Superior user experience & Network Performance...2013/02/11 · Ongoing communication Tariff plans...

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CAPITALS

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Ricardo Guardia Ericsson Latin America & Caribbean July 27, 2015

Superior User Experience & Network Performance

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CAPITALS

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Value of performance

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© Ericsson AB 2014 | July 2015

Performance drives loyalty

Shapley regression analysis, showing the relative impact between each driver and loyalty to operator brand (NPS)

Marketing

Customer service

Offer

Network

Network performance

Value for money

Ongoing communication

Tariff plans offered

Customer support

Account management

Billing and payment

Handset/ Devices offered

Initial purchase

Loyalty rewards

Source: Ericsson ConsumerLab Network Performance Study 2013

Base: 12169 Smartphone users in BR, CHN, INDO, SK, JP, US, UK, SE, RU, TUR, CHL, MX

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The virtuous value of Performance From qualitative to quantitative proof

Capital

expenditures

Operational

performance

Market

performance

Financial

performance

CTO

CMO

CFO

“If we do not differentiate on quality, it ends up with my GB versus your GB

and we will be destroying value for all”

CMO of large Latin operator

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Advanced regression analysis to investigate causality & quantify impact based on empirical data from 3 markets

Capital expenditures Operational performance Market performance Financial performance

Capacity upgrades

Network modernization

Product/service development

Accessibility & data completion

rate

Percent connections higher than 1

Mbps

Speech call quality index

Market Share

ARPU increase

Churn reduction

Revenues

EBITDA

Free cash flow from operations

Latency reduction

Throughput

Model aimed at defining the causal relationship from capital expenditures to financial performance

Direct effect, building up to maximum

impact over 12-18 months

Direct effect, building up to maximum

impact over 0-3 quarters

Positive cumulative incremental FCF

after 4-6 quarters + =

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Descriptive statistics show correlation between metrics

y=0.1011x+96.983R²=0.14301

96.5

97.0

97.5

98.0

98.5

99.0

99.5

0 2 4 6 8 10 12 14 16 18

SpeechCallQ

ualityInde

x

AverageAnnualCAPEXperConnec on($R)

CAPEX VS.

SPEECH CALL

QUALITY

y=0.0113x-0.8086R²=0.73436

24%

25%

26%

27%

28%

29%

30%

31%

32%

94.5 95 95.5 96 96.5 97 97.5 98 98.5 99 99.5

MarketS

hareofC

onne

con

s(%)

SpeechCallQualityIndex

SPEECH

CALL

QUALITY

VS.

MARKET

SHARE

y=158.08x-209.43R²=0.36229

2,000

2,500

3,000

3,500

4,000

4,500

15 17 19 21 23 25 27

QuarterlyReven

ues(

‘000

’000

R$)

ARPU(R$)

ARPU

VS. REVENUES

CAPEX VS.

LATENCY

LATENCY VS.

ARPU

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

80 100 120 140 160 180 200

QuarterlyReven

ues(

‘000

’000

MXM

)

ARPU(MXM)

ARPU

VS. REVENUES

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00

Latency

AverageAnnualCAPEXperConnec on(MXM)

0

50

100

150

200

250

300

0 100 200 300 400 500 600 700

ARPU

(MXM

)

Latency

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0 200 400 600 800 1000 1200

Churn(%

)

Latency

LATENCY VS.

CHURN

ARPU

VS. REVENUES

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1,000.0

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

Latency

AverageAnnualCAPEXperConnec on(MXM)

CAPEX VS.

LATENCY

Brazil Mexico United States

Capital

expenditures

Operational

performance

Market

performance

Financial

performance

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correlation to causality regression analysis for Brazil

Capital investments

Operational performance

Market performance

Financial performance

Market Share ARPU

(***)

(***)

(***)

(***)

$R

Mill

ions

Churn

Perc

enta

ge

poin

ts

0.000

0.100

0.200

0.300

0.400

0.500

ARPU($R)

MktShare(%)

Churn(%)

ARPU($R)

MktShare(%)

Churn(%)

ARPU($R)

MktShare(%)

Churn(%)

ARPU($R)

MktShare(%)

Churn(%)

Samples > 1 Mbps Data Completion Data Accessibility Speech Quality

T+2

(***)

(**) T+1

(**) T+2

(**) (***) T+1

(**)

T+1

(**) (***)

T+1

(**) (***)

T+1

(**)

T+3

(***)

(*) (***) (**)

(***)

Perc

enta

ge

poin

ts

(***) Statistically significant at 99% (**) Significant at

95% (*) Significant at 90%

Source: TAS, Ericsson analysis

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positive effects on financials

Source: Ericsson and Telecom Advisory Services LLC (2014)

Base: Market data from Brazil, Mexico, US

NPV – Net present value

FCF – Free cash flow from operations Anything above zero is a

worthwhile investment

Changes following 10 percent increase in CAPEX over a 5-year period

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value of performance recognized by financial analysts

Wireless operators can sustainably compete

in our view on only two dimensions:

– Pricing: drives price erosion

– Quality of network services: supports

pricing power Jan 6, 2015; Contact: Pierre Ferragu (Senior Analyst) •

[email protected] • +44-207-170-5005

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Market

performance

Large operators also acknowledge the same logic

Financial

performance

Vodafone CFO top priority: “Deliver returns on £19B Spring CAPEX investment”

Operational

performance

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Performance when it counts

After today’s emergency,

I am seriously thinking to

go with Entel.

Thanks to Entel I could

stay communicated with

all my family.

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Superior user experience & Network Performance...2013/02/11 · Ongoing communication Tariff plans...

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Transcript of Superior user experience & Network Performance...2013/02/11 · Ongoing communication Tariff plans...