Page 6 - MCOM 2016 CASE STUDY 1

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5. The Case Study

For this maiden edition of the Competition, we chose Mobile Communications (MCOM) Plc, a
multinational mobile telecommunications giant domiciled in Sadimba, Africa and listed on the Sadimban
Stock Exchange with the S$ as its functional currency and the US$ as its presentation currency. Sadimba
is an English-speaking country and one of the most economically advanced in Africa. It is the base from
which majority of global multinationals seeking to enter into and expand in the rest of Africa prefer to
locate their regional head quarters. MCOM's financial year is January to December. MCOM represents a
real-African business in terms of its mastery of the strategic and operational challenges of doing business

in africa (and the Middle East). MCOM competes vigorously in a number of markets with different rivals
but prefers to benchmark itself against V-Mobile as provided in Appendix 3.

5.1 The Global Environment of MCOM

The mobile industry continues to scale rapidly with half of the world’s population now owning a mobile
subscription—up from just 1 in 5 ten years ago. An additional one billion subscribers are predicted by
2020, taking the global penetration rate to approximately 60%. Developed markets such as Europe and

North America are growing more slowly as penetration rates approach levels close to saturation.
Meanwhile Sub-Saharan Africa is still the world’s most under-penetrated regions with subscriber growth
at +/-12% and penetration rate below 45% and predicted to reach 56% by FY2020.

Technology shifts and smartphones: There is an accelerating technology shift to mobile broadband
networks (i.e. 3G and 4G technologies) predicted to reach 70-80% of global connections by 2020 -the
level at which growth tends to slow. This migration is being driven by greater availability and affordability

of smartphones and more extensive network coverage with most of the growth expected from developing
markets. Smartphone average selling prices (ASPs) in 2008 where US$200 and in some developing
markets it has reached the 'sweet spot' of the US$25-50 range.

Shifts to mobile data: The growing number of smartphones and other advanced devices (e.g. tablets)
are increasing the use of data-intensive applications, such as video streaming, on mobile networks. Cisco

estimates that smartphones generate 37 times more data traffic than feature phones, while 4G
smartphones generate almost 3 times as much data traffic as 3G smartphones with volumes forecast to
grow at a Compound Annual Growth Rate (CAGR) of 57% out to 2019, an almost tenfold increase. On
demand video on mobile devices is the key driver of mobile data growth, with a 66% annual increase
through to 2019 compared with 57% for data as a whole. In 2014 YouTube reported that mobile devices
now generate 50% of its global traffic, up from 41% in 2013. Major operators are monetising this strong
growth helping to stablise revenues at a time when traditional services are under pressure and operators

have significant investment commitments as they roll out high speed networks.

The CFO Business Case Study Competition 2016 Pack
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