NEWGEN TECHNOLOGIES Broadband Investment Paper Project and Investment Overview
By:
Ronald C. Manalastas, MBA Key Investment Proponent
NEWGEN TECHNOLOGIES VENTURE CAPITAL PROPOSAL Project and Investment Overview
1. PROPOSAL
For a venture capital partner to invest in the establishment of a new telecommunications company using strategic technologies
2. VISION
To emerge as a “new generation” telecommunication carrier with an allmarket service capacity and global presence (i.e. NewGen Technologies)
3. MISSION
To provide Broadband Wireless Access (BWA) solution with the technology strengths of: Open standard BWA 802.16-2004 fixed wireless (f/w) access 802.16e-2005 mobile wireless access Intel 5116 chip for f/w applications (2004) Intel 2250 chip for mobile usage (2005)
4. OBJECTIVE
Find until May 31, 2007 a venture capital partner who can invest US$ 5.4 Million to: Buy or invest in telecom franchises Acquire CPCN from the NTC Build nationwide infrastructure Fund 1st year of BWA operations
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5. INDUSTRY SITUATION
1. Emerging migration from 3-play to 4-play environment 2. No local carrier has commercially offered BWA 3. Carriers not serious in introducing BWA because it will: cannibalize own mobile revenues w/o equivalent return force obsolescence of existing technology platform erode and waste huge imbedded capital in technology 4. No technology substitute or BWA equivalent in next 10 years 5. No new players expected in midterm due to high entry barriers 6. Takes two (2) years to respond to a “first BWA operator”
6. INTERACTIVE MARKET OPPORTUNITIES
1. Service Provider Side Innovative enhancements in interactive channel formats
2. Consumer Side Convenient channel access Greater usage control Content-rich online resources
3. Demand Implication New interactive technologies for new market needs Enhanced quality interactive experience fueling growth
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7. MARKET RATIONALE (Philippines)
8 M Internet users 1.6 M PC owners 300 K DSL / Broadband subscribers 3.5 M landline telephones 35 M mobile phone subscribers 800 K small-medium enterprises 4.2 M ABC household market
8. INDUSTRY VOLUMES / MARKET SHARES
(In Million US$ / P48.00: US$1.00)
2006 % Share 3-Year % Growth Ne w % Growth
PLAYER PLDT GLOBE DIGITEL BAYANTEL OTHERS* NEWGEN TOTAL
2004 2,629 1,167 150 115 203 4,264 Projected
2005
2006
2007 2,776 1,331 206 124 210 1 4,648 3.1
2008 2009 2010 2,845 2,916 2,989 1,393 1,459 1,527 218 231 245 127 130 264 215 220 225 9 20 32 4,807 4,976 5,282 3.4 3.5 6.1
2,619 2,708 60 1,229 1,271 28 219 194 4 106 121 3 209 215 5 4,382 4,509 100 % Industry Growth
1.7 4.4 11.5 2.1 2.0 2.9
2.5 4.7 6.0 2.3 2.2 -
* Composed of about 75 other telecom entities with a per capita revenue of US$ 2.9
Million; whereas, NEWGEN 2007-2008 average annual revenue is US$ 5 Million
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9. INDUSTRY PROFITABILITY (Net Income After-Tax)
(In Million US$ / P48.00: US$1.00)
PLAYER PLDT Net Sales Net Income % of Sales GLOBE Net Sales Net Income % of Sales DIGITEL Net Sales Net Income % of Sales BAYANTEL* Net Sales EBITDA % of Sales NEWGEN Net Sales Oper. Income Est. Tax** Net Income % of Sales
20 04 2,629 588 22
2005 2,619 604 23
2006 2,708 656 24
2007 2,776 694 25
2008 2,845 740 26
20 09 2,916 787 27
2010 2,989 837 28
1,167 229 20
1,229 215 17
1,271 244 19
1,331 266 20
1,393 292 21
1,459 321 22
1,527 351 23
150 (38) (25)
219 (21) (10)
194 (33) (17)
206 (33) (16)
218 (31) (14)
231 (28) (12)
245 (24) (10)
115 42 36
106 40 38
121 50 41
124 51 41
127 53 42
130 56 43
133 59 44
-
-
-
1 (0.750) (0.750) (75)
9 5.7 0.7 5.0 56
20 14.3 1.7 12.6 63
32 24.1 2.9 21.2 66
* Bayantel continues to record losses after tax ** 12% tax provision made for comparability with PLDT, Globe, and Digitel
10. STRATEGY
Leverage the professional orientation and proven senior managerial capacity of proponents for the development and growth of BWA business nationwide, and globally
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11. NEWGEN SUBSCRIBER / EMPLOYEE COMMUNITY
Cumulative Count Base Station Number of Customers Number of Employees Y1 35 7,000 29 Y2 72 30,000 41 Y3 135 63,000 53 Y4 239 112,000 60
12. FINANCIAL HIGHLIGHTS
(In ‘000 US$ / P48.00: US$1.00)
1. Income Statement Y1
Operating Revenues Operating Expenses Operating Income PAYBACK PERIOD 958 1,708 (750)
Y2
9,229 3,500 5,729
Y3
19,625 5,292 14,333 18 Months
Y4
31,562 7,438 24,124
TOTAL
61,375 17,938 43,437
2. Cash Flow Statement Y1
Investment Profit (Loss) Add: Depreciation Total Sources Total Uses Cash Inflow Beginning Balance Ending Balance 5,417 (750) 375 5,042 5,021 21 21
Y2
5,729 688 6,417 3,417 3,000 21 3,021
Y3
14,333 1,250 15,583 5,688 9,895 3,021 12,916
Y4
24,124 2,167 26,292 8,708 17,584 12,916 30,500
TOTAL
5,417 43,437 4,480 53,334 22,834 30,550 30,500
13. PROPOSED PARTNERSHIP TERMS
1. EQUITY STRUCTURE
Investor: Industrial:
60% ownership 40% ownership
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2. WORK ENGAGEMENT
4-year guaranteed employment contract for the industrial partners
3. EXECUTIVE COMPENSATION & PERKS
International / Industry Standards
4. EXIT PROVISION
4-year term, for negotiation upon expiry
14. INVESTMENT PROPONENTS 1. ROBERTO L. DUQUE Profile
A respected telecom personality who conceived the creation and was directly involved in the initial operations of Easy Call and Bayantel, and introduced with the incorporators / founders the rationale to establish SMART Communications
Work Engagement
• • • • • • • • President, Wireless Works, Inc. (present) President, TEC Consultants, Inc. Deputy Commissioner, NTC Head, Special Projects, Smart Communications Managing Director, Timenet / Bayantel Chief Executive Officer, RCPI / Bayantel Vice-President, Engineering, ICC / Bayantel Director, Engineering, Globe Telecom
Educational Accomplishment
• Master in Business Administration (MBA-SEP) Pamantasan ng Lungsod ng Maynila • B.S. in Electronics and Communications Engineering Don Bosco Technical College • Registered ECE / PRC 1999 Most Outstanding ECE * With a 30-year telecom industry experience
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2. RONALD C. MANALASTAS Profile
A high-energy business builder and strategist with proven capacity for sales, business development, and marketing management work in start-up, expansion, and turnaround engagements covering telecom and value-added services national distribution
Work Engagement
• • • • • Managing Consultant, HITEL Business Consulting Chief Executive Officer, Enterprise Technology Vice-President, Business Development, Timenet Vice-President, Commercial Operations, RCPI Business Unit Manager, Philips Electronics
* With a 27-year telecom industry experience
Educational Accomplishment
• Master in Business Administration (MBA) Ateneo de Manila University • Bachelor of Laws, Jose Rizal University • A.B. Economics, University of the Philippines
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3. MANOLO R. MALABANAN Profile
A senior executive who possesses superior professional capacity for financial and administration management involving accounting, investment, treasury, budgeting, planning, audit, controls, property, and logistics
Work Engagement
• • • • • • Managing Director, HITEL Business Consulting General Manager, Sewingdale Philippines, Inc. Finance Director, Pt. Luminary Polisindo, Indonesia Finance Director, Pt. Glorindo Filetex, Indonesia Exec. Vice-President, CFM Engineering Devt. Corp. Head, Internal Audit, Awass, Inc., Saudi Arabia Internal Auditor, Ayala Corporation
Educational Accomplishment
• Advanced Studies in Business Management University of the East • Bachelor of Science in Business Administration University of the East
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