Strategic Foresight - Insights in Business and Technology

  NBN Co FY 23 Results - Key Takeaways  -- NBN Co’s Revenue has increased by 4% in FY23 and is facing headwinds for increasing the revenue.  CAGR stands at 8.7%. WACC - 3.18% (heading upwards) Has the highest EBITDA margin (68.2%) among telcos globally. Consumer uptake is at a snail's pace with only 40K net additions in the last 12 months.  12.3 Mn customers ready to connect  8.56 Mn are active (30% idle network) 6.64 Mn (78.2%) users are on <= 50 Mbps 2 Mn (24.2%) users < 50 Mbps, 4.52 Mn users on 50 Mbps 1.83 Mn (20.7%) users are on >= 100 Mbps (risen by 2%) 6.6 Mn premises ready for Ultrafast (incl 2.5 Mn on HFC) Poor uptake – only 50-60K has upgraded In all 1.83 Mn users are using Ultrafast (>=100 Mbps) internet. Facing heat from Starlink and 5G providers in remote areas Starlink In Australia > 120K subscribers Sky Muster has declined from 108K to 96.1K In the Enterprise 35K EE SIOs are active.  It seeks to improve its top and bottom line by implementing price i

How Energy and Utilities Can Transform Response from GenAI tool ChatGPT: -- The transformation of the energy and utilities sector is a complex and ongoing process driven by technological advancements, environmental concerns, changing consumer expectations, and regulatory changes. This transformation is often referred to as the "energy transition" or "utility transformation." Here are some key ways in which the energy and utilities sector can transform: Transition to Renewable Energy : One of the most significant transformations in the energy sector is the shift from fossil fuels to renewable energy sources like solar, wind, and hydropower. This transition reduces greenhouse gas emissions and promotes sustainability. Decentralisation: Traditional energy systems were centralized, with power generated at large power plants and distributed through a grid. The future of energy includes more decentralized systems, where individual homes and businesses generate their ow

Exploring the Digital Services Landscape and Opportunities for the Telecom Industry in Australia . Consumer: Financial Services across Insurance, e-commerce and Fintech have an addressable market of > $100 Bn and Telcos are eager to increase their wallet share to the mid-20s.  Enterprise:  The potential for growth in areas like IoT and Smart places is immense, with minimal infrastructure investment required in comparison to 5G.   Private 5G and SD-WAN are currently in high demand across various industries including Mining, Tourism, Energy, Heathcote, and Supply Chain. These verticals are the focus due to their increasing need for advanced technological solutions. My previous post on IT Services Opportunity across the Telecom Industry   

Australia is Lagging in Internet Speed While Price is Going Up.  There are valuable takeaways from New Zealand's fibre optic infrastructure rollout, which boasts faster spee ds and more affordable pricing. Why Australia's Internet services are so expensive compared to other countries. A quick Big Mac Index test reveals why What the Industry Experts Paul Budde, John de Ridder and Bob James are saying  about why Australia is Lagging.  Source: Comms day The NBN Pricing Construct by Tony Eyers is a worthy read to view the four-tiered structure.   AVC - Connection Cost  CVC - Bandwidth or Capacity Cost POI - Connection Cost  POI - One-Off Set-up Fee      Snippet from the note below.  Source: TekTel 

Mapping of Tech Spend and Technology gives a good view of IT spending in 2023 Mapping of Digittal Services across Consumers and Enterprises gives a good view of Telecom spending in 2023 My Other Post on  -"Telecom Industry Australia - Where the Money will be spent in the next two to three years", can be read here .

 

Starlinks Growing Presence in Australias Telecom Sector and Transforming Connectivity in Remote Areas.  Source AFR : Telstra announced a deal to offer internet and voice calls via Mr Musk’s Starlink service on Tuesday, which uses a constellation of small, lower-orbiting satellites providing faster speeds than the NBN Sky Muster.  Telstra’s broadband deal with Starlink is non-exclusive, meaning the challenger could still pitch its services to NBN. However, Telstra has exclusivity in providing voice call services through Starlink . Optus Deal The second-largest Australian telecommunications company announced a deal on Wednesday that will let users access the internet and make calls on their phones via Starlink’s satellites from late 2025.  Beaming signals from space would also help Optus compete with Telstra’s superior regional tower network. The Optus-Starlink partnership also poses a risk to the NBN Co because the same SIM cards that a phone uses to connect to a satellite could al

How Australian Telcos are Outperforming their Global Peers  Globally telecom players are facing cut-throat competition from various players across Tier 1-3 operators and OTT players, here in Australia there is an Oligopoly of operators across fixed lines and mobile, hence services are expensive and they command better margins on their service. Enterprise Value and Market Cap. of NBN in Jan 2023 - Without deferring the debt of $32 Bn. If NBN is sold today it will get around $24 - $26 Bn and that is less than what govt has infused as equity ($29.5 Bn).   Other Key Points: With the highest EBITDA Margin among the major Telecom Players in Australia keen to know why the wholesale price can't be reduced, esp when govt has deferred $32Bn in debt and in effect, IBL is only for $12 Bn.  With the change in direction of NBN rollout from Economies of Scope to Economies of Scale, NBN will benefit across the value chain. Benefits in terms of pro

Telecom Engagement Model for Private 5G  Key Message  Private 5G is about transforming business operations and driving new revenue opportunities via the application layer.  Telcos are adopting different engagement & deployment models for Private 5G.  An increase in the footprint across the engagement value chain leads to an increase in the complexity but reduces time to market  Jio in India is heading for end-to-end value chain control  The ecosystem is getting more complex as partners are also competitors. Edge Continuum Edge Computing is a decentralised mechanism done at the edge of the network, close to the data source, as opposed to on the cloud or away in data servers.  With the rise of the Internet of Things (IoT) devices more and more smart devices connect to the network, hence businesses are facing demanding and diverse data challenges.  Key Strategies are  Retail – Sell directly to Enterprise  Retail – Sell via Partners like HPS Wholesale - become Wholesale pr

Has Optus on Recovery Path from Cyber Security Attack    Quick Snapshot of the Performance:  Optus is facing multiple challenges, while it was trying to recover from the losses it suffered during the COVID, it was impacted by a data hacking issue in Sep 2022.   This incident has shrunk their brand equity, and customers have lost faith. Hence, 65K customers have churned; in particular, the Mobile business suffered at least in the short term. Optus have recovered from their loss of 65K in 1-2 quarters, which is not only surprising but commendable. It is worth pointing out that the price rise has assisted in cushioning the effect. Having said that, the data hack has impacted their brand equity and has further strained their finances and balance sheet.  Singtel board and exec team need to make a call if they can recover the brand equity or if it is time to rebrand or sell the business or increase its, MVNO or white label, share like Amaysim. Q3 FY23 Story from Numbers  Impact of cyber

Adani Stock in Perspective: PE today is 94. Before the Hindenburg report it was > 254. Valuation Guru- @AswathDamodaran highlights his view on Adani stock .  According to him, the stock is overpriced even after the Hindenburg report impact. He values the stock for Rs 947. On Jan 1, 2023, the stock was trading at Rs 3858 and PE around 254.  Today the stock is trading at Rs 1719 and a PE of 94.  Background: Adani Group which was established in 1984 has become a conglomerate of infrastructure companies in sectors like airports, shipping, logistics, power generation (solar), and defence.   It's well established that infrastructure companies are about high volume and low margin, where with ageing returns get better, unlike telecom where returns diminish with ageing. While the Adani group had an astronomical rise from 2021 onwards where revenue grew by 112.70%, its margins were low at 3.4%, which is on the lower side as compared to other companies in this sector.  Adani group has bui

H1 FY23 NBN result is worrying for the government.  Reason: The uptake by new subscribers is nearly stagnant at 85Mn connected premises ( same as FY22 ) and is moving at a snail's pace.  With NBNs net growth being negligible, suggesting forces of attrition are at play and with 10K customers switching to Starlink, it is not helping its cause either.  NBN is facing severe headwinds from 5G, Starlink and other fixed-line players, hence there is a twofold push by them. One is to increase the wholesale price and the second is to get regulatory protection from ACC to guard their market share against 5G and other players. Today if NBN is sold it will get a price of $19 to $25 Bn ( the lower end is realistic ) which is less than the contributed equity of $29.5Bn.  The government has committed to the electorate that it will upgrade FTTN/B to FTTC/P and increase the penetration of high-speed internet and make it affordable. Their intent is to make high-speed internet in Australia to be at pa

 Telecom Industry Evolution - 1990 to 2023 elecTelecom Industry Operating Model Evolution - 1990 to 2023 From Linear to Agile Telecom Industry Performance -2023  Telecom Industry Growth - Spectrum  Organic and Inorganic Telecom Industry - Todays Setup and Building Blocks 

 Why the Government had to intervene in Vodafone Idea    Shareholding of Vodafone Idea My previous post on Telecom Industry in India - Oligopoly to Triopoly Source: Ventura, BSE

  Open AI - Why Google is Threatened If search without AI was an order of complexity - one, then search with AI is like an order of complexity two. Google is now launching its own #AI chatbot - BardAI which will respond to complex queries instead of simple questions served by google doodle. AI is now venturing into more complex tasks; hopefully, more players will participate and emerge. More info on Open AI can be found here

State of IT Services and Software Industry - 2023 

  My other work on Digital Transformation can be found here  

Global State of Telecom Industry - 2023  

Key Message: Market Size: $2.9 Tn  Growth (CAGR): (6%), Recovering since COVID   Technology Change: High  Life Cycle: Matured Regulation: Heavy  Avg P/E < 15 (no growth), Industry is struggling in generating ROI  Organic Growth: Both Horizontal and Vertical Play are employed  Inorganic Growth: Adapt, Amalgamate, Acquisition  

Key Message: Market Size: $2.9 Tn  Growth (CAGR): (6%), Recovering since COVID   Technology Change: High  Life Cycle: Matured Regulation: Heavy  Avg P/E < 15 (no growth), Industry is struggling in generating ROI  Organic Growth: Both Horizontal and Vertical Play are employed  Inorganic Growth: Adapt, Amalgamate, Acquisition