Page 3 - MCOM MODEL ANSWER 1

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A. Executive summary

1. Introduction

We began 2015 on the back of strong 2014 results showing record profits that placed our
market cap at S$410 billion, the highest we have seen the last half decade. We however closed
the year with a market cap of S$260 billion, representing a 58% loss in shareholder value.

Therefore 2016 presents major challenges to recapture lost value including major threats in
Nakolia and Ilania, ongoing weaknesses in our operating model and a mobile operator license

opportunity in Chininsia (See PESTEL, Porter Diamond, Porter 5 Forces, SWOT and Mendelow
Analysis in Appendix 1, 2, 3 and 4). Embedded within some of these issues are serious ethical
dilemmas that may not readily be apparent yet could put our good name into serious question.

These challenges need focused board attention to restore the long-term health of MCOM.

2. Terms of reference

This report was commisioned by the MCOM board to the Group CFO. It seeks to prioritise and
evaluate the issues we face and provide strategic advice. It also seeks to clarify our moral
dilemmas and offer appropriate solutions to help us remain ethical as a business.

3. Prioritisation & key recommendations

In this section, we have applied the SWOT analysis (Appendix 3) taking into account the impact
and urgency of each issue to prioritise our main challenges:

1st Priority: Fine from the Nakolian Telecommunications Regulatory Authority (NTRA).

We have been imposed a penalty of S$58 billion by the NTRA for not deactivating unregistered
users. This amount is large enough to wipe-off our full operating profit for 2015 and push us into
our first reported loss as a company. The NTRA is adamant the fine cannot be reduced further.

We have challenged the matter in court but there is no way of assessing our prospects. Nakolia
is our biggest market and it is not clear if taking on the NTRA is a wise move as a win or a loss

could irreparably damage our relationship with the new Nakolian government and threaten at
least 36% of future group turnover, making this our 1st priority. We could use cash, raise debt

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za