Its lyon congress 2011 ss 23 egnos and galileo for intelligent mobility
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ITS Lyon Congress 2011 SS 23: EGNOS and Galileo for intelligent mobility. GNSS for Innovative Road Applications. Business Plan Analysis. Paolo Cerini (Bain & Company). Service/product flows. Economic flows. Business Model: EETS Service Provider role. EGNOS/GALILEO OPERATING COMPANY.

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ITS Lyon Congress 2011 SS 23: EGNOS and Galileo for intelligent mobility

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Its lyon congress 2011 ss 23 egnos and galileo for intelligent mobility

ITS Lyon Congress 2011SS 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

Economic flows

Business Model:EETS Service Provider role

EGNOS/GALILEO OPERATING COMPANY

TOLL CHARGER

1, 2…N

CONTENT

PROVIDER

TELCO

OPERATING COMPANY

GNSS SERVICE PROVIDER

Toll Collected

% Fee on toll collected

Payment for usage

Payment for usage

Guaranteed service

Service fee

EETS PAN-EUROPEAN SERVICE PROVIDER

Servicebundle

Add-on

Service

Fee per Add-on

TollCollected

Fee per bundle

END USER/CUSTOMER

(Private + Business)

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


Offer structure

Offer Structure

Business

Private

BasicPackage

HW

Smart OBU without GUI

Smart OBU without GUI

Services

EFC

E-CALL

EFC

E-CALL

Add-On

HW

Wireless GUI

Wireless GUI

Services

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

  • 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)


Addressable end user market

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


Market penetration commercial strategy

Market PenetrationCommercial Strategy

  • In order to define a progressive penetration plan, fivegeo-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 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

Area 3

Area 2

Area 4

Area 1

Area 5


Revenues generation potential business private segment

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 (%)


Revenues streams evolution business private 2015 2030

Revenues streams evolution Business + Private (2015-2030)

Revenues streams break down

User-fee Business

Motorway % fee

Add-on VAS Business

Urban % fee

User-fee Private

Add-on VAS Private

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


Cost structure evolution business private 2015 2030

Cost Structure evolutionBusiness + 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 largestcostitems, for~55% of total costs (including VAS)


Ebit at steady state condition business private 2030

EBIT at steady-state conditionBusiness + 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


Free cash flow analysis business private

Free cash flow analysisBusiness + 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)


Sensitivity analysis business private segments

Sensitivity analysisBusiness + Private segments

NPV*

EBITDA

@2030

[email protected]

Positive FCF

Base Case

485 M€

257 M€

212 M€

@2021

Base case plus

(+10 % penetr.; +5% price)

729 M€

309 M€

264 M€

@2019

Best case

(-30% Comm. cost

1.167 M€

412 M€

367 M€

@2018

Best case plus

(-30% Comm. cost; free OBU from 2021)

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

* Discountedat 8% WACC; EconomicConditions2012


Conclusions

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


Next speps

Next Speps

  • Customizationof the general Business Planconducted so far for a specificpotential service provider

  • Detailedanalysiswith Service ProvidersofspecificValueAddedServicestobeofferedas a bundle or on demand


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