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Hi - How to appraoch this case?

Daniela rottenberg

Recently, the client Deutsche Telekom is considering making a bid for one of 5 licenses to operate a new generation of mobile phone network (5G) in the United Kingdom. 5G (5th generation mobile networks or 5th generation wireless systems) denotes the next major phase of mobile telecommunications standards beyond the current 4G/IMT-Advanced standards.

Deutsche Telekom has engaged XYZ Consulting to help with the bidding issue and to determine the appropriate strategy for the auction. Should the client bid for the first 5G license in UK? If yes, how much should the client bid?

Nuno replied on 04/17/2017

Hi there,

I would start by asking some general questions to have a better feeling on the case:

1) Does our client provides this new service elsewhere? If not, does our client already has the capability to provide it without major investments?

2) How does this particular auction work? (i.e. it is like an "English auction"? / do we have some type of advantage for being an outside bidder? etc)

3) What dictates a good deal in the client's eyes? Does he want to breakeven in a certain timeframe? Does the contract has a timeframe?

Then I would move on to my structure:

I would like to analyze this problem in two steps: first the qualitative side and then the quantitative side. On the qual. side I would look for both external and internal conditions; external being market and competition and the internal being more about our client and the 5G technology we are going to provide.

Basically on the first step, I would like to analyze the size of the potential market, what companies will bid with us and what do they have to offer, I would look for possible barriers to enter and focus on what we can provide as well.

After gathering all the info I would focus on the quantitative side, probably through a breakeven analysis or use some type of target (i.e. client would like to see some return after X years, or the contract is only valid for a certain timeframe and our client would like to breakeven within that time).

--

The analysis I proposed could vary depending on the answers to the 3 first questions. (mostly for the bid)

(edited)

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