620 likes | 799 Views
G NSS for IN novative R oad A pplications. GINA WP 4.2. Business and Exploitation Plan May 3 rd 2011. Content. Introduction & Business model definition Addressable market and market potential General Cost Structure Business Case Scenarios Business Segment stand-alone scenario
E N D
GNSS for INnovative Road Applications GINA WP 4.2 Business and Exploitation Plan May 3rd 2011
Content Introduction & Business model definition Addressable market and market potential General Cost Structure Business Case Scenarios Business Segment stand-alone scenario Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
EuropeanCommissionPushforinteroperability and EETS The European Council and Parliament are developing a strategy for interoperability by establishing the European Electronic Tolling Service (EETS) and supporting pan-European research projects (i.e. CESARE, RCI) involving major stakeholders Main References • Interoperability Directive 52/ EC (2004) • Commission Decision 750/CE (2009) • CESARE I-IV • RCI (Road Charging Interoperability) Technologies • GNSS - Satellite positioning (Preferred) • DSRC - 5.8 GHz microwave technology EETS Key Elements • One OBU – One Contract for all EETS Road domains • Non-discriminatory EETS Provider access to all EETS domains • No additional toll • Complementary to actual electronic toll services • No physical barriers • Separation of roles between Toll Chargers and Service Providers Timetable • Mid-2012 for >3,5 tons vehicles (i.e. Trucks, Buses, etc.) • Mid 2014 for other vehicles (i.e. Cars, Light Commercial Vehicles, etc.) GINA D4.4 – Business and exploitation plan
Pan-European supporting projects - Cesare IV Framework InteroperabilityManagement • Settlement of disputes • Governance • Establishment and operation of certification procedures EETSService Provider • Toll payment guarantee • Invoicing (on behalf of Toll Chargers) • EETS contracts Issuing • OBU Issuing Toll Chargers • Transport services provisioning • Infrastructure maintenance and upgrade EETSService Users • Road user fees payment (via the EETS Provider) • EETS Service fees payment Within CESARE project a basic EETS framework has been modelled and the roles of the four main actors (Toll Chargers, EETS Service Provider, EETS Service Users and Interoperability Management) have been defined GINA D4.4 – Business and exploitation plan
Service/product flows Economic flows GINA EETS Business Model – Service vs Economic Flows 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 GINA D4.4 – Business and exploitation plan
GINA Offer structure Business Consumer BasicPackage HW Smart OBU without GUI Smart OBU without GUI Services EFC E-CALL Fleet Management/ Basic 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 set of services offered in a bundle solution to maximize service usage and market penetration • a set of add-on services that can be purchased separately • Two customer segments have been identified: business (i.e. commercial vehicles) and consumer (i.e. passenger cars) GINA D4.4 – Business and exploitation plan
Content Introduction & Business model definition Addressable market and market potential General Cost Structure Business Case Scenarios Business Segment stand-alone scenario Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
Addressable end-user market For the addressable end-user market the Business Case has analysed the last available data relevant to the European market of cars, buses, light commercial vehicles, light, medium and heavy trucks, using CAGR of the last 4 years to project data The analysis took into consideration all the countries belonging to EU27. GINA D4.4 – Business and exploitation plan
Forecast for circulating cars in Europe (2010-2030) EU 27 cars market expected to increase from 244 Mln in the 2010 to 298 Mln in the 2030 with a CAGR around 1% Relative weight of the first 7 countries (Germany, Italy, France, GB, Spain, Poland, Netherlands) out of the total EU market is almost constant around 75% GINA D4.4 – Business and exploitation plan
Forecast for circulating LCV, Trucks and Buses in Europe (2010-2030) EU 27 commercial vehicles and trucks market expected to increase from 36 Mln in the 2010 to 48 Mln in the 2030 with a CAGR around 1,5% Relative weight of the first 7 countries (Germany, Italy, France, GB, Spain, Poland, Netherlands) out of the total EU market is almost constant around 70% GINA D4.4 – Business and exploitation plan
Actual European toll collection market • European toll collection market is ~€23B and Western European account for over 90% of the total collection • Despite that, road pricing schemes are expected to spread rapidly all around EU due to: • Growing mobility needs • Inability of many government to finance additional road infrastructure • Increasing concerns over the environmental impact of road transport • Need for a better and more efficient use of existing infrastructure Source: ASECAP National Reports GINA D4.4 – Business and exploitation plan
European toll collection forecast(2010-2030) Annual toll collection revenues have been projected along the Business Case according to actual road charging scheme trends and upcoming projects All EU27 countries RUC scheme where analysed in depth in order to take into account all country peculiarities Source: ASECAP National Reports, Toll Road News, Euromonitor, GINA project analysis GINA D4.4 – Business and exploitation plan
European Electronic Toll Collection (ETC) products and services market Companies with operations in many geos Annual ETC revenue (2008) European Electronic Tolling products and services market is ~€1.4B and highly fragmented Source: GIA Report, Company Annual Reports, IBTTA, ASECAP GINA D4.4 – Business and exploitation plan
Prominent European ETC vendors Vendor Est. ETC global revenue ($M) Main location Lane Maint. Hardware Back Office GINA D4.4 – Business and exploitation plan
Urban Road Charging fee collection estimation (2010-2030) • Urban Charging fee collection revenues of EU-27 Top-50* cities have been estimated starting from the ones of currently in place UC scheme (i.e. London, Milan, Stockholm) and adjusting them proportionally to population EU-27 Top-50 cities URCCollection Perpetuity Growth Progressive Introduction of Urban Road Charging Scheme in the remaining TOP 50 European cities Introduction of Urban Road Charging Scheme in all cities above 1M inhabitants Growth of actual Urban Road Charging Scheme *EU-27 Top-50 cities have been selected according to population and traffic index (Tom Tom data) GINA D4.4 – Business and exploitation plan
Content Introduction & Business model definition Addressable market and market potential General Cost Structure Business Case Scenarios Business Segment stand-alone scenario Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
GINA Telecommunication costs- Main assumptions • The communication channel among the OBUs and the Central IT Infrastructure will be done by GPRS/UMTS: RUC data reports will be sent daily to optimizes bandwidth and server usage • The communication requirement range for the basic package have been assumed around 100 MB/month for both the consumer and the business segment Telco Requirements Costs • Communication prices per country, based on currently offered mobile broadband services*, with a 40% discount achievable thanks to proper negotiation and business agreements • Further 40% discount for private segment versus business segment Roaming • International roaming costs declining along the BP time horizon from 5 to 3 times the cost of national services • Average roaming percentage weight: • Consumer segment: 10% • Business segment: 20% FutureTrends Telco costs stable along the BP time horizon: cost would not be decrease significantly, rather than maximum data cap would increase rapidly *General public offers scaled down starting from offers with data allowance as close as possible to the defined communication range (100- 500 MB/month) GINA D4.4 – Business and exploitation plan
European mobile broadband services prices BACKUP Note: data refers to mobile broadband services via USB modem / PCMI card since any add-ons for voice communications is required Actual mobile broadband costs vary from 1,0 € to 8,4 € across different EU-27 countries, with an average of 2,9€ GINA D4.4 – Business and exploitation plan
GINA OBU related costs- Main assumptions • The OBU purchase cost and all the costs related to installation and assistance would be included in the basic package • OBU cost for business segment, installation included, assumed to be 160€ in 2015 (starting from 220€ in 2012), declining to 80€ in 2030 following an exp-curve: • Costs are highly affected by scale economies • Installation costs (actually around 50€/OBU) would be drastically reduced in case of partnership with vehicles manufacturers • OBU cost for consumer segment, assumed to be 45€ in 2018 (starting from 90€ in 2012), declining to 30€ in 2030 following an exp-curve; installation costs in this case have not been considered since the OBU has been assumed “plug & play” type, much simpler than the business segment type OBU & Installation OBU+InstallCost Evolution (Business Segment) OBU+InstallCost Evolution (Consumer Segment) Financing • OBU + Install costs assumed to be sustained through a “leasing like” purchasing, • 10% interest rate • 5 years leasing duration, after 5 years the OBU would be completely renewed Assistance • Assistance costs for fixing troubles with OBU assumed to be equal to 30% the annual leasing fee GINA D4.4 – Business and exploitation plan
GINA Architecture Overview RUC & ServiceUsers(e.g. MotorwayCompanies, Municipalities, Insurancescompanies) GINA EETSService Provider External Entities GINA Core IT Infrastructure Central IT Infrastructure Service Center 1 Content Provider 1 Vehicles Users OBU Service Center 2 Content Provider 2 Service Center 3 Content Provider 3 Service Center n Content Provider n • GINA core IT infrastructure is composed by two main blocks: • the Central IT Infrastructure • the Service Centers • These tow blocks are the key elements for determining both Capital Expenditure profile and Operating Expenses profile GINA D4.4 – Business and exploitation plan
GINA Opex & Capexprofile estimation For both Opex and Capex a stepwise evolution profile has been assumed, reflecting the progressive penetration in different areas According to the defined penetration plan three main phases have been identified: Phase I Investments and operating costs to support the service provision to the business segment in Area 1 (Central Southern Europe) Phase II Investments and operating costs to support the service provision to business and private segment in Area 4 (Eastern Europe) and Area 5 (Mediterranean Island) in addition to Area 1 Phase III Investments and operating costs to support the service provision in Area 2 and Area 3 (Benelux & Great Britain) (Northern Europe) in addition to Area 1, Area 4 & Area 5 GINA D4.4 – Business and exploitation plan
GINA Opex & Capex- Main Assumptions Opex Launch on the market for Business segment on 2015 Architecture upgrades driven by penetration plan 1 years prior toeach architecture upgrade, 50% of the upgraded architecture on-going costs shall be supported to prepare the go-live During the launch year for each phase additional launch costs shall be supported Opexreductionfor the business segment stand-alone scenario equalto40% (notappliedforcore IT infrastructurePhase 1) Depreciation Capex Hardware: 5 years Software: 3 years Othermaterial: 5 years Other not material: 15 years Launch/ UpgradesInvestment 33% of investments have to be supported two years ahead GINA SP launch or architecture upgrades, the remaining 66% one year ahead Capexreductionfor the business segment stand-alone scenario equalto30% On-goinginvestment Sustaining/maintenancecapex are equal to depreciation GINA D4.4 – Business and exploitation plan
GINA Opex profile (2013-2030)- Business segment stand-alone Area 1&4&5 +Area 2&350% On-Going Area 1&4&5on-going costs Area 2&3Launch Opex distribution Area 1 +Area 4&550% On-Going Pan-EU system On-going Area 1Launch + ongoing costs Area 4&5Launch Area 1 ongoing costs Area 1 - 50% ongoing costs Pan-EU system on-going operating expenses equal to ~34M€ GINA D4.4 – Business and exploitation plan
GINA Opex - Details by Phase Business segment stand-alone BACKUP GINA D4.4 – Business and exploitation plan
GINA Opex profile (2013-2030)- Business + Private segments Area 1&4&5 +Area 2&350% On-Going Area 1&4&5on-going costs Area 2&3Launch Opex distribution Area 1 +Area 4&550% On-Going Pan-EU system On-going Area 1Launch + ongoing costs Area 4&5Launch Area 1 ongoing costs Area 1 - 50% ongoing costs Pan-EU system on-going operating expenses equal to ~57M€ GINA D4.4 – Business and exploitation plan
GINA Opex - Details by Phase Business + Private segments BACKUP GINA D4.4 – Business and exploitation plan
GINA Capex profile (2013-2030) –Business segment stand-alone Area 1 system development and business start-up Area 2&3 system “Scaling-up” Area 4&5 system “Scaling-up” Capex distribution Maintenance Overall about 621 Mln € Capex in 17 years GINA D4.4 – Business and exploitation plan
GINA Capex - Details by Phase Business stand-alone segment BACKUP GINA D4.4 – Business and exploitation plan
GINA Capex profile (2013-2030) –Business + Private segments Area 2&3 system “Scaling-up” Area 4&5 system “Scaling-up” Capex distribution Area 1 system development and business start-up Maintenance Overall about 731 Mln € Capex in 17 years GINA D4.4 – Business and exploitation plan
GINA Capex - Details by Phase Business + Private segments BACKUP GINA D4.4 – Business and exploitation plan
EGNOS signal and SG&A Costs- Main Assumptions EGNOSSignalCosts Galileo Concessionaire costs for GNSS services included EDAS equal to 1,5 € per annum* * GIROADS study relevant to EGNOS System operating costs: system operations costs between 30 and 35 million euros per annum (cost allocation for the road domain between 3 and 15 million euros per year) Commissions to sales agent (either belonging to third parties or to an own sales force network) equal to 5% of total revenues (based on telecom benchmark where commissions go from 4 to 8% of revenues) Commercial costs Marketing costs 0,9% of the revenues (based on telecom benchmarking) for advertising and promo costs for product launch, customer retention initiatives and brand/product awareness building Administration, Finance & Controlcosts Staff of 300 employees for the pan-European service provider at regime condition costing 80k€ each (2,2% of revenues) • Rent and other minor costs assumed to be 0,7% of the revenues • Lost revenues due to claims and frauds have been assumed: • 0,5% of toll collected for Infrastructure operators • 1% of toll collected for Municipalities OtherCosts GINA D4.4 – Business and exploitation plan
Content Introduction & Business model definition Addressable market and market potential General Cost Structure Business Case Scenarios Business Segment stand-alone scenario Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
GINA Penetration Strategy • For an EETS provider, covering all Europe in a “big bang” fashion seems to be very tough both from an economical and operational point of view and a progressive geographical penetration seems to be the only feasible solution • In order to define a progressive penetration plan, 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 • 5 geo-cluster have been identified : • 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 2 Area 4 Area 1 Area 5 GINA D4.4 – Business and exploitation plan
GINA Penetration Plan AnnualToll Coll.(2009) Nr.Countries MainActual Scheme Penetration Plan 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Central-Southern Europe(Area 1) 20,4 M€ 6 Toll system for all vehicles Launch of GINA for BUSINESS SEGMENT Launch of GINA for CONSUMER SEGMENT Benelux &Great Britain(Area 2) Launch of GINA for CONSUMER + BUSINESS SEGMENT 0,3 M€ 5 Toll free Northern Europe(Area 3) 0,4 M€ 6 Toll free Launch of GINA for CONSUMER + BUSINESS SEGMENT Eastern Europe(Area 4) Launch of GINA for CONSUMER + BUSINESS SEGMENT 0,9 M€ 7 Vignette Mediterranean Island(Area 5) 0,5 M€ 3 Toll system for all vehicles Launch of GINA for CONSUMER + BUSINESS SEGMENT The implementation plan have been defined with the objective of maximizing penetration and optimizing operational and capital expenditure GINA D4.4 – Business and exploitation plan
GINA Market Share Competitive Arena & GINA Market Share • The EETS market has been assumed to be characterized by the presence of few big players due to: • very high capital requirements • institutional restrictions (i.e. certification/ standardization issues on road charging) • EETS Service providers may come from different industries, i.e.: • Oil companies • Banks & financial institutions • Telco operators • Road Operator/Toll Chargers • GINA Service Provider have been assumed to reach a market share around 30% of the EETS market • GINA market leadership assumption have been driven by: • GINA SP would be one of the first entrant • GINA SP would have a technological competitive advantage based on EGNOS/Galileo performance GINA D4.4 – Business and exploitation plan
GINA Business Case Scenarios- Main Assumptions Business stand-alone Segment • EETS Overall Penetration in the Business Segment for each country belonging to the different areas has been supposed 8-10% in the launch year and growing 40% in the first 2 years, 8% for the following 8 years and 2% from the 10th year on • GINA Market Share 30% • Price of Base package: from 12 €/month in 2015 to 8,5 €/month in 2030 • Discount for the first submission year: 40% • % of roaming: 20% Business + Private Segment • EETS Overall Penetration in the Private Segment for each country belonging to the different areas has been supposed 3% in the launch year and growing 25% in the first 2 years, 8% for the following 4 years and 2% from the 7th year on • GINA Market Share 30% • Price of Base package: from 4 €/month in 2018 to 3 €/month in 2030 • Discount for the first submission year: 40% • % of roaming: 10% GINA D4.4 – Business and exploitation plan
Content • Introduction & Business model definition • Addressable market and market potential • General Cost Structure • Business Case Scenarios • Business Segment stand-alone scenario • Revenues generation potential • Cost structure definition • Profitability analysis • Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
Market potential vs GINA Penetration - Business segment No. of commercial vehiclesin EU27 (Mln) GINAPenetration (%) GINA Service Provider business segment users would pass from 0,7Mln in 2015 to 6Mln in 2030, with a penetration of ~12% on the overall addressable market at regime condition GINA D4.4 – Business and exploitation plan
GINA Pricing Scheme- Business Segment Business Price Evolution (€/month) Service Price End Users Basic Package Smart OBU without GUI EFC E-CALL Fleet Management/ Basic 12-8,50€/month Add On Fleet Management/ Tracking & tracing Theft management Traffic info system Navigation services/ Dynamic re-routing Wireless GUI 10 €/month 2 €/month 2 €/month 8 €/month • In order to maximize penetration and service usage a 40% discount on the first year subscription fee has been assumed 2% Percentage on toll collection Toll Chargers 5% Percentage on toll collection Municipalities GINA D4.4 – Business and exploitation plan
GINA Revenues streams evolution (2015-2030) Revenues streams break down User-fee Motorway % fee Add-on VAS End-user fees are the most important revenues stream accounting for ~66% of total revenues at regime conditions VAS fees account for about 31% of total revenues GINA D4.4 – Business and exploitation plan
Content • Introduction & Business model definition • Addressable market and market potential • Business Case Scenarios • General Cost Structure • Business Segment stand-alone scenario • Revenues generation potential • Cost structure definition • Profitability analysis • Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
GINA Cost structure elements • The cost structure is referred to the GINA Service Provider intended as the company that sells different ITS service packages to final customers by aggregating inputs of specific service providers • Main costs element are the following: • Telecommunication costs • VAS Provisioning costs • OBUrelated costs (Leasing, Installation, Assistance) • Core IT Infrastructure costs ( Central Infrastructure, Service Centers) • EGNOS signal guarantee costs • Lost Revenues • SG&A( Selling commissions, marketing expenses, administrative and othe costs) • D&A (Depreciation and Amortization relevant to Capital Expenditure) 1 2 4 3 5 6 7 8 9 GINA D4.4 – Business and exploitation plan
GINA Cost Structure evolution Cost Structure evolution 9 8 7 6 5 4 3 2 1 The cost structure remains approximately constant along the Business Plan horizon GINA D4.4 – Business and exploitation plan
GINA Steady state (2030)cost breakdown Steady state (2030) cost breakdown 9 8 7 6 5 4 3 2 1 • Cost structure at steady-state condition (2030) amounts to ~ 770 M€ • Telecom costs are the largestcostitems, for~55% of total costs (including VAS) GINA D4.4 – Business and exploitation plan
Content • Introduction & Business model definition • Addressable market and market potential • Business Case Scenarios • General Cost Structure • Business Segment stand-alone scenario • Revenues generation potential • Cost structure definition • Profitability analysis • Business + Private Segments scenario GINA D4.4 – Business and exploitation plan
GINA Profitability Profitability evolution Mln€ EBITDA figures stably positive starting from 2017,growing to 206 M€ in 2030 (22% of revenues) GINA D4.4 – Business and exploitation plan
GINA EBIT formation – Steady-State (2030) Steady State (2028) EBIT formation Variable Costs Fixed costs • Steady-State (2030) EBIT is around 18% of total revenues • Telco costs are the largest cost item accounting for about 43% of total revenues, followed by OBU costs accounting for about 18% of total revenues GINA D4.4 – Business and exploitation plan
GINA Free cash flow analysis Unlevered Free cash flow (Mln €) • Unlevered Free Cash flow positive after 6 years from start-up • Cumulative FCF positive from 2025 (10 years after start-up) • 2012 NPV is ~ 388 M€ assuming a WACC equal to 8% GINA D4.4 – Business and exploitation plan
Content • Introduction & Business model definition • Addressable market and market potential • Business Case Scenarios • General Cost Structure • Business Segment stand-alone scenario • Business + Private Segments scenario • Revenues generation potential • Cost structure definition • Profitability analysis GINA D4.4 – Business and exploitation plan
Market potential vs GINA Penetration – Private segment No. of cars in EU27 (Mln) GINAPenetration (%) GINA Service Provider private segment users would pass from 1,8 Mlnin 2018 to 6,5 Mlnin 2028, with a penetration of ~2% on the overall addressable market at regime condition GINA D4.4 – Business and exploitation plan