INVESTAURA in Insights

More often than not, MVNOs have not been particularly successful. We have seen many MVNOs on the market, but most have failed commercially and have sold their customer base to the host-MNO.

So what does it take to be a winner in the MVNO space? Well, let us start by taking some perspective on where MVNOs come from.

What are MVNOs all about?

MVNO are mobile service providers that do not own a GSM or UMTS spectrum licence but partner with an existing mobile network operator, also called host-MNO, and buy capacity on their radio access network. Since their initial appearance in the late 1990s in the Nordic countries and the UK, MVNOs have became widespread in Europe, America and some countries in Asia. They are now emerging in developing countries in the Middle East and Latin America.

MVNOs exist in various forms depending on the depth of their role in the value chain:

Full-blown MVNOs own the same network assets as an MNO except a radio network. They also have their own Mobile Network Code and own interconnection agreements. This type of MVNO is the exception rather than the rule because MNOs usually consider them to be ‘too big a threat’.

MVNO-light own basic service platforms (SMSC, VMSC) as well as Billing and CRM systems. Other network assets are provided by the host-MNO (MSC, HLR, Mobile Network Code, Interconnection).

Branded Resellers resells the products and services of a host-MNO under their own brand and are essentially a marketing and sales channel. They are the most common form of MVNO on the market because they are easy to set-up and regarded as the lowest threat by MNOs.
Read More “So you want to be MVNO. You too?”