Time allowed Reading and planning:15 minutes Writing: 3 hours
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Section A – This ONE question is compulsory and MUST be attempted
1Introduction
2T el is one of the largest mobile network operators in the world. It has grown mainly through significant acquisitions and it has extensive experience in buying companies and integrating them into the group. 2T el continually invests substantial funds in rearch into network technologies. Like all global mobile network operators, it is constantly looking for technical opportunities for making its networks quicker, more reliable and, if possible, cheaper to install and maintain.
A business opportunity has arin in The Federated States (TFS) where network operator licences are about to be
renewed. 2T el is currently evaluating this opportunity and is considering either bidding directly for a licence (as 2T el) or acquiring a current licene and bidding through this company. 2T el is interested in entering the highly regulated mobile network market in TFS, even though most of its acquisitions to date have been in countries where there is little or no government regulation of the mobile network operators.
The Federated States (TFS)
The Federated States is a denly populated country with a population of 70 million people. The country has experienced five years of economic decline, characterid by high unemployment, falling incomes, and rising personal and government debt. Crime rates are also increasing. A year ago, a new government was elected with a mandate to tackle the economic problems of the country. Its priority has been to reduce the national debt and to help achieve this aim, it has introduced higher taxes and cut welfare benefits. The removal of the welfare benefits provoked civil disturbance and rioting, where shops were looted and burnt and mass demonstrations, usually ending in violence, were held in the streets of major cities.
TFS is an increasingly socially fragmented country with vocal minority groups reprenting a wide ra
nge of pressure groups and communities. It has a comprehensive and complex legal system, presided over by nior judges who were largely appointed by the previous government. The current government has suggested that many recent judgements made by the judges are politically-motivated and are designed to hold back the government’s reforms. The employment laws of TFS make it relatively expensive to employ people (there are minimum wages laws) and also difficult to dismiss them (employment protection laws). Legal proceedings are often time-consuming and expensive.
A report into the riots and demonstrations highlighted the role mobile phones and social networks played in
co-ordinating attacks on shops and people. The report acknowledged that such communication devices had long been
a widely ud tool in organid crime in TFS, but that it had now also become a significant factor in organising mass
disobedience. In an effort to procute offenders, the government asked mobile phone network operators to give it information about text messages and the timing and duration of phone calls whic
h possible offenders had nt and received during the period of the riots. The information provided was ud as supporting evidence in court, and helped convict a number of people.
The releasing of this information to the government has proved controversial. The network operators have been criticid by civil liberties organisations which believe that this is personal, confidential information and, under the terms of the Data Protection Act of TFS, should not have been relead without the person’s connt. On the other hand, the government has praid the network operators for their good citizenship and believes that the data provided is exempt from the Act as the Act allows data to be exempt if it is ud ‘for the detection and prevention of crime’. An influential newspaper, whilst recognising the contribution of the networks to the successful procution of offenders, felt that ‘instead of helping catch offenders, the networks, by making their rvices unavailable might have prevented the offences in the first place’. One of the current network licenes, Z-T el, is being sued for damages by people who claim that their confidential information has been illegally relead to the government. The ca has yet to be prented to a court, but lawyers for both sides are confident of success.
Licensing arrangements in TFS王森蛋糕学校
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thrilledCommunication network licences are granted to mobile network operators for an eight-year period. Licences are allocated to bidding companies on the basis that the companies meet a certain number of criteria. This includes financial criteria, such as liquidity and gearing, and environmental criteria. Successive governments of TFS have enacted environmental regulations and t environmental targets (such as carbon emissions and recycling rates) which all companies operating in TFS have to achieve.
非常卧底Beyond the minimum criteria, the licences are allocated to the highest bidders, the companies which offer the most money for a licence. There are four current licenes and the were the four highest bidders in 2009, the last time that the licences were granted. During the licence period, no new network operators can enter the market. All four licenes are of a similar size, although their profitability varies (e T able one). The government is keen to ensure that no one network provider dominates the market.
Table one: Comparative data (2014) for the four licenes六年级英语单词
英文招聘广告All figures in $m Z-Tel T-Me Tello Co-nekt
Revenue750700725740
hammer是什么意思Gross profit350300325325
Net profit 12580100125
The licences are due for renewal in three years’ time. At prent, the rules for licence granting are exactly the same as for the previous licence allocation – four licences given to the four applicants who fulfil the minimum criteria and make the four highest bids. However, some government ministers are unhappy about this and are lobbying for a change which favours bids from current licenes. The government has already stated that any of the current licenes which fail to be reallocated a licence will be paid a $100m exit fee to help the losing company adjust to the loss of its licence. This will be paid for by the company which is replacing them, and is in addition to the contract fee paid by the successful bidder to the government. Some government ministers feel this bias towards current licenes should go further. One government minister recently suggested that ‘the help provided to us during the recent riots should be acknowledged in some way’. There has also been a suggestion that there should be more than four licenes. This would increa competition and would also rai
more money for national debt repayments. However, except for introducing an exit fee, the government has not yet officially stated any changes to the rules on licence allocation.
The network operators are monitored by a regulator, Ofnet, appointed by the government. In general, Ofnet has been supportive of the four current mobile network operators and it has openly praid their attitude and rvice on a number of occasions. Ofnet’s primary focus is on pricing, rvice availability and rvice transfer. All prices are agreed in a ries of meetings between the regulator and the licenes. As a result, the prices t by the four operators are very similar and are slightly less than the operators would like them to be. The companies, therefore, have to compete on branding, rvice support and network quality. In many geographical locations, one of the networks often provides a better signal quality and network speed, and indeed poor signal coverage is the most often cited reason for customers changing rvice operators. It is already possible for subscribers to move to a different rvice provider, but Ofnet believes, that this should be made even easier, and so is bringing in regulations to enable this. Licenes who do not comply with the regulations will be fined. The licenes are unconvinced of the demand for moving provider. One commented ‘most subscribers move due to poor network rvice, and they can already do this!’
Mobile devices in TFS
Despite the economic decline of the last five years, mobile devices are en as esntial to most people within TFS. The demand for mobile devices and the networks which support them has incread dramatically in the last five years. Furthermore, mobile devices are particularly prized by the young, who e having the latest up-to-date technology as an important status symbol. Conquently, the manufacturers of mobile devices continually update the features and functionality of their devices. This has had an important effect on the mobile networks. Demand for rvices has incread not only due to an increa in calls, messages and web browsing but also due to the increasing demand which improved rvices place on network availability, bandwidth and speed. Thus the network operators have to continually upgrade the technologies and configurations which support their rvice networks. Most people in TFS rent their phones as part of a contract with the network provider. The minimum contract period is for one year, although many people tie themlves in for longer periods to take advantage of lower prices. Most people upgrade their phones when they renew their contract, to ensure that they have the device with the latest features. Old phones are returned by customers to their network provider, who, in turn, nds them back to the original manufacturer. The environmentally-friendly disposal of the mobile phones is a continual problem for the mobile phone manufacturers.
Rearch into the tendering process
2Tel has commissioned rearch from Professor Tan of Midshire University, an acknowledged expert in probabilistic decision making, into the TFS bidding process. Here are some of his conclusions. He has determined probabilities using a bid price of $550m and the probabilities are bad on four licences being available.
(1)If the bidding rules are not changed before the next licence allocation, then every bidder has a 0·4 probability of
being granted a licence if their bid is for $550m.
(2)If the bidding rules are changed before the next licence allocation to favour current licence holders, then a current
licence holder has a 0·6 probability of being granted a licence if they bid $550m for the licence. A new bidder has only a 0·2 chance of being allocated a licence if they bid $550m for the licence. The probabilities are bad on rearch in other countries where bidding is biad towards the current licence holders.
(3)It will cost current licence holders $10m to prepare a bid for a licence. New bidders, becau of their unfamiliarity
with the bid process, will incur a cost of $20m to prepare their bid.
初中英语教学设计与反思2Tel is particularly interested in acquiring T-Me, the smallest of the current licenes. Their rearch suggests that they can implement efficiency gains which will generate $100m net profit per annum for the final two years of the current contract. This compares with T-Me’s current net profit levels of $80m per year. Further efficiency gains and incread usage will lead to $120m net profit per year for the eight years of the contract, should the offer for T-Me be successful. An initial approach to T-Me has suggested that an offer of $400m for T-Me would be accepted.
The same net profitability for the contract (eight years at $120m per annum) is also expected if 2T el decides not to acquire T-Me and is successful in a direct bid for a licence.
Before entering any market (or industry), 2Tel commissions an independent briefing paper from a business analyst which considers both the external environment of that market or industry (the wider macro-environment which the market or industry works within) and the competitive environment of the market or industry itlf (the market or industry the propod company will work within). The br
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iefing papers conclude with a brief summary of the opportunities and threats pod by the environment. The briefing papers are ud by the board of 2T el as part of its evaluation of whether a market is attractive to enter. In this ca, whether it should attempt to enter the TFS mobile operator industry, and if it does attempt to enter, whether it should enter directly or through acquiring a current operator.
Required:
(a)Write the briefing paper required by 2Tel. The briefing paper should:
(i)Analy the macro-environmental factors affecting the TFS mobile operator industry;(14 marks)
(ii)Analy competition within the TFS mobile operator industry;(8 marks) (iii)Conclude with a summary of the opportunities and threats identified in the analysis. (4 marks) Professional marks are available in part (a) for the structure, coherence, style and clarity of the briefing paper.
(4 marks)
(b)2T el also requires an evaluation of the relative advantages of bidding for a licence, either through acquiring
T-Me, or through bidding directly. The evaluation should analy four specific scenarios (acquire and not gain licence; acquire and gain licence; bid directly and gain licence; bid directly and not gain licence). The analysis of each scenario should include the financial implications of each scenario. The evaluation should conclude with your recommendation on the preferred entry strategy.
Required:
Produce the evaluation of each scenario as required by 2Tel.
Note: Construction of a decision tree is not required and ignore the time value of money in your evaluation.
(20 marks)
(50 marks)
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