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SFR - Strategy

Essec SMIB 2012 /2013
by

Antony ZOUZOUT

on 15 September 2012

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Transcript of SFR - Strategy

SMIB - 2012/2013 About the French Mobile Market 100 % Owned by VIVENDI
Sfr turnover : 12,183 M €
Sfr account for 42 % of VIVENDI turnover
N°2 French mobile provider
3 differents CEO in 2012
10 000 employees
SFR is structured in three main activities The impact of the new entrant Support of the French government (lowered entrance barriers)
Roaming agreement with Orange.
Free mobile came with an attractive low cost offer ISSUE Situation analysis Historically three main competitors
- Orange
- SFR
- Bouygues Telecom.
Mobile Virtual Network Operator (MVNO) market is growing
FREE, new mobile entrant in 2012.
70,4 million customers in Mobile segment
Mobile market revenues are decreasing while the number of customers is increasing Case study Strategic management Kheira KADRI
Erwan LE ROCH
Kader SEDDAK
Antony ZOUZOUT About the French Mobile Market
About SFR
The Issue
Situation Analysis
Recommendation
Which return ?
Risks Analysis
And tomorrow ...
Appendix Index Loss of 274 000 customers
Restructuring plan : 1000 employees
Saving plan :500 millions euros to 2014
5 % decrease in EBITDA
10, 3 %decrease in net operating income (1,3 billion euros) Loss of 380 000 customers
3 % decrease in sales revenue
Restructuring plan of 556 employees.
Renegotiation of contracts with his french subcontractors Loss of 615.000 customers
Still the market leader with 43 %
Agreement with FREE Mobile how to do :
- Investment in the network (QoS, 4G ...)
- Reinforce the customer relationship
- Offer more added value services
- loyalty program
- simplify the offers Recommendation Differentiation by delivering high quality services Which benefits ? Risks B2C :
850 SFR stores
20 millions mobile customers
35% mobile market shares
4.6 million fixed-line customers
€ 9 billion in revenue B2B :
150,000 customers B to B
1 100 sales engineers
13% fixed lines market share
35% mobile market share
€ 2 billion in sales Wholesale :
200 operator customers (business between operators)
Major player in the MVNO
€ 1 billion in sales 3,6 Million of customers in 1st half 2012 i.e 5,4% of market share 320 million mobile revenue in 1st half 2012 Capacity to invest with a 1,35 x gearing and 1,5 billion euros in cash Vs 31 % decrease in EBITDA due to investment About APPENDIX And tomorrow.... swot PESTEL PORTER 5 (+1) FORCES COMPETITOR ANALYSIS
- Short term view : stabilize the loss of clients
- Long term view : Gain new customers attracted by the quality of our offers Reinforce SFR's brand recognized as reliable operator
- Business opportunities towards other competitors : roaming agreement
- be closer to the customer using our distribution network. (850 stores) Ability to provide new services based on new customers devices use increase the Average Revenu Per User
increase the margin on these services Mitigation infrastructures investment are heavy and could not allow quick changes in term of pricing strategy No differentiation with some competitors such as Orange in terms of infrastructure quality Strategy partially based on exterior factors such as : technical development of mobile devices. Low cost offer already launched (RED) permit to reduce low cost competitors strategy Investments needed by all competitors will have a direct impact on their prices High competition between mobile devices manufacturers should lead to important innovations and then benefit to mobile operators Important distribution network (over 850 stores).
1,7 billion euros per year in network infrastructures
EBITDA = 83 % of the mobile segment In this context, what strategy can SFR put in place to limit the impact of the leakage of customers attracted by the offer of FREE ? SFR ENVIRONMENT COMPETITORS A highly profitable company with significant cash
Strong Network (1,7 B€ investment/year)
Strong reputation, recognized as a reliable mobile operator
Cost structure does not fit to low cost
Strong distribution network
Number of smartphone (41%)
Performance of Mobile devices
Mobile Apps consumes more and more bandwidth
Customers are expecting a high quality network. 2012 : FREE gained 5,2% of Market Share over others operators
Q2 2012 : FREE impact is decreasing
Regarding 2012 figures, we can assume :
Low cost offer has a certain attractiveness but it does not seduce all customers
SFR has maintained its main customer bases P: the government and the regulator wanted to increase competition among operators by promoting the emergence of a fourth mobile operator. historically, the telecommunications sector is a public service, this explains the important role of the French government in this sector. E : Strong market penetration : limited increase in the number of new customers, but development of new services lead to increase the revenue per customers. S : Evolution of habits to a need for ever-increasing nomadism. Young people are equipped with a mobile sooner.Development of social networks.Creation of communities (FB, twitter...) T: perpetual evolution of mobile devices.Customer is always looking for new services. Booming of smartphone market - development of the optical fiber ... E: increased nulbers of antennas have resulted in a strong opposition from associations related to health risks. L : ARCEP has allowed only 3G licenses. strandard are related to existing installations of antennas. FREE SFR ISSUE SFR should maintain and develop new quality offers. Differentiation RISKS ANALYSIS sfr annual report

ARCEP

www.sfr.com

les echos

le figaro

SFR Trade union (unsa) SOURCES THANK YOU
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