Transcript 4_Successful mergers and integrations of telecom

Successful mergers and
integrations of telecom
operators
2005
St Kitts & Nevis
Markku Kivinen
+1 202 361 8039
[email protected]
© Omnitele Ltd. 2005
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Presentation contents
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Omnitele in brief
Drivers for consolidation
Planning of merger/integration process
Integration challenges
Summary of learnings
© Omnitele Ltd. 2005
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Omnitele in brief
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Telecom consulting since 1988
We provide leading edge mobile operator know-how
Projects in more than 70 countries worldwide
Owned by Finnish telecom operator group
Offices in Finland, the Netherlands and the U.S.
Net sales in 2004 EUR 5,2 million
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Omnitele global presence
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Drivers for consolidation
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Market share impact
Western European Operator Market Shares (5/2004)
Already merged
Exception
(3 ?)
Danger zone
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
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K
U
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Sw
Sw
Sp
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<15% market share not sufficient in a saturated market
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Po
rtu
ga
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Fr
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Fi
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Be
lg
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N
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rl a
nd
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Ire
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G
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G
Ita
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Au
st
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D
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0%
Densely populated (Hong Kong) have lower cost per subscriber – better chances
Sparsely populated countries (Finland) have high cost per subscriber
Caribbean markets still growing, but reaching saturation soon
Cost savings
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Network and organization economies of scale
Purchasing power impact on CAPEX
In-net calls (termination charges)
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Planning of merger/integration
process
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Example case: Finland
Land of Santa Claus, thousand lakes,
midnight sun, ice hockey and the best
race car drivers in the world
Four operators: Sonera, Elisa, Finnet and
Telia Mobile until Finnet acquired
Telia Mobile in 2003.
Finnet
– 450.000 subscribers, all post-paid
– 3600 GSM BTS (80% Ericsson, 20% Nokia)
– ~100 pre-commercial WCDMA BTS
Telia Mobile Finland
– 250.000 subscribers, also prepaid
– 1160 BTS (all Nokia)
– ~100 pre-commercial WCDMA BTS
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Before the process is public
Due diligence & other advance planning
Integration plan
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Due diligence
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Customer communication
Brand management
Customer care
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Operator’s plan for vendor participation
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Network integration plan
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Customer management plan
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Financial
Sales & marketing
Network & facilities
Organization and employees
Legal
Whose network to use as a basis for a future
integrated network?
What are the costs of integrating two networks?
Which equipment is redundant?
How and when can the swap to one radio
network be made?
How and when can the swap to one core
network be made?
Integration plan of other assets,
functions & organization
Renewed contracts
Risk sharing
Swap opportunities
” Free-of-charge advice”
Redundant equipment
Plans needs to be done in detail:
 To realistically estimate the integration cost in the merger decision
 To speed up the integration process to save money
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Show time:
Operator integration management
Typical issues to consider
• Detailed integration plan – “no more surprises”
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Integration of two service portfolios into one
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Which/whose services to keep
How to bill for services
Customer communication
Integration of two networks into one network
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Division of responsibilities
Timetable
How to integrate as fast as possible and with no service downtime
Organizational aspects
Vendors’ role confirmed in the process:
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Logistics
Professional services
Failures lead to
 Confused & disappointed customers; high churn
 More money spent than expected, expected savings do not materialize
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Integration challenges
2004
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Example of a real integration process timeframe
First radio nw
swap 8.9.
Deal closing 6.6.
5/03
6/03
Integration planning
• Project plan on:
1. Service operator strategy and
its implications to network
integration
2. Basis for integration
3. BSS integration
4. NSS integration
5. Service platform integration
6. IN integration
7. GPRS integration
8. CS data integration
9. IP networks integration
10. Transmission networks
integration
11. OSS integration
12. Mediation and Billing
13. UMTS
14. WLAN
• First version made before
closing, second together
with TMF
• Updated and specified
regularly during the
integration project!
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8/03
Core swap 20.11.
10/03
Last radio nw swap
21.11.
12/03
Service integration phase
Radio integration “MVNO” phase
• Integration of service pl.
• Traffic moved regionally to the Finnet network
• Integration of customer
• Existing core network and service platforms in
management & billing
use in TMF network, Finnet core upgraded to
cover the traffic from the TMF subscribers
moved to the Finnet network
• TMF customers billed with billing systems of Core integration (HLR migration) phase
• Detailed planning of core swap and service
TMF
platforms
• Finnet and TMF subscribers have own
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Core swap
separate service portfolios
Finnet (450.000 subscribers) acquiring competing operator
Telia Mobile Finland (TMF, 250.000 subscribers) with
partly overlapping network
Radio network integration challenges
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Eliminate unnecessary coverage overlap and cost – select best sites
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To provide seamless coverage, more sites are needed to serve customers of
both networks
– Extensive testing/benchmarking needed
– Frequency changes (850/900/1800/1900) impact coverage
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Capacity planning of the future network is critical
– Traffic distributions vary a lot between competitors
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Multivendor environment is always tough to handle, especially in small
geographical scale – vendor swaps & logistics ?
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Documentation, documentation, documentation...
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Realistic planning/deployment workload expectations are critical
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Market for redundant equipment is limited
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Core & service platform integration
challenges
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How to provide seamless user
experience during the integration ?
How compatible are the services,
service platforms and billing
environments ?
How to integrate two service
portfolios into one ?
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Kill or maintain
Legal aspects
Billing and provisioning
External communication to customers
All the services controlled by the
subscriber may be lost in migration e.g.
call diversions, barring, barring password
and call waiting, operator logo
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Harmonizing interconnection and
termination fees ?
Intelligent Network and service
platforms ?
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Telia Mobile Finland was regarded as
market leader for prepaid customers
while Finnet did not have any prepaid
subscriptions
To keep the prepaid solution required not
only the IN but also saving TMF’s MSC
(INAP) and NCC (SMS, content, GPRS
and MMS charging)
Transferring subscribers
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SIM swaps are risky business
HLR migration for postpaid is a
challenging task
Customer Care challenges
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Educate the Customer Care
– Build processes and different compensation levels
– Handle the changes in subscription management
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Prepare yourself for call volumes from both new subscribers and
existing subscribers, as existing subscribers are also experiencing
changes in network performance
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Prepare different offers with retailers
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Letters to customers, particularly corporate
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To prepare for competitors’ attacks, various counter offers must be
ready (newspapers, web, direct SMS offers)
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Customer Care integration
Case Finnet/Telia:
In CC integration, target was to deploy the best practices
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Politically challenging
Lots of personnel involved
Most visible part of the operator towards the customers
Starting point:
– TMF had a CC with very high reputation
– Finnet had a partly outsourced CC function (shareholders’ fixed line operations)
– Finnet had a ”VIP CC” for corporate customers
– Failure of the billing system of Finnet and replacement decision just before integration
made matters worse
– Mobile number portability introduced with lots of interest in Finnet
Final outcome:
– Completely new CC process introduced with participation of both parties
– More than 10% savings in CC cost per customer, mean waiting time <30 seconds
achieved
– Eventually best CC reputation in the market and winner in number portability
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Summary of learnings
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Operator integration – key learnings
1. Subscriber management is crucial
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SIM card swaps for non-OTA capable SIM’s
Discontinuity is a driver for churn: Provide seamless service for end-users during
and after integration
Inform customers of “no change” or “change towards better”
2. Prepare the ”best guess plan” well before closing the deal
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High level planning to identify showstoppers & major hidden cost items
Focus on contracts & other third party related issues
New IN and other platforms may be needed to accommodate subscribers with
varying services
Breaking BTS site leases may take longer than expected
Running parallel networks is extremely expensive
3. Identify key people from the acquired party
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Absorb the best people, take best practices in use asap
Keep both organisations motivated
Review of the ”best guess” plan
“Interim consolidation organisation” needs to be immediately nominated
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Operator integration – key learnings
4. Identify hidden clauses in contracts with suppliers
– Example: Contract may be valid only if major part of NSS from vendor xxx
– Re-sales of redundant infrastructure may be contractually restricted
(network management system from vendor yyy)
5. Re-negotiate operational & expansion contracts
– New technology pilot networks and commercial contracts back on the table
– Subcontractor agreements (planning, implementation, maintenance, tower
leases)
6. All parts of the consolidated network need to be capable of handling
significantly more traffic after the swap
– Temporary half-rate to be able to quickly move traffic to one radio network
– Seamless swap BSC area / MSC area ; start with smaller regions
– GPRS throughput may be significantly impacted
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Operator integration – key learnings
Third party’s role as the temporary project office:
Omnitele services
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Technical and organizational/economical due diligence
Integration project planning and support
Integration project management
Service integration support
Technical experts in e.g:
– BSS integration
– Core nw integration
– Service platforms integration
Risk sharing - things get done in time
Neutral third party – best practices identified, disputes solved
Telecom specific knowledge – pitfalls identified in advance
Experienced temporary project staff available
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For more information about Omnitele,
please visit our web site
www.omnitele.fi
2004
© Omnitele Ltd. 2005
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