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SuperMovil - Telco startup market expansion

Case information

Difficulty: Intermediate

Interviewer-led

400+ Ratings

Times solved: 13.4k

Market analysis Market entry Market sizing Mergers & Acquisition

Case Prompt:

Your client is the CEO of a Europe-based mobile Telco operator, SuperMovil.

Their business model is very unique: they are a “virtual Telco”. They differ from traditional mobile operators (e.g. Vodafone, T-Mobile, Telefónica/O2, etc.) in that they do not own optic fiber, antennas and satellites, but instead partner with the cited traditional Telcos and rent capacity in order to offer their services. Hence, they differ from the classical Telco, since they don't make big CAPEX investments.

Your client has expressed interest in expanding her company’s operations to a new country.

Which are all the factors you would take into consideration to orchestrate this geographical expansion?

*Note: The M&A department has shortlisted 10 countries as top candidates, but this info will be provided and worked on later on in the case.

Overview of All Exhibits

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Question 1 – Structuring

Which are all the factors you would take into consideration to orchestrate this geographical expansion?

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Example of an excellent structure (presented as an issue tree):

ECONOMIC FACTORS

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
  - Population
  - 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

SOCIAL FACTORS

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:
- Culture
- Population density
Post-merger integration risks (after M&A):
- Integration of vision, mission and values
- Different working cultures
- Different compensations

POLITICAL FACTORS

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.

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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?

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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.

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Further Questions

Bonus question : On top of the potential revenue in Spain and India, which others factors would you consider to decide between both markets?

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SuperMovil - Telco startup market expansion i

Case Prompt:

Question 1 – Structuring

Question 2 – Exhibit

Question 3 – Math

Final question – Executive summary

Further Questions

SuperMovil - Telco startup market expansion