Even if LTE is still technically in a pre-mature phase, it is arousing unprecedented interest from equipment vendors and operators, as it promises to fundamentally change the mobile ecosystem enabling new services and applications. However, in these uncertain economic times, there is no room for risky and poorly analyzed business decisions that will influence heavily the success of the LTE initiative. Therefore, the keystone is the adoption of a holistic and iterative approach, capable of taking into account all market, technical, economic and financial aspects, ensuring the best possible alignment between business and technology strategies, identifying clearly the main cost drivers and evaluating correctly the feasibility of the investment. This requires not focusing on the single facets of the revenue forecast, technical decisions and cost calculation, but considering all these different elements in a comprehensive and integrated view, building the business case through successive approximations. This presentation sets out the guidelines for this holistic and iterative approach in order to transform such promising technology in a real business. This presentation is supported by a business case related to the deployment of a LTE infrastructure to provide broadband services to residential users located in the five most important Italian cities.

1. LTE: how to transform a promising technology
in a real business
Andrea Calcagno, CEO & EVP
10th September 2009
Radisson SAS Hotel
Amsterdam Schiphol Airport

2. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
2

3. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
3

4. Company Profile
 Solutions, consulting and engineering company founded in 2003 as a spin-
off of the University of Pisa.
 Gained quickly a foothold in the NGN/NGS scenario focusing on standard
3G and 4G wireless technologies such as HSxPA, WiMAX and LTE.
 Providing the market with:
 State-of-art Business Case Analysis tools for WiMAX and LTE
 Next-Gen OSS/BSS components and integrated solutions, with a focus
on the delivery of turnkey WiMAX CSNs, that leverage the company’s
modular and scalable WROP (access & service management) and
TelcoGIS (geographic information system) platforms
 Selected high-value services such as strategic consulting on
technology and investment plans and engineering services for network
planning and design
 Regular Member of the WiMAX Forum and a Member of the TM Forum.
4

5. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
5

6. LTE Project Life Cycle – Initial planning stage
Building a carrier-class LTE network is and will remain
a complex undertaking …
… and the initial planning phase is very critical for
the success of the initiative
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7. Initial Planning Phase – Facing Crucial Questions
In these uncertain economic times, there is no room for risky and poorly
analyzed decisions when facing crucial questions, such as:
 What will be the best addressable market
segment with a chosen technology
characterization?
 What will be the effect on the P&L when
changing the CIR in a service bundle?
 How will the characterization of the
technology influence the network
dimensioning?
 What will be the best tradeoff between
coverage and capacity requirements in
the network deployment?
 How will different types of eNodeBs/user
equipments affect the TCO?
7

8. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
8

9. Keystone
Holistic and iterative approach, capable of:
 taking into account all market, technical,
economic and financial aspects
 ensuring the best possible alignment
between business and technology strategies
 identifying clearly the main cost drivers
 evaluating correctly the feasibility of the
investment
Not focusing on the single facets but considering all these different
elements in a comprehensive and integrated view, building the
business case through successive approximations
9

10. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
10

11. Applicative scenario
Technology
2.6 GHz, 10 MHz, FDD
Service Profile User
Equipment
Mobile Broadband
(Flat data + voice)
Applicative
scenario
Operator
Target Market
CLEC
Consumers Greenfield
Scenario
Dense Urban Urban Suburban
11

12. Business case analysis tool
 The business planning activity can be better done when equipped with an
appropriate business case analysis tool that allows performing four main
integrated analyses:
 Market Analysis: estimating the potential market and revenues for
4G LTE services
 Technical Analysis: dimensioning the network infrastructure to
derive the required bill of quantities
 Economic & Financial Analysis: calculating all key economic &
financial projections and indicators
 Scenario & Sensitivity Analysis: analyzing the influence of
parameter and boundary condition changes
12

13. Market Analysis – Territorial Data
 Useful information for the coverage and capacity planning
13

14. Market Analysis – Service Profile
Technical Features Pricing Policies
€ 200
7 Mbps
€ 150
1
2 Mbps
64 Kbps
32 Kbps
DL PIR DL CIR UL PIR UL CIR
Internet Access VoIP lines
per user
€ 27.2
VoIP
User Equipment Distribution €5
Data
80%
Monthly One time Monthly Lease
20% Service Fee Activation Fee Fee
14

15. Market Analysis – Users and Revenues Forecast
 The potential market and turnover have been estimated taking into
account the Bass Diffusion Model (inclination to innovation and ‘word of
mouth’ phenomenon):
 Penetration rate @ Y10: 9%
 Churn rate @ Y10: 7%
 Net Users @ Y10 324,774
 Revenues @ Y10 130 M €
15

16. Technical Analysis – Technology
 Parameters:
 Operating Band: 2.6 GHz
 Channel Bandwidth: 10 MHz
 Duplexing Format: FDD
16

17. Technical Analysis – Equipment Configuration
Enhanced NodeB User Equipment
17

18. Technical Analysis – Performance
 The LTE performance has been evaluated by taking into account:
 Link Budget Analysis (eNB/UE configuration, margins, etc.)
 Path Loss (Cost 231 Hata Model)
 Modulation & Schemes distribution
 Average Radius: 0.8 ÷ 2.34 Km
 Average Capacity:
 Up Link 7.32 Mbps
 Down Link 16.24 Mbps
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19. Technical Analysis – Network Dimensioning
 A lot of relevant parameters have been taken into consideration:
 Down and up link capacity demand per year
 Existing backbone infrastructures, sites and radio links
 Wireless backhaul technology distribution
 478 eNB
 1434 Logical Sectors
 3 MME
 3 S-GW
 3 P-GW
 46 Radio Links
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20. Technical Analysis – Network Roll-out
 The network roll-out has been defined in terms of the percentage of year-
on-year deployed infrastructure by taking into account capacity
requirements
 Steady-state condition (100% roll-out) @ Y5
20

21. Economic & Financial Analysis – CAPEX and OPEX
 To forecast expenditures, all main CAPEX and OPEX figures have been
defined and calculated
 Total Cumulated CAPEX 118 M €
 32% UE
 28% eNB
 Total Cumulated COS 255 M €
 40% VoIP
 23% eNB
 Total Cumulated SG&A 110 M €
 48% Mkt & Sales
 30% G&A
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22. Economic & Financial Analysis – Profit & Loss
 EBITDA > 0 @ Y3
 EBIT > 0 @ Y4
 Net Income > 0 @ Y5
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23. Economic & Financial Analysis – Cash Flow
 Peak Funding 77 M €
 PBP 6.3 Years
 NPV @ Y10 60 M €
23

24. Scenario & Sensitivity Analysis
24

25. Content
 Company Profile
 LTE Project Life Cycle
 Holistic and Iterative Approach
 LTE Business Case
 In a Nutshell
25

26. In a Nutshell
 A holistic and iterative approach that takes into account all business and
technology aspects since the outset is the keystone
 The business plan activity can be better done when equipped with an
appropriate business case analysis tool, which has to have some key
characteristics:
 Based on real best practices
 Equipped with calibrated, LTE-technology-related, market, technical and
economic models
 Presenting manageable input and output with meaningful correlations
 Supporting an iterative way of working by design in order to optimize results
 TEA|LTE by WiTech supports and provides exactly all of the above
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27. Thank You
for
Your Attention
Andrea Calcagno
WiTech S.p.A.
CEO & EVP Via Giuntini 25
56023 Navacchio di Cascina PISA
Andrea.calcagno@witech.it Italy
Phone: +39 050 775 056 int 203 www.witech.it
Mobile +39 347516 44 01
Phone: +39 050 775 056
+39 050 754 719
+39 050 754 720
Fax: +39 050 75 47 22
E-mail: tea.info@witech.it

28. Back up slides – The Business Case Analysis Tool
TEA|LTE
Andrea Calcagno, CEO
10th September 2009
Radisson SAS Hotel
Amsterdam Schiphol Airport

29. TEA|LTE
 Empowering 4G LTE players with an effective business case analysis
tool to set a solid foundation for a successful initiative
 Unique and integrated application
 Built over five years of extensive industry experience with
strategic assignments and projects for major operators and equipment
suppliers
 Full compliant with the latest version (Release 8) of the LTE standard
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30. TEA|LTE – Key Characteristics
 Analyzing the business case for the LTE initiative with a holistic approach, in an
integrated and iterative way, taking into account all critical aspects
 Supporting a fast and simplified configuration of more than 500 input parms
with a number of them pre-set to typical/recommended values in the technical part
 Enabling the user to view results instantly in an animated graphical format
through a dashboard-styled and very easy-to-use GUI
 Compliant with the LTE standard
 Allowing the definition of custom bands
 Manual setting of number of Users, eNodeBs, Logical Sectors, Radio Links, MME,
S-GW and P-GW
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31. TEA|LTE - Four Main Integrated Analyses
Analyzing the Estimating the
influence of potential
parameter and market and
boundary revenues for 4G
condition LTE services
changes
Calculating all Dimensioning the
key economic & network
financial infrastructure
projections and to derive the
indicators required bill of
quantities
31

32. TEA|LTE – Market Analysis
Estimating the potential market and revenues for 4G LTE services:
 Extension of the geographical areas (up to 5) to be served and their specific
scenario distribution
 Market segments (up to 6) to be addressed
 Service profiles (up to 6) to be offered
 Market segment penetration per year
 Impact of churn
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33. TEA|LTE – Technical Analysis
Dimensioning the network infrastructure to derive the required bill of quantities:
 Technology characterization
 Type of eNB (up to 3) and UE (up to 6)
 Path loss model for the link budget analysis
 Down and up link capacity demand per year
 Existing backbone infrastructures
 Existing sites
 Existing radio links
 Wireless backhaul technology distribution
33

34. TEA|LTE – Economic and Financial Analysis
Calculating all key economic & financial projections and indicators to assess the
feasibility of the initiative:
 CAPEX & OPEX
 Depreciations
 Interest rate on borrowings, tax rate, discount rate
 Financing
 Equity
 Perpetual growth
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35. TEA|LTE – Scenario and Sensitivity Analysis
 Analyzing the influence of parameter and boundary condition changes, to
identify the most critical factors for the success of the initiative
 Allowing a fast and iterative fine-tuning of the business case, in real-time and
total privacy
 Presenting the results in an animated graphical format instantly from the
different Market, Technical, Economic & Financial perspectives
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36. TEA|LTE – Comprehensive Report
 Automatically compiled and published in editable and PDF formats.
 Containing a complete summary (with tables, diagrams and charts) of:
 Inputs and assumptions
 Results of the market analysis
 Outcome of the technical modeling
 Economic and financial statements for up to ten years
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