10.5M population in the Five Cities

Vishal Malik,

Thank you for the information. The data you provided are really helpful. Because the title cannot be longer than 128 characters, I open a new post here.

OK. Let’s go back to the data and re-do the analysis.

The 4.87M number comes from the Orascom’s presentation. As I pointed out above, it’s the number for the key four cities mentioned in the document. Thank you for the new link and address the new numbers.

The 10.5M number sounds like the total population from both Urban and Suburban. For example, the Toronto 2.5M in Orascom’s doc and 5.1M from the Wiki which I believe is GTA. Yes. I googled the same number.

Let’s use the 10.5M from the Five cities in 2006. The number will rise to around 11M in 2011. Depends on the roaming of the landed immigrants, this number could be even much higher. Let’s use 11M for now.

11M * 80% Market Penetration = 8.8M. The Low End subs will be 8.8M * 22.6% = 1.99M and the High End subs will be 8.8M * 77.4% = 6.8M.

A question here, will the 1.5M Globalive Target subs come from the Five Cities only or from the Three Provinces (Urban and Rural Area)?

From my above post, I assumed 50% subs come from the Four Cities (Urban only) and 50% subs distributed from Suburban to Rural Area. I made this assumption because:

1. Orascom addressed the Rural Area in 2011/2012 700MHz auction
2. 500M-700M CAPEX over the next four years from OTH may not be sufficient to cover all three provinces from Urban to Rural Area.

I think the 50% number is conservative. Compared 8.8M with 4.1M subs I addressed in my above post. If 100% 1.5M subs come from the Five Cities (Urban and Suburban), my previous numbers still work. If not, we can decrease the old numbers with new assumed Percentage. The Market Share Globalive need to gain will vary from 10% to 18% which means less pressure for the management team.

The assumptions not suggestions for CRTC and co-operative derive from the presentation. When investors asked about Tower sharing during the presentation, Globalive replied that CRTC will be the coordinator if I remember correctly. Globalive also mentioned that it would not intend to a Price War but it would have less to lose.

I like to put the Tower Sharing into the technical part next. Even CRTC regulates the rules and policies; there is an obvious disadvantage for the tenant because he may be going to put his antennas much lower than the owner. This disadvantage will address more sites to cover the same area.

I would say Target Blended ARPU $30 is already some kind of Price War. From the document Orascom provided, the current Canada ARPU is $55.

Again, thank you very much for the updated information. Actually, I started my research recently because I am looking for an engineering job from Globalive. I hope it can be a career and I can grow with the network and the company. However I need to do the homework first.

:-)

Lowest price guarantee! If another company has a plan or offer, you should be able to match it or beat it. This works in the retail industry, why not in the wireless industry?

As a Rogers Subscriber, here are a few things you can do to win me over:

1) Drop the System Access Fee. I HATE seeing this on my bill every month. Roll it in to the cost of the plans if you must (But I'd prefer it if you didn't!), but get it off my bill as a line item. I feel like I'm being ripped off every month.

2) Add things like Voicemail, Caller ID, etc TO THE PLANS, not as money grabbing add-ons. It is 2008, I would consider these things standard features. Please provide All-Inclusive pricing for your plans, not the bait-and-switch tactics other carriers do.

3) Unlimited Data

4) English-as-their-first-language customer support people based in Canada that actually know something about your company and the products and services you provide. This one is really simple to fix...

5) Unlimited Nation Wide calling, with no LD fees. AT&T does it in the states, why can't we have it here?

6) Shorter (or no) contracts. Rely on great plans, great products and great service to keep your customers coming back, not legally binding documents.

Good luck.

The Globalive Short Term Goal

First of all, thanks Vishal Malik for the link which provides Globalive and Orascom’s own analysis and strategy for Canada. The numbers inside are really helpful. Base on the documents, I did my own analysis and hope it may help.

The Globalive short term goal is to cover three of the four richest provinces (BC, AB, ON) and four of the five key cities (Toronto, Calgary, Edmonton and Vancouver), 1.5M subscribers in the next 3 years. The long term goal is 3.5M subs, EBITDA positive in 2012 and EBITDA margin close to 40% in the future. The target ARPU is $30+ blended.

Ideally, I assume the EBITDA in 2018 (2012 positive, 2018 rise to 40%) will be:

3.5M subs * ARPU $30 * 12 Months * 40% = 504M

How to achieve this? Let’s start with short term goal, 1.5M subs in 2011.

The total population in Canada is 33.2M. The population growth rate is 0.83% (2008 est). In 2011, the total population in Canada will be 34M. The three provinces (BC, AB, ON) represent 65.2% = 22.17M. However Globalive will address rural areas once 700MHz auction anticipated in 2011 or 2012. So I assume the current goal is mostly focused on the four key cities (Toronto, Calgary, Edmonton, and Vancouver).The total population in these four cities is 4.87M in 2006. In 2011, it will rise to 5.1M.

The Market Penetration (2007) is 60.9%. It is 3 years lag compared with US which is 84%. It is forecasted to reach 103% in 2018 and 77% in 2011.

I would say 77% in 2011 is a reasonable and conservative number. Based on Age structure:

0-14 years old: 16.3%
15-64 years old: 68.8%
65+ years old: 14.99%

I assume even distribution in young and old Ages, and then the number from 12-75 years old is around 78%. The business people may like to hold multiple regional SIM cards. Some people may like to hold one SIM card for work and the second one for private.

The four key cities may have a high market penetration assumed 80%. The total population 5.1M * 80% is 4.1M subs. I assume 50% of the 1.5M Globalive subs will come from the four key cities, 1.5M * 50% = 0.75M. It means Globalive need to gain 18.3% Market Share in the four key cities. Is it hard to achieve?

The current national wide Market Share distribution is (MTS and SaskTel not included):

Rogers: 37% (19.3% Prepaid, 80.7% Postpaid)
Bell: 31% (28.9% Prepaid, 71.1% Postpaid)
Telus: 28% (19.7% Prepaid, 80.3% Postpaid)
The summarized average is 22.6% Prepaid subs and 77.4% Postpaid subs right now.

The ARPUs distribution is:

Rogers: Prepaid $16 Postpaid $72 Blended $61
Bell: Blended $54
Telus: Blended $64

The Operating Margin for the three is:

Rogers: 46%
Bell: 40%
Telus: 44%

The numbers easily tell why Bell has lower Margin at 40%. It’s because of its 28.9% prepaid subs and lower Blended $54.

Let’s go back to Globalive target ARPU $30+ blended.

The inflation rate is not considered here. I assume Globalive will have 30% Prepaid and 70% Postpaid subscriber distribution. You may argue: “Wrong, you are totally wrong! Globalive is targeting the Prepaid Market.” OK. Let me change the name from Prepaid to Low End subs and Postpaid to High End subs here. Think about it, once the services are customized with no contract, how do you define Prepaid and Postpaid? From the service provider, the difference is Low End payment subs and High End payment subs.

At 80% market penetration, the key four cities total subs is 4.1M in 2011. We knew the summarized average Low End subs is 22.6% = 0.927M and High End subs is 77.4% = 3.17M. I don’t want to tune the numbers here because these numbers are much closed to the 80/20 theory.

Globalive need to attract 0.75M subs in these cities as I assumed above. 0.75M * 30% = 0.225M and 0.75M * 70% = 0.525M. The Market Share numbers will be 24.3% (0.225M/0.927M) Low End and 16.6% (0.525M/3.17M) High End. I think the numbers are challenging but sound reasonable.

I assume the Low End ARPU target is $10, then the High End ARPU need to be $39. These prices are 63% Rogers Prepaid and 54% Rogers Postpaid. However, compare $30 to Bell $54, the Operating Margin may be much lower. We can argue on all kinds of cost like operation cost, facilities cost and marketing cost later. If Globalive want to achieve 40% margin, building the profitable Phone Plans is the key. It explains why the target 40% Margin is set to be a long term goal from Globalive.

From the comments, people are suggesting:

Drop the System Access Fee
Add free add-ons like Caller ID
Unlimited Data
Unlimited Nation Wide calling, with no LD fees
Low/no roaming charges
Free incoming calls and text messages

From the above financial analysis, at ARPU $39 level, I would say some of the ideas may trigger the Price War. The discount prepaid brands Fido, Solo and Kodoo are the potential weapons from the current top three companies. Globalive may have less to lose but I think everybody will sit down and be co-operative. CRTC may be like a round table for price, tower sharing, etc. Otherwise, as my previous post mentioned, the history of Fido is an example.

Again, I am an engineer not a business person. The conclusions may be not correct based on my own assumptions and calculations. My next post will try to cover the launch and technical side from my engineering experience.

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My first post is here:

SWOT Analysis for Globalive Wireless [url blocked]

The link from Vishal Malik is here: [url blocked]

SWOT Analysis for Globalive Wireless

I like to share my SWOT Analysis for Globalive and hope it may help. Please excuse my English.

Strengths:

Globalive Wireless is a new wireless service provider. It does not have any legacy burden as Telus and Bell. It will not be as bureaucratic as Rogers. A new company has all the flexibility on new policies and customer plans. Canadians, a shock wave is coming!

I did not put UMTS/HSPA/LTE as advanced technologies here because Rogers, Telus & Bell are working on the same path. Actually, I should say Rogers, Telus & Bell and Globalive are going to be the Top 3 operators in the near future.

Weaknesses:

Globalive Wireless is a new service provider. It’s a strength but a weakness either. On the flip side, Globalive does not own any legacy Transmission, Backbone and Towers. To lease, co-locate or to build them takes time or money. Thanks to the new technologies, the BSS and NSS are all IP based but sufficient coverage is still the key to attract customers willing to switch.

There is a long way to go for Globalive to become a national wireless service provider. The shortcut is to attract the experienced employees from the competitors and provide them with growth opportunities and compensation.

The funding and budget may not be as much as the other competitors’. Rogers has paid $999M for the spectrum and presents the ambition to keep its No.1 position. Bell paid $740M and Telus paid $879M for the spectrum. Although Bell is struggling with its privatization plan right now but together with Telus, they are a Giant which is hard to defeat.

Opportunities:

Canadian Wireless Market is still underdeveloped compared with our neighbor US. Part of the Canadian customers are exhausted with old faces and their plans. The potential customers for Globalive may come from the following sources:

1. Exhausted customers from Rogers/Telus/Bell who like a refresh face
2. Current customers from Rogers/Telus/Bell who like a flexible or better plan
3. New customers who just need a phone for temporary use or emergency contact
4. Roaming customers who need a temporary local phone with cheaper price
5. Commercial grouped customers (Corporation, plants etc.) for customized services

Threats:

We can learn the history from Fido, Clearnet and Look Communications. The threats are from:

1. Telus & Bell build their new network much faster in service than Globalive
2. No sufficient coverage to attract competitor’s customers
3. Not flexible or better plans as customers expected
4. Attractive phone plans or business models easily copied by competitors
5. Low subscriber volume below target

As I mentioned above, Telus & Bell jointed is going to use the same technologies and follow the same path. If they can prove their ability and strengthen the marketing strategy, it is going to be less room for Globalive to survive from the beginning. Think about their current customer base and the potentials. Rogers GSM customers are going to have a new option to switch after then. Time is the money and the positive cash flow is the key to survive. Otherwise, Fido is the example. Keeping lower prices and blooming the customer base then sell itself.

Sufficient coverage. Why is it so important? How many people have complained about dead spot? UMTS/HSPA does not like GSM, it actually provide less coverage because of its frequency band and depends on the target bite error rate. The product price per voice line is higher compared with GSM. The internet and data stream are the future but voice calls still be the King. More coverage means more sites. No one will be happy to see its Globalive phone roaming to Rogers or Telus & Bell unless a mutual roaming agreement signed between these three companies. A business man won’t take a chance to switch to a less coverage provider. The youth are fine with its city and entertainment area.

Flexible or better plans. Why people want to get a second opinion? It’s about the benefit and the choice. I like to use a fashion name here, Customized Services. Everyone thinks he or she is unique. That’s why he or she likes Customized Services. It makes him or her feel treated as a King or Queen for its VIP treatment. It’s the choice made by his or her own idea. Yeah, it is called freedom.

The positive cash flow. I keep talking this because I think the best strategy for Globalive is not to fight with Rogers and Telus & Bell in the front line. A new company needs to survive first then to nibble the market. Investing most of the time and energy in the potential customers and keep them. One of the potential plans is to provide Customized Services. Some ideas from mine are:

1. Install a repeater device for the clubs or concrete buildings which have the high penetration loss. It’s cheaper than to install a new site and the cost is transferred to the business owner. They are willing to pay for it. Will you go to a club with lower signals and dropped calls?

2. Customized Services for big companies and let the companies to provide the phones to their employees as a benefit with the control on the final cost.

3. Provide dual sim cards phone, one for the work and the other for private. It’s implemented in Asia for long time.

4. Provide open platform to third part companies for add-on services. Like voting, service subscribes, pay bills, web gaming, web chatting, etc. Why Non-Telus subscribers are not able to vote via text messages for Canadian Idol? CTV says it’s for security and fairness reasons. I don’t think it’s fair for Globalive, Rogers and Bell users. OK. Let’s talk something else. How about let the Globalive subscribers have unlimited mobile uploading, downloading and chatting at Facebook, YouTube etc. with a very low customized monthly fee?

5. Globalive Stores. How to build Globalive Brand as quickly as possible? How to let youth or subscribers to purchase the service as easily as possible? The traditional way is to use the current sales network. However, think about the potential customers who are going to play with media, data and Internet! Build a website; let them purchase the credit points like game credits. Give them the opportunities to customize their own plans online. Sounds exciting and familiar with Xbox plan? The technologies are forwarding to 4G, we are the Forth Generation Mobilians and Globalive should be ambitious to be the leader of 4G Mobilians Provider!

I can tell more however the ideas are based on the simple concepts.

1. Flexible

2. Customized Services

3. Open platform and Win-Win profit sharing with third part companies.

The first concept is the key why Fido can increase its customer base and force Bell to create the Solo brand.

The second concept Customized Services is already the key for not only service providers but also for other industry like retailers or web sites like Amazon and eBay.

The third concept Open platform and Win-Win strategy is one of the points why Microsoft Xbox can survive and nibble the market from Sony Play station.

The final part is selfishness. I am looking for a career opportunity at Globalive Wireless and hope to grow with it in the future. I am a professional engineer of Ontario although I present these business ideas.

Canadian dreams
canadiandreamstelcom@gmail.com

As a regular (every few minutes!) mobile user myself, I find the internet experience really needs to be improved - we need faster connection and a better experience overall in how websites work.

Has anyone thought about the potential to use mobile phones for a lot more than just calls, browsing, and texting? A lot of mobile operators around the world have point of sale integration in place with retailers to permit all different kinds of mobile payments - I think this could work well in Canada to pay for any road/bridge tolls, parking meters, and anything else we all need to carry change around for!

Just when you thought the Apple iPhone was the latest and greatest mobile technology, Google has decided to launch an open software platform and operating system for cell phones called Android.

The system will be launched next week in the US and UK under T-Mobile.

However, unlike the iPhone which is built and operated exclusively by Apple, Android will be run on devices that are part of The Open Handset Alliance (comprised of Google, several phone manufacturers and wireless networks) created to develop open standards for mobile devices.

In simpler terms, this means that Android will soon be able to run on a variety of mobile devices rather than just one exclusive phone. In many ways future of wireless is turning what was once just a mobile phone into a hand held, all-in-one, mobile computer.

What are your thoughts on this? Do you find it exciting? Does it matter to you?

Most of what people are asking for on this forum, I already get from Koodo. No contract, no system acces fee, no fee for incoming text messages and I get per second billing. So far so good, and I'm crossing my finger that they don't screw up.

This is an amazing start. We've already had about 7,000 visitors who have posted 1,300 original ideas.

It is great to see how many care about wireless in Canada and have taken the time to post your ideas, thoughts and concerns. I want you to know that I plan on commenting regularly and we are actively reviewing all of the posts.

The big issues for people so far seem to be network type, affordable data plans and contract length. Keep the ideas coming!

And, in case you haven't looked, we posted this on the blog this afternoon:

"Hello everyone!

The past 24 hours have been extremely exciting and busy for us; WirelessSoapbox.com has been flooded with activity and we couldn't be happier!

So far, we've received over 1,300 original ideas which have been commented on 600 times.

We've been reading your comments and there are several recurring themes Canadians are bringing up when expressing their wants and needs for a wireless company. The top 6 are:

1. No System Access/Hidden Fees
2. Fixed Pricing for Unlimited Options (Minutes, Data, Texting, Long Distance)
3. Cheap, Basic Plans with ability to upgrade/customize
4. Shorter/No Contracts
5. GSM/3G Network
6. Improved Customer Service (Less waiting time, talk to live people, talk to people in Canada rather than outsourced customer service reps)

Thanks for letting us know your thoughts and keep visiting the site!"