Business plan development for a 3G broadband services company

Abstract

RoIP aims to provide global access of 3G mobile broadband services at local prices. In the present scenario, a typical traveler who crosses international borders every few days faces a big hassle in obtaining the best 3G broadband service in every country he travels to. A business user would rather spend his time on business than look out for the best plan available and further incurs documentary hassles in obtaining a broadband device. A tourist faces huge roaming charges if he tries to use internet on his mobile phone. These kinds of users are also troubled by the fact that the short term packages offered by many operators are costly and also they come with fair usage policy which hinders the full speed usage requirements that the user might have. Each time they land in a new country, the user is forced to reconfigure his laptop and in most cases change the modem being used. These pain points are addressed by RoIP through its unique 3G broadband service which provides lower rates for short term users on the same device. The device reconfigures itself whenever the user lands in a new country and the user can recharge online anytime or enroll for our postpaid service. RoIP uses patent pending product and process technologies to streamline operations and to provide lower rates for its customers. RoIP through its process also adds value to the telecom operators. Telecom operators benefit from higher market share, higher revenue and lower operating costs by partnering with RoIP. The market for this product and associated service is immense. In 2005 alone, there were 750 million travelers in the world and is steadily growing at around 2% per annum. 16% of these travelers go on business and are supposedly heavy users of internet. Capturing even 1% of this market would result in very high revenues. 46% of travelers travel by air and this number is growing at an annual rate of 5% making airports a very important place to address target customers. To capture this segment, RoIP depends on its network of dedicated franchisees as well as its own offices across the globe. RoIP also employs local partners to handle local contracts and billing functionalities so as to provide the best rate locally. The operations involve buying bulk data usage from operators and providing it to short term customers and thereby making use of the arbitrage between short term and long term plans. The arbitrage exists across countries also which enables charging prices lower than the local operators in a few countries. The RoIP operations would be rolled out in four phases while launching in countries with large number of prospective customers and considering strategic choices. These operations earn a gross profit greater than 30%. The net profit is around 20% after the final roll out plan. RoIP will keep its pricing simple with a standard rate across the globe. This rate will be based on the number of days of service which also bundles a free data usage per day. The average price charged is around 12 SGD per GB which provides considerable savings to our customers. The company is expected to provide an internal rate of return of 68% over a five year horizon. An investment of around SGD 3.2 million is required and the investor is expected to earn an annual return of around 54% over a 5 year investment horizon.