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As Posted in One of My Previous Posts

As Posted in One of My Previous Posts

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Published by Carlos Valdecantos
Are the emerging crisis out of the crisis?
More info at consultantvalueadded.wordpress.com or www.grou-mmc.com
Are the emerging crisis out of the crisis?
More info at consultantvalueadded.wordpress.com or www.grou-mmc.com

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Published by: Carlos Valdecantos on Jan 03, 2009
Copyright:Attribution Non-commercial

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06/17/2009

 
OPEX improvement: Making the best of a slowdownAs posted in one of my previous posts, the current environment isshowing a clear downturn for telecommunication service providersand operators that are currently reporting a relevant deceleration intheir client’s average revenues per minute as a result of thesignificant decrease of the minutes of use of consumption.How are these operators handling this downturn? One of our clientshas recently asked us to support them on improving their EBITDAlevels through cost improvement. It has a difficult starting pointposition: EBITDA margin accounted for 18% of the revenues. Theundergoing study is focusing in evaluating EBITDA improvementopportunities based on actionable OPEX reduction, therefore nottaking into consideration neither potential revenues enhancement(mix or volume) nor ICX optimization opportunities.
 
After an initial assessment of three weeks, we found that theactionable OPEX accounted from €130 – 150 Millions in 2009, andEBITDA margin amounted €30 - 40 Millions
 The estimated stand-alone cost-adjustment opportunitywould account for an increase of +4% to +8% of theEBITDA margin (€+15M to €+28M)
–An initial +4% to +6% increase from large buckets of opportunities and a further improve of +1% to +2%from the fine-tuning of the operations and detailedstream-lining of the organization This initial +4% to +6% (+€15M to +€22M) improvementopportunity would come mostly from four different sources:
Overhead adjustments: mostly elimination of redundancies and review / adjustment of existinginflationated organization. Estimated opportunity +€ 9Mto +€ 11.5M
Commissions optimization, with an estimatedopportunity of +€ 3M to +€ 5M, which would assume a9% to 15% improvement of the commissions paid
Customer Care stream-lining and adjustments, with anopportunity of approximately +€ 2M to +€ 3M
IT & Billing optimization of operations, head-count andreview of outsourcing methods The large buckets of overhead optimization would have two differentnatures, despite partially related:
Redundancies in activities performed by severaldepartments: controlling & reporting and marketing asthe most significant ones

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