Revenue and cost modelling for mobile operator in Africa

The problem

Preparing annual budgets and updating a company’s business plan is a recurring, though difficult, task for telecoms operators because of the complexity and variability of the environment that they operate in. The process involves at least the finance, technical, commercial, HR and marketing departments.

All stakeholders have important contributions to make to accurately forecast future performance. Accounting for the operator’s historical performance – in terms of subscriber count, acquisition, revenue, direct and indirect costs – is also a difficult task because the information sits in different information systems.

We were asked by the marketing department of a leading mobile operator from one of the largest countries in Africa to build a robust revenue and cost budget model with a 10-year timeline.

The solution

Our team began the assignment by interviewing stakeholders and conducting extensive specification workshops. A specification document was put together to complete this first phase, identifying clearly our clients' expectations in relation to model features (granularity, timelines, automation, scope). Then, a first version of the revenue and cost budget model was put together and presented to the teams. This enabled the teams to fully understand both the requirements in order to use the model (in particular, the recurring information request to run) as well as the capabilities and benefits of the end result. We developed a second, optimised version of the model, using the lessons learned during the first iteration. We also delivered extensive training through workshops, hotline support (calls and Skype) and webinars.

The result

The Analysys Mason revenue and cost model is now used by the marketing team as their central tool to track performance and forecast future KPIs. A robust process is in place to update the model on a monthly basis and to reforecast accordingly. The annual forecasting process is no longer a massive investment in time and effort (and errors), as the model is used to perform both short term (1–2 years) and long term (up to 10-year) forecasts.

The team

Our team was directed by David Eurin, Partner at Analysys Mason, who is one of our most experienced consultants. He focused on commercial and regulatory strategies in the African region. Brian Burns, Lead Consultant, managed the project on a day-to-day basis and developed most of the core functions of the Excel-based model. He was supported on an ad-hoc basis by several junior consultants. Our team has extensive experience in supporting mobile operators during budgeting and benchmarking processes, aiming at producing robust revenue and cost forecast. The team draws on the international experience of Analysys Mason, including more than 200 projects in Africa alone over the past 3 years.