Superior User Experience & Network Performance
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Presented at CANTO 2015 by Ricardo Guardia, Ericsson Latin America & Caribbean July 27, 2015
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Superior User Experience & Network Performance
- 1. Ricardo Guardia Ericsson Latin America & Caribbean July 27, 2015 Superior User Experience & Network Performance
- 3. © Ericsson AB 2014 | July 2015 Performance drives loyalty Shapley regression analysis, showing the relative impact between each driver and loyalty to operator brand (NPS) Marketing Customer service Offer Network Network performance Value for money Ongoing communication Tariff plans offered Customer support Account management Billing and payment Handset/ Devices offered Initial purchase Loyalty rewards Source: Ericsson ConsumerLab Network Performance Study 2013 Base: 12169 Smartphone users in BR, CHN, INDO, SK, JP, US, UK, SE, RU, TUR, CHL, MX
- 4. © Ericsson AB 2014 | July 2015 The virtuous value of Performance From qualitative to quantitative proof Capital expenditures Operational performance Market performance Financial performance CTO CMO CFO “If we do not differentiate on quality, it ends up with my GB versus your GB and we will be destroying value for all” CMO of large Latin operator
- 5. © Ericsson AB 2014 | July 2015 Advanced regression analysis to investigate causality & quantify impact based on empirical data from 3 markets Capital expenditures Operational performance Market performance Financial performance Capacity upgrades Network modernization Product/service development Accessibility & data completion rate Percent connections higher than 1 Mbps Speech call quality index Market Share ARPU increase Churn reduction Revenues EBITDA Free cash flow from operations Latency reduction Throughput Model aimed at defining the causal relationship from capital expenditures to financial performance Direct effect, building up to maximum impact over 12-18 months Direct effect, building up to maximum impact over 0-3 quarters Positive cumulative incremental FCF after 4-6 quarters+ =
- 6. © Ericsson AB 2014 | July 2015 Descriptive statistics show correlation between metrics CAPEX VS. SPEECH CALL QUALITY SPEECH CALL QUALITY VS. MARKET SHARE ARPU VS. REVENUES CAPEX VS. LATENCY LATENCY VS. ARPU ARPU VS. REVENUES LATENCY VS. CHURN ARPU VS. REVENUES CAPEX VS. LATENCY Brazil Mexico United States Capital expenditures Operational performance Market performance Financial performance
- 7. © Ericsson AB 2014 | July 2015 correlation to causality regression analysis for Brazil Capital investments Operational performance Market performance Financial performance Market ShareARPU (***) (***) (***) (***) $RMillions Churn Percentage points Samples > 1 MbpsData CompletionData AccessibilitySpeech Quality T+2 (***) (**) T+1 (**) T+2 (**) (***) T+1 (**) T+1 (**) (***) T+1 (**) (***) T+1 (**) T+3 (***) (*) (***) (**) (***) Percentage points (***) Statistically significant at 99% (**) Significant at 95% (*) Significant at 90% Source: TAS, Ericsson analysis
- 8. © Ericsson AB 2014 | July 2015 positive effects on financials Source: Ericsson and Telecom Advisory Services LLC (2014) Base: Market data from Brazil, Mexico, US NPV – Net present value FCF – Free cash flow from operations Anything above zero is a worthwhile investment Changes following 10 percent increase in CAPEX over a 5-year period
- 9. © Ericsson AB 2014 | July 2015 value of performance recognized by financial analysts Wireless operators can sustainably compete in our view on only two dimensions: – Pricing: drives price erosion – Quality of network services: supports pricing power Jan 6, 2015; Contact: Pierre Ferragu (Senior Analyst) • pierre.ferragu@bernstein.com • +44-207-170-5005
- 10. © Ericsson AB 2014 | July 2015 Market performance Large operators also acknowledge the same logic Financial performance Vodafone CFO top priority: “Deliver returns on £19B Spring CAPEX investment” Operational performance
- 11. © Ericsson AB 2014 | July 2015 Performance when it counts After today’s emergency, I am seriously thinking to go with Entel. Thanks to Entel I could stay communicated with all my family.
- 12. © Ericsson AB 2014 | July 2015 JOIN THE CONVERSATION Ericsson.com/jm Facebook.com/EricssonCaribbean Twitter.com/EricssonCarib YouTube.com/Ericsson