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ISP Project

Jann Lau

on 23 November 2010

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Transcript of ISP M-PMT GROUP 5

SWOT Mobile Payments : Paying for Itself OPPORTUNITIES STRENGTHS THREATS WEAKNESSES Established in 1989

Subsidiary of Deutsche Telekom

Market Leader in Hungarian telecommunications industry

Organization Restructuring

10 member companies in Hungary; 6 international member companies Overview of Magyar Telekom Strategy Initiatives Increase Cash Flows Increase Profitability with Minimum CAPEX Expand non-voice services Diversify and Improve ARPU Mobile Payment Service Why Mobile Payment? Brand Equity

Telecommunications Market Leader

Powerful strategic investor in Deustche Telekom (DT)

Only 3-Screens company in Hungary

Wholly owned full-service subsidiaries in CEE region Competition from Vodafone, Pannon, and smaller competitiors

Stagnation of domestic fixed-line market

Mobile market nearing saturation point

Migration from fixed-line services toward ADSL and other broadband technologies

Local loop unbundling = increased pressure from competition in fixed-line market Decline in fixed-line revenues and subscribers

Low autonomy regarding expansion opportunities as DT's subsidiary


Corruption Scandal (Macedonia) Trends in the Telecommunications Industry Conclusion Increase Cash Flows Diversify and Improve ARPU Increase Profitability with Minimum CAPEX Expand non-voice services Telecommunications Industry Analysis Analysis of MT's Resources 2011 2012 2013 2014 2015 Mobile Payment Service Strategy Timeline Questions? 2016 Nationwide retail roll-out; 33,766 POS readers Expand adoption of m-payments by industries Evaluation Phase Identifying Financial Services Partners Initial 6-month Test Phase Largest financial services provider in Hungary
46% Total Profit of Hungarian Banking Sector in 2005
Largest bank card issuer (2005: >3.3m retail debit cards,
>250k credit cards) MasterCard, Visa, and AMEX collectively process >90% payments between the banks of merchants and the banks of purchasers Encourage Existing MT Customer sign-up Target Revenue: 100M HUF
Install NFC Readers in retailer
terminals with POS machines

*CASE STUDY: SK Telecom (2003) Mass invites through monthly bills to mobile subscribers
Marketing through existing MT retailers and OTP branches
Incentive program for early adopters Identify Off-Shore Manufacturer to Purchase SMART SIM Cards and NFC Readers from *The Payment Card Business in Hungary *Central Bank of Hungary Revenue Assumptions: Cost Assumptions: Credit usage in Hungary grew 23% per annum for last 6 years
- We expect 20% annual growth for following 6 years
15% existing MT customers to sign-up;
- 20% signees to replace credit card with mobile payments
User base to grow 30% annually for next 5 years
MT receives 1.3% transaction value Purchase and install 200,000 SMART SIM cards per year @ $5 per SIM
Install NFC Readers in all 33,766 retail terminals in year 1
Maintenance Cost = 1% of revenue
Marketing Cost = 5% of revenue
Est. 300M HUF for Set-Up, Test Phase, and P'ship (Post)

Differentiation from competitors


Relationship with Financial Institutions Low barrier to entry in mobile payments

Unstable macroeconomic conditions

Price-sensitive consumers Insight into consumer spending habits

Synergy effects in marketing

Growing credit card usage Decline in Fixed-Line revenue

Potential Privacy Rights of consumers

New line of business vulnerable to regulation changes What is a 3G SMART SIM Card? 2G and 3G compatible SIM
Customer’s bank card number is linked to their cell phone number.
Thus, mobile phone acts as a debit/credit card. What is an NFC Reader? Wireless communications technology which allows for the transmission of data between two NFC enabled devices, such as a mobile phone and a POS register, when held 10 to 20 cm away from one another.
ISO/IEC 14443 standard RISKS: Technology does not catch on

Security of personal information

Perceived system safety risk

First mover disadvantage Interchange Fee = EU * ASV * No. of swipes/yr. * Terminal Rate * 1.3% Strong growth in non-voice markets

Fragmented Hungarian IT market

Expansion of IPTV services

Growing popularity of smartphones
Full transcript