Presentation Paolo Cerini: `GINA Business Plan Analysis`

Report
ITS Lyon Congress 2011
SS 23: EGNOS and Galileo for
intelligent mobility
GNSS for Innovative
Road Applications
Business Plan Analysis
Paolo Cerini (Bain & Company)
Business Model:
EETS Service Provider role
Service/product
flows
EGNOS/GALILEO OPERATING COMPANY
OPERATING
COMPANY
GNSS SERVICE
PROVIDER
Guaranteed service
Service fee
Economic
flows
TOLL CHARGER
1, 2…N
Toll
Collected
% Fee on toll
collected
CONTENT
PROVIDER
Payment
for usage
TELCO
Payment
for usage
EETS PAN-EUROPEAN SERVICE PROVIDER
Service
bundle
Add-on
Service
Toll
Collected
Fee per
bundle
END USER/CUSTOMER
(Private + Business)
Fee per
Add-on
INFRASTRUCURE
OWNER
PUBLIC INSTITUTIONS
The EETS Service Provider has a key role as it is the link
between all the players along the Value Chain and it is
involved in all economic and service exchanges
2
Offer Structure
AddOn
•Smart OBU without GUI
•EFC
•E-CALL
•EFC
•E-CALL
•Wireless GUI
•Wireless GUI
•Fleet Management/
Tracking and Tracing
•Theft management
•Traffic info system
•Navigation services/ active re-routing
•Theft management
•Traffic info system
•Navigation services/ active re-routing
Services
•Smart OBU without GUI
HW
Basic
Package
Private
Services
HW
Business
• GINA Service Provider offer has been structured as a basic package with a set of
add-on services (VAS) that can be purchased separately
• Two customer segments have been identified: Business (i.e. commercial vehicles)
and Private (i.e. passenger cars)
3
Addressable end-user market
• Analysis perimeter: all the
countries belonging to
EU27.
• Business Case has analysed
last available data relevant
to the European market of
cars, buses, light
commercial vehicles, light,
medium and heavy trucks,
using CAGR of last 4 years
to project data
Business Segment Potential
Circulating trucks in Europe
Private Segment Potential
Circulating cars in Europe
4
Market Penetration
Commercial Strategy
• In order to define a progressive penetration plan, five geo-clusters have
been defined using the following criteria:
- Geo-adjacency and Trans European Network (TEN-T) priority axis
- Actual Road Charging scheme
- Upcoming Road Charging projects
Area 3
Area 2
Area 4
Area 1
Area 5
- Area 1- Central-Southern EU:
Germany, France, Italy, Spain,
Portugal and Austria
- Area 2 -Benelux & Great Britain:
Netherlands, Belgium, Luxemburg,
UK, Ireland
- Area 3 - Northern Europe:
Denmark, Sweden, Finland, Latvia,
Estonia and Lithuania
- Area 4 - Eastern Europe:
Poland, Czech Rep., Slovakia,
Slovenia, Hungary, Romania and
Bulgaria
- Area 5 - Mediterranean Island:
Greece, Malta, Cipro
5
Revenues Generation Potential
Business + Private Segment
Business Segment
Private Segment
Price
Price
Market
Share
Market Penetration
Market Penetration
Total Potential
Market (Mln)
Total Market
Penetration (%)
6
Revenues streams evolution
Business + Private (2015-2030)
Revenues streams break down
User-fee Business
Add-on VAS Business
User-fee Private
Add-on VAS Private
Motorway % fee
Urban % fee
Launch of GINA
Offer for private
segment
• End-user fees remain the most important revenues stream accounting
for ~65% of total revenues
• Private segment revenues up to 30% of total revenues
7
Cost Structure evolution
Business + Private (2015-2030)
• The cost structure remains approximately constant along the Business Plan horizon
• Cost structure at steady-state condition (2030) amounts to ~ 1080 M€
• Telecom costs are the largest cost items, for ~55% of total costs (including VAS)
8
EBIT at steady-state condition
Business + Private (2030)
EBIT build-up in 2030
Variable Costs
Fixed costs
• Steady-State (2030) EBIT is around 16% of total revenues
• Telco costs are the largest cost item accounting for about 46% of total revenues,
followed by OBU costs accounting for about 14% of total revenues
9
Free cash flow analysis
Business + Private
Operative Free cash flow
Launch of GINA
Offer for private
segment
• Operative Free Cash flow positive after 6 years from start-up
• Cumulative FCF positive from 2025 (10 years after start-up)
10
Sensitivity analysis
Business + Private segments
NPV*
EBITDA
@2030
EBIT
@2030
485 M€
257 M€
212 M€
@2021
729 M€
309 M€
264 M€
@2019
1.167 M€
412 M€
367 M€
@2018
1.606 M€
531 M€
486 M€
@2018
Low Penetration
(-30 % penetr.)
32 M€
147 M€
102 M€
@2022
Worst case
(-20 % penetr.;
-10% price)
29 B€
161 M€
116 M€
@ 2022
Base Case
Base case plus
(+10 % penetr.; +5%
price)
Best case
(-30% Comm. cost
Best case plus
(-30% Comm. cost; free
OBU from 2021)
* Discounted at 8% WACC; Economic Conditions 2012
Positive FCF
11
Conclusions
• Significant business opportunity with a good profitability in
the long term (EBITDA at regime condition about 20% of
Revenues) with two major issues:
 Long break-even period that requires a significant start-up
financial stress (cumulative FCF positive after 10 years)
 High Sensitivity to price change
• Monthly end-user fees are by far the most important source of
revenues: toll chargers % fee have a very limited impact
• Largest cost items are Telco costs followed by OBU related costs:
 Likely to decrease (best case scenarios very probable)
 Alliance with Technology and Telco providers is key
• Value Added Services represent a good opportunity to enlarge the
business beyond toll collection service
12
Next Speps
• Customization of the general Business Plan
conducted so far for a specific potential
service provider
• Detailed analysis with Service Providers of
specific Value Added Services to be offered
as a bundle or on demand
13

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