Telekom Strategy Consulting Case: Fiber Optic Expansion

Let candidate actively ask for those numbers

1. Number of households to be connected:
   • Total households = Population / Average household size = 250,000 / 2.5 = 100,000
   • Households to be connected = 100,000 * 0.90 = 90,000
2. Cable length for urban households:
   • Urban households = 90,000  
   • Urban cable length = 90,000 * 0.3 km = 27,000 km
3. Cable length for businesses:
   • Businesses to be connected = 50,000 * 0.90 = 45,000
   • Business cable length = 45,000 * 0.5 km = 22,500 km
4. Total base cable length = 27,000 + 22,500 km = 49,500 km
5. Additional 15% for routing: 49,500 km * 0.15 = 7,425 km
6. Total estimated cable length required: 49,500 km + 7,425 km = 56,925 km

1. Installation costs
2. Connection costs
3. Maintenance costs

1. Total installation cost:
   • Fiber optic installation: 56,925 km * €8,000 = €455,400,000
2. Total Connection Cost
   • Connection cost for households: 90,000 * €200 = €18,000,000
   • Connection cost for businesses: 45,000 * €500 = €22,500,000
   • Total installation + connection cost: €455,400,000 + €18,000,000 + €22,500,000 = €495,900,000
3. Total annual maintenance cost:
   • Maintenance cost: 56,925 km * €100 = €5,692,500
      

Infographic to show the interviewee after calculation

• Competitive
• Price skimming
• Penetration pricing
• Value-based pricing
• Cost-based

• Revenue from households: 90,000 * €50 * 12 = €54,000,000
• Revenue from businesses: 45,000 * €100 * 12 = €54,000,000
• Total annual revenue: €54,000,000 + €54,000,000 = €108,000,000

Infographic to show the interviewee after calculation

1. Break-even point and pricing strategy:

• The break-even point can be calculated by determining how many years it will take for the cumulative profit (annual revenue minus annual costs) to cover the initial one-time costs.
• Given: Annual Revenue = €108,000,000; One-Time Costs = €495,900,000; Annual Costs = €5,692,500
• Step 1: Calculate Annual Profit  
• Annual Profit = Annual Revenue − Annual Costs = €108,000,000 − €5,692,500 = €102,307,500 
• Step 2: Calculate Break-even Point
• Break-even Point (in years) = One Time Costs / Annual Profit = €495,900,000 / 102,307,500 ≈ 4.85 years
   

2. Measures to increase financial viability:

• Increasing the subscription fees.
• Exploring additional revenue streams, such as premium services or partnerships with local businesses.
• Implementing cost-saving measures in the installation and maintenance processes.

• Demographic analysis of the population.
• Key benefits of high-speed internet for residential and business users.
• Competitive landscape and current internet providers.
• Potential marketing channels and strategies.

1. Identify the target audience and their specific needs.
2. Highlight the key benefits of the fiber optic network.
3. Analyze the competitive landscape.
4. Develop targeted marketing campaigns using appropriate channels.
5. Create promotional offers to incentivize early adoption.

1. Target Audience:
   • Households looking for reliable, high-speed internet for streaming, gaming, and remote work.
   • Businesses needing robust connectivity for daily operations and customer interactions.
2. Key Benefits:
   • For households: seamless streaming, faster downloads, stable connections for multiple devices.
   • For businesses: increased productivity, support for remote work, improved communication with clients.
3. Competitive Analysis:
   • Identify current ISPs, their market share, and pricing.
   • Highlight Deutsche Telekom's superior infrastructure and service quality.
4. Marketing Campaigns:
   • Utilize social media to reach tech-savvy residents.
   • Host local events to demonstrate the benefits of high-speed internet.
   • Partner with tech companies and local influencers to promote the service.
5. Promotional Offers:
   • Offer introductory discounts for the first 6 months.
   • Provide bundled services (e.g., internet + TV) at a reduced rate.
     Implement referral programs to encourage word-of-mouth marketing.