Paragraphs highlighted in green indicate diagrams or tables that shall be shared in the “Case exhibits” section.
Paragraphs highlighted in blue shall be verbally communicated to the interviewee.
Paragraphs highlighted in orange indicate hints for you on how to guide the interviewee through the case.
Question 1 – Structuring: Which are all the factors you would take into consideration to orchestrate this geographical expansion?
After the prompt, the candidate is entitled to ask some questions. Data to be provided to the candidate:
- SuperMovil currently operates in Europe, in concrete:
- France: where they partner with JaunePhone
- Italy: where they partner with WindyMobile
- SuperMovil only offers data-bundle packages (e.g., with your SIM card you can only have internet access, no "normal" calls) – Particularly targeted to tourists and young populations who are very eager to explore this option.
Example of an excellent structure (presented as an issue tree):
- Overall market analysis: conduction of deep analysis on:
- Market size
- Market fragmentation:
- Are there any other Telco start-ups with similar business model to ours? – Given that the key to our success is the ability to move and escalate fast, we need to keep in the radar other players operating the same way.
- Who are the main "traditional" Telcos? (CAPEX owners) per market? – Key for this particular case, since they are needed business partners for our expansion
- Estimated market trends: both short and medium term
- Analysis of potential new markets: conduction of deep analysis on the shortlisted countries around key KPIs in order to identify the ideal target:
- Potential number of users
- Penetration rate
- Industry & segment growth rate
- Stability of the market
- Operational approach: SuperMovil rents capacity from traditional Telcos, which grants them operational speed. In order to penetrate a new market, options are:
- M&A (Merger & Acquisition): buying a Telco in the new market that operates with the same business model (i.e., renting capacity)
- JV (Join Venture): partnering with a traditional telco:
- Local Telco in the targeted country, targeting the most insteresting one in terms of:
- Market penetration
- CAPEX (antennas, fiber optic, etc.) availability
- Company's health and stability
- Local Telco in the targeted country that is a branch from one of their current European partners, in order to leverage the established business relationship
- Brand perception risk when moving to a new location (particularly outside Europe, their current market)
- Operational risks in a new and unknown market (particularly if outside Europe), highly influenced by:
- Population density
- Post-merger integration risks (after M&A):
- Integration of vision, mission and values
- Different working cultures
- Different compensations
- Anti-trust regulation compliance, when expanding inorganically
- Need to adapt to new regulations in the new markets - Telco is a highly regulated industry
IMPORTANT NOTE: Social & political factors, that encompass the risks of the operation, are key in the case. Structures without them lack a key part of the analysis
Question 2 – Exhibit: SuperMovil's M&A department has shortlisted 10 countries as potential options for the international expansion. They want our help determining which is/are the most interesting ones.
Table 1 should be shared with the candidate, who has 2-3 minutes to analyze it and draw conclusions.
If the candidate needs clarifications, the 3 KPIs considered most important by the client are:
- Industry growth rate: not only telecommunications, but the data bundle packages in particular
- % of data bundle users: percentage of the total mobile phone users who use/will soon use only data bundle packages
- Stability of the data bundles segments
Example of an excellent exhibit analysis:
There are 2 countries in the list that stand out, since they are "best-in-class" in 2 out of 3 KPIs tested:
- Spain: Although having low industry growth rate, it is a stable market with >50% of data-bundle users.
- India: Although being an uncertain market from an the stability perspective, it combines a high growth rate with >50% of data-bundle users.
To arrive to this conclusion, the candidate should compare in each column and flag the best-in-class (e.g., in the Industry growth rate column, High is the best-in-class). Both Spain and India are best-in-class in 2 out of 3 KPIs tested.
Additionally, the candidate can suggest two different approaches:
- Deep-diving into each of the two countries with real data to calculate the real entitlement and then choosing one
- Diversifying the risk and expanding into the two countries: given the nature of Spain and India, they complement each other very well and would result in a very balanced strategy:
- Spain is a "secure" option given its market stability, with little risk but also less opportunities for big revenues.
- India is a "risky" option given its market uncertainty, but higher revenue opportunities – given its high industry growth rate and % of data bundle users.
Question 3 – Math: Now that we have shortlisted Spain and India as our top 2 candidates, and considering that in both cases we could acquire 1% of the actual data-bundle users, how much revenue can we estimate in each market?
Table 2 should be shared with the candidate
Example of an excellent calculation and conclusion:
- 50,000,000 inhabitants * 95% penetration rate * 50% of data-budle users * $30 monthly = 712,500,500 total market value (can be rounded up to 700 million)
- 700 million total users * 1% that can be adquired = ~$7 million
- 1,100,000,000 inhabitants * 70% penetration rate * 60% of data-budle users * $10 monthly = 4,620,000,000 total market value (can be rounded up to 4.5 billion)
- 4.5 billion total users * 1% that can be adquired = ~$40 million
Hence, as a conclusion:
- If we can only expand to one country, India would bring higher revenues, ~$40 million vs. ~$7 million.
- However, the candidate can also suggest to diversify the risk and expand into the two countries: given the nature of Spain and India, they complement each other and would result in a very balanced strategy.
Final question – Executive summary: You are the business analyst who worked in this DD, and who is currently guiding the CEO of SuperMovil to the ExCom meeting with the partners. In the elevator ride (1 minute), she asks you to provide her a quick note on what the conclusions are.
- Spain and India are the best countries to expand to, with estimated revenues of ~$40 million and ~$7 million monthly.
- In order to do so, SuperMovil should consider (1) buying a local player with the same operating model or (2) partnering with a local traditional Telco who owns the infrastructure (e.g., fiber optic).
- As next steps, we will focus on deep-diving on the risks cited in the structure & an analysis of the Spanish and Indian market to shortlist potential partners.